SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1
TO
SCHEDULE 13D\A
Under the Securities Exchange Act of 1934
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ROC COMMUNITIES, INC.
(Name of Issuer)
Common Stock, $.01 Par Value Per Share
(Title of Class of Securities)
749650-0-7
(CUSIP Number)
---------
C.G. Kellogg
Chateau Properties, Inc.
19500 Hall Road
Clinton Townshp, Michigan 48038
(810) 286-3600
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
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Copy to:
Henry J. Brennan
Timmis & Inman L.L.P.
300 Talon Centre
Detroit, Michigan 48207
(313) 396-4200
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July 17, 1996
(Date of event which requires filing of this statement)
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/ / Check box if the filing person has previously filed a statement on
Schedule 13G to report the / / acquisition which is the subject of
this Schedule 13D, and is filing this schedule because of Rule
13d-1(b)(3) or (4).
/ / Check box is a fee is being paid with the statement.
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Page 1 of 64
Exhibit Index at Page 9
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CUSIP No. 749650-0-7 Page 2 of 31 Pages
13D
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1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSON
CHATEAU PROPERTIES, INC.
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP ______
(a) /_____/
______
(b) /_____/
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3. SEC USE ONLY
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4. SOURCE OF FUNDS
WC/OO
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED _______
PURSUANT TO ITEM 2(d) OR 2(e) /______/
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6. CITIZENSHIP OR PLACE OF ORGANIZATION
MARYLAND
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7. SOLE VOTING POWER
NUMBER OF
0
UNITS ---------------------------------------------------------------
8. SHARED VOTING POWER
BENEFICIALLY
594,063
OWNED BY ---------------------------------------------------------------
9. SOLE DISPOSITIVE POWER
EACH
420,000*
REPORTING ---------------------------------------------------------------
10. SHARED DISPOSITIVE POWER
PERSON WITH
0
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,014,063**
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12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES ______
SHARES CERTAIN /_____/
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13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.9%
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14. TYPE OF REPORTING PERSON
CO
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* Beneficial ownership is disclaimed with respect to all of such shares.
See Item 5.
** Beneficial ownership is disclaimed with respect to 420,000 of such shares.
See Item 5.
<PAGE>
Item 1. Security and Issuer.
This Schedule 13D (this "Schedule") relates to shares of common
stock, par value $0.01 per share ("Shares") of ROC Communities, Inc., a
Maryland corporation ("ROC"). The principal executive offices of ROC are
located at 6430 South Quebec Street, Englewood, Colorado 80111.
Item 2. Identity and Background.
(a)-(c) The person filing this statement is Chateau Properties,
Inc., a Maryland corporation ("Chateau"). The principal executive office of
Chateau is located at 19500 Hall Road, Clinton Township, Michigan 48038.
Chateau is a real estate investment trust primarily engaged in the ownership,
operation and management of manufactured home communities.
Pursuant to General Instruction C of Schedule 13D, the names,
business addresses, principal occupations and citizenship of the executive
officers and directors of Chateau are set forth in Annex A hereto and are
incorporated herein by reference.
(d)-(e) During the last five years, neither Chateau nor, to the
knowledge of Chateau, any of the executive officers and directors of Chateau
listed in Annex A has (i) been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) or (ii) been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and
as a result of such proceeding was or is subject to a judgment, decree or
final order enjoining further violations of or prohibiting, activities subject
to federal or state securities laws or final order enjoining further
violations of or prohibiting activities subject to federal or state securities
laws or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
On July 17, 1996, ROC, Chateau, Chateau Communities, Inc., a
Maryland corporation ("Chateau Communities") organized by ROC and Chateau, and
R Acquisition Sub, Inc., a Maryland corporation and a subsidiary of Chateau
Communities ("RSub"), entered into an Agreement and Plan of Merger (the
"Merger Agreement"), pursuant to which Chateau will merge with Chateau
Communities, with Chateau Communities surviving such merger (the "Chateau
Merger"), and ROC will merge with RSub, with ROC surviving such merger (the
"ROC Merger" and, together with the Chateau Merger, the "Mergers").
As a result of the Mergers, each outstanding share of common
stock, par value $.01 per share, of ROC ("ROC Common Stock") and non-voting
redeemable stock, par value $.01 per share, of ROC ("ROC Non-Voting Stock")
will be converted into 1.042 shares of common stock, par value $.0001 per
share, of Chateau Communities ("Chateau Communities Common Stock"), and each
outstanding share of common stock, par value $.01 per share, of Chateau
("Chateau Common Stock") will be converted into one share of Chateau
Communities Common Stock. The Mergers were announced in a press release issued
by ROC and Chateau on July 18, 1996. The Mergers are subject to a number of
conditions, as described in the Merger Agreement.
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Concurrently with entering into the Merger Agreement, Chateau
was granted the ROC Option (defined in Item 4 below) and received the ROC
Principal Proxy (defined in Item 4 below) entitling Chateau to vote the shares
of ROC Common Stock held by certain officers of ROC in favor of the ROC
Merger. None of the triggering events permitting exercise of the ROC Option
has occurred as of the date of this Schedule 13D. In the event that the ROC
Option becomes exercisable and Chateau wishes to purchase for cash the ROC
Common Stock subject thereto, Chateau anticipates that it would fund the
exercise price from working capital or through other sources, which could
include borrowings.
Item 4. Purpose of the Transaction.
Concurrently with the execution and delivery of the Merger
Agreement, ROC entered into a Stock Option Agreement(the "ROC Option
Agreement") with CP Limited Partnership, a Maryland limited partnership of
which Chateau is the sole general partner (the "Operating Partnership"),
whereby ROC has granted to the Operating Partnership an option to purchase up
to 420,000 shares of ROC Common Stock, exercisable by the Operating
Partnership, in whole or in part, at any time or from time to time after the
Merger Agreement becomes terminable by Chateau under circumstances which could
entitle the Operating Partnership to receive the Chateau Break-Up Expenses or
the Chateau Break-Up Fee under Section 8.2(b) of the Merger Agreement,
regardless of whether the Merger Agreement is actually terminated (any such
event by which the Merger Agreement becomes so terminable by Chateau being
referred to herein as a "Chateau Trigger Event"). The right of the Operating
Partnership to exercise its option shall terminate on the date which is 365
days after the date that ROC shall notify the Operating Partnership in writing
of the occurrence of any Chateau Trigger Event. Chateau has also entered into
a Stock Option Agreement (the "Chateau Option Agreement" and, together with
the ROC Option Agreement, the "Reciprocal Option Agreements") with ROC whereby
Chateau has granted to ROC an option to purchase up to 420,000 shares of
Chateau Common Stock, exercisable by ROC, in whole or in part, at any time or
from time to time after the Merger Agreement becomes terminable by ROC under
circumstances which could entitle ROC to receive the ROC Break-Up Expenses or
the ROC Break-Up Fee under Section 8.2(d) of the Merger Agreement, regardless
of whether the Merger Agreement is actually terminated (any such event by
which the Merger Agreement becomes so terminable by ROC being referred to
herein as a "ROC Trigger Event"). The right of ROC to exercise its option
shall terminate on the date which is 365 days after the date that Chateau
shall notify ROC in writing of the occurrence of any ROC Trigger Event.
Notwithstanding any other provisions of the Reciprocal Option Agreements, the
Total Profit (as defined) which either ROC or the Operating Partnership, as
grantee of a stock option (the "Option") issued by Chateau or ROC,
respectively, may realize from the Option may not exceed $10 million plus the
applicable amount of Break-Up Expenses (as defined in the Merger Agreement).
In connection with the Merger Agreement, certain holders of
Chateau Common Stock delivered to ROC an Agreement and Irrevocable Proxy (the
"Chateau Principal Proxy") to vote their shares of Chateau Common Stock in
favor of the Chateau Merger and the approval and adoption of the Merger
Agreement and the other transactions contemplated thereby, and certain holders
of ROC Common Stock delivered to Chateau an Agreement and Irrevocable Proxy
(the "ROC Principal Proxy") to vote their shares of ROC Common Stock in favor
of the ROC Merger and the approval and adoption of the Merger Agreement and
the other transactions contemplated thereby. Copies of
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<PAGE>
the ROC Principal Proxy and the Chateau Principal Proxy are attached hereto as
Exhibits 7.1 and 7.2, respectively, and are incorporated herein by reference.
If the Mergers are approved by Chateau's stockholders and ROC's
stockholders and consummated, as a result of the Mergers ROC will become a
substantially owned subsidiary of Chateau Communities. In connection with the
Mergers, the composition of ROC's board would change, its charter and bylaws
will be amended and shares of its common stock will be delisted from the New
York Stock Exchange. Except as set forth in this Item 4, Chateau has no plans
or proposals which relate to or would result in any of the matters set forth
in clauses (a) through (j) of Item 4 of Schedule 13D.
The preceding summary of certain provisions of the Chateau
Option Agreement, the ROC Option Agreement, the Chateau Principal Proxy and
the ROC Principal Proxy, copies of which are filed as exhibits hereto, is not
intended to be complete and is qualified in its entirety by reference to the
full text of such agreements.
Item 5. Interest in Securities of the Issuer.
(a)-(b) Pursuant to the ROC Option Agreement, the Operating
Partnership has the right, exercisable only in certain circumstances, none of
which have occurred as of the date hereof, to acquire up to 420,000 shares of
ROC Common Stock, which would represent beneficial ownership of approximately
3.3% of the shares of ROC Common Stock outstanding after giving effect to the
issuance of these 420,000 shares. If the Operating Partnership were to acquire
such shares Chateau, as the general partner of the Operating Partnership,
would have sole voting and, subject to certain restrictions set forth in the
ROC Option Agreement, investment power with respect thereto. Because of the
limited circumstances in which the option granted under the ROC Option
Agreement is exercisable, Chateau disclaims beneficial ownership of such
shares of ROC Common Stock subject to the ROC Option Agreement.
Pursuant to the ROC Principal Proxy, Chateau has sole voting
power with respect to 594,063 shares of Chateau Common Stock, representing
approximately 4.8% of the shares of ROC Common Stock currently outstanding,
for the purpose of voting in favor of the ROC Merger and the approval and
adoption of the Merger Agreement and the other transactions contemplated
thereby. Chateau does not have dispositive power with respect to such shares
nor does it have voting power with respect to such shares except with regard
to the ROC Merger and matters relating thereto.
To the best of its knowledge, no executive officer or director
of Chateau beneficially owns any shares of ROC Common Stock.
(c) Except as described above, there have been no transactions
in shares of ROC Common Stock by Chateau, or, to the best knowledge of
Chateau, any of Chateau's executives officers and directors during the past 60
days.
(d)-(e) Not applicable.
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<PAGE>
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer.
On June 4, 1996 Chateau and ROC entered into a Confidentiality
and Standstill Agreement, which was amended on June 20 and 21, 1996, which
provides that until June 4, 1997 Chateau will not, without ROC's prior
consent, acquire any shares of ROC's Common Stock nor will it commence any
tender offer, proxy solicitation or other proposal for an extraordinary
corporate transaction. Except as set forth herein, neither Chateau nor, to the
best knowledge of Chateau, any of its directors or executive officers, has any
contracts, arrangements, understandings or relationships (legal or otherwise)
with any other person with respect to any securities of ROC.
Item 7. Material to be Filed as Exhibits.
Exhibit 7.1 Agreement and Irrevocable Proxy, dated as of July
17, 1996, by and between Gary P. McDaniel, Steven
G. Davis, James B. Grange and Rees F. Davis, Jr.,
and Chateau Properties, Inc.
Exhibit 7.2 Stock Option Agreement dated as of July 17, 1996
between ROC Communities, Inc., as issuer, and CP
Limited Partnership, as Grantee.
Exhibit 7.3 Confidentiality and Standstill Agreement dated as
of June 4, 1996 between Chateau Properties, Inc.
and ROC Communities, Inc., as amended June 20 and
21, 1996.
Exhibit 7.A Agreement and Plan of Merger dated as of July 17,
1996, among Chateau Properties, Inc., ROC
Communities, Inc., Chateau Communities, Inc. and
R Acquisition Sub, Inc.
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<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: August 22, 1996
CHATEAU PROPERTIES, INC.
By: /s/ Tamara D. Fischer
---------------------
Executive Vice President and
Chief Financial Officer
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<PAGE>
ANNEX A
IDENTITY AND BACKGROUND
The following table sets forth the names, addresses and principal
occupations of the executive officers and directors of Chateau. Each such
person is a citizen of the United States. The business address of each
executive officer of Chateau is 19500 Hall Road, Clinton Township, Michigan
48038.
Name and Address Occupation
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John A. Boll Chairman of the Board of Directors of Chateau
C.G. Kellogg President and Chief Executive Officer and
Director of Chateau
Tamara D. Fischer Chief Financial Officer of Chateau
Gebran S. Anton, Jr. Director - owner of Gebran Anton Development
Company and Anton Zorn & Associates, Inc., a
commercial and industrial real estate broker
Jay G. Rudolph Director - interim Director of Finance
and administration of Renaissance Center
Management Company; retired partner of Coopers
and Lybrand L.L.P.
Edward R. Allen Director - engaged in various real estate
development projects, formerly Chairman and Chief
Executive Officer of InterCoastal Communities,
Inc.
James M. Lane Director - retired Senior Vice President in
charge of NDB Bank's Trust Investment Division
Kenneth E. Myers Director - President and Chief Executive Officer
of William Beaumont Hospital
A-1
<PAGE>
EXHIBIT INDEX
Sequential
Page
Exhibit Number Exhibit Description Number
- -------------- ------------------- ----------
Exhibit 7.1 + Agreement and Irrevocable Proxy, dated as of
July 17, 1996, by and between Gary P. McDaniel,
Steven G. Davis, James B. Grange and Rees F.
Davis, Jr., and Chateau Properties, Inc.
Exhibit 7.2 + Stock Option Agreement dated as of July 17, 1996
between ROC Communities, Inc., as issuer, and CP
Limited Partnership, as Grantee.
Exhibit 7.3 + Confidentiality and Standstill Agreement dated as
of June 4, 1996 between Chateau Properties, Inc.
and ROC Communities, Inc., as amended June 20
and 21, 1996.
Exhibit 7.4 Agreement and Plan of Merger dated as of 10
July 17, 1996, among Chateau Properties, Inc.,
ROC Communities, Inc., Chateau Communities, Inc.
and R Acquisition Sub, Inc.
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+ Previously filed.
Exhibit 7.4
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<PAGE>
AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of
July 17, 1996, among CHATEAU PROPERTIES, INC., a Maryland corporation
("Chateau"), ROC COMMUNITIES, INC., a Maryland corporation ("ROC"), CHATEAU
COMMUNITIES, INC., a Maryland corporation organized by Chateau and ROC for the
purpose of consummating the strategic business combination transactions
described herein (the "Company"), and R ACQUISITION SUB, INC., a Maryland
corporation and a subsidiary of the Company ("RSub").
RECITALS
(a) Certain terms used herein shall have the meanings assigned
to them in Article X.
(b) The Boards of Directors of Chateau and ROC have determined
that it is advisable and in the best interest of their respective companies
and their stockholders to consummate the strategic business combination
transaction provided for herein, pursuant to which, upon the terms and subject
to the conditions set forth in this Agreement, (i) Chateau will merge with the
Company with the Company being the surviving corporation in such merger (the
"Chateau Merger") and each issued and outstanding share of common stock, par
value $.01 per share, of Chateau (the "Chateau Common Stock") will be
converted into the right to receive the Chateau Merger Consideration (as
defined below) and, concurrently therewith, (ii) ROC will merge with RSub and
will be the surviving corporation (the "ROC Surviving Corporation") in such
merger (the "ROC Merger" and, together with the Chateau Merger, the "Mergers")
and each issued and outstanding share of common stock, par value $.01 per
share, of ROC (the "ROC Common Stock") and non-voting redeemable stock, par
value $.01 per share, of ROC (the "ROC Non-Voting Stock" and, together with
the ROC Common Stock, the "ROC Stock") will be converted into the right to
receive the ROC Merger Consideration (as defined below and, together with the
Chateau Merger Consideration, the "Merger Consideration").
(c) In connection with the Mergers, the consummation of each of
which shall be conditioned upon the concurrent consummation of the other, the
following additional transactions will be effected (the Mergers, together with
the other documents, agreements and transactions contemplated by this
Agreement, being referred to collectively herein as the "Transactions"): (i)
ROC, the Company and CP Limited Partnership, a Maryland limited partnership
which is the operating partnership of Chateau (the "Operating Partnership"),
will enter into the Contribution Agreement substantially in the form of
Exhibit A hereto (the "Contribution Agreement") and immediately following the
Mergers will perform their respective obligations thereunder; (ii) the Amended
and Restated Agreement of Limited Partnership of the Operating Partnership
(the "Operating Partnership Agreement") will be amended and restated
substantially as provided in the form attached as Exhibit B hereto (the
"Operating Partnership Agreement Amendment"); and (iii) Chateau and ROC will
cause the Company to enter into a Registration Rights Agreement (the
"Registration Rights Agreement"), in the form attached as Exhibit C hereto
with certain holders (after giving effect to the Mergers) of the Common Stock,
par value $.0001 per share, of the Company (the "Common Stock") and units of
limited partner interest ("OP Units") in the Operating Partnership.
(d) As a condition to, and simultaneously with the execution
of, this Agreement, Chateau and ROC are entering into (i) a Chateau Stock
Option Agreement substantially in the form
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<PAGE>
attached as Exhibit D hereto (the "Chateau Option Agreement") pursuant to
which Chateau has granted ROC an option exercisable upon the occurrence of
certain events and (ii) a ROC Stock Option Agreement substantially in the form
attached as Exhibit E hereto (the "ROC Option Agreement" and, together with
the Chateau Option Agreement, the "Option Agreements") pursuant to which ROC
has granted the Operating Partnership an option exercisable upon the
occurrence of certain events.
(e) As a condition to the willingness of each of Chateau and
ROC to enter into this Agreement, the holders (the "ROC Principals") of ROC
Common Stock listed in Schedule A hereto delivered to Chateau a proxy
(collectively, the "ROC Principal Proxies") to vote their shares of ROC Common
Stock in favor of the ROC Merger and the approval and adoption of this
Agreement and the other Transactions contemplated hereby, and the holders (the
"Chateau Principals") of Chateau Common Stock listed in Schedule B hereto have
delivered to ROC a proxy (collectively, the "Chateau Principal Proxies") to
vote their shares of Chateau Common Stock in favor of the Chateau Merger and
the approval and adoption of this Agreement and the other Transactions
contemplated hereby.
(f) As a condition to the willingness of each of Chateau and
ROC to enter into this Agreement, Chateau and limited partners of the
Operating Partnership holding in excess of 47% of the outstanding OP Units
have consented to the Operating Partnership Agreement Amendment.
(g) Chateau and ROC desire to make certain representations,
warranties, covenants and agreements in connection with the Mergers and other
Transactions and also to prescribe various conditions to the Mergers.
(h) For federal income tax purposes it is intended that (i) the
Chateau Merger qualify as a tax-free reorganization under Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "Code"), and (ii) the ROC
Merger qualify as a tax-free transfer by the stockholders of ROC to the
Company in exchange for shares of Common Stock pursuant to Section 351 of the
Code.
(i) ROC, as the surviving corporation in the ROC Merger,
intends that, following the ROC Merger, it shall continue to be subject to
taxation as a real estate investment trust (a "REIT") within the meaning of
the Code.
NOW, THEREFORE, in consideration of the representations,
warranties, covenants and agreements contained in this Agreement, the parties
agree as follows:
ARTICLE I
The Mergers
SECTION 1.1 The Mergers. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the Maryland
General Corporation Law (the "MGCL"), ROC shall be merged with RSub at the
Effective Time (as defined below) and, concurrently therewith, Chateau shall
be merged with the Company at the Effective Time. Following the ROC Merger,
the separate corporate existence of RSub shall cease and ROC shall
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<PAGE>
continue as the surviving corporation and shall succeed to and assume all the
rights and obligations of RSub in accordance with the MGCL. Following the
Chateau Merger, the separate corporate existence of Chateau shall cease and
the Company shall continue as the surviving corporation and shall succeed to
and assume all the rights and obligations of Chateau in accordance with the
MGCL.
SECTION 1.2 Closing. The closing of the Mergers, the concurrent
consummation of each of which shall be conditioned on the consummation of the
other, will take place at 10:00 a.m. Eastern Time on a date to be specified by
the parties, which (subject to satisfaction or waiver of the conditions set
forth in Sections 6.2 and 6.3) shall be no later than the second business day
after satisfaction or waiver of the conditions set forth in Section 6.1 (the
"Closing Date"), at the offices of Rogers & Wells, 200 Park Avenue, New York,
New York 10166, unless another date or place is agreed to in writing by the
parties hereto.
SECTION 1.3 Effective Time. As soon as practicable following
the satisfaction or waiver of the conditions set forth in Article VI, the
parties shall concurrently file articles of merger or other appropriate
documents for each Merger (the "Articles of Merger") executed in accordance
with Section 3-110 of the MGCL and shall make all other filings or recordings
required under the MGCL to effect the Mergers. The Mergers shall become
effective at such time as the Articles of Merger for both Mergers have been
duly filed with the Department of Assessments and Taxation of the State of
Maryland, or at such other time as Chateau and ROC shall specify in the
Articles of Merger (the time and the day the Mergers become effective being,
respectively, the "Effective Time" and the "Effective Day"), it being
understood that the parties shall cause the Effective Time to occur on the
Closing Date.
SECTION 1.4 Effects of the Mergers. The Mergers shall have the
effects set forth in the MGCL.
SECTION 1.5 Charters and By-laws.
(a) The Company. The Charter (the "Company Charter") and
By-laws (the "Company By-laws") of the Company, as the surviving corporation
in the Chateau Merger, shall be consistent with the terms outlined in Exhibit
F hereto on or before, and immediately following, the consummation of the
Mergers.
(b) Surviving Corporation. The Charter and By-laws of ROC as in
effect at the Effective Time shall be the Charter and By-laws of ROC upon
consummation of the ROC Merger; provided that such Charter shall be amended
such that following the ROC Merger, after giving effect thereto, the ownership
of ROC Common Stock by the Company shall not violate the ownership limit
described in the ROC Charter.
SECTION 1.6 Directors. The initial directors of the Company as
of the date hereof shall be John A. Boll and Gary P. McDaniel (the "Initial
Directors"), as specified in the initial Charter of the Company. On or before,
and immediately following, the Effective Time, the Board of Directors of the
Company shall consist of ten directors, including Messrs. Boll and McDaniel,
with four directors being designated by each of ROC and Chateau consistent
with the terms outlined in Exhibit F. The directors of ROC immediately
following the Effective Time shall be appointed by the Company in its capacity
(after giving effect to the ROC Merger) as substantially the sole stockholder
of ROC.
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<PAGE>
SECTION 1.7 Officers. The officers of the Company immediately
following the Effective Time shall be as follows:
Gary P. McDaniel Chief Executive Officer
C.G. ("Jeff") Kellogg President
James B. Grange Chief Operating Officer
Tamara D. Fischer Chief Financial Officer
Rees F. Davis, Jr. Executive Vice President - Acquisitions
Each such officer shall be employed by the Company pursuant to an employment
agreement (the "Employment Agreements") substantially in accordance with the
terms outlined in Exhibit G hereto. The officers of ROC following the Mergers
shall be chosen by the Board of Directors of ROC as reconstituted by the
Company in accordance with Section 1.6 above.
SECTION 1.8 Principal Executive Office. The principal executive
office of the Company following the Effective Date shall be in Englewood,
Colorado.
ARTICLE II
Effect of the Mergers on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 2.1 Effect on Capital Stock. By virtue of the Mergers
and without any action on the part of the holder of any shares of Chateau
Common Stock or ROC Stock:
(a) Conversion of Stock.
(i) At the Effective Time, each issued and outstanding
share of ROC Stock shall be converted into the right to receive from the
Company 1.042 fully paid and nonassessable shares of Common Stock. At the
Effective Time, all such shares of ROC Stock shall no longer be outstanding
and shall automatically be cancelled and retired and all rights with respect
thereto shall cease to exist, and each holder of a certificate representing
any such shares of ROC Stock shall cease to have any rights with respect
thereto, except the right to receive, upon surrender of such certificate in
accordance with Section 2.2(c), certificates representing the shares of Common
Stock required to be delivered under this Section 2.1(a) and any cash in lieu
of fractional shares of Common Stock to be issued or paid in consideration
therefor upon surrender of such certificate (the "ROC Merger Consideration")
and any dividends or other distributions to which such holder is entitled
pursuant to Section 2.2(d), in each case, without interest and less any
required withholding taxes.
(ii) At the Effective Time, each issued and outstanding
share of Chateau Common Stock shall be converted into the right to receive
from the Company one fully paid and nonassessable share of Common Stock. At
the Effective Time, all such shares of Chateau Common Stock shall no longer be
outstanding and shall automatically be cancelled and retired and all rights
with respect thereto shall cease to exist, and each holder of a certificate
representing any such shares of Chateau Common Stock shall cease to have any
rights with respect thereto, except the right to
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<PAGE>
receive, upon surrender of such certificate in accordance with Section 2.2(c),
certificates representing the shares of Common Stock required to be delivered
under this Section 2.1(a) and any cash in lieu of fractional shares of Common
Stock to be issued or paid in consideration therefor upon surrender of such
certificate (the "Chateau Merger Consideration") and any dividends or other
distributions to which such holder is entitled pursuant to Section 2.2(d), in
each case, without interest and less any required withholding taxes.
(iii) Notwithstanding the foregoing, the parties understand
that the rights of each stockholder of the Company under this Section 2.1(a)
will be subject to the ownership limitations and other related provisions
contained in the Company Charter.
(b) Conversion of Shares of Common Stock of RSub. Immediately
prior to the Effective Time, RSub shall have issued and outstanding 10,000,120
shares of common stock ("RSub Common Stock"), 10,000,000 of which shares shall
be owned by the Company and 120 of which shares shall be held by 120 separate
individuals who are "accredited investors" within the meaning of Rule 501(a)
under the Securities Act of 1933, as amended (the "Securities Act"). At the
Effective Time, each issued and outstanding share of RSub Common Stock shall
be converted into one validly issued, fully paid and non-assessable share of
common stock of the ROC Surviving Corporation.
SECTION 2.2 Exchange of Certificates.
(a) Exchange Agent. Prior to the Effective Time, Chateau and
ROC shall jointly appoint a bank or trust company to act as exchange agent
(the "Exchange Agent") for the exchange of the Merger Consideration upon
surrender of certificates representing issued and outstanding Chateau Common
Stock and ROC Stock.
(b) Provision of Shares. Chateau and ROC shall cause the
Company to provide to the Exchange Agent on or before the Effective Time, for
the benefit of the holders of Chateau Common Stock and ROC Stock, sufficient
shares of Common Stock issuable in exchange for the issued and outstanding
shares of Chateau Common Stock and ROC Stock pursuant to Section 2.1.
(c) Exchange Procedure. As soon as reasonably practicable after
the Effective Time, the Exchange Agent shall mail to each holder of record of
a certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of Chateau Common Stock and ROC Stock (the
"Certificates") whose shares were converted into the right to receive the
Merger Consideration pursuant to Section 2.1, (i) a letter of transmittal
(which shall specify that delivery shall be effected, and risk of loss and
title to the Certificates shall pass, only upon delivery of the Certificates
to the Exchange Agent and shall be in a form and have such other provisions as
the Company may reasonably specify) and (ii) instructions for use in effecting
the surrender of the Certificates in exchange for the applicable Merger
Consideration. Upon surrender of a Certificate for cancellation to the
Exchange Agent or to such other agent or agents as may be appointed by the
Company, together with such letter of transmittal, duly executed, and such
other documents as may reasonably be required by the Exchange Agent, the
holder of such Certificate shall be entitled to receive in exchange therefor
the applicable Merger Consideration and any dividends or other distributions
to which such holder is entitled pursuant to Section 2.2(d), and the
Certificate so surrendered shall forthwith be cancelled. In the event of a
transfer of ownership of Chateau
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Common Stock or ROC Stock which is not registered in the transfer records of
Chateau or ROC, as the case may be, payment may be made to a person other than
the person in whose name the Certificate so surrendered is registered if such
Certificate shall be properly endorsed or otherwise be in proper form for
transfer and the person requesting such payment either shall pay any transfer
or other taxes required by reason of such payment being made to a person other
than the registered holder of such Certificate or establish to the
satisfaction of the Company that such tax or taxes have been paid or are not
applicable. Until surrendered as contemplated by this Section 2.2, each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive upon such surrender the applicable Merger
Consideration, without interest, into which the shares theretofore represented
by such Certificate shall have been converted pursuant to Section 2.1 and any
dividends or other distributions to which such holder is entitled pursuant to
Section 2.2(d). No interest will be paid or will accrue on the applicable
Merger Consideration upon the surrender of any Certificate or on any cash
payable pursuant to Section 2.2(d) or Section 2.2(g).
(d) Record Dates; Distributions with Respect to Unexchanged
Shares.
(i) Each of Chateau and ROC shall declare a dividend to
their respective stockholders, and the Operating Partnership shall declare a
distribution to holders of OP Units, the record date for each of which shall
be the Effective Day. The dividend of each shall be equal to such party's most
recent quarterly dividend rate, multiplied by the number of days elapsed since
the last day of the immediately preceding calendar quarter through and
including the Effective Day, and divided by 90. The dividends payable
hereunder to holders of Chateau Common Stock and ROC Stock shall be paid upon
presentation of the Certificates of such stock for exchange in accordance with
this Article II.
(ii) No dividends or other distributions with respect to
Chateau Common Stock or ROC Stock with a record date after the Effective Time
shall be paid to the holder of any unsurrendered Certificate with respect to
the shares represented thereby, and no cash payment in lieu of fractional
shares shall be paid to any such holder pursuant to Section 2.2(g), in each
case until the surrender of such Certificate in accordance with this Article
II. Subject to the effect of applicable abandoned property, escheat or similar
laws, following surrender of any such Certificate there shall be paid to the
holder of such Certificate, without interest, (A) at the time of such
surrender, the amount of any cash payable in lieu of any fractional share of
Common Stock to which such holder is entitled pursuant to Section 2.2(g) and
(B) if such Certificate is exchangeable for one or more whole shares of Common
Stock, (x) at the time of such surrender, the amount of dividends or other
distributions with a record date after the Effective Time theretofore paid
with respect to such whole shares of Common Stock and (y) at the appropriate
payment date, the amount of dividends or other distributions with a record
date after the Effective Time but prior to such surrender and with a payment
date subsequent to such surrender payable with respect to such whole shares of
Common Stock.
(e) No Further Ownership Rights in Chateau Common Stock or ROC
Stock. All Merger Consideration paid upon the surrender of Certificates in
accordance with the terms of this Article II (and any cash paid pursuant to
Section 2.2(g)) shall be deemed to have been paid in full satisfaction of all
rights pertaining to the shares of Chateau Common Stock or ROC Stock
theretofore represented by such Certificates, subject, however, to the
obligation of Chateau or ROC, as the case may be, to pay, without interest,
any dividends or make any other distributions with a record date prior to the
Effective Time which may have been declared or made by Chateau or ROC on such
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shares in accordance with the terms of this Agreement or prior to the date of
this Agreement and which remain unpaid at the Effective Time and have not been
paid prior to such surrender, and there shall be no further registration of
transfers on the stock transfer books of Chateau or ROC of the shares of
Chateau Common Stock or ROC Stock which were outstanding immediately prior to
the Effective Time. If, after the Effective Time, Certificates are properly
presented to the Company or ROC they shall be cancelled and exchanged as
provided in this Article II.
(f) No Liability. None of the Company, Chateau, ROC, RSub or
the Exchange Agent shall be liable to any person in respect of any Merger
Consideration delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law. Any portion of the Merger
Consideration delivered to the Exchange Agent pursuant to this Agreement that
remains unclaimed for six months after the Effective Time shall be redelivered
by the Exchange Agent to the Company, upon demand, and any holders of
Certificates who have not theretofore complied with Section 2.2(c) shall
thereafter look only to the Company for delivery of the Merger Consideration,
subject to applicable abandoned property, escheat and other similar laws.
(g) No Fractional Shares.
(i) No certificates or scrip representing fractional
shares of Common Stock shall be issued upon the surrender for exchange of
Certificates, and such fractional share interests will not entitle the owner
thereof to vote, to receive dividends or to any other rights of a stockholder
of the Company.
(ii) Notwithstanding any other provision of this Agreement,
each holder of shares of Chateau Common Stock or ROC Stock exchanged in the
Mergers who would otherwise have been entitled to receive a fraction of a
share of Common Stock (after taking into account all Certificates delivered by
such holder) shall receive, from the Exchange Agent in accordance with the
provisions of this Section 2.2(g), a cash payment in lieu of such fractional
share of Common Stock representing such holder's proportionate interest, if
any, in the net proceeds from the sale by the Exchange Agent in one or more
transactions (which sale transactions shall be made at such times, in such
manner and on such terms as the Exchange Agent shall determine in its
reasonable discretion) on behalf of all such holders of the aggregate of the
fractional shares of Common Stock which would otherwise have been issued (the
"Excess Shares"). The sale of the Excess Shares by the Exchange Agent shall be
executed on the New York Stock Exchange (the "NYSE") through one or more
member firms of the NYSE and shall be executed in round lots to the extent
practicable. Until the net proceeds of such sale or sales have been
distributed to the holders of Certificates, the Exchange Agent will hold such
proceeds in trust (the "Exchange Trust") for the holders of Certificates. The
Company shall pay all commissions, transfer taxes and other out-of-pocket
transaction costs, including the expenses and compensation of the Exchange
Agent, incurred in connection with this sale of the Excess Shares. As soon as
practicable after the determination of the amount of cash, if any, to be paid
to holders of Certificates in lieu of any fractional shares of Common Stock,
the Exchange Agent shall make available such amounts to such holders of
Certificates without interest.
(h) Withholding Rights. The Company or the Exchange Agent shall
be entitled to deduct and withhold from the Merger Consideration otherwise
payable pursuant to this Agreement to any holder of shares of Chateau Common
Stock or ROC Stock such amounts as the Company or the Exchange Agent is
required to deduct and withhold with respect to the making of such payment
under the Code, or any provision of state, local or foreign tax law. To the
extent that amounts are
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so withheld by the Company or the Exchange Agent, such withheld amounts shall
be treated for all purposes of this Agreement as having been paid to the
holder of the shares of Chateau Common Stock or ROC Stock, as the case may be,
in respect of which such deduction and withholding was made by the Company or
the Exchange Agent.
ARTICLE III
Representations and Warranties
SECTION 3.1 Representations and Warranties of ROC. ROC
represents and warrants to Chateau as follows:
(a) Organization, Standing and Corporate Power of ROC. ROC is a
corporation duly organized and validly existing under the laws of Maryland and
has the requisite corporate power and authority to carry on its business as
now being conducted. ROC is duly qualified or licensed to do business and is
in good standing in each jurisdiction in which the nature of its business or
the ownership, leasing of its properties or management of properties for
others makes such qualification or licensing necessary, other than in such
jurisdictions where the failure to be so qualified or licensed, individually
or in the aggregate, would not have a material adverse effect on the business,
properties, assets, financial condition or results of operations of ROC and
the ROC Subsidiaries taken as a whole (a "ROC Material Adverse Effect").
(b) ROC Subsidiaries. Schedule 3.1(b) to the ROC Disclosure
Letter (as defined below) sets forth each ROC Subsidiary (as defined below)
and the ownership interest therein of ROC. Except as set forth in Schedule
3.1(b) to the ROC Disclosure Letter, (i) all the outstanding shares of capital
stock of each ROC Subsidiary that is a corporation have been validly issued
and are fully paid and nonassessable and are owned by ROC, by another ROC
Subsidiary or by ROC and another ROC Subsidiary, free and clear of all
pledges, claims, liens, charges, encumbrances and security interests of any
kind or nature whatsoever (collectively, "Liens") and (ii) all equity
interests in each ROC Subsidiary that is a partnership, limited liability
company or trust are owned by ROC, by another ROC Subsidiary or by ROC and
another ROC Subsidiary free and clear of all Liens. Except for the capital
stock of, or other equity interests in, the ROC Subsidiaries, ROC does not
own, directly or indirectly, any capital stock or other ownership interest,
with a fair market value as of the date of this Agreement greater than
$250,000 in any Person or which represents 10% or more of the outstanding
capital stock or other ownership interest of any class in any Person. Each ROC
Subsidiary that is a corporation is duly incorporated and validly existing
under the laws of its jurisdiction of incorporation and has the requisite
corporate power and authority to carry on its business as now being conducted
and each ROC Subsidiary that is a partnership, limited liability company or
trust is duly organized and validly existing under the laws of its
jurisdiction of organization and has the requisite partnership power and
authority to carry on its business as now being conducted. Each ROC Subsidiary
is duly qualified or licensed to do business and is in good standing in each
jurisdiction in which the nature of its business or the ownership, leasing of
its properties or management of properties for others makes such qualification
or licensing necessary, other than in such jurisdictions where the failure to
be so qualified or licensed, individually or in the aggregate, would not have
a ROC Material Adverse Effect.
(c) Capital Structure. The authorized capital stock of ROC
consists of 90,000,000
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shares of ROC Common Stock, 158,017 shares of ROC Non-Voting Stock and
9,841,983 shares of preferred stock, par value $.01 per share (the "ROC
Preferred Stock"). On the date hereof, (i) 12,423,500 shares of ROC Common
Stock, 158,017 shares of ROC Non-Voting Stock and no shares of ROC Preferred
Stock were issued and outstanding, (ii) 490,000 shares of ROC Common Stock
were available for issuance under ROC's Amended and Restated 1993 Stock Option
and Stock Appreciation Rights Plan (the "1993 Stock Plan") and (iii) 270,000
shares of ROC Common Stock were reserved for issuance upon exercise of
outstanding stock options to purchase shares of ROC Common Stock granted to
employees of ROC under the 1993 Stock Plan (the "ROC Stock Options"). On the
date of this Agreement, except as set forth above in this Section 3.1(c), no
shares of capital stock or other voting securities of ROC were issued,
reserved for issuance or outstanding. There are no outstanding stock
appreciation rights relating to the capital stock of ROC. All outstanding
shares of capital stock of ROC are duly authorized, validly issued, fully paid
and nonassessable and not subject to preemptive rights. There are no bonds,
debentures, notes or other indebtedness of ROC having the right to vote (or
convertible into, or exchangeable for, securities having the right to vote) on
any matters on which stockholders of ROC may vote. Except (A) for the ROC
Stock Options, (B) as set forth in Schedule 3.1(c) to the ROC Disclosure
Letter, and (C) as otherwise permitted under Section 4.1, there are no
outstanding securities, options, warrants, calls, rights, commitments,
agreements, arrangements or undertakings of any kind to which ROC or any ROC
Subsidiary is a party or by which such entity is bound, obligating ROC or any
ROC Subsidiary to issue, deliver or sell, or cause to be issued, delivered or
sold, additional shares of capital stock, voting securities or other ownership
interests of ROC or any ROC Subsidiary or obligating ROC or any ROC Subsidiary
to issue, grant, extend or enter into any such security, option, warrant,
call, right, commitment, agreement, arrangement or undertaking. Except as set
forth in Schedule 3.1(c) to the ROC Disclosure Letter, there are no
outstanding contractual obligations of ROC or any ROC Subsidiary to
repurchase, redeem or otherwise acquire any shares of capital stock of ROC or
any capital stock, voting securities or other ownership interests in ROC or
any ROC Subsidiary or make any material investment (in the form of a loan,
capital contribution or otherwise) in any Person (other than a ROC
Subsidiary).
(d) Authority; Noncontravention; Consents. ROC has the
requisite corporate power and authority to enter into this Agreement and,
subject to approval of the ROC Merger, this Agreement and the other
Transactions contemplated hereby by the requisite vote of the holders of the
ROC Common Stock (the "ROC Stockholder Approvals"), to consummate the
Transactions contemplated by this Agreement to which ROC is a party. ROC has
the requisite corporate power and authority to enter into the ROC Option
Agreement and to consummate the Transactions contemplated thereby to which ROC
is a party. The execution and delivery of this Agreement and the ROC Option
Agreement by ROC and the consummation by ROC of the Transactions contemplated
hereby and thereby to which ROC is a party have been duly authorized by all
necessary corporate action on the part of ROC, subject to approval of this
Agreement pursuant to the ROC Stockholder Approvals. This Agreement and the
ROC Option Agreement have been duly executed and delivered by ROC and
constitute valid and binding obligations of ROC, enforceable against ROC in
accordance with their terms. The ROC Principal Proxies have been duly executed
and delivered by the ROC Principals and constitute valid and binding proxies
of the ROC Principals enforceable in accordance with their terms. Except as
set forth in Schedule 3.1(d) to the ROC Disclosure Letter, the execution and
delivery of this Agreement and the ROC Option Agreement by ROC do not, and the
consummation of the Transactions contemplated hereby and thereby to which ROC
is a party and compliance by ROC with the provisions of this Agreement and the
ROC Option Agreement will not, conflict with, or result in any violation of,
or default (with or without notice or lapse of time, or
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both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a material benefit under, or
result in the creation of any Lien upon any of the properties or assets of ROC
or any ROC Subsidiary under, (i) the Charter or By-laws of ROC or the
comparable charter or organizational documents or partnership or similar
agreement (as the case may be) of any ROC Subsidiary, each as amended or
supplemented to the date of this Agreement, (ii) any loan or credit agreement,
note, bond, mortgage, indenture, reciprocal easement agreement, lease or other
agreement, instrument, permit, concession, franchise or license applicable to
ROC or any ROC Subsidiary or their respective properties or assets or (iii)
subject to the governmental filings and other matters referred to in the
following sentence, any judgment, order, decree, statute, law, ordinance, rule
or regulation (collectively, "Laws") applicable to ROC or any ROC Subsidiary,
or their respective properties or assets, other than, in the case of clause
(ii) or (iii), any such conflicts, violations, defaults, rights or Liens that
individually or in the aggregate would not (x) have a ROC Material Adverse
Effect or (y) prevent the consummation of the Transactions. No consent,
approval, order or authorization of, or registration, declaration or filing
with, any federal, state or local government or any court, administrative or
regulatory agency or commission or other governmental authority or agency (a
"Governmental Entity"), is required by or with respect to ROC or any ROC
Subsidiary in connection with the execution and delivery of this Agreement or
the ROC Option Agreement by ROC or the consummation by ROC of the other
Transactions contemplated hereby and thereby, except for (i) the filing with
the Securities and Exchange Commission (the "SEC") of (x) a joint proxy
statement relating to the approval by ROC's stockholders and Chateau's
stockholders of the Transactions contemplated by this Agreement (as amended or
supplemented from time to time, the "Proxy Statement") and a registration
statement relating to the issuance of the Merger Consideration (the
"Registration Statement") and (y) such reports under Section 13(a) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as may be
required in connection with this Agreement and the Transactions contemplated
by this Agreement, (ii) the filing of the Articles of Merger for the ROC
Merger with the Department of Assessments and Taxation of the State of
Maryland, (iii) such filings as may be required in connection with the payment
of any Transfer and Gains Taxes (as defined below) and (iv) such other
consents, approvals, orders, authorizations, registrations, declarations and
filings as are set forth in Schedule 3.1(d) to the ROC Disclosure Letter or
(A) as may be required under (x) federal, state, local or foreign
environmental laws or (y) the "blue sky" laws of various states or (B) which,
if not obtained or made, would not prevent or delay in any material respect
the consummation of any of the Transactions contemplated by this Agreement or
otherwise prevent ROC from performing its obligations under this Agreement in
any material respect or have, individually or in the aggregate, a ROC Material
Adverse Effect.
(e) SEC Documents; Financial Statements; Undisclosed
Liabilities. ROC has filed all required reports, schedules, forms, statements
and other documents with the SEC since August 18, 1993 (the "ROC SEC
Documents"). All of the ROC SEC Documents (other than preliminary material),
as of their respective filing dates, complied in all material respects with
all applicable requirements of the Securities Act and the Exchange Act and, in
each case, the rules and regulations promulgated thereunder applicable to such
ROC SEC Documents. None of the ROC SEC Documents at the time of filing
contained any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except to the extent such statements have been modified or
superseded by later filed ROC SEC Documents. Other than as set forth in
Schedule 3.1(e) to the ROC Disclosure Letter, there is no unresolved
violation, criticism or exception by any Governmental Entity of which ROC has
received written notice with respect to any ROC report or statement which, if
resolved in a manner unfavorable to ROC, could have a ROC
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Material Adverse Effect. The consolidated financial statements of ROC included
in the ROC SEC Documents complied as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, have been prepared in accordance with generally
accepted accounting principles ("GAAP") (except, in the case of interim
financial statements, as permitted by Forms 10-Q or 8-K of the SEC) applied on
a consistent basis during the periods involved (except as may be indicated in
the notes thereto) and fairly presented, in accordance with the applicable
requirements of GAAP, the consolidated financial position of ROC and the ROC
Subsidiaries taken as a whole, as of the dates thereof and the consolidated
results of operations and cash flows for the periods then ended (subject, in
the case of interim financial statements, to normal year-end adjustments).
Except as set forth in the ROC Filed SEC Documents (as defined below), in
Schedule 3.1(e) to the ROC Disclosure Letter or as permitted by Section 4.1
(for the purposes of this sentence, as if Section 4.1 had been in effect since
December 31, 1995), neither ROC nor any ROC Subsidiary has any liabilities or
obligations of any nature (whether accrued, absolute, contingent or otherwise)
required by GAAP to be set forth on a consolidated balance sheet of ROC or in
the notes thereto and which, individually or in the aggregate, would have a
ROC Material Adverse Effect.
(f) Absence of Certain Changes or Events. Except as disclosed
in the ROC SEC Documents filed and publicly available prior to the date of
this Agreement (referred to collectively as the "ROC Filed SEC Documents") or
in Schedule 3.1(f) to the ROC Disclosure Letter, since the date of the most
recent financial statements included in the ROC Filed SEC Documents (the
"Financial Statement Date") and to the date of this Agreement, ROC and the ROC
Subsidiaries have conducted their business only in the ordinary course and
there has not been (i) any material adverse change in the business, financial
condition or results of operations of ROC and the ROC Subsidiaries taken as a
whole, that has resulted or would result, individually or in the aggregate, in
Economic Losses (as defined in Section 6.2 below) of $5,000,000 or more (a
"ROC Material Adverse Change"), nor has there been any occurrence or
circumstance that with the passage of time would reasonably be expected to
result in a ROC Material Adverse Change, (ii) except for regular quarterly
dividends not in excess of $.425 per share of ROC Stock, with customary record
and payment dates, any declaration, setting aside or payment of any dividend
or other distribution (whether in cash, stock or property) with respect to any
of ROC's capital stock, other than the dividend required to be paid pursuant
to Section 2.2(d)(i), (iii) any split, combination or reclassification of any
of ROC's capital stock or any issuance or the authorization of any issuance of
any other securities in respect of, in lieu of or in substitution for, or
giving the right to acquire by exchange or exercise, shares of its capital
stock or any issuance of an ownership interest in, any ROC Subsidiary except
as permitted by Section 4.1, (iv) any damage, destruction or loss, whether or
not covered by insurance, that has or would have a ROC Material Adverse Effect
or (v) any change in accounting methods, principles or practices by ROC or any
ROC Subsidiary materially affecting its assets, liabilities or business,
except insofar as may have been disclosed in the ROC Filed SEC Documents or
required by a change in GAAP.
(g) Litigation. Except as disclosed in the ROC Filed SEC
Documents or in Schedule 3.1(g) to the ROC Disclosure Letter, and other than
personal injury and other routine tort litigation arising from the ordinary
course of operations of ROC and the ROC Subsidiaries which are covered by
adequate insurance, there is no suit, action or proceeding pending or, to the
knowledge of ROC, threatened against or affecting ROC or any ROC Subsidiary
that, individually or in the aggregate, could reasonably be expected to (i)
have a ROC Material Adverse Effect or (ii) prevent the consummation of any of
the Transactions, nor is there any judgment, decree,
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injunction, rule or order of any Governmental Entity or arbitrator outstanding
against ROC or any ROC Subsidiary having, or which, insofar as reasonably can
be foreseen, in the future would have, any such effect.
(h) Absence of Changes in Benefit Plans; ERISA Compliance.
(i) Except as disclosed in the ROC Filed SEC Documents or
in Schedule 3.1(h)(i) to the ROC Disclosure Letter and except as permitted by
Section 4.1 (for the purpose of this sentence, as if Section 4.1 had been in
effect since December 31, 1995), since the date of the most recent audited
financial statements included in the ROC Filed SEC Documents, there has not
been any adoption or amendment in any material respect by ROC or any ROC
Subsidiary of any bonus, pension, profit sharing, deferred compensation,
incentive compensation, stock ownership, stock purchase, stock option, phantom
stock, retirement, vacation, severance, disability, death benefit,
hospitalization, medical or other employee benefit plan, arrangement or
understanding (whether or not legally binding) providing benefits to any
current or former employee, officer or director of ROC or any ROC Subsidiary
or any person affiliated with ROC under Section 414(b), (c), (m) or (o) of the
Code (collectively, "ROC Benefit Plans").
(ii) Except as described in the ROC Filed SEC Documents or
in Schedule 3.1(h)(ii) to the ROC Disclosure Letter or as would not have a ROC
Material Adverse Effect, (A) all ROC Benefit Plans, including any such plan
that is an "employee benefit plan" as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), are in
compliance with all applicable requirements of law, including ERISA and the
Code, and (B) neither ROC nor any ROC Subsidiary has any liabilities or
obligations with respect to any such ROC Benefit Plan, whether accrued,
contingent or otherwise (other than obligations to make contributions and pay
benefits and administrative costs incurred in the ordinary course), nor to the
knowledge of ROC are any such liabilities or obligations expected to be
incurred. Except as set forth in Schedule 3.1(h)(ii) to the ROC Disclosure
Letter, the execution of, and performance of the Transactions contemplated in,
this Agreement will not (either alone or together with the occurrence of any
additional or subsequent events) constitute an event under any ROC Benefit
Plan, policy, arrangement or agreement, trust or loan that will or may result
in any payment (whether of severance pay or otherwise), acceleration,
forgiveness of indebtedness, vesting, distribution, increase in benefits or
obligation to fund benefits with respect to any employee or director. The only
severance agreements or severance policies applicable to ROC or the ROC
Subsidiaries are the agreement and policies specifically referred to in
Schedule 3.1(h)(ii) to the ROC Disclosure Letter.
(i) Taxes.
(i) Each of ROC and each ROC Subsidiary has timely filed
all Tax Returns and reports required to be filed by it (after giving effect to
any filing extension properly granted by a Governmental Entity having
authority to do so). Each such Tax Return is true, correct and complete in all
material respects. ROC and each ROC Subsidiary have paid (or ROC has paid on
their behalf), within the time and manner prescribed by law, all Taxes that
are due and payable. Except as disclosed in Schedule 3.1(i)(i) to the ROC
Disclosure Letter, the federal, state and local income, sales and franchise
tax returns of ROC and each ROC Subsidiary have not been audited by any
Governmental Entity responsible for tax matters (a "Taxing Authority"). There
are no Tax liens upon the assets of ROC or any ROC Subsidiary. The most recent
financial statements contained in the ROC Filed SEC Documents reflect an
adequate reserve for all material Taxes
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payable by ROC and by each ROC Subsidiary for all taxable periods and portions
thereof through the date of such financial statements. Since the Financial
Statement Date, ROC has incurred no liability for Taxes under Section 857(b),
860(c) or 4981 of the Code, and neither ROC nor any ROC Subsidiary has
incurred any liability for Taxes other than in the ordinary course of
business. Except as set forth in Schedule 3.1(i)(i) to the ROC Disclosure
Letter, to the knowledge of ROC, no event has occurred, and no condition or
circumstance exists, which presents a material risk that any material Tax
described in the preceding sentence will be imposed upon ROC. To the knowledge
of ROC, no deficiencies for any Taxes have been proposed, asserted or assessed
against ROC or any of the ROC Subsidiaries, and no requests for waivers of the
time to assess any such Taxes have been granted or are pending. As used in
this Agreement, "Taxes" shall mean any federal, state, local or foreign
income, gross receipts, license, payroll, employment withholding, property,
sales, excise or other tax or governmental charges of any nature whatsoever,
together with any penalties, interest or additions thereto and "Tax Return"
shall mean any return, declaration, report, claim for refund, or information
return or statement relating to Taxes, including any schedule or attachment
thereto, and including any amendment thereof.
(ii) ROC (A) for all of its taxable years commencing with
1993 through the most recent December 31, has been subject to taxation as a
REIT within the meaning of the Code and has satisfied the requirements to
qualify as a REIT for such years, (B) has operated, and intends to continue to
operate, in such a manner as to qualify as a REIT for its tax year ending
December 31, 1996, and (C) has not taken or omitted to take any action which
could reasonably be expected to result in a challenge to its status as a REIT,
and, to ROC's knowledge, no such challenge is pending or threatened.
(j) No Loans or Payments to Employees, Officers or Directors.
Except as set forth in Schedule 3.1(j) to the ROC Disclosure Letter or as
otherwise specifically provided for in this Agreement, there is no (i) loan
outstanding from or to any employee or director, (ii) employment or severance
contract, (iii) other agreement requiring payments to be made on a change of
control or otherwise as a result of the consummation of any of the
Transactions with respect to any employee, officer or director of ROC or any
ROC Subsidiary or (iv) any agreement to appoint or nominate any person as a
director of ROC or the Company.
(k) Brokers; Schedule of Fees and Expenses. No broker,
investment banker, financial advisor or other person, other than PaineWebber
Incorporated ("PaineWebber"), the fees and expenses of which, as set forth in
a letter agreement between ROC and PaineWebber, have previously been disclosed
to Chateau and will be paid by ROC, is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
Transactions based upon arrangements made by or on behalf of ROC or any ROC
Subsidiary.
(l) Compliance with Laws. Except as disclosed in the ROC Filed
SEC Documents and except as set forth in Schedule 3.1(l) to the ROC Disclosure
Letter, neither ROC nor any of the ROC Subsidiaries has violated or failed to
comply with any statute, law, ordinance, regulation, rule, judgment, decree or
order of any Governmental Entity applicable to its business, properties or
operations, except for violations and failures to comply that would not,
individually or in the aggregate, reasonably be expected to result in a ROC
Material Adverse Effect.
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(m) Contracts; Debt Instruments.
(i) Neither ROC nor any ROC Subsidiary is in violation of
or in default under, in any material respect (nor does there exist any
condition which upon the passage of time or the giving of notice or both would
cause such a violation of or default under), any material loan or credit
agreement, note, bond, mortgage, indenture, lease, permit, concession,
franchise or license, or any agreement to acquire real property, or any other
material contract, agreement, arrangement or understanding, to which it is a
party or by which it or any of its properties or assets is bound, except as
set forth in Schedule 3.1(m)(i) to the ROC Disclosure Letter and except for
violations or defaults that would not, individually or in the aggregate,
result in a ROC Material Adverse Effect. The property managements in respect
of the management of certain manufactured home communities owned by companies
affiliated with The Windsor Corporation, a California corporation ("Windsor"),
detailed on Schedule 3.1(m)(i) to the ROC Disclosure Letter are in full force
and effect and represent enforceable obligations of the parties thereto.
(ii) Except for any of the following expressly identified
in the most recent financial statements contained in the ROC Filed SEC
Documents and except as permitted by Section 4.1, Schedule 3.1(m)(ii) to the
ROC Disclosure Letter sets forth (A) a list of all loan or credit agreements,
notes, bonds, mortgages, indentures and other agreements and instruments
pursuant to which any indebtedness of ROC or any of the ROC Subsidiaries in an
aggregate principal amount in excess of $2,000,000 per item is outstanding or
may be incurred and (B) the respective principal amounts outstanding
thereunder on June 30, 1996. For purposes of this Section 3.1(m)(ii) and
Section 3.2(m)(ii), "indebtedness" shall mean, with respect to any person,
without duplication, (A) all indebtedness of such person for borrowed money,
whether secured or unsecured, (B) all obligations of such person under
conditional sale or other title retention agreements relating to property
purchased by such person, (C) all capitalized lease obligations of such
person, (D) all obligations of such person under interest rate or currency
hedging transactions (valued at the termination value thereof), (E) all
guarantees of such person of any such indebtedness of any other person and (F)
any agreements to provide any of the foregoing.
(iii) Schedule 3.1(m)(iii) to the ROC Disclosure Letter sets
forth a complete list of each consulting agreement between ROC and any ROC
Subsidiary, including the annual compensation payable thereunder and the date
as of which such consulting agreement expires.
(n) Environmental Matters. Except as disclosed in
Schedule 3.1(n) to the ROC Disclosure Letter or in the environmental
audits/reports listed thereon, each of ROC and each ROC Subsidiary has
obtained all licenses, permits, authorizations, approvals and consents from
Governmental Entities which are required in respect of its business,
operations, assets or properties under any applicable Environmental Law (as
defined below) and each of ROC and each ROC Subsidiary is in compliance in all
material respects with the terms and conditions of all such licenses, permits,
authorizations, approvals and consents and with any applicable Environmental
Law. Except as disclosed in Schedule 3.1(n) to the ROC Disclosure Letter or in
the environmental audits/reports listed thereon:
(i) No Order has been issued, no complaint has been filed,
no penalty has been assessed and no investigation or review is pending or
threatened by any Governmental Entity with respect to any alleged failure by
ROC or any ROC Subsidiary to have any license, permit, authorization, approval
or consent from Governmental Entities required under any applicable
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Environmental Law in connection with the conduct of the business or operations
of ROC or any ROC Subsidiary or with respect to any treatment, storage,
recycling, transportation, disposal or "release" as defined in 42 U.S.C. ss.
9601(22) ("Release"), by ROC or any ROC Subsidiary of any Hazardous Material
(as defined below).
(ii) Neither ROC nor any ROC Subsidiary nor any prior owner
or lessee of any property now or previously owned or leased by ROC or any ROC
Subsidiary has handled any Hazardous Material on any property now or
previously owned or leased by ROC or any ROC Subsidiary; and, without limiting
the foregoing, (A) no polychlorinated biphenyl is or has been present, (B) no
friable asbestos is or has been present, (C) there are no underground storage
tanks, active or abandoned and (D) no Hazardous Material has been Released in
a quantity reportable under, or in violation of, any Environmental Law, at, on
or under any property now or previously owned or leased by ROC or any ROC
Subsidiary, during any period that ROC or any ROC Subsidiary owned or leased
such property or, to the knowledge of ROC and its Subsidiaries, prior thereto.
(iii) Neither ROC nor any ROC Subsidiary has transported or
arranged for the transportation of any Hazardous Material to any location
which is the subject of any action, suit, arbitration or proceeding that could
be reasonably expected to lead to claims against ROC or any ROC Subsidiary for
clean-up costs, remedial work, damages to natural resources or personal injury
claims, including, but not limited to, claims under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended,
and the rules and regulations promulgated thereunder ("CERCLA").
(iv) No oral or written notification of a Release of a
Hazardous Material has been filed or should have been filed by or on behalf of
ROC or any ROC Subsidiary and no property now or previously owned or leased by
ROC or any ROC Subsidiary is listed or proposed for listing on the National
Priorities List promulgated pursuant to CERCLA or on any similar state list of
sites requiring investigation or clean-up.
(v) There are no Liens arising under or pursuant to any
Environmental Law on any real property owned or leased by ROC or any ROC
Subsidiary, and no action of any Governmental Entity has been taken or, to the
knowledge of ROC and its Subsidiaries, is in process which could subject any
of such properties to such Liens, and neither ROC nor any ROC Subsidiary would
be required to place any notice or restriction relating to the presence of
Hazardous Material at any such property owned by it in any deed to such
property.
(vi) There have been no environmental investigations,
studies, audits, tests, reviews or other analyses conducted by, or which are
in the possession of, ROC or any ROC Subsidiary in relation to any property or
facility now or previously owned, leased or managed by ROC or any ROC
Subsidiary which have not been listed in Schedule 3.1(n) to the ROC Disclosure
Letter and made available to Chateau prior to the execution of this Agreement.
(vii) As used herein:
(A) "Environmental Law" means any Law of any
Governmental Entity relating to human health, safety or protection of
the environment or to emissions, discharges, releases or threatened
releases of pollutants, contaminants or Hazardous Materials in the
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environment (including, without limitation, ambient air, surface
water, ground water, land surface or subsurface strata), or otherwise
relating to the treatment, storage, disposal, transport or handling of
any Hazardous Material; and
(B) "Hazardous Material" means (A) any petroleum or
petroleum products, radioactive materials, asbestos in any form that
is or could reasonably be expected to become friable, urea
formaldehyde foam insulation and transformers or other equipment that
contain dielectric fluid containing levels of polychlorinated
biphenyls (PCBs); (B) any chemicals, materials, substances or wastes
which are now or hereafter become defined as or included in the
definition of "hazardous substances," "hazardous wastes," "hazardous
materials," "extremely hazardous wastes," "restricted hazardous
wastes," "toxic substances," "toxic pollutants" or words of similar
import, under any Environmental Law; and (C) any other chemical,
material, substance or waste, exposure to which is now or hereafter
prohibited, limited or regulated by any Governmental Entity.
(o) Tangible Property and Assets. Except as disclosed in
Schedule 3.1(o) to the ROC Disclosure Letter, ROC and its Subsidiaries have
good and marketable fee simple title to, or have valid leasehold interests in,
those manufactured home communities described in Schedule 3.1(o) to the ROC
Disclosure Letter, free and clear of all Liens other than (i) any statutory
Lien arising in the ordinary course of business by operation of law with
respect to a liability that is not yet due or delinquent and (ii) any
easement, restriction or minor imperfection of title or similar Lien which
individually or in the aggregate with other such Liens does not materially
impair the value of the property or asset subject to such Lien or the use of
such property or asset in the conduct of the business of ROC or any such ROC
Subsidiary.
(p) Books and Records.
(i) The books of account and other financial records of
ROC and each ROC Subsidiary are in all material respects true, complete and
correct, have been maintained in accordance with good business practices, and
are accurately reflected in all material respects in the financial statements
included in the ROC Filed SEC Documents.
(ii) ROC has previously delivered or made available to
Chateau true and correct copies of the Charter and By-laws of ROC, as amended
to date, and the charter, by-laws, organization documents, partnership
agreements and joint venture agreements of its Subsidiaries, and all
amendments thereto. All such documents are listed in Schedule 3.1(p)(iii) to
the ROC Disclosure Letter. ROC has also delivered to Chateau a copy of a
binder for its Director and Officer liability insurance policy.
(iii) The minute books and other records of corporate or
partnership proceedings of ROC and each ROC Subsidiary have been made
available to Chateau, contain in all material respects accurate records of all
meetings and accurately reflect in all material respects all other corporate
action of the stockholders and directors and any committees of the Board of
Directors of ROC and the ROC Subsidiaries which are corporations.
(q) Opinion of Financial Advisor. ROC has received the opinion
of PaineWebber, satisfactory to ROC, a signed version of which has been
provided to Chateau, with regard to the fairness of the Mergers to ROC and the
stockholders of ROC from a financial point of view.
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(r) State Takeover Statutes. No Takeover Statute (as defined
below) of the State of Maryland, including, without limitation, the control
share acquisition provisions of Section 3-701 et seq. of the MGCL or the
business combination provisions of Section 3-601 et seq. of the MGCL, applies
or purports to apply to the ROC Merger, this Agreement, any of the
Transactions, ROC or any holders of its equity securities.
(s) Registration Statement. The information furnished by ROC
for inclusion in the Registration Statement will not, as of the effective date
of the Registration Statement, contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein not misleading.
(t) Vote Required. The affirmative vote of at least two-thirds
of the outstanding shares of ROC Common Stock is the only vote of the holders
of any class or series of ROC's capital stock necessary (under applicable law
or otherwise) to approve the ROC Merger, this Agreement and the other
Transactions contemplated hereby.
SECTION 3.2 Representations and Warranties of Chateau. Chateau
represents and warrants to ROC as follows:
(a) Organization, Standing and Corporate Power of Chateau.
Chateau is a corporation duly organized and validly existing under the laws of
Maryland and has the requisite corporate power and authority to carry on its
business as now being conducted. Chateau is duly qualified or licensed to do
business and is in good standing in each jurisdiction in which the nature of
its business or the ownership or leasing of its properties makes such
qualification or licensing necessary, other than in such jurisdictions where
the failure to be so qualified or licensed, individually or in the aggregate,
would not have a material adverse effect on the business, properties, assets,
financial condition or results of operations of Chateau and the Chateau
Subsidiaries, taken as a whole (a "Chateau Material Adverse Effect").
(b) Chateau Subsidiaries. Schedule 3.2(b) to the Chateau
Disclosure Letter (as defined below) sets forth each Chateau Subsidiary (as
defined below) and the ownership interest therein of Chateau. Except as set
forth in Schedule 3.2(b) to the Chateau Disclosure Letter, (i) all the
outstanding shares of capital stock of each Chateau Subsidiary that is a
corporation have been validly issued and are fully paid and nonassessable and
are owned by Chateau, by another Chateau Subsidiary or by Chateau and another
Chateau Subsidiary, free and clear of all Liens and (ii) all equity interests
in each Chateau Subsidiary that is a partnership (other than the Operating
Partnership) or limited liability company or trust are owned by Chateau or by
Chateau and another Chateau Subsidiary free and clear of all Liens. Except for
the capital stock of or other equity interests in the Chateau Subsidiaries,
Chateau does not own, directly or indirectly, any capital stock or other
ownership interest, with a fair market value as of the date of this Agreement
greater than $250,000 in any Person or which represents 10% or more of the
outstanding capital stock or other ownership interest of any class in any
Person. Each Chateau Subsidiary that is a corporation is duly incorporated and
validly existing under the laws of its jurisdiction of incorporation and has
the requisite corporate power and authority to carry on its business as now
being conducted and each Chateau Subsidiary that is a partnership, limited
liability company or trust is duly organized and validly existing under the
laws of its jurisdiction of organization and has the requisite power and
authority to carry on its business as now being conducted. Each Chateau
Subsidiary is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the nature of its
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business or the ownership or leasing of its properties makes such
qualification or licensing necessary, other than in such jurisdictions where
the failure to be so qualified or licensed individually or in the aggregate,
would not have a Chateau Material Adverse Effect.
(c) Capital Structure. The authorized capital stock of Chateau
consists of 30,000,000 shares of Chateau Common Stock and 2,000,000 shares of
preferred stock, par value $.01 per share (the "Chateau Preferred Stock"). On
the date hereof, (i) 6,099,710 shares of Chateau Common Stock and no shares of
Chateau Preferred Stock were issued and outstanding, (ii) 366,600 shares were
available for grant under Chateau's 1993 Long Term Incentive Plan (the
"Chateau Plan"), (iii) 619,150 shares of Chateau Common Stock were reserved
for issuance upon exercise of outstanding stock options to purchase shares of
Chateau Common Stock granted to Chateau employees and directors under the
Chateau Plan (the "Chateau Stock Options"), and (iv) 8,836,310 shares of
Chateau Common Stock were reserved for issuance upon exchange of OP Units for
shares of Chateau Common Stock pursuant to the Operating Partnership
Agreement. On the date of this Agreement, except as set forth in this Section
3.2(c), no shares of capital stock or other voting securities of Chateau were
issued, reserved for issuance or outstanding. There are no outstanding stock
appreciation rights relating to the capital stock of Chateau. All outstanding
shares of capital stock of Chateau are, and all shares which may be issued
pursuant to this Agreement will be, when issued, duly authorized, validly
issued, fully paid and nonassessable and not subject to preemptive rights.
There are no bonds, debentures, notes or other indebtedness of Chateau having
the right to vote (or convertible into, or exchangeable for, securities having
the right to vote) on any matters on which stockholders of Chateau may vote.
Chateau's Percentage Interest (as defined in the Operating Partnership
Agreement) in the Operating Partnership is 40.84%. The OP Units consist of (i)
5,046,303 Exchangeable OP Units (as defined in the Operating Partnership
Agreement) which together represent a 33.79% Percentage Interest in the
Operating Partnership and are exchangeable for Chateau Common Stock on a
one-for-one basis into an aggregate of 5,046,303 shares of Chateau Common
Stock in accordance with the terms of the Operating Partnership Agreement,
subject to adjustment as provided in the Operating Partnership Agreement, and
(ii) 3,720,182 Excess OP Units (as defined in the Operating Partnership
Agreement) which together represent a 25.37% Percentage Interest in the
Operating Partnership and are not exchangeable except in accordance with the
Operating Partnership Agreement. Schedule 3.2(c) to the Chateau Disclosure
Letter sets forth the name, address, number of Exchangeable OP Units and
Excess Units and the Percentage Interest of each partner in the Operating
Partnership. Except (A) for the Chateau Stock Options and OP Units (which,
subject to certain restrictions, may be delivered to Chateau in exchange for
Chateau Common Stock), (B) as set forth in Schedule 3.2(c) to the Chateau
Disclosure Letter, (C) as otherwise permitted under Section 4.2, and (d) as
contemplated under Chateau's dividend reinvestment plan, as of the date of
this Agreement there are no outstanding securities, options, warrants, calls,
rights, commitments, agreements, arrangements or undertakings of any kind to
which Chateau or any Chateau Subsidiary is a party or by which such entity is
bound, obligating Chateau or any Chateau Subsidiary to issue, deliver or sell,
or cause to be issued, delivered or sold, additional shares of capital stock,
voting securities or other ownership interests of Chateau or of any Chateau
Subsidiary or obligating Chateau or any Chateau Subsidiary to issue, grant,
extend or enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking. Except (x) as set forth in
Schedule 3.2(c) to the Chateau Disclosure Letter and (y) as required under the
Operating Partnership Agreement, there are no outstanding contractual
obligations of Chateau or any Chateau Subsidiary to repurchase, redeem or
otherwise acquire any shares of capital stock or other ownership interests in
Chateau or any Chateau Subsidiary or make any material investment (in the form
of a loan, capital contribution or otherwise) in any Person other than the
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Operating Partnership.
(d) Authority; Noncontravention; Consents. Chateau has the
requisite corporate power and authority to enter into this Agreement and,
subject to approval of the Chateau Merger, this Agreement and the other
Transactions contemplated hereby by the requisite vote of the holders of the
Chateau Common Stock required to approve this Agreement (the "Chateau
Stockholder Approvals" and, together with the ROC Stockholder Approvals, the
"Stockholder Approvals"), to consummate the transactions contemplated by this
Agreement to which Chateau is a party. Chateau has the requisite corporate
power and authority to enter into the Chateau Option Agreement and to
consummate the Transactions contemplated thereby to which Chateau is a party.
The execution and delivery of this Agreement and the Chateau Option Agreement
by Chateau and the consummation by Chateau of the Transactions contemplated
hereby and thereby to which Chateau is a party have been duly authorized by
all necessary corporate action on the part of Chateau, subject to the approval
of this Agreement pursuant to the Chateau Stockholder Approvals. The execution
and delivery of the Operating Partnership Agreement Amendment has been duly
authorized by Chateau and by all other necessary partnership action, except
that such amendment also requires the consent of a Majority in Interest (as
defined in the Operating Partnership Agreement) of limited partners of the
Operating Partnership. As of the date hereof, limited partners representing in
excess of 47% in interest of such limited partners have consented to the
Operating Partnership Agreement Amendment. Immediately following the Effective
Time, subject to the receipt of such required consents of limited partners,
the Operating Partnership Agreement Amendment will constitute a valid and
binding obligation of the Operating Partnership, enforceable against the
Operating Partnership in accordance with its terms. This Agreement and the
Chateau Option Agreement have been duly executed and delivered by Chateau and
constitute valid and binding obligations of Chateau, enforceable against
Chateau in accordance with their terms. The Chateau Principal Proxies have
been duly executed and delivered by the Chateau Principals and constitute
valid and binding proxies of the Chateau Principals, enforceable in accordance
with their terms. Except as set forth in Schedule 3.2(d) to the Chateau
Disclosure Letter, the execution and delivery of this Agreement and the
Chateau Option Agreement by Chateau do not, and the consummation of the
Transactions contemplated hereby and thereby to which Chateau is a party and
compliance by Chateau with the provisions of this Agreement and the Chateau
Option Agreement will not, conflict with, or result in any violation of, or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any obligation or
to loss of a material benefit under, or result in the creation of any Lien
upon any of the properties or assets of Chateau or any Chateau Subsidiary
under, (i) the Charter or By-laws of Chateau or the comparable charter or
organizational documents or partnership or similar agreement (as the case may
be) of any Chateau Subsidiary, each as amended or supplemented to the date of
this Agreement, (ii) any loan or credit agreement, note, bond, mortgage,
indenture, reciprocal easement agreement, lease or other agreement,
instrument, permit, concession, franchise or license applicable to Chateau or
any Chateau Subsidiary or their respective properties or assets or (iii)
subject to the governmental filings and other matters referred to in the
following sentence, any Laws applicable to Chateau or any Chateau Subsidiary
or their respective properties or assets, other than, in the case of clause
(ii) or (iii), any such conflicts, violations, defaults, rights or Liens that
individually or in the aggregate would not (x) have a Chateau Material Adverse
Effect or (y) prevent the consummation of the Transactions. No consent,
approval, order or authorization of, or registration, declaration or filing
with, any Governmental Entity is required by or with respect to Chateau or any
Chateau Subsidiary in connection with the execution and delivery of this
Agreement or the Chateau Option Agreement by Chateau or the consummation by
Chateau of any of the Transactions contemplated hereby and thereby, except for
(i) the filing with
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the SEC of (x) the Proxy Statement and the Registration Statement and (y) such
reports under Section 13(a) of the Exchange Act as may be required in
connection with this Agreement and the Transactions contemplated by this
Agreement, (ii) the filing of the Articles of Merger for the Chateau Merger
with the Department of Assessments and Taxation of the State of Maryland,
(iii) such filings as may be required in connection with the payment of any
Transfer and Gains Taxes and (iv) such other consents, approvals, orders,
authorizations, registrations, declarations and filings as are set forth in
Schedule 3.2(d) to the Chateau Disclosure Letter or (A) as may be required
under (x) federal, state or local environmental laws or (y) the "blue sky"
laws of various states or (B) which, if not obtained or made, would not
prevent or delay in any material respect the consummation of any of the
Transactions contemplated by this Agreement or otherwise prevent Chateau from
performing its obligations under this Agreement in any material respect or
have, individually or in the aggregate, a Chateau Material Adverse Effect.
(e) SEC Documents; Financial Statements; Undisclosed
Liabilities. Chateau has filed all required reports, schedules, forms,
statements and other documents with the SEC since November 16, 1993 and the
Operating Partnership has filed all required reports, schedules, forms,
statements, and other documents with the SEC since March 2, 1995
(collectively, the "Chateau SEC Documents"). All of the Chateau SEC Documents
(other than preliminary material), as of their respective filing dates,
complied in all material respects with all applicable requirements of the
Securities Act and the Exchange Act and, in each case, the rules and
regulations promulgated thereunder applicable to such Chateau SEC Documents.
None of the Chateau SEC Documents at the time of filing contained any untrue
statement of a material fact or omitted to state any material fact required to
be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading, except
to the extent such statements have been modified or superseded by later filed
Chateau SEC Documents. Other than as set forth in Schedule 3.2(e) to the
Chateau Disclosure Letter, there is no unresolved violation, criticism or
exception by any Governmental Entity of which Chateau or the Operating
Partnership has received written notice with respect to any Chateau or
Operating Partnership report or statement which, if resolved in a manner
unfavorable to Chateau or the Operating Partnership, could have a Chateau
Material Adverse Effect. The consolidated financial statements of Chateau and
the Operating Partnership included in the Chateau SEC Documents complied as to
form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with GAAP (except, in the case of interim financial
statements, as permitted by Forms 10-Q and 8-K of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated in
the notes thereto) and fairly presented, in accordance with the applicable
requirements of GAAP, the consolidated financial position of Chateau and the
Chateau Subsidiaries, taken as a whole, as of the dates thereof and the
consolidated results of operations and cash flows for the periods then ended
(subject, in the case of interim financial statements, to normal year-end
adjustments). Except as set forth in the Chateau Filed SEC Documents (as
defined below), in Schedule 3.2(e) to the Chateau Disclosure Letter or as
permitted by Section 4.2 (for the purposes of this sentence, as if Section 4.2
had been in effect since December 31, 1995), neither Chateau nor any Chateau
Subsidiary has any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) required by GAAP to be set forth on a
consolidated balance sheet of Chateau or the Operating Partnership or in the
notes thereto and which, individually or in the aggregate, would have a
Chateau Material Adverse Effect.
(f) Absence of Certain Changes or Events. Except as disclosed
in the Chateau SEC Documents filed and publicly available prior to the date of
this Agreement (referred to
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collectively as the "Chateau Filed SEC Documents") or in Schedule 3.2(f) to
the Chateau Disclosure Letter, since the date of the most recent financial
statements included in the Chateau Filed SEC Documents (the "Chateau Financial
Statement Date") and to the date of this Agreement, Chateau and the Chateau
Subsidiaries have conducted their business only in the ordinary course and
there has not been (i) any material adverse change in the business, financial
condition or results of operations of Chateau and the Chateau Subsidiaries
taken as a whole, that has resulted or would result, individually or in the
aggregate, in Economic Losses (as defined in Section 6.3 below) of $5,000,000
or more (a "Chateau Material Adverse Change"), nor has there been any
occurrence or circumstance that with the passage of time would reasonably be
expected to result in a Chateau Material Adverse Change, (ii) except for (A)
regular quarterly dividends (in the case of Chateau) not in excess of $.425
per share of Chateau Common Stock, (B) regular quarterly distributions (in the
case of the Operating Partnership) not in excess of $.425 per OP Unit and (C)
any distributions by any Chateau Subsidiaries (other than the Operating
Partnership) to other Chateau Subsidiaries or to Chateau, in each case with
customary record and payment dates, any declaration, setting aside or payment
of any dividend or distribution (whether in cash, stock or property) with
respect to any of Chateau's capital stock or any OP Units, other than the
dividend required to be paid pursuant to Section 2.2(d)(i) (and the
corresponding Operating Partnership distribution), (iii) any split,
combination or reclassification of any of Chateau's capital stock or any
issuance or the authorization of any issuance of any other securities in
respect of, in lieu of or in substitution for, or giving the right to acquire
by exchange or exercise, shares of its capital stock or any issuance of an
ownership interest in any Chateau Subsidiary, except as permitted by Section
4.2, (iv) any damage, destruction or loss, whether or not covered by
insurance, that has or would have a Chateau Material Adverse Effect or (v) any
change in accounting methods, principles or practices by Chateau or any
Chateau Subsidiary materially affecting its assets, liabilities or business,
except insofar as may have been disclosed in the Chateau Filed SEC Documents
or required by a change in GAAP.
(g) Litigation. Except as disclosed in the Chateau Filed SEC
Documents or in Schedule 3.2(g) of the Chateau Disclosure Letter, and other
than personal injury and other routine tort litigation arising from the
ordinary course of operations of Chateau or the Chateau Subsidiaries which are
covered by adequate insurance, there is no suit, action or proceeding pending
or, to the knowledge of Chateau, threatened against or affecting Chateau or
any Chateau Subsidiary that, individually or in the aggregate, could
reasonably be expected to (i) have a Chateau Material Adverse Effect or (ii)
prevent the consummation of any of the Transactions, nor is there any
judgment, decree, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against Chateau or any Chateau Subsidiary having, or
which, insofar as reasonably can be foreseen, in the future would have, any
such effect.
(h) Absence of Changes in Benefit Plans; ERISA Compliance.
(i) Except as disclosed in the Chateau Filed SEC Documents
or in Schedule 3.2(h)(i) to the Chateau Disclosure Letter and except as
permitted by Section 4.2 (for the purpose of this sentence, as if Section 4.2
had been in effect since December 31, 1995), since the date of the most recent
audited financial statements included in the Chateau Filed SEC Documents,
there has not been any adoption or amendment in any material respect by
Chateau or any Chateau Subsidiary of any bonus, pension, profit sharing,
deferred compensation, incentive compensation, stock ownership, stock
purchase, stock option, phantom stock, retirement, vacation, severance,
disability, death benefit, hospitalization, medical or other employee benefit
plan, arrangement or understanding (whether or not legally binding) providing
benefits to any current or former employee,
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officer or director of Chateau or any Chateau Subsidiary or any person
affiliated with Chateau under Section 414(b), (c), (m) or (o) of the Code
(collectively, "Chateau Benefit Plans").
(ii) Except as described in the Chateau Filed SEC Documents
or in Schedule 3.2(h)(ii) to the Chateau Disclosure Letter or as would not
have a Chateau Material Adverse Effect, (A) all Chateau Benefit Plans,
including any such plan that is an "employee benefit plan" as defined in
Section 3(3) of ERISA, are in compliance with all applicable requirements of
law, including ERISA and the Code, and (B) neither Chateau nor any Chateau
Subsidiary has any liabilities or obligations with respect to any such Chateau
Benefit Plans, whether accrued, contingent or otherwise (other than
obligations to make contributions and pay benefits and administrative costs
incurred in the ordinary course), nor to the knowledge of Chateau are any such
liabilities or obligations expected to be incurred. Except as set forth in
Schedule 3.2(h)(ii) to the Chateau Disclosure Letter, the execution of, and
performance of the Transactions contemplated in, this Agreement will not
(either alone or together with the occurrence of any additional or subsequent
events) constitute an event under any Chateau Benefit Plan, policy,
arrangement or agreement, trust or loan that will or may result in any payment
(whether of severance pay or otherwise), acceleration, forgiveness of
indebtedness, vesting, distribution, increase in benefits or obligation to
fund benefits with respect to any employee or director. The only severance
agreements or severance policies applicable to Chateau or the Chateau
Subsidiaries are the agreement and policies specifically referred to in
Schedule 3.2(h)(ii) to the Chateau Disclosure Letter.
(i) Taxes.
(i) Each of Chateau and each Chateau Subsidiary (including
the Operating Partnership) has timely filed with the appropriate taxing
authority all Tax Returns and reports required to be filed by it (after giving
effect to any filing extension properly granted by a Governmental Entity
having authority to do so). Each such Tax Return is true, correct and complete
in all material respects. Chateau and each Chateau Subsidiary (including the
Operating Partnership) have paid (or Chateau has paid on their behalf), within
the time and manner prescribed by law, all Taxes that are due and payable.
Except as disclosed in Schedule 3.2(i)(i) to the Chateau Disclosure Letter,
the federal, state and local income, sales and franchise tax returns of
Chateau and each Chateau Subsidiary have not been audited by any Taxing
Authority. There are no Tax liens upon the assets of Chateau or any Chateau
Subsidiary. The most recent financial statements contained in the Chateau
Filed SEC Documents reflect an adequate reserve for all material Taxes payable
by Chateau and by each Chateau Subsidiary for all taxable periods and portions
thereof through the date of such financial statements. Since the Chateau
Financial Statement Date, Chateau has incurred no liability for Taxes under
Section 857(b), 860(c) or 4981 of the Code, and neither Chateau nor any
Chateau Subsidiary has incurred any liability for Taxes other than in the
ordinary course of business. Except as set forth in Schedule 3.2(i)(i) to the
Chateau Disclosure Letter, to the knowledge of Chateau, no event has occurred,
and no condition or circumstance exists, which presents a material risk that
any material Tax described in the preceding sentence will be imposed upon
Chateau. To the knowledge of Chateau, no deficiencies for any Taxes have been
proposed, asserted or assessed against Chateau or any of the Chateau
Subsidiaries, and no requests for waivers of the time to assess any such Taxes
have been granted or are pending.
(ii) Chateau (A) for all of its taxable years commencing
with 1993 through the most recent December 31, has been subject to taxation as
a REIT within the meaning of the Code and has satisfied the requirements to
qualify as a REIT for such years, (B) has operated, and intends
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to continue to operate, in such a manner as to qualify as a REIT for its tax
year ending December 31, 1996, and (C) has not taken or omitted to take any
action which could reasonably be expected to result in a challenge to its
status as a REIT, and, to Chateau's knowledge, no such challenge is pending or
threatened. The Operating Partnership has at all times, and each other Chateau
Subsidiary which is a partnership or files Tax Returns as a partnership for
federal income tax purposes has since its acquisition by Chateau, been
classified for federal income tax purposes as a partnership and not as a
corporation or as an association taxable as a corporation.
(j) No Loans or Payments to Employees, Officers or Directors.
Except as set forth in Schedule 3.2(j) to the Chateau Disclosure Letter or as
otherwise specifically provided for in this Agreement, there is no (i) loan
outstanding from or to any employee or director, (ii) employment or severance
contract, (iii) other agreement requiring payments to be made on a change of
control or otherwise as a result of the consummation of any of the
Transactions with respect to any employee, officer or director of Chateau or
any Chateau Subsidiary or (iv) any agreement to appoint or nominate any person
as a director of Chateau or the Company.
(k) Brokers; Schedule of Fees and Expenses. No broker,
investment banker, financial advisor or other person, other than Merrill Lynch
& Co. ("Merrill Lynch"), the fees and expenses of which, as set forth in a
letter agreement between Chateau and Merrill Lynch, have previously been
disclosed to ROC and will be paid by Chateau, is entitled to any broker's,
finder's, financial advisor's or other similar fee or commission in connection
with the Transactions based upon arrangements made by or on behalf of Chateau
or any other Chateau Subsidiary.
(l) Compliance with Laws. Except as disclosed in the Chateau
Filed SEC Documents and except as set forth in Schedule 3.2(l) to the Chateau
Disclosure Letter, neither Chateau nor any of the Chateau Subsidiaries has
violated or failed to comply with any statute, law, ordinance, regulation,
rule, judgment, decree or order of any Governmental Entity applicable to its
business, properties or operations, except for violations and failures to
comply that would not, individually or in the aggregate, reasonably be
expected to result in a Chateau Material Adverse Effect.
(m) Contracts; Debt Instruments.
(i) Neither Chateau nor any Chateau Subsidiary is in
violation of or in default under, in any material respect (nor does there
exist any condition which upon the passage of time or the giving of notice or
both would cause such a violation of or default under), any material loan or
credit agreement, note, bond, mortgage, indenture, lease, permit, concession,
franchise or license, or any agreement to acquire real property, or any other
material contract, agreement, arrangement or understanding, to which it is a
party or by which it or any of its properties or assets is bound, except as
set forth in Schedule 3.2(m)(i) to the Chateau Disclosure Letter and except
for violations or defaults that would not, individually or in the aggregate,
result in a Chateau Material Adverse Effect.
(ii) Except for any of the following expressly identified
in the most recent financial statements contained in the Chateau Filed SEC
Documents and except as permitted by Section 4.2, Schedule 3.2(m)(ii) to the
Chateau Disclosure Letter sets forth (A) a list of all loan or credit
agreements, notes, bonds, mortgages, indentures and other agreements and
instruments pursuant to which any indebtedness of Chateau or any of the
Chateau Subsidiaries in an aggregate
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principal amount in excess of $2,000,000 per item is outstanding or may be
incurred and (B) the respective principal amounts outstanding thereunder on
June 30, 1996.
(iii) Schedule 3.2(m)(iii) to the Chateau Disclosure Letter
sets forth a complete list of each agreement (including a description thereof)
made by Chateau and/or any Chateau Subsidiary with a limited partner of the
Operating Partnership relating to any commitment to maintain any specific debt
allocations or permit any such limited partner to take any action to assure
any debt allocation.
(iv) Schedule 3.2(m)(iv) to the Chateau Disclosure Letter
sets forth a complete list of each consulting agreement between Chateau and
any Chateau Subsidiary, including the annual compensation payable thereunder
and the date as of which such consulting agreement expires.
(n) Operating Partnership Agreement. The execution and delivery
of the Operating Partnership Agreement has been duly authorized, executed and
delivered by Chateau. Assuming due execution by the limited partners of the
Operating Partnership, the Operating Partnership Agreement constitutes a valid
and binding obligation of Chateau enforceable against Chateau in accordance
with its terms.
(o) Environmental Matters. Except as disclosed in Schedule
3.2(o) to the Chateau Disclosure Letter or in the environmental audits/reports
listed thereon, each of Chateau and each Chateau Subsidiary has obtained all
licenses, permits, authorizations, approvals and consents from Governmental
Entities which are required in respect of its business, operations, assets or
properties under any applicable Environmental Law, and each of Chateau and
each Chateau Subsidiary is in compliance in all material respects with the
terms and conditions of all such licenses, permits, authorizations, approvals
and consents and with any applicable Environmental Law. Except as disclosed in
Schedule 3.2(o) to the Chateau Disclosure Letter or in the environmental
audits/reports listed thereon:
(i) No Order has been issued, no complaint has been filed,
no penalty has been assessed and no investigation or review is pending or
threatened by any Governmental Entity with respect to any alleged failure by
Chateau or any Chateau Subsidiary to have any license, permit, authorization,
approval or consent from Governmental Entities required under any applicable
Environmental Law in connection with the conduct of the business or operations
of Chateau or any Chateau Subsidiary or with respect to any Release by Chateau
or any Chateau Subsidiary of any Hazardous Material.
(ii) Neither Chateau nor any Chateau Subsidiary nor any
prior owner or lessee of any property now or previously owned or leased by
Chateau or any Chateau Subsidiary has handled any Hazardous Material on any
property now or previously owned or leased by Chateau or any Chateau
Subsidiary; and, without limiting the foregoing, (A) no polychlorinated
biphenyl is or has been present, (B) no friable asbestos is or has been
present, (C) there are no underground storage tanks, active or abandoned and
(D) no Hazardous Material has been Released in a quantity reportable under, or
in violation of, any Environmental Law, at, on or under any property now or
previously owned or leased by Chateau or any Chateau Subsidiary, during any
period that Chateau or any Chateau Subsidiary owned or leased such property
or, to the knowledge of Chateau and its Subsidiaries, prior thereto.
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(iii) Neither Chateau nor any Chateau Subsidiary has
transported or arranged for the transportation of any Hazardous Material to
any location which is the subject of any action, suit, arbitration or
proceeding that could be reasonably expected to lead to claims against Chateau
or any Chateau Subsidiary for clean-up costs, remedial work, damages to
natural resources or personal injury claims, including, but not limited to,
claims under CERCLA.
(iv) No oral or written notification of a Release of a
Hazardous Material has been filed or should have been filed by or on behalf of
Chateau or any Chateau Subsidiary and no property now or previously owned or
leased by Chateau or any Chateau Subsidiary is listed or proposed for listing
on the National Priorities List promulgated pursuant to CERCLA or on any
similar state list of sites requiring investigation or clean-up.
(v) There are no Liens arising under or pursuant to any
Environmental Law on any real property owned or leased by Chateau or any
Chateau Subsidiary, and no action of any Governmental Entity has been taken
or, to the knowledge of Chateau and its Subsidiaries, is in process which
could subject any of such properties to such Liens, and neither Chateau nor
any Chateau Subsidiary would be required to place any notice or restriction
relating to the presence of Hazardous Material at any such property owned by
it in any deed to such property.
(vi) There have been no environmental investigations,
studies, audits, tests, reviews or other analyses conducted by, or which are
in the possession of, Chateau or any Chateau Subsidiary in relation to any
property or facility now or previously owned or leased by Chateau or any
Chateau Subsidiary which have not been listed in Schedule 3.2(o) to the
Chateau Disclosure Letter and made available to ROC prior to the execution of
this Agreement.
(p) Tangible Property and Assets. Except as disclosed in
Schedule 3.2(p) to the Chateau Disclosure Letter, Chateau and its Subsidiaries
have good and marketable fee simple title to, or have valid leasehold
interests in, those manufactured housing communities described in the Chateau
Disclosure Letter, free and clear of all Liens other than (i) any statutory
Lien arising in Schedule 3.2(p) to the ordinary course of business by
operation of law with respect to a liability that is not yet due or delinquent
and (ii) any easement, restriction or minor imperfection of title or similar
Lien which individually or in the aggregate with other such Liens does not
materially impair the value of the property or asset subject to such Lien or
the use of such property or asset in the conduct of the business of Chateau or
any such Chateau Subsidiary.
(q) Books and Records.
(i) The books of account and other financial records of
Chateau and each Chateau Subsidiary are in all material respects true,
complete and correct, have been maintained in accordance with good business
practices, and are accurately reflected in all material respects in the
financial statements included in the Chateau Filed SEC Documents.
(ii) Chateau has previously delivered or made available to
ROC true and correct copies of the Charter and By-laws of Chateau, as amended
to date, and the charter, by-laws, organization documents, partnership
agreements and joint venture agreement of its Subsidiaries, and all amendments
thereto. All such documents are listed in Schedule 3.2(q)(ii) to the Chateau
Disclosure Letter. Chateau has also delivered to ROC evidence of its Director
and Officer liability insurance policy.
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(iii) The minute books and other records of corporate or
partnership proceedings of Chateau and each Chateau Subsidiary have been made
available to ROC, contain in all material respects accurate records of all
meetings and accurately reflect in all material respects all other corporate
action of the stockholders and directors and any committees of the Board of
Directors of Chateau and the Chateau Subsidiaries which are corporations.
(r) Opinion of Financial Advisor. Chateau has received the
opinion of Merrill Lynch, satisfactory to Chateau, a signed version of which
has been provided to ROC, with regard to the fairness of the Mergers to
Chateau and the stockholders of Chateau from a financial point of view.
(s) State Takeover Statutes. No Takeover Statute of the State
of Maryland, including, without limitation, the control share acquisition
provisions of Section 3-701 et seq. of the MGCL or the business combination
provisions of Section 3-601 et seq. of the MGCL, applies or purports to apply
to the Merger, this Agreement, any of the Transactions, Chateau or any holders
of its equity securities.
(t) Registration Statement. The information furnished by
Chateau for inclusion in the Registration Statement will not, as of the
effective date of the Registration Statement, contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading.
(u) Vote Required. The affirmative vote of at least two-thirds
of the outstanding shares of Chateau Common Stock is the only vote of the
holders of any class or series of Chateau's capital stock necessary (under
applicable law or otherwise) to approve this Agreement and the Transactions
contemplated hereby.
ARTICLE IV
Covenants
SECTION 4.1 Conduct of Business by ROC. During the period from
the date of this Agreement to the Effective Time, ROC shall, and shall cause
the ROC Subsidiaries each to, carry on its businesses in the usual, regular
and ordinary course in substantially the same manner as heretofore conducted
and, to the extent consistent therewith, use commercially reasonable efforts
to preserve intact its current business organization, goodwill, ongoing
businesses and its status as a REIT within the meaning of the Code. Without
limiting the generality of the foregoing, the following additional
restrictions shall apply: During the period from the date of this Agreement to
the Effective Time, except as set forth in Schedule 4.1 to the ROC Disclosure
Letter or as otherwise contemplated by this Agreement, ROC shall not and shall
cause the ROC Subsidiaries not to (and not to authorize or commit or agree
to):
(a) (i) except for regular quarterly dividends not in excess of
$.405 per share of ROC Stock (which may be increased to an amount not in
excess of $.425 per share of ROC Stock upon prior notice to Chateau) with
customary record and payment dates, declare, set aside or pay any dividends
on, or make any other distributions in respect of, any of ROC's capital stock
or stock in any ROC Subsidiary that is not directly or indirectly wholly owned
by ROC, other than the
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dividend required to be paid pursuant to Section 2.2(d)(i), (ii) except as
permitted by Section 4.1(e), split, combine or reclassify any capital stock or
partnership interests or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for shares of such
capital stock or partnership interests or (iii) except as permitted by Section
4.1(e), purchase, redeem or otherwise acquire any shares of capital stock of
ROC;
(b) except as permitted under Section 4.1(e), the ROC Option
Agreement and the exercise of outstanding ROC Stock Options, issue, deliver or
sell, or grant any option or other right in respect of, any shares of capital
stock, any other voting or redeemable securities of ROC or any ROC Subsidiary
or any securities convertible into, or any rights, warrants or options to
acquire, any such shares, voting securities or convertible or redeemable
securities except to ROC or a ROC Subsidiary;
(c) except as otherwise contemplated by this Agreement, amend
the Charter, Bylaws, partnership agreement or other comparable charter or
organizational documents of ROC or any ROC Subsidiary;
(d) in the case of ROC or any of its Subsidiaries, merge or
consolidate with any Person;
(e) (x) in a transaction involving capital, securities or other
assets or indebtedness of ROC or a ROC Subsidiary or any combination thereof
in excess of $5,000,000, without providing to Chateau reasonable prior written
notice of and an opportunity to consult in connection with such transaction or
(y) in a transaction involving capital, securities, other assets or
obligations of ROC or a ROC Subsidiary or any combination thereof in excess of
$10,000,000, without obtaining the prior written consent of Chateau, which
consent shall not unreasonably be withheld or delayed: (i) acquire or agree to
acquire by merging or consolidating with, or by purchasing all or a
substantial portion of the equity securities or assets of, or by any other
manner, any business or any corporation, partnership, limited liability
company, joint venture, association, business trust or other business
organization or division thereof or interest therein or any assets; (ii)
mortgage or otherwise encumber or subject to any Lien or sell, lease or
otherwise dispose of any of its material properties or assets or assign or
encumber the right to receive income, dividends, distributions and the like or
agree to do any of the foregoing; or (iii) incur any indebtedness for borrowed
money or guarantee any such indebtedness of another person, issue or sell any
debt securities or warrants or other rights to acquire any debt securities of
ROC, guarantee any debt securities of another person, enter into any "keep
well" or other agreement to maintain any financial statement condition of
another person or enter into any arrangement having the economic effect of any
of the foregoing, prepay or refinance any indebtedness or make any loans,
advances or capital contributions to, or investments in, any other person;
(f) engage in any transactions of the types described in
clauses (i), (ii), (iii) and (iv) of paragraph (e) above, whether or not
related, involving, in the aggregate, capital, securities or other assets or
indebtedness of ROC or a ROC Subsidiary or any combination thereof in excess
of $20,000,000, without obtaining the prior written consent of Chateau, which
may be withheld for any reason or no reason;
(g) make any tax election (unless required by law or necessary
to preserve ROC's status as a REIT);
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(h) (i) change in any material manner any of its methods,
principles or practices of accounting in effect at the Financial Statement
Date, or (ii) make or rescind any express or deemed election relating to
taxes, settle or compromise any claim, action, suit, litigation, proceeding,
arbitration, investigation, audit or controversy relating to taxes, except in
the case of settlements or compromises relating to taxes on real property in
an amount not to exceed, individually or in the aggregate, $500,000, or change
any of its methods of reporting income or deductions for federal income tax
purposes from those employed in the preparation of its federal income tax
return for the taxable year ending December 31, 1995, except, in the case of
clause (i), as may be required by the SEC, applicable law or GAAP and with
notice thereof to Chateau;
(i) except as provided in this Agreement, adopt any new
employee benefit plan, incentive plan, severance plan, bonus plan, stock
option or similar plan, grant new stock appreciation rights or amend any
existing plan or rights, or enter into or amend any employment agreement or
similar agreement or arrangement (other than as contemplated under Section
5.11(b)(iv)) or, except in the ordinary course consistent with past practice,
grant or become obligated to grant any increase in the compensation of
officers or employees, except such changes as are required by law or which are
not more favorable to participants than provisions presently in effect;
(j) settle any stockholder derivative or class action claims
arising out of or in connection with any of the Transactions; and
(k) enter into or amend or otherwise modify any agreement or
arrangement with persons that are affiliates or, as of the date hereof, are
officers, directors or employees of ROC or any ROC Subsidiary not approved by
a majority of the "independent" members of the Board of Directors of ROC.
SECTION 4.2 Conduct of Business by Chateau. During the period
from the date of this Agreement to the Effective Time, Chateau shall, and
shall cause the Chateau Subsidiaries each to, carry on its businesses in the
usual, regular and ordinary course in substantially the same manner as
heretofore conducted and, to the extent consistent therewith, use commercially
reasonable efforts to preserve intact its current business organization,
goodwill, ongoing businesses and its status as a REIT within the meaning of
the Code. Without limiting the generality of the foregoing, the following
additional restrictions shall apply: During the period from the date of this
Agreement to the Effective Time, except as set forth in Schedule 4.2 to the
Chateau Disclosure Letter or as otherwise contemplated by this Agreement,
Chateau shall not and shall cause the Chateau Subsidiaries not to (and not to
authorize or commit or agree to):
(a) (i) except (x) in the case of Chateau, for regular
quarterly dividends not in excess of $.405 per share of Chateau Common Stock
(which may be increased to an amount not in excess of $.425 per share of
Chateau Common Stock upon prior notice to ROC), and (y) in the case of the
Operating Partnership, for regular quarterly distributions to the general and
limited partners of the Operating Partnership not in excess of $.405 per OP
Unit (which may be increased to an amount not in excess of $.425 per OP Unit
upon prior notice to ROC), and (z) any distributions by any other wholly owned
Chateau Subsidiaries, in each case with customary record and payment dates,
declare, set aside or pay any dividends on, or make any other distributions in
respect of, any of Chateau's capital stock or the OP Units or partnership
interests or stock in any Chateau Subsidiary that is not directly or
indirectly wholly owned by Chateau, other than the dividend required to be
paid pursuant to Section 2.2(d)(i) (and the corresponding Operating
Partnership distribution),
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(ii) except in connection with the Transactions, as otherwise permitted by
Section 4.2(e) or as contemplated under the exchange provisions of the
Operating Partnership Agreement, split, combine or reclassify any capital
stock or partnership interests or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for shares of such
capital stock or partnership interests or (iii) except as contemplated under
the exchange provisions of the Operating Partnership Agreement or as permitted
under Section 4.2(e), purchase, redeem or otherwise acquire any shares of
capital stock of Chateau or OP Units or any options, warrants or rights to
acquire, or security convertible into, shares of capital stock of Chateau or
such OP Units;
(b) except (i) as permitted under or required pursuant to this
Agreement, Chateau's dividend reinvestment plan, Section 4.2(e), the Chateau
Option Agreement, the exercise of outstanding Chateau Stock Options or as
contemplated under the exchange provisions of the Operating Partnership
Agreement, issue, deliver or sell, or grant any option or other right in
respect of, any shares of capital stock, any other voting or redeemable
securities (including OP Units or other partnership interests) of Chateau or
any Chateau Subsidiary or any securities convertible into, or any rights,
warrants or options to acquire, any such shares, voting securities or
convertible or redeemable securities except to Chateau or a Chateau
Subsidiary;
(c) except as otherwise contemplated by this Agreement, amend
the Charter, Bylaws, partnership agreement or other comparable charter or
organizational documents of Chateau or any Chateau Subsidiary;
(d) in the case of Chateau, the Operating Partnership or any
other Chateau Subsidiary, merge or consolidate with any Person;
(e) (x) in a transaction involving capital, securities or other
assets or indebtedness of Chateau or a Chateau Subsidiary or any combination
thereof in excess of $5,000,000, without providing to ROC reasonable prior
written notice of and an opportunity to consult in connection with such
transaction or (y) in a transaction involving capital, securities, other
assets or indebtedness of Chateau or a Chateau Subsidiary or any combination
thereof in excess of $10,000,000, without obtaining the prior written consent
of ROC, which consent shall not unreasonably be withheld or delayed: (i)
acquire or agree to acquire by merging or consolidating with, or by purchasing
all or a substantial portion of the equity securities or assets of, or by any
other manner, any business or any corporation, partnership, limited liability
company, joint venture, association, business trust or other business
organization or division thereof or interest therein or any assets; (ii)
mortgage or otherwise encumber or subject to any Lien or sell, lease or
otherwise dispose of any of its material properties or assets or assign or
encumber the right to receive income, dividends, distributions and the like or
agree to do any of the foregoing; or (iii) incur any indebtedness for borrowed
money or guarantee any such indebtedness of another person, issue or sell any
debt securities or warrants or other rights to acquire any debt securities of
Chateau or any Chateau Subsidiary, guarantee any debt securities of another
person, enter into any "keep well" or other agreement to maintain any
financial statement condition of another person or enter into any arrangement
having the economic effect of any of the foregoing, prepay or refinance any
indebtedness or make any loans, advances or capital contributions to, or
investments in, any other person;
(f) engage in any transactions of the types described in
clauses (i), (ii) and (iii) of paragraph (e) above, whether or not related,
involving, in the aggregate, capital, securities or other assets or
obligations of Chateau or a Chateau Subsidiary or any combination thereof in
excess
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of $20,000,000, without obtaining the prior written consent of ROC, which
consent may be withheld for any reason or no reason;
(g) make any tax election (unless required by law or necessary
to preserve Chateau's status as a REIT or the status of the Operating
Partnership as a partnership for federal tax purposes);
(h) (i) change in any material manner any of its methods,
principles or practices of accounting in effect at the Chateau Financial
Statement Date, or (ii) make or rescind any express or deemed election
relating to taxes, settle or compromise any claim, action, suit, litigation,
proceeding, arbitration, investigation, audit or controversy relating to
taxes, except in the case of settlements or compromises relating to taxes on
real property in an amount not to exceed, individually or in the aggregate,
$500,000, or change any of its methods of reporting income or deductions for
federal income tax purposes from those employed in the preparation of its
federal income tax return for the taxable year ending December 31, 1995,
except, in the case of clause (i), as may be required by the SEC, applicable
law or GAAP and with notice thereof to ROC;
(i) except as provided in this Agreement, adopt any new
employee benefit plan, incentive plan, severance plan, bonus plan, stock
option or similar plan, grant new stock appreciation rights or amend any
existing plan or rights, or enter into or amend any employment agreement or
similar agreement or arrangement (other than as contemplated under Section
5.11(b)(iv)) or, except in the ordinary course consistent with past practice,
grant or become obligated to grant any increase in the compensation of
officers or employees, except such changes as are required by law or which are
not more favorable to participants than provisions presently in effect;
(j) settle any stockholder derivative or class action claims
arising out of or in connection with any of the Transactions; and
(k) enter into or amend or otherwise modify any agreement or
arrangement with persons that are affiliates or, as of the date hereof, are
officers, directors or employees of Chateau or any Chateau Subsidiary not
approved by a majority of the "independent" members of the Board of Directors
of Chateau.
SECTION 4.3 Other Actions. Each of ROC and Chateau shall not
and shall cause its respective subsidiaries not to take any action that would
result in (i) any of the representations and warranties of such party (without
giving effect to any "knowledge" qualification) set forth in this Agreement
that are qualified as to materiality becoming untrue, (ii) any of such
representations and warranties (without giving effect to any "knowledge"
qualification) that are not so qualified becoming untrue in any material
respect or (iii) except as contemplated by Section 7.1, any of the conditions
to the Mergers set forth in Article VI not being satisfied.
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ARTICLE V
Additional Covenants
SECTION 5.1 Preparation of the Registration Statement and the
Proxy Statement; Stockholders Meetings.
(a) As soon as practicable following the date of this
Agreement, ROC and Chateau shall prepare and file with the SEC a preliminary
Proxy Statement in form and substance satisfactory to each of Chateau and ROC,
and ROC and Chateau will cause the Company to provide on a supplemental basis
to the SEC the Registration Statement, in which the Proxy Statement will be
included as a prospectus. Each of ROC and Chateau shall use its best efforts
to cause the Company to (i) respond to any comments of the SEC and (ii) have
the Registration Statement declared effective under the Securities Act and the
rules and regulations promulgated thereunder as promptly as practicable after
such filing and to keep the Registration Statement effective as long as is
necessary to consummate the Mergers. Each of ROC and Chateau will use its best
efforts to cause the Proxy Statement to be mailed to ROC's stockholders or
Chateau's stockholders, respectively, as promptly as practicable after the
Registration Statement is declared effective under the Securities Act. Each
party will notify the other promptly of the receipt of any comments from the
SEC and of any request by the SEC for amendments or supplements to the
Registration Statement or the Proxy Statement or for additional information
and will supply the other with copies of all correspondence between such party
or any of its representatives and the SEC with respect to the Registration
Statement or the Proxy Statement. The Registration Statement and the Proxy
Statement shall comply in all material respects with all applicable
requirements of Law. Whenever any event occurs which is required to be set
forth in an amendment or supplement to the Registration Statement or the Proxy
Statement, Chateau or ROC, as the case may be, shall promptly inform the other
of such occurrences and cooperate in filing with the SEC, causing the Company
to file with the SEC and/or mailing to the stockholders of Chateau and the
stockholders of ROC such amendment or supplement in a form reasonably
acceptable to Chateau and ROC.
(b) Chateau covenants that the Proxy Statement shall include
the recommendation of the Board of Directors of Chateau in favor of the
approval of the Chateau Merger, this Agreement and the other Transactions
contemplated hereby; provided that the recommendation of Chateau may not be
included or may be withdrawn, modified or amended if Chateau shall approve or
recommend a Superior Competing Transaction (as defined below) or enter into an
agreement with respect to such Superior Competing Transaction and the Board of
Directors of Chateau determines in good faith that is in compliance with
Section 7.1. ROC covenants that the Proxy Statement shall include the
recommendation of the Board of Directors of ROC in favor of the approval of
the ROC Merger, this Agreement and the other Transactions contemplated hereby;
provided that the recommendation of ROC may not be included or may be
withdrawn, modified or amended if ROC shall approve or recommend a Superior
Competing Transaction (as defined below) or enter into an agreement with
respect to such Superior Competing Transaction and the Board of Directors of
ROC determines in good faith that is in compliance with Section 7.1. Chateau
shall furnish all information concerning Chateau and the holders of Chateau
Common Stock as may reasonably be requested in connection with any action
required to be taken under any applicable state securities or "blue sky" laws
in connection with the issuance of Common Stock pursuant to the Mergers, and
ROC shall furnish all information concerning ROC and the holders of ROC Stock
as may be reasonably requested in connection with any such action. Chateau and
ROC will use their best efforts to cause the Company
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to obtain, prior to the effective date of the Registration Statement, all
necessary state securities or "blue sky" permits or approvals required to
carry out the Mergers and the other Transactions contemplated by this
Agreement. In connection with the preparation of the Proxy Statement and the
Registration Statement, Chateau shall use reasonable efforts to cause to be
delivered to ROC, prior to the mailing of such Proxy Statement to ROC's
stockholders and Chateau's stockholders, the opinion dated the date of the
Proxy Statement of Timmis & Inman, subject to certificates, letters and
assumptions, reasonably satisfactory to ROC, that (i) Chateau was organized
and has operated in conformity with the requirements for qualification as a
REIT within the meaning of the Code since 1993 and (ii) the Operating
Partnership has been during and since 1993 and each Chateau Subsidiary that is
a partnership or limited liability company has been since its acquisition, and
following the Mergers shall be treated as of such date, for federal income tax
purposes, as a partnership and not as a corporation or an association taxable
as a corporation. In connection with the preparation of the Proxy Statement
and the Registration Statement, ROC shall use reasonable efforts to cause to
be delivered to Chateau, prior to the mailing of the Proxy Statement to ROC's
stockholders and Chateau's stockholders, the opinion dated the date of the
Proxy Statement of Rogers & Wells, subject to certificates, letters and
assumptions, reasonably satisfactory to Chateau, that (i) ROC was organized
and has operated in conformity with the requirements for qualification as a
REIT within the meaning of the Code since 1993, (ii) the Financing Partnership
(as defined below), following the merger of the Financing Sub (as defined
below) with and into the Financing Partnership as contemplated by the
Contribution Agreement, will be treated as of such date for federal income tax
purposes as a partnership and not as a corporation or as an association
taxable as a corporation and (iii) following the Mergers (after giving effect
thereto), the Company's proposed method of operation will enable it to meet
the requirements for qualification and taxation as a REIT under the Code.
(c) ROC will, as soon as practicable following the date of this
Agreement, duly call, give notice of, convene and hold a meeting of its
stockholders (the "ROC Stockholders Meeting") for the purpose of obtaining the
ROC Stockholder Approvals. ROC will, through its Board of Directors, recommend
to its stockholders approval of the ROC Merger, this Agreement and the other
Transactions contemplated by this Agreement; provided that prior to the ROC
Stockholders Meeting such recommendation may be withdrawn, modified or amended
if ROC shall approve or recommend a Superior Competing Transaction (as defined
below) or enter into an agreement with respect to such Superior Competing
Transaction and the Board of Directors of ROC determines in good faith that is
in compliance with Section 7.1.
(d) Chateau will, as soon as practicable following the date of
this Agreement, duly call, give notice of, convene and hold a meeting of its
stockholders (the "Chateau Stockholders Meeting") for the purpose of obtaining
the Chateau Stockholder Approvals. Chateau will, through its Board of
Directors, recommend to its stockholders approval of the Chateau Merger, this
Agreement and the other Transactions contemplated by this Agreement; provided
that prior to the Chateau Stockholders Meeting such recommendation may be
withdrawn, modified or amended if Chateau shall approve or recommend a
Superior Competing Transaction (as defined below) or enter into an agreement
with respect to such Superior Competing Transaction and the Board of Directors
of Chateau determines in good faith that is in compliance with Section 7.1.
SECTION 5.2 Access to Information; Confidentiality. Subject to
the requirements of confidentiality agreements with third parties, each of ROC
and Chateau shall, and shall cause each of its respective subsidiaries to,
afford to the other party and to the officers, employees, accountants,
counsel, financial advisors and other representatives of such other party,
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reasonable access during normal business hours during the period prior to the
Effective Time to all their respective properties, books, contracts,
commitments, personnel and records and, during such period, each of ROC and
Chateau shall, and shall cause each of its respective subsidiaries to, furnish
promptly to the other party (a) a copy of each report, schedule, registration
statement and other document filed by it during such period pursuant to the
requirements of federal or state securities laws and (b) all other information
concerning its business, properties and personnel as such other party may
reasonably request. Each of ROC and Chateau will hold, and will cause its
respective subsidiaries' officers, employees, accountants, counsel, financial
advisors and other representatives and affiliates to hold, any nonpublic
information in confidence to the extent required by, and in accordance with,
and will comply with the provisions of the letter agreement between ROC and
Chateau dated as of June 4, 1996, as amended to date (as so amended, the
"Confidentiality Agreement").
SECTION 5.3 Best Efforts; Notification.
(a) Chateau agrees to utilize its best efforts to obtain any
remaining consents to the approval of the Operating Partnership Agreement
Amendment from the limited partners of the Operating Partnership and, upon the
terms and subject to the conditions set forth in this Agreement, each of
Chateau and ROC agrees to use its best efforts to take, or cause to be taken,
all actions, and to do, or cause to be done, and to assist and cooperate with
the other in doing, all things necessary, proper or advisable to fulfill all
conditions applicable to such party pursuant to this Agreement and to
consummate and make effective, in the most expeditious manner practicable, the
Mergers and the other Transactions contemplated hereby, including (i) the
obtaining of all necessary actions or nonactions, waivers, consents and
approvals from Governmental Entities and the making of all necessary
registrations and filings and the taking of all reasonable steps as may be
necessary to obtain an approval, waiver or exemption from, or to avoid an
action or proceeding by, any Governmental Entity, (ii) the obtaining of all
necessary consents, approvals, waivers or exemption from non-governmental
third parties; provided, however, that if either party is obliged to make
expenditures, or incur costs, expenses or other liabilities to obtain the
consent of any non-governmental party, it shall consult reasonably with the
other party upon reasonable notice prior to making payment of any such amount,
and in no event shall either ROC or Chateau make payment of any such amount in
excess of $500,000 in obtaining such consents without obtaining the prior
written consent of the other, which consent shall not unreasonably be withheld
or delayed, (iii) the defending of any lawsuits or other legal proceedings,
whether judicial or administrative, challenging the Mergers, this Agreement or
the consummation of the Transactions, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental Entity
vacated or reversed, and (iv) the execution and delivery of any additional
instruments necessary to consummate the Transactions contemplated by and to
fully carry out the purposes of, this Agreement; provided, however, that a
party shall not be obligated to take any action pursuant to the foregoing if
the taking of such action or the obtaining of any waiver, consent, approval or
exemption is reasonably likely to result in the imposition of a condition or
restriction of the type referred to in Section 6.1(d). In connection with and
without limiting the foregoing, ROC, Chateau and their respective Boards of
Directors shall (i) take all action necessary so that no "fair price,"
"business combination," "moratorium," "control share acquisition" or any other
anti-takeover statute or similar statute enacted under state or federal laws
of the United States or similar statute or regulation (a "Takeover Statute")
is or becomes applicable to the Mergers, this Agreement or any of the other
Transactions and (ii) if any Takeover Statute becomes applicable to the
Mergers, this Agreement or any other Transaction, take all action necessary so
that the Mergers and the other Transactions may be
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consummated as promptly as practicable on the terms contemplated by this
Agreement and otherwise to minimize the effect of such Takeover Statute on the
Mergers and the other Transactions.
(b) ROC shall give prompt notice to Chateau, and Chateau shall
give prompt notice to ROC, if (i) any representation or warranty made by it
contained in this Agreement that is qualified as to materiality becomes untrue
or inaccurate in any respect or any such representation or warranty that is
not so qualified becomes untrue or inaccurate in any material respect or (ii)
it fails to comply with or satisfy in any material respect any covenant,
condition or agreement to be complied with or satisfied by it under this
Agreement; provided, however, that no such notification shall affect the
representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement.
SECTION 5.4 Affiliates. Prior to the Closing Date, ROC and
Chateau shall exchange letters identifying all persons who are, at the time
this Agreement is submitted for approval to the stockholders of ROC and
Chateau, their respective "affiliates" for purposes of Rule 145 under the
Securities Act. ROC and Chateau shall use their respective best efforts to
cause each of their respective affiliates to deliver on or prior to the
Closing Date a written agreement substantially in the form attached as Exhibit
H hereto.
SECTION 5.5 Tax Treatment. Each of Chateau and ROC shall use
its reasonable best efforts to (a) cause the Chateau Merger to qualify as a
tax-free reorganization under Section 368(a) of the Code, (b) cause the ROC
Merger to be treated for federal income tax purposes as a tax-free transfer by
the stockholders of ROC of their shares to the Company in exchange for shares
of Common Stock under Section 351 of the Code and (c) to obtain the opinions
of counsel referred to in Sections 6.2(e) and 6.3(e).
SECTION 5.6 No Solicitation of Transactions. Subject to Section
7.1, each of Chateau and ROC shall not directly or indirectly, through any
officer, director, employee, agent, investment banker, financial advisor,
attorney, accountant, broker, finder or other representative, initiate,
solicit (including by way of furnishing nonpublic information or assistance)
any inquiries or the making of any proposal that constitutes, or may
reasonably be expected to lead to, any Competing Transaction (as defined
below), or authorize or permit any of its officers, directors, employees or
agents, attorneys, investment bankers, financial advisors, accountants,
brokers, finders or other representatives to take any such action. Each of
Chateau and ROC shall notify the other in writing (as promptly as practicable)
of all of the relevant details relating to all inquiries and proposals which
it or any of its Subsidiaries or any such officer, director, employee, agent,
investment banker, financial advisor, attorney, accountant, broker, finder or
other representative may receive relating to any of such matters and if such
inquiry or proposal is in writing, each of Chateau and ROC shall deliver to
the other a copy of such inquiry or proposal. For purposes of this Agreement,
"Competing Transaction" shall mean any of the following (other than the
Transactions contemplated by this Agreement): (i) any merger, consolidation,
share exchange, business combination, or similar transaction involving Chateau
(or any of its Subsidiaries) or ROC (or any of its Subsidiaries), as the case
may be; (ii) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition of 30% or more of the assets of Chateau and its Subsidiaries taken
as a whole or ROC and its Subsidiaries taken as a whole, as the case may be,
in a single transaction or series of related transactions, excluding any bona
fide financing transactions which do not, individually or in the aggregate,
have as a purpose or effect the sale or transfer of control of such assets;
(iii) any tender offer or exchange offer for 30% or more of the outstanding
shares of capital stock of Chateau
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(or any of its Subsidiaries) or ROC (or any of its Subsidiaries) or the filing
of a registration statement under the Securities Act in connection therewith;
or (iv) any public announcements of a proposal, plan or intention to do any of
the foregoing or any agreement to engage in any of the foregoing.
SECTION 5.7 Public Announcements. Chateau and ROC will consult
with each other before issuing, and provide each other the opportunity to
review and comment upon, any press release or other public statements with
respect to the Transactions, including the Mergers, and shall not issue any
such press release or make any such public statement prior to such
consultation, except as may be required by applicable law, court process or by
obligations pursuant to any listing agreement with any national securities
exchange. The parties agree that the initial press release to be issued with
respect to the Transactions will be in the form agreed to by the parties
hereto prior to the execution of this Agreement.
SECTION 5.8 Listing. ROC and Chateau will cause the Company
promptly to prepare and submit to the NYSE a new listing application covering
the Common Stock issuable in the Mergers. Prior to the Effective Time, ROC
shall use its best efforts to have NYSE approve for listing, upon official
notice of issuance, the Common Stock to be issued in the Mergers.
SECTION 5.9 Letters of Accountants.
(a) ROC shall use its reasonable best efforts to cause to be
delivered to Chateau and ROC "comfort" letters of Deloitte & Touche LLP, ROC's
independent public accountants, dated and delivered the date on which the
Registration Statement shall become effective and as of the Effective Time,
and addressed to Chateau and ROC, in form and substance reasonably
satisfactory to Chateau and ROC and reasonably customary in scope and
substance for letters delivered by independent public accountants in
connection with transactions such as those contemplated by this Agreement.
(b) Chateau shall use its reasonable best efforts to cause to
be delivered to ROC and Chateau "comfort" letters of Coopers & Lybrand L.L.P.,
Chateau's independent public accountants, dated the date on which the
Registration Statement shall become effective and as of the Effective Time,
and addressed to ROC and Chateau, in form and substance reasonably
satisfactory to ROC and Chateau and reasonably customary in scope and
substance for letters delivered by independent public accountants in
connection with transactions such as those contemplated by this Agreement.
SECTION 5.10 Transfer and Gains Taxes. Chateau and ROC shall
cooperate in the preparation, execution and filing of all returns,
questionnaires, applications or other documents regarding any real property
transfer or gains (including, without limitation, any New York State Tax on
Gains Derived from Certain Real Property Transfers and New York State Real
Estate Transfer Tax), sales, use, transfer, value added stock transfer and
stamp taxes, any transfer, recording, registration and other fees and any
similar taxes which become payable in connection with the Transactions
(together with any related interests, penalties or additions to tax, "Transfer
and Gains Taxes"). From and after the Effective Time, Chateau shall cause the
Operating Partnership to pay or cause to be paid all Transfer and Gains Taxes.
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SECTION 5.11 Benefit Plans and Other Employee Arrangements.
(a) Benefit Plans. Subject to subsections (b) and (c) below,
upon and after the Effective Time, Chateau and ROC shall either (i) cause the
Company or the Operating Partnership (or their respective successors or
assigns) to maintain the ROC Benefit Plans and the Chateau Benefit Plans at
benefit levels not materially less favorable in the aggregate than those in
effect on the date of this Agreement or (ii) cause the Company or the
Operating Partnership (or their respective successors or assigns) to provide
benefits to former employees of ROC, Chateau and their respective Subsidiaries
that are not materially less favorable in the aggregate to such employees than
those provided under the ROC Benefit Plans and the Chateau Benefit Plans, as
applicable, as in effect on the date of this Agreement. With respect to any
Company Benefit Plan which is an "employee benefit plan" as defined in Section
3(3) of ERISA in which employees of ROC or Chateau or their respective
Subsidiaries may participate, solely for purposes of determining eligibility
to participate, vesting and entitlement to benefits but not for purposes of
accrual of pension benefits, service with ROC, Chateau or any of their
respective Subsidiaries shall be treated as service with the Company or the
Operating Partnership, as the case may be; provided, however, that such
service shall not be recognized to the extent that such recognition would
result in a duplication of benefits under both a ROC Benefit Plan or a Chateau
Benefit Plan, on the one hand, and a benefit plan of the Company, on the other
hand (or is not otherwise recognized for such purposes under the benefit plans
of the Company or the Operating Partnership).
(b) Stock Incentive Plans.
(i) Immediately prior to or as of the Effective Time and
solely with respect to individuals employed by ROC immediately prior to the
Effective Time, ROC shall cause the ROC Stock Options to be accelerated,
thereby causing the ROC Stock Options to be fully vested and immediately
exercisable and solely with respect to individuals employed by Chateau or the
Operating Partnership immediately prior to that date, Chateau shall cause the
Chateau Stock Options to be accelerated, thereby causing the Chateau Stock
Options to be fully vested and immediately exercisable.
(ii) As of the Effective Time, each outstanding ROC Stock
Option and Chateau Stock Option shall be assumed by the Company and shall be
deemed to constitute an option to acquire, on the same terms and conditions as
were applicable under such ROC Stock Option or Chateau Stock Option, the same
number of shares of Common Stock as the holder of such ROC Stock Option or
Chateau Stock Option would have been entitled to receive pursuant to the
Mergers had such holder exercised such ROC Stock Option or Chateau Stock
Option in full immediately prior to the Effective Time at a price per share
equal to the aggregate exercise price for the shares subject to such ROC Stock
Option or Chateau Stock Option divided by the number of full shares of Common
Stock deemed to be purchasable pursuant to such ROC Stock Option or Chateau
Stock Option; provided, however, that the number of shares of Common Stock
that may be purchased upon exercise of such ROC Stock Option or Chateau Stock
Option shall not include any fractional share but shall be rounded upward to
the next whole number of shares.
(iii) At the Effective Time, the Company shall assume the
1993 Stock Plan and the Chateau Plan (collectively, the "Plans") (such Plans
having been amended as appropriate to take into account the adjustments set
forth in Section 5.11(b)(ii)), and its Board of Directors shall appoint a
committee to administer the Plans (the "Committee"). At the Effective Time,
the Plans
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shall be amended such that no further options shall be issued thereunder.
(iv) At the Effective Time, the Company shall adopt a new
long-term stock incentive plan (the "Company Plan") to be administered by the
Committee. The Company Plan shall provide for grants of restricted stock,
options and other incentive compensation to key employees and directors of the
Company and its Subsidiaries as provided more fully in Exhibit G hereto.
Chateau and ROC each covenant that they will each reasonably cooperate with
each other in order to provide the Committee with flexibility to grant options
under the Company Plan following the Mergers that will qualify as "incentive
stock options" within the meaning of Section 422 of the Code.
(c) Employment Agreements. Each of Chateau and ROC shall cause
the Company to prepare and execute the Employment Agreements for the executive
officers named in Section 1.6 prior to the Effective Time, which Employment
Agreements shall provide that they shall become effective at the Effective
Time.
(d) Cooperation. ROC and Chateau shall cooperate in good faith
with respect to the effectuation of the covenants described in subsections (b)
and (c) above.
SECTION 5.12 Indemnification; Directors' and Officers'
Insurance.
(a) (i) ROC shall, and, from and after the Effective Time, the
Company shall, indemnify, defend and hold harmless each person who is now or
has been at any time prior to the date hereof or who becomes prior to the
Effective Time, an officer or director of ROC or any ROC Subsidiary (the "ROC
Indemnified Parties") against all losses, claims, damages, costs, expenses
(including attorneys' fees and expenses), liabilities or judgments or amounts
that are paid in settlement of, with the approval of the indemnifying party
(which approval shall not be unreasonably withheld), or otherwise in
connection with any threatened or actual claim, action, suit, proceeding or
investigation in connection with any threatened or actual claim, action, suit,
proceeding or investigation based on or arising out of the fact that such
person is or was a director or officer of ROC or any ROC Subsidiary at or
prior to the Effective Time, whether asserted or claimed prior to, or at or
after, the Effective Time ("ROC Indemnified Liabilities"), including all ROC
Indemnified Liabilities based on, or arising out of, or pertaining to this
Agreement or the Transactions, in each case to the full extent a corporation
is permitted under the MGCL to indemnify its own directors or officers, as the
case may be (and the Company will pay expenses in advance of the final
disposition of any such action or proceeding to each ROC Indemnified Party to
the full extent permitted by law subject to the limitations set forth in
Section 5.12(a)(iii)). Chateau shall, and, from and after the Effective Time,
the Company shall, indemnify, defend and hold harmless each person who is now
or has been at any time prior to the date hereof or who becomes prior to the
Effective Time, an officer or director of Chateau or any Chateau Subsidiary
(the "Chateau Indemnified Parties" and, together with the ROC Indemnified
Parties, the "Indemnified Parties") against all losses, claims, damages,
costs, expenses (including attorneys' fees and expenses), liabilities or
judgments or amounts that are paid in settlement of, with the approval of the
indemnifying party (which approval shall not be unreasonably withheld), or
otherwise in connection with any threatened or actual claim, action, suit,
proceeding or investigation in connection with any threatened or actual claim,
action, suit, proceeding or investigation based on or arising out of the fact
that such person is or was a director or officer of Chateau or any Chateau
Subsidiary at or prior to the Effective Time, whether asserted or claimed
prior to, or at or after, the Effective Time
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("Chateau Indemnified Liabilities" and, together with the ROC Indemnified
Liabilities, the "Indemnified Liabilities"), including all Chateau Indemnified
Liabilities based on, or arising out of, or pertaining to this Agreement or
the Transactions, in each case to the full extent a corporation is permitted
under the MGCL to indemnify its own directors or officers, as the case may be
(and the Company will pay expenses in advance of the final disposition of any
such action or proceeding to each Chateau Indemnified Party to the full extent
permitted by law subject to the limitations set forth in Section
5.12(a)(iii)).
(ii) Any Indemnified Parties proposing to assert the right
to be indemnified under this Section 5.12 shall, promptly after receipt of
notice of commencement of any action against such Indemnified Parties in
respect of which a claim is to be made under this Section 5.12 against ROC
and/or Chateau, and, from and after the Effective Time, the Company
(collectively, the "Indemnifying Parties"), notify the Indemnifying Parties of
the commencement of such action, enclosing a copy of all papers served. If any
such action is brought against any of the Indemnified Parties and such
Indemnified Parties notify the Indemnifying Parties of its commencement, the
Indemnifying Parties will be entitled to participate in and, to the extent
that they elect by delivering written notice to such Indemnified Parties
promptly after receiving notice of the commencement of the action from the
Indemnified Parties, to assume the defense of the action and after notice from
the Indemnifying Parties to the Indemnified Parties of their election to
assume the defense, the Indemnifying Parties will not be liable to the
Indemnified Parties for any legal or other expenses except as provided below
and except for the reasonable costs of investigation subsequently incurred by
the Indemnified Parties in connection with the defense. If the Indemnifying
Parties assume the defense, the Indemnifying Parties shall have the right to
settle such action without the consent of the Indemnified Parties; provided,
however, that the Indemnifying Parties shall be required to obtain such
consent (which consent shall not be unreasonably withheld) if the settlement
includes any admission of wrongdoing on the part of the Indemnified Parties or
any decree or restriction on the Indemnified Parties or their officers or
directors; provided, further, that no Indemnifying Parties, in the defense of
any such action shall, except with the consent of the Indemnified Parties
(which consent shall not be unreasonably withheld), consent to entry of any
judgment or enter into any settlement that does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Parties of a release from all liability with respect to such
action. The Indemnified Parties will have the right to employ their own
counsel in any such action, but the fees, expenses and other charges of such
counsel will be at the expense of such Indemnified Parties unless (i) the
employment of counsel by the Indemnified Parties has been authorized in
writing by the Indemnifying Parties, (ii) the Indemnified Parties have
reasonably concluded (based on advice of counsel) that there may be legal
defenses available to them that are different from or in addition to those
available to the Indemnifying Parties, (iii) a conflict or potential conflict
exists (based on advice of counsel to the Indemnified Parties) between the
Indemnified Parties and the Indemnifying Parties (in which case the
Indemnifying Parties will not have the right to direct the defense of such
action on behalf of the Indemnified Parties) or (iv) the Indemnifying Parties
have not in fact employed counsel to assume the defense of such action within
a reasonable time after receiving notice of the commencement of the action, in
each of which cases the reasonable fees, disbursements and other charges of
counsel will be at the expense of the Indemnifying Parties.
(iii) It is understood that the Indemnifying Parties shall
not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees, disbursements and other
charges of more than one separate firm admitted to practice in such
jurisdiction at any one time for all such Indemnified Parties unless (a) the
employment of more than
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one counsel has been authorized in writing by the Indemnifying Parties, (b)
any of the Indemnified Parties have reasonably concluded (based on advice of
counsel) that there may be legal defenses available to them that are different
from or in addition to those available to other Indemnified Parties or (c) a
conflict or potential conflict exists (based on advice of counsel to the
Indemnified Parties) between any of the Indemnified Parties and the other
Indemnified Parties, in each case of which the Indemnifying Parties shall be
obligated to pay the reasonable fees and expenses of such additional counsel
or counsels.
(iv) The Indemnifying Parties will not be liable for any
settlement of any action or claim effected without their written consent
(which consent shall not be unreasonably withheld).
(b) The provisions of this Section 5.12 are intended to be for
the benefit of, and shall be enforceable by, each Indemnified Party, his or
her heirs and his or her personal representatives and shall be binding on all
successors and assigns of Chateau, ROC and the Company.
SECTION 5.13 Operating Partnership Agreement Amendment. Chateau
hereby agrees that, immediately prior to the Effective Time, it shall have
duly executed and delivered the Operating Partnership Agreement Amendment, and
upon obtaining the necessary limited partner consents such Amendment shall
provide that it will be effective immediately following the Effective Time.
SECTION 5.14 Company Charter and By-laws. Chateau and ROC
hereby agree to cooperate and use their best efforts to finalize the Company
Charter and the Company Bylaws as soon as practicable following the date
hereof.
SECTION 5.15 Contribution Agreement. Immediately following the
Effective Time, the Company, ROC and the Operating Partnership shall execute
and deliver the Contribution Agreement and shall perform their respective
obligations thereunder.
SECTION 5.16 Private Placement of Common Stock of RSub. ROC
shall use its best efforts to cause 120 "accredited investors" (as defined in
Rule 501(a) under the Securities Act) to purchase, on or prior to the
Effective Date, one share each of RSub Common Stock, at a purchase price of
$100 per share.
SECTION 5.17 Registration Rights Agreement. ROC agrees to use
its reasonable efforts to cause each person listed on Part I of Exhibit A to
the Registration Rights Agreement to execute and deliver to the Company such
Registration Rights Agreement on or prior to the Closing Date. Chateau agrees
to use its reasonable efforts to cause each person listed on Part II of
Exhibit A and on Exhibit B to the Registration Rights Agreement to execute and
deliver such Registration Rights Agreement on or prior to the Closing Date.
The parties acknowledge that certain limited partners of the Operating
Partnership may currently have registration rights that may be more favorable
than those contemplated by the Registration Rights Agreement.
SECTION 5.18 Provisions Relating to Certain ROC Indebtedness.
Notwithstanding any other provision of this Agreement, ROC and Chateau shall
be required to utilize reasonable efforts and to cooperate with each other to
cause the condition specified in Section 6.2(g)
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to be satisfied on or prior to the Closing Date.
SECTION 5.19 Exemptions from Certain Provisions of the MGCL.
Prior to the Effective Time, the Board of Directors of the Company shall adopt
an irrevocable resolution to the effect that the Chateau Principals and the
ROC Principals and the present or future affiliates or associates of any of
the foregoing or any other person acting in concert or as a group with any of
the foregoing shall be exempted from the business combination provisions of
Section 3-601 et seq. of the MGCL or any successor statutory provisions.
ARTICLE VI
Conditions Precedent
SECTION 6.1 Conditions to Each Party's Obligation To Effect the
Mergers. The respective obligation of ROC and Chateau to effect the Mergers
and to consummate the other Transactions contemplated to occur on the Closing
Date is subject to the satisfaction or waiver on or prior to the Effective
Time of the following conditions:
(a) Stockholder Approval. The Stockholder Approvals shall have
been obtained.
(b) Listing of Shares. The NYSE shall have approved for listing
the Common Stock to be issued in the Mergers.
(c) Registration Statement. The Registration Statement shall
have become effective under the Securities Act and shall not be the subject of
any stop order or proceedings by the SEC seeking a stop order.
(d) No Injunctions or Restraints. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court
of competent jurisdiction or other legal restraint or prohibition preventing
the consummation of the Mergers or any of the other Transactions shall be in
effect.
(e) Blue Sky Laws. The Company shall have received all state
securities or "blue sky" permits and other authorizations necessary to issue
the shares of Common Stock comprising the Merger Consideration.
(f) Opinion Related to REIT Status. Chateau and ROC shall have
received an opinion dated as of the Closing Date of Rogers & Wells, subject to
certificates, letters and assumptions, reasonably satisfactory to Chateau and
ROC that following the Mergers (after giving effect thereto), the Company's
proposed method of operation will enable it to meet the requirements for
qualification and taxation as a REIT under the Code.
(g) The Investment Company Act Opinion. Chateau and ROC shall
have received an opinion dated as of the Closing Date of Rogers & Wells,
subject to certificates, letters and assumptions, reasonably satisfactory to
Chateau and ROC, to the effect that neither the Company nor any of its
Subsidiaries is an "investment company" or an entity "controlled" by an
"investment company" as such terms are defined in the Investment Company Act
of 1940, as amended.
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(h) Evidence of Completion of Private Placement and Receipt of
Consents from Limited Partners. Each of ROC and Chateau shall have received
reasonably satisfactory evidence of the completion of the Private Placement
referred to in Section 5.15 and the receipt of any remaining consents from the
limited partners constituting a Majority in Interest of the Operating
Partnership to the Operating Partnership Agreement Amendment.
(i) Certain Actions and Consents. All material actions by or in
respect of or filings with any Governmental Entity required for the
consummation of the Transactions shall have been obtained or made.
(j) Formation of the Company. ROC and Chateau shall be
reasonably satisfied that the Company Charter and Company By-laws are in forms
substantially in accordance with the terms outlined in Exhibit F hereto and
that all of the other transactions contemplated by Sections 1.5 and 1.6 hereof
shall have been completed or will be completed immediately following the
Effective Time.
SECTION 6.2 Conditions to Obligations of Chateau. The
obligations of Chateau to effect the Chateau Merger and to consummate the
other Transactions contemplated to occur on the Closing Date are further
subject to the following conditions, any one or more of which may be waived by
Chateau:
(a) Representations and Warranties. The representations and
warranties of ROC (without giving effect to any "materiality" qualification or
limitation) set forth in this Agreement shall be true and correct as of the
Closing Date, as though made on and as of the Closing Date, except to the
extent the representation or warranty is expressly limited by its terms to
another date, and Chateau shall have received a certificate (which certificate
may be qualified by knowledge to the same extent as such representations and
warranties are so qualified) signed on behalf of ROC by the chief executive
officer or the chief financial officer of ROC to such effect. This condition
shall be deemed satisfied notwithstanding any failure of a representation or
warranty of ROC to be true and correct as of the Closing Date (without giving
effect to any materiality qualification) if the aggregate amount of Economic
Losses (as defined below) that would reasonably be expected to arise as a
result of the failures of such representations and warranties to be true and
correct as of the Closing Date does not exceed $5,000,000 (such amount to be
calculated by counting in all cases from the first dollar of such Economic
Losses without giving effect to the $5,000,000 limitation set forth in Section
3.1(f)). "Economic Losses," as used in this Section 6.2, shall mean any and
all net damage, net loss (including diminution in the value of properties or
assets which diminution, with regard to permanent cash flow losses from any
property or assets that produces cash flow, shall be measured by multiplying
the annual net cash flow produced by such property or asset over the 12-month
period preceding the date of the applicable loss by a factor of 10), net
liability or expense suffered by ROC and the ROC Subsidiaries taken as a
whole, but shall not include any claims, damages, loss, expense or other
liability resulting from any class action or stockholders' derivative lawsuits
relating to the Transactions against ROC, if any, filed subsequent to the date
of this Agreement or any amounts paid or expenses incurred by ROC in obtaining
non-governmental third party consents, as contemplated by Section 5.3 up to
the amount of $500,000 provided therein.
(b) Performance of Obligations of ROC. ROC shall have performed
in all material respects all obligations required to be performed by it under
this Agreement at or prior to the Effective Time, and Chateau shall have
received a certificate signed on behalf of ROC by the
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chief executive officer or the chief financial officer of ROC to such effect.
(c) Material Adverse Change. Since the date of this Agreement,
there has been no material adverse change in the business, results of
operations or financial condition of ROC and the ROC Subsidiaries, taken as a
whole, that have resulted or would result, individually or in the aggregate,
in Economic Losses of $5,000,000 or more. Chateau shall have received a
certificate of the chief executive officer or chief financial officer of ROC
to the effect that there has been no such material adverse change.
(d) Opinions Relating to REIT Status. Chateau shall have
received an opinion dated as of the Closing Date of Rogers & Wells, subject to
certificates, letters and assumptions, reasonably satisfactory to Chateau,
that (i) commencing with its taxable year ended December 31, 1993, ROC was
organized and has operated in conformity with the requirements for
qualification as a REIT within the meaning of the Code, (ii) following the
Mergers (after giving effect thereto), ROC's proposed method of operation will
enable it to meet the requirements for qualification and taxation as a REIT
under the Code and (iii) following the Mergers (after giving effect thereto),
the Financing Partnership will be treated for federal income tax purposes as a
partnership and not as a corporation or an association taxable as a
corporation.
(e) Other Tax Opinion. Chateau shall have received an opinion
dated as of the Closing Date from Rogers & Wells, subject to certificates,
letters and assumptions, reasonably satisfactory to Chateau, to the effect
that the formation of RSub and the ROC Merger will be treated for federal
income tax purposes as a tax-free transfer by the stockholders of ROC of their
shares of ROC Stock to the Company in exchange for shares of Common Stock
under Section 351 of the Code and no gain or loss will be recognized by ROC or
its stockholders as a result of the ROC Merger.
(f) Consents. All consents and waivers from third parties
necessary in connection with the consummation of the Transactions shall have
been obtained, other than such consents and waivers from third parties, which,
if not obtained, would not result, individually or in the aggregate, in
Economic Losses of $5,000,000 or more.
(g) Certain ROC Indebtedness. The Specified Debt Obligations
(as herein defined) of ROC or any ROC Subsidiary that are outstanding
immediately prior to the Effective Time, and will remain outstanding and shall
be assumed by, or otherwise become the indebtedness of, the Operating
Partnership or the Financing Partnership, as the case may be, upon
consummation of the transactions contemplated by the Contribution Agreement,
will, following such transactions, provide by their respective terms to the
effect that neither the Company nor any partner of the Financing Partnership
(other than the Operating Partnership) or the Operating Partnership will have
any liability for the repayment of the Specified Debt Obligations. For
purposes hereof, "Specified Debt Obligation" shall include the indebtedness
owed by ROC or any ROC Subsidiary under the Credit Agreement (Revolving) or
Credit Agreement (Term), dated as of May 2, 1996, with each of the lenders
named therein or under any credit agreements with Pacific Mutual Insurance
Company.
(h) Consummation of ROC Merger. The ROC Merger shall have been
consummated concurrently with the Chateau Merger.
(i) Registration Rights Agreement. The Company shall have duly
executed and delivered the Registration Rights Agreement substantially in the
form attached as Exhibit C hereto.
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Notwithstanding the foregoing, Chateau shall not be obligated
to effect the Chateau Merger if the Economic Losses resulting from the failure
of one or more of the conditions set forth in Sections 6.2(a), 6.2(c) and
6.2(f) to be satisfied (the determination of whether a failure of any of such
conditions has occurred for the purposes of this sentence being made without
giving effect to the $5,000,000 limitations set forth in such sections), in
the aggregate, but without duplication exceeds $5,000,000.
SECTION 6.3 Conditions to Obligation of ROC. The obligation of
ROC to effect the ROC Merger and to consummate the other Transactions
contemplated to occur on the Closing Date is further subject to the following
conditions, any one or more of which may be waived by ROC:
(a) Representations and Warranties. The representations and
warranties of Chateau (without giving effect to any "materiality"
qualification or limitation) set forth in this Agreement shall be true and
correct as of the Closing Date, as though made on and as of the Closing Date,
except to the extent the representation or warranty is expressly limited by
its terms to another date, and ROC shall have received a certificate (which
certificate may be qualified by knowledge to the same extent as such
representations and warranties are so qualified) signed on behalf of Chateau
by the chief executive officer or the chief financial officer of Chateau to
such effect. This condition shall be deemed satisfied notwithstanding any
failure of a representation or warranty of Chateau to be true and correct as
of the Closing Date (without giving effect to any materiality qualification)
if the aggregate amount of Economic Losses (as defined below) that would
reasonably be expected to arise as a result of the failures of such
representations and warranties to be true and correct as of the Closing Date
does not exceed $5,000,000 (such amount to be calculated by counting in all
cases from the first dollar of such Economic Losses without giving effect to
the $5,000,000 limitation set forth in Section 3.2(f)). "Economic Losses," as
used in this Section 6.3, shall mean any and all net damage, net loss
(including diminution in the value of properties or assets which diminution,
with regard to permanent cash flow losses from any property or assets that
produces cash flow, shall be measured by multiplying the annual net cash flow
produced by such property or asset over the 12-month period preceding the
date of the applicable loss by a factor of 10), net liability or expense
suffered by Chateau or the Chateau Subsidiaries taken as a whole, but shall
not include any claims, damages, loss, expense or other liability resulting
from any class action or stockholders' derivative lawsuits relating to the
Transactions against Chateau, if any, filed subsequent to the date of this
Agreement or any amounts paid or expenses incurred by Chateau in obtaining
non-governmental third party consents, as contemplated by Section 5.3 up to
the amount of $500,000 provided therein.
(b) Performance of Obligations of Chateau. Chateau shall have
performed in all material respects all obligations required to be performed by
it under this Agreement at or prior to the Effective Time, and ROC shall have
received a certificate of Chateau signed on behalf of Chateau by the chief
executive officer or the chief financial officer of such party to such effect.
(c) Material Adverse Change. Since the date of this Agreement,
there has been no material adverse change in the business, results of
operations or financial condition of Chateau, the Operating Partnership and
the other Chateau Subsidiaries taken as a whole, that have resulted or would
result, individually or in the aggregate, in Economic Losses of $5,000,000 or
more. ROC shall have received a certificate of the chief executive officer or
chief financial officer of Chateau to the effect that there has been no such
material adverse change.
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(d) Opinions Relating to REIT and Partnership Status. ROC shall
have received an opinion dated as of the Closing Date of Timmis & Inman,
subject to certificates, letters and assumptions, reasonably satisfactory to
ROC, that (i) commencing with its taxable year ended December 31, 1993,
Chateau was organized and has operated in conformity with the requirements for
qualification as a REIT within the meaning of the Code and (ii) the Operating
Partnership has been at all times (and each Chateau Subsidiary organized as a
partnership, joint venture or limited liability company has since its
acquisition by Chateau) and, following the Mergers (after giving effect
thereto), will be treated as a partnership for federal income tax purposes and
not as a corporation or an association taxable as a corporation.
(e) Other Tax Opinion. ROC shall have received an opinion dated
as of the Closing Date from Timmis & Inman, subject to certificates, letters
and assumptions reasonably satisfactory to ROC, to the effect that the Chateau
Merger will qualify as a tax-free reorganization under Section 368(a) of the
Code, and no gain or loss will be recognized by Chateau or its stockholders as
a result of the Chateau Merger.
(f) Consents. All consents and waivers from third parties
necessary in connection with the consummation of the Transactions shall have
been obtained, other than such consents and waivers from third parties, which,
if not obtained, would not result, individually or in the aggregate, in
Economic Losses of $5,000,000 or more.
(g) Consummation of Chateau Merger. The Chateau Merger shall
have been consummated concurrently with the ROC Merger.
(h) Registration Rights Agreement. The Company shall have duly
executed and delivered the Registration Rights Agreement substantially in the
form attached as Exhibit C hereto.
Notwithstanding the foregoing, ROC shall not be obligated to
effect the ROC Merger if the Economic Losses resulting from the failure of one
or more of the conditions set forth in Sections 6.3(a), 6.3(c) and 6.3(f) to
be satisfied (the determination of whether a failure of any of such conditions
has occurred for the purposes of this sentence being made without giving
effect to the $5,000,000 limitations set forth in such sections), in the
aggregate, but without duplication exceeds $5,000,000.
ARTICLE VII
Board Actions
SECTION 7.1 Board Actions. Notwithstanding Section 5.7 or any
other provision of this Agreement to the contrary, to the extent required by
the fiduciary obligations of the Board of Directors of either Chateau or ROC,
as determined in good faith based on the advice of outside counsel, either
Chateau or ROC may:
(a) disclose to its stockholders any information required to be
disclosed under applicable law;
(b) in response to an unsolicited request therefor, participate
in discussions or
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negotiations with, or furnish information with respect to itself pursuant to a
confidentiality agreement no less favorable to itself than the Confidentiality
Agreement (as determined by its outside counsel) to, any person in connection
with a Competing Transaction proposed by such person; and
(c) approve or recommend (and in connection therewith withdraw
or modify its approval or recommendation of this Agreement and the Mergers) a
Superior Competing Transaction (as defined below) or enter into an agreement
with respect to such Superior Competing Transaction (for purposes of this
Agreement, "Superior Competing Transaction" means a bona fide proposal of a
Competing Transaction made by a third party which a majority of the members of
the Board of Directors of Chateau or ROC, as the case may be, determines in
good faith (based on the advice of its investment banking firm) to be more
favorable to its stockholders than the Chateau Merger or the ROC Merger, as
the case may be.
ARTICLE VIII
Termination, Amendment and Waiver
SECTION 8.1 Termination. This Agreement may be terminated at
any time prior to the filing of the Articles of Merger for each Merger with
the Department of Assessments and Taxation of the State of Maryland, whether
before or after either of the Stockholder Approvals are obtained:
(a) by mutual written consent duly authorized by the respective
Boards of Directors of Chateau and ROC;
(b) by Chateau, upon a breach of any representation, warranty,
covenant or agreement on the part of ROC set forth in this Agreement, or if
any representation or warranty of ROC shall have become untrue, in either case
such that the conditions set forth in Section 6.2(a) or Section 6.2(b), as the
case may be, would be incapable of being satisfied by March 31, 1997 (as
otherwise extended);
(c) by ROC, upon a breach of any representation, warranty,
covenant or agreement on the part of Chateau set forth in this Agreement, or
if any representation or warranty of Chateau shall have become untrue, in
either case such that the conditions set forth in Section 6.3(a) or Section
6.3(b), as the case may be, would be incapable of being satisfied by March 31,
1997 (as otherwise extended);
(d) by either Chateau or ROC, if any judgment, injunction,
order, decree or action by any Governmental Entity of competent authority
preventing the consummation of the Mergers shall have become final and
nonappealable;
(e) by either Chateau or ROC, if the Mergers shall not have
been consummated before March 31, 1997; provided, however, that a party that
has willfully and materially breached a representation, warranty or covenant
of such party set forth in this Agreement shall not be entitled to exercise
its right to terminate under this Section 8.1(e);
(f) by either Chateau or ROC if, upon a vote at a duly held ROC
Stockholders
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Meeting or any adjournment thereof, the ROC Stockholder Approvals shall not
have been obtained as contemplated by Section 5.1;
(g) by either Chateau or ROC if, upon a vote at a duly held
Chateau Stockholders Meeting or any adjournment thereof, the Chateau
Stockholder Approvals shall not have been obtained as contemplated by Section
5.1;
(h) by ROC if prior to the ROC Stockholders Meeting, the Board
of Directors of ROC or any committee thereof shall have withdrawn or modified
in accordance with Section 7.1 hereof in any manner adverse to Chateau its
approval or recommendation of the ROC Merger or this Agreement in connection
with the approval and recommendation of a Superior Competing Transaction;
(i) by Chateau if (i) prior to the ROC Stockholders Meeting,
the Board of Directors of ROC or any committee thereof shall have withdrawn or
modified in any manner adverse to Chateau its approval or recommendation of
the ROC Merger or this Agreement in connection with, or approved or
recommended, any Superior Competing Transaction, (ii) ROC shall have entered
into any agreement with respect to any Competing Transaction (other than a
confidentiality agreement as contemplated by Section 7.1(b)) or (iii) the
Board of Directors of ROC or any committee thereof shall have resolved to do
any of the foregoing;
(j) by Chateau if prior to the Chateau Stockholders Meeting,
the Board of Directors of Chateau or any committee thereof shall have
withdrawn or modified in accordance with Section 7.1 hereof in any manner
adverse to ROC its approval or recommendation of the Chateau Merger or this
Agreement in connection with the approval and recommendation of a Superior
Competing Transaction;
(k) by ROC if (i) prior to the Chateau Stockholders Meeting,
the Board of Directors of Chateau or any committee thereof shall have
withdrawn or modified in any manner adverse to ROC its approval or
recommendation of the Chateau Merger or this Agreement in connection with, or
approved or recommended, a Superior Competing Transaction, (ii) Chateau shall
have entered into any agreement with respect to any Competing Transaction
(other than a confidentiality agreement as contemplated by Section 7.1(b)) or
(iii) the Board of Directors of Chateau or any committee thereof shall have
resolved to do any of the foregoing;
(l) by ROC or Chateau if, over any consecutive 20-Trading Day
(as herein defined) period ending prior to the first date of the mailing of
the Proxy Statement to the respective stockholders of ROC and Chateau, the
average of the ratios determined by comparing the Closing Price (as herein
defined) of the ROC Common Stock to the Closing Price of the Chateau Common
Stock on each day over such period is more than 1.20 to one or less than 0.89
to one, and the party desiring such termination provides notice to the other
party within three business days of the end of such consecutive 20-Trading Day
period but in no event later than the date of the mailing; provided, however,
that the right of either of Chateau or ROC to terminate this Agreement under
this Section 8.1(l) shall not be available if, at the time such party proposes
to exercise such termination right, such party has received a bona fide
proposal for a Competing Transaction. For purposes hereof, "Trading Day" shall
mean a day on which the NYSE is open for trading, and "Closing Price" shall
mean the last reported sale price per share of the ROC Common Stock or Chateau
Common Stock, as the case may be, as reported on the NYSE consolidated tape on
the Trading Day in question.
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SECTION 8.2 Expenses.
(a) Except as otherwise specified in this Section 8.2 or agreed
in writing by the parties, all out-of-pocket costs and expenses incurred in
connection with this Agreement and the Transactions contemplated hereby shall
be paid by the party incurring such cost or expense.
(b) ROC agrees that if this Agreement shall be terminated
pursuant to Section 8.1(b), then ROC will pay to the Operating Partnership, or
as directed by the Operating Partnership, an amount equal to the Chateau
Break-Up Expenses (as defined below). In addition, ROC agrees that if this
Agreement shall be terminated pursuant to Section 8.1(b), (f), (h) or (i) and,
in the case of Section 8.1(b) or (f), following the date of this Agreement and
prior to termination, ROC shall have received a proposal constituting a
Competing Transaction and within 12 months following termination ROC shall
enter into a definitive agreement providing for a Competing Transaction that
is equally or more favorable from a financial point of view to ROC's
stockholders as the ROC Merger, then ROC will pay as directed by the Operating
Partnership a fee in an amount equal to the Chateau Break-Up Fee (as defined
below). Payment of any of such amounts shall be made, as directed by the
Operating Partnership, by wire transfer of immediately available funds
promptly, but in no event later than two business days after the amount is due
as provided herein. The "Chateau Break-Up Fee" shall be an amount equal to the
lesser of (i) $10,000,000 (the "Base Amount") or (ii) the sum of (A) the
maximum amount that can be paid to the Operating Partnership without causing
Chateau to fail to meet the requirements of Sections 856(c)(2) and (3) of the
Code determined as if the payment of such amount did not constitute income
described in Sections 856(c)(2) and 856(3) of the Code ("Qualifying Income"),
as determined by independent accountants to Chateau and (B) in the event
Chateau receives a letter from outside counsel (the "Chateau BreakUp Fee Tax
Opinion") indicating that Chateau has received a ruling from the IRS holding
that the Operating Partnership's receipt of the Base Amount would either
constitute Qualifying Income as to Chateau with respect to Chateau's
proportionate share thereof or would be excluded from Chateau's gross income
for purposes of Sections 856(c)(2) and (3) of the Code (the "REIT
Requirements") or that the receipt by the Operating Partnership of the
remaining balance of the Base Amount following the receipt of and pursuant to
such ruling would not be deemed constructively received prior thereto, the
Base Amount less the amount payable under clause (A) above. In the event that
the Operating Partnership is not able to receive the full Base Amount, ROC
shall place the unpaid amount in escrow and shall not release any portion
thereof to the Operating Partnership unless and until ROC receives any one or
a combination of the following: (i) a letter(s) from Chateau's independent
accountants indicating the maximum amount that can be paid at that time to the
Operating Partnership without causing Chateau to fail to meet the REIT
Requirements or (ii) a Chateau Break-Up Fee Tax Opinion, in which event ROC
shall pay to the Operating Partnership the lesser of the unpaid Base Amount or
the maximum amount stated in the letter(s) referred to in (i) above from time
to time. ROC's obligation to pay any unpaid portion of the Chateau Break-Up
Fee (provided ROC has otherwise complied with its obligations under this
provision) shall terminate (and any amount still held in such escrow shall be
released to ROC) on the date that is five years from the date the Chateau
Break-Up Fee first becomes due under this Agreement. In addition, amounts held
in escrow may be earlier released as provided in Section 8.2(c). The "Chateau
Break-Up Expenses" shall be an amount equal to the lesser of (i) the Operating
Partnership's out-of-pocket expenses incurred in connection with this
Agreement and the other Transactions (including, without limitation, all
attorneys', accountants' and investment bankers' fees and expenses) but in no
event in an amount greater than $3,000,000 (such amount not to exceed such
$3,000,000 being referred to in this Section 8.2(b) or (c) as the "Expense Fee
Base Amount") and (ii) the sum of (A) the
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maximum amount that can be paid to the Operating Partnership without causing
Chateau to fail to meet the requirements of Sections 856(c)(2) and (3) of the
Code determined as if the payment of such amount did not constitute Qualifying
Income, as determined by independent accountants to Chateau and (B) in the
event Chateau receives a Chateau Break-Up Fee Tax Opinion indicating that
Chateau has received a ruling from the IRS holding that the Operating
Partnership's receipt of the Expense Fee Base Amount would either constitute
Qualifying Income as to Chateau with respect to Chateau's proportionate share
thereof or would be excluded from Chateau's gross income for purposes of the
REIT Requirements or that receipt by the Operating Partnership of the
remaining balance of the Expense Fee Base Amount following the receipt of and
pursuant to such ruling would not be deemed constructively received prior
thereto, the Expense Fee Base Amount less the amount payable under clause (A)
above. In the event that the Operating Partnership is not able to receive the
full amount of the Chateau Break-Up Expenses, ROC shall place the unpaid
amount in escrow and shall not release any portion thereof to the Operating
Partnership unless and until ROC receives any one or combination of the
following: (i) a letter(s) from Chateau's independent accountants indicating
the maximum amount that can be paid at that time to the Operating Partnership
without causing Chateau to fail to meet the REIT Requirements or (ii) a
Chateau Break-Up Fee Tax Opinion indicating that Chateau's receipt of the
Expense Fee Base Amount would satisfy in whole or in part the REIT
Requirements, in which event ROC shall pay to the Operating Partnership the
lesser of the unpaid Expense Fee Base Amount or the maximum amount stated in
the letter(s) referred to in (i) above from time to time. ROC's obligation to
pay any unpaid portion of the Chateau Break-Up Expenses (provided ROC has
otherwise complied with its obligations under this provision) shall terminate
(and any amount still held in such escrow shall be released to ROC) on the
date that is five years from the date the Chateau Break-Up Expenses first
become due under this Agreement. In addition, amounts held in escrow may be
earlier released as provided in Section 8.2(c).
(c) Notwithstanding anything to the contrary contained in
Section 8.2(b) above, if the Operating Partnership realizes any Total Profit
pursuant to the ROC Option Agreement and at any time or from time to time the
sum of (i) the Total Profit realized by the Operating Partnership, (ii) the
Chateau Break-Up Fee paid to the Operating Partnership and (iii) the amount of
Chateau Break-Up Expenses paid to the Operating Partnership exceeds the sum of
(i) the Base Amount (which amount shall be counted as zero if ROC has not
become obligated to pay the Chateau Break-Up Fee under this Agreement) and
(ii) the Expense Fee Base Amount (which amount shall be counted as zero if ROC
has not become obligated to pay the Chateau Break-Up Expenses under this
Agreement), then the Chateau Break-Up Fee and/or Chateau Break-Up Expenses
shall be reduced (it being agreed that the allocation of the reduction between
the Chateau Break-Up Fee and the Chateau Break-Up Expenses shall be determined
in the discretion of Chateau) by such excess, and the amount, if any, still
held in escrow shall be released from the escrow account to ROC, and the
Operating Partnership shall promptly refund the balance of such excess to ROC.
(d) Chateau agrees that if this Agreement shall be terminated
pursuant to Section 8.1(c), then Chateau will pay, as directed by ROC, an
amount equal to the ROC Break-Up Expenses (as defined below). In addition,
Chateau agrees that if this Agreement shall be terminated pursuant to Section
8.1(c), (g), (j) or (k) and, in the case of Section 8.1(c) or (g), following
the date of this Agreement and prior to termination, Chateau shall have
received a proposal constituting a Competing Transaction and within 12 months
following termination the Chateau shall enter into a definitive agreement
providing for a Competing Transaction that is equally or more favorable from a
financial point of view to the Chateau's stockholders as the Chateau Merger,
then Chateau will pay as directed by ROC a fee in an amount equal to the ROC
Break-Up Fee (as defined below). Payment of any
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of such amounts shall be made, as directed by ROC, by wire transfer of
immediately available funds promptly, but in no event later than two business
days after the amount is due as provided herein. The "ROC Break-Up Fee" shall
be an amount equal to the lesser of (i) $10,000,000 (the "Base Amount") and
(ii) the sum of (A) the maximum amount that can be paid to ROC without causing
it to fail to meet the requirements of Sections 856(c)(2) and (3) of the Code
determined as if the payment of such amount did not constitute Qualifying
Income, as determined by independent accountants to ROC and (B) in the event
ROC receives a letter from outside counsel (the "ROC Break-Up Fee Tax
Opinion") indicating that ROC has received a ruling from the IRS holding that
ROC's receipt of the Base Amount would either constitute Qualifying Income or
would be excluded from gross income for purposes of Sections 856(c)(2) and (3)
of the Code or that the receipt by ROC of the remaining balance of the Base
Amount following the receipt of and pursuant to such ruling would not be
deemed constructively received prior thereto, the Base Amount less the amount
payable under clause (A) above. In the event that ROC is not able to receive
the full Base Amount, Chateau shall place the unpaid amount in escrow and
shall not release any portion thereof to ROC unless and until Chateau receives
any one or a combination of the following: (i) a letter(s) from ROC's
independent accountants indicating the maximum amount that can be paid at that
time to ROC without causing ROC to fail to meet the REIT Requirements or (ii)
a ROC Break-Up Fee Tax Opinion, in which event Chateau shall pay to ROC the
lesser of the unpaid Base Amount or the maximum amount stated in the letter(s)
referred to in (i) above from time to time. Chateau's obligation to pay the
ROC Break-Up Fee (provided Chateau has otherwise complied with its obligations
under this provision) shall terminate (and any amount still held in such
escrow shall be released to Chateau) on the date that is five years from the
date the ROC Break-Up Fee first becomes due under this Agreement. In addition,
amounts held in escrow may be earlier released as provided in Section 8.2(e).
The "ROC Break-Up Expenses" shall be an amount equal to the lesser of (i)
ROC's out-of-pocket expenses incurred in connection with this Agreement and
the other Transactions (including, without limitation, all attorneys',
accountants' and investment bankers' fees and expenses) but in no event in an
amount greater than $3,000,000 (such amount not to exceed such $3,000,000
being referred to in this Section 8.2(d) or (e) as the "Expense Fee Base
Amount") and (ii) the sum of (A) the maximum amount that can be paid to ROC
without causing it to fail to meet the requirements of Sections 856(c)(2) and
(3) of the Code determined as if the payment of such amount did not constitute
Qualifying Income, as determined by independent accountants to ROC and (B) in
the event ROC receives a ROC Break-Up Fee Tax Opinion indicating that ROC has
received a ruling from the IRS holding that ROC's receipt of the Expense Fee
Base Amount would either constitute Qualifying Income or would be excluded
from gross income for purposes of the REIT Requirements or that receipt by ROC
of the remaining balance of the Expense Fee Base Amount following the receipt
of and pursuant to such ruling would not be deemed constructively received
prior thereto, the Expense Fee Base Amount less the amount payable under
clause (A) above. In the event that ROC is not able to receive the full
Expense Fee Base Amount, Chateau shall place the unpaid amount in escrow and
shall not release any portion thereof to ROC unless and until Chateau receives
any one or combination of the following: (i) a letter(s) from ROC's
independent accountants indicating the maximum amount that can be paid at that
time to ROC without causing ROC to fail to meet the REIT Requirements or (ii)
a ROC Break-Up Fee Tax Opinion indicating that ROC's receipt of the Expense
Fee Base Amount would satisfy in whole or in part the REIT Requirements, in
which event Chateau shall pay to ROC the lesser of the unpaid Expense Fee Base
Amount or the maximum amount stated in the letter(s) referred to in (i) above
from time to time. Chateau's obligation to pay any unpaid portion of the ROC
Break-Up Expenses (provided Chateau has otherwise complied with its
obligations under this provision) shall terminate (and any amount still held
in such escrow shall be released to Chateau) on the date that is five years
from the date the
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ROC Break-Up Expenses first become due under this Agreement. In addition,
amounts held in escrow may be earlier released as provided in Section 8.2(e).
(e) Notwithstanding anything to the contrary contained in
Section 8.2(d) above, if ROC realizes any Total Profit pursuant to the Chateau
Option Agreement and at any time or from time to time the sum of (i) the Total
Profit, (ii) ROC Break-Up Fee and (iii) the amount of ROC Break-Up Expenses
exceeds the sum of (i) the Base Amount (which amount shall be counted as zero,
if Chateau has not become obligated to pay the ROC Break-Up Fee under this
Agreement) and (ii) the Expense Fee Base Amount (which amount shall be counted
as zero, if Chateau has not become obligated to pay the ROC Break-Up Expenses
under this Agreement), then the ROC BreakUp Fee and/or the ROC Break-Up
Expenses shall be reduced (it being agreed that the allocation of the
reduction shall be determined in the discretion of ROC) by such excess, and
the amount, if any, still held in escrow shall be released from the escrow
account to Chateau and ROC shall promptly refund the balance of such excess to
Chateau.
(f) In the event that Chateau, the Operating Partnership or ROC
is required to file suit to seek all or a portion of the amounts payable under
this Section 8.2, and such party prevails in such litigation, such party shall
be entitled to all expenses, including attorney's fees and expenses which it
has incurred in enforcing its rights hereunder; provided that such expenses
shall be considered part of out-of-pocket expenses incurred in connection with
this Agreement and the other Transactions within the definition of Chateau
Break-Up Expenses or ROC Break-Up Expenses, as the case may be.
SECTION 8.3 Effect of Termination. In the event of termination
of this Agreement by either ROC or Chateau as provided in Section 8.1, this
Agreement shall forthwith become void and have no effect, without any
liability or obligation on the part of Chateau, or ROC, other than the last
sentence of Section 5.2, Section 8.2, this Section 8.3 and Article IX and
except to the extent that such termination results from a willful breach by a
party of any of its representations, warranties, covenants or agreements set
forth in this Agreement.
SECTION 8.4 Amendment. This Agreement may be amended by the
parties in writing by action of their respective Boards of Directors at any
time before or after any Stockholder Approvals are obtained and prior to the
filing of the Articles of Merger for each merger with the Department of
Assessments and Taxation of the State of Maryland; provided, however, that,
after the Stockholder Approvals are obtained, no such amendment, modification
or supplement shall alter the amount or change the form of the consideration
to be delivered to ROC's or Chateau's stockholders or alter or change any of
the terms or conditions of this Agreement if such alteration or change would
adversely affect ROC's stockholders or Chateau's stockholders.
SECTION 8.5 Extension; Waiver. At any time prior to the
Effective Time, each of ROC and Chateau may (a) extend the time for the
performance of any of the obligations or other acts of the other party, (b)
waive any inaccuracies in the representations and warranties of the other
party contained in this Agreement or in any document delivered pursuant to
this Agreement or (c) subject to the proviso of Section 8.4, waive compliance
with any of the agreements or conditions of the other party contained in this
Agreement. Any agreement on the part of a party to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party. Any waivers pursuant to clause (c) of the second
preceding sentence (i) of the provisions of Section 4.1(e) may be given in
writing by or on behalf of Chateau by the chief
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executive officer of Chateau and (ii) of the provisions of Section 4.2(e) may
be given in writing by or on behalf of ROC by the chief executive officer of
ROC. The failure of any party to this Agreement to assert any of its rights
under this Agreement or otherwise shall not constitute a waiver of those
rights.
ARTICLE IX
General Provisions
SECTION 9.1 Nonsurvival of Representations and Warranties. None
of the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time. This
Section 9.1 shall not limit any covenant or agreement of the parties which by
its terms contemplates performance after the Effective Time.
SECTION 9.2 Notices. All notices, requests, claims, demands and
other communications under this Agreement shall be in writing and shall be
deemed given if delivered personally, sent by overnight courier (providing
proof of delivery) to the parties or sent by telecopy (providing confirmation
of transmission) at the following addresses or telecopy numbers (or at such
other address or telecopy number for a party as shall be specified by like
notice):
(a) if to Chateau, to
Chateau Properties, Inc.
19500 Hall Road
Clinton Township, MI 48038
Attn: C.G. ("Jeff") Kellogg
Fax: (810) 286-1496
with a copy to:
Timmis & Inman L.L.P.
300 Talon Centre
Detroit, MI 48207
Attn: Henry J. Brennan, III
Fax: (313) 396-4229
(b) if to ROC, to
ROC Communities, Inc.
6430 S. Quebec Street
Englewood, CO 80111
Attn: Gary P. McDaniel
Fax: (303) 741-3715
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with a copy to:
Rogers & Wells
200 Park Avenue
New York, NY 10166
Attn: Jay L. Bernstein, Esq.
Fax: (212) 878-8375
(c) if to the Company or RSub, to each of the parties at
the addresses indicated in (a) and (b) above.
SECTION 9.3 Interpretation. When a reference is made in this
Agreement to a Section, such reference shall be to a Section of this Agreement
unless otherwise indicated. The table of contents and headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to
be followed by the words "without limitation."
SECTION 9.4 Counterparts. This Agreement may be executed in one
or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other parties.
SECTION 9.5 Entire Agreement; No Third-Party Beneficiaries.
This Agreement, the Confidentiality Agreement and the other agreements entered
into in connection with the Transactions (a) constitute the entire agreement
and supersedes all prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter of this Agreement and,
(b) except for the provisions of Article II, Section 5.11(b) and (d) and
Section 5.12, are not intended to confer upon any person other than the
parties hereto any rights or remedies.
SECTION 9.6 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF MARYLAND,
REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES
OF CONFLICT OF LAWS THEREOF.
SECTION 9.7 Assignment. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement shall be assigned or
delegated, in whole or in part, by operation of law or otherwise by any of the
parties without the prior written consent of the other parties. Subject to the
preceding sentence, this Agreement will be binding upon, inure to the benefit
of, and be enforceable by, the parties and their respective successors and
assigns.
SECTION 9.8 Enforcement. The parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any court of the
United States located in the State of Maryland or in any Maryland State court,
this being in addition to any other remedy to which they are entitled at law
or in equity. In addition, each of the parties hereto (a) consents to
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submit itself (without making such submission exclusive) to the personal
jurisdiction of any federal court located in the State of Maryland or any
Maryland State court in the event any dispute arises out of this Agreement or
any of the Transactions contemplated by this Agreement and (b) agrees that it
will not attempt to deny or defeat such personal jurisdiction by motion or
other request for leave from any such court.
ARTICLE X
Certain Definitions
SECTION 10.1 Certain Definitions. For purposes of this
Agreement:
An "affiliate" of any person means another person that directly
or indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with, such first person.
"Chateau Disclosure Letter" means the letter previously
delivered to ROC by Chateau disclosing certain information in connection with
this Agreement.
"Chateau Subsidiary" means the Operating Partnership and each
other Subsidiary of Chateau.
"Financing Partnership" means a newly organized financing
partnership into which the Financing Sub will merge pursuant to the terms of
the Contribution Agreement.
"Financing Sub" means ROCF, Inc., a Maryland corporation.
"Knowledge" where used herein with respect to ROC shall mean
the knowledge of the persons named in Schedule 10 to the ROC Disclosure Letter
and where used with respect to Chateau shall mean the knowledge of the persons
named in Schedule 10 to the Chateau Disclosure Letter.
"Person" means an individual, corporation, partnership, limited
liability company, joint venture, association, trust, unincorporated
organization or other entity.
"ROC Disclosure Letter" means the letter previously delivered
to Chateau by ROC disclosing certain information in connection with this
Agreement.
"ROC Subsidiary" means each Subsidiary of ROC.
"Subsidiary" of any person means any corporation, partnership,
limited liability company, joint venture or other legal entity of which such
person (either directly or through or together with another Subsidiary of such
person) owns 50% or more of the voting stock or other equity interests of such
corporation, partnership, limited liability company, joint venture or other
legal entity.
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IN WITNESS WHEREOF, Chateau, ROC, the Company and RSub have
caused this Agreement to be signed by their respective officers thereunto duly
authorized, all as of the date first written above.
CHATEAU PROPERTIES, INC.
By: \s\ C.G. Kellogg
--------------------
Name: C.G. Kellogg
Title: President
ROC COMMUNITIES, INC.
By: \s\ Gary P. McDaniel
--------------------
Name: Gary P. McDaniel
Title: President and Chief
Executive Officer
CHATEAU COMMUNITIES, INC.
By: \s\ Gary P. McDaniel
--------------------
Name: Gary P. McDaniel
Title: Chief Executive Officer
R ACQUISITION SUB, INC.
By: \s\ Gary P. McDaniel
--------------------
Name: Gary P. McDaniel
Title: Chief Executive Officer
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