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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
SEPTEMBER 17, 1996
(DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED))
ROC COMMUNITIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MARYLAND 001-12258 84-1226771
(STATE OR OTHER JURISDICTION (COMMISSION (IRS EMPLOYER
OF INCORPORATION) FILE NUMBER) IDENTIFICATION NUMBER)
6430 SO. QUEBEC STREET, ENGLEWOOD, COLORADO 80111
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(303) 741-3707
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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ITEM 5. OTHER EVENTS.
MERGER WITH CHATEAU
On September 17, 1996, ROC Communities, Inc. (the "Company") entered into
an Amended and Restated Agreement and Plan of Merger (the "Amended Merger
Agreement") among the Company, Chateau Properties, Inc. ("Chateau") and R
Acquisition Sub ("RSub"), which contemplates a strategic business combination
transaction pursuant to which RSub will merge with the Company, with the
Company surviving the merger (the "Merger").
As a result of the Merger, each outstanding share of common stock, par
value $.01 per share, of the Company ("Company Common Stock") and each
outstanding share of non-voting redeemable stock, par value $.01 per share, of
the Company will be converted into 1.042 shares of common stock, par value $.01
per share, of Chateau ("Chateau Common Stock"). The Amended Merger Agreement
provides that Chateau will declare and pay a stock dividend on the Chateau
Common Stock equal to 3.16% (in the aggregate) of the outstanding Chateau Common
Stock (on a fully diluted basis) to securityholders of record immediately prior
to the effective time of the Merger. The dividend will be declared prior to,
but is contingent upon, the consummation of the Merger. The Merger is subject
to a number of conditions, as described in the Amended Merger Agreement.
In connection with the execution of the Amended Merger Agreement, Chateau
has agreed to waive in part the provisions of a standstill agreement applicable
to the Company, and, as a result, the Company is permitted to purchase up to 7%
of the outstanding shares of Chateau Common Stock. However, the Company has not
made any determination at this time as to the number of shares of Chateau Common
Stock it will purchase pursuant to such right, or whether the Company will
purchase any such shares. Pursuant to such waiver, the Company has agreed to
vote all shares of Chateau Common Stock owned by the Company in favor of the
Merger.
Effective upon consummation of the Merger, two of Chateau's seven directors
will resign and the size of Chateau's board of directors will be increased by
three directors to a total of ten directors, and the Company will have the right
to appoint five of those ten directors.
In connection with the execution of the Amended Merger Agreement, the
Company also entered into (i) a First Amendment, dated as of September 17, 1996,
to the Stock Option Agreement between the Company and Chateau, and (ii) a First
Amendment, dated as of September 17, 1996, to the Agreement and Irrevocable
Proxy among C.G. Kellogg, Tamara D. Fischer, John A. Boll and the Company, in
each case in order to make certain technical and conforming amendments.
SHAREHOLDER RIGHTS AGREEMENT
On September 17, 1996, the Board of Directors of the Company declared a
dividend of one right to purchase preferred stock ("Right") for each outstanding
share of the Company Common Stock to stockholders of record at the close of
business on September 30, 1996 (the "Record Date") and for each share of Company
Common Stock issued (including shares
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distributed from the Company's treasury) by the Company thereafter and prior
to the Distribution Date (as defined below). Each Right entitles the
registered holder, subject to the terms of the Rights Agreement (as defined
below), to purchase from the Company one one-thousandth of a share (a "Unit")
of Series A Junior Participating Preferred Stock, par value $.01 per share
("Preferred Stock"), of the Company, at a purchase price of $70.00 per Unit
(the "Purchase Price"), subject to adjustment. The description and terms of
the Rights are set forth in a Rights Agreement (the "Rights Agreement")
between the Company and KeyBank National Association, as Rights Agent (the
"Rights Agent").
Initially, the Rights will attach to all certificates representing shares
of outstanding Company Common Stock, and no separate Rights certificates will be
distributed. The Rights will separate from the Company Common Stock and the
"Distribution Date" will occur upon the earliest to occur of (i) 10 business
days following a public announcement (the date of such announcement being the
"Stock Acquisition Date") that (a) a person or group of affiliated or associated
persons (an "Acquiring Person") has acquired, obtained the right to acquire, or
otherwise obtained beneficial ownership of 15% or more of the then outstanding
shares of Company Common Stock or (b) a majority of the independent directors of
the Company has, in accordance with the criteria set forth in the Rights
Agreement, declared a person who beneficially owns at least 10% of the then
outstanding shares of Company Common Stock to be an "Adverse Person," (ii) 10
business days (or such later date as may be determined by action of the Board of
Directors prior to such time as any person becomes an Acquiring Person)
following the commencement of a tender offer or exchange offer that would result
in a person or group beneficially owning 15% or more of the then outstanding
shares of Company Common Stock (other than a tender or exchange offer for all
outstanding shares of Common Stock at a price and on terms that a majority of
the independent directors of the Company determines to be fair to and otherwise
in the best interests of the Company and its stockholders), and (iii) the date
on which it is publicly announced that a person or group has become the
beneficial owner of 40% or more of the then outstanding shares of Company Common
Stock. Until the Distribution Date, (i) the Rights will be evidenced by Company
Common Stock certificates and will be transferred with and only with such
Company Common Stock certificates, (ii) new Company Common Stock certificates
issued after the Record Date (including shares distributed from the Company's
treasury) will contain a notation incorporating the Rights Agreement by
reference and (iii) the surrender for transfer of any certificates evidencing
outstanding Company Common Stock will also constitute the transfer of the Rights
associated with the Company Common Stock evidenced by such certificates.
The Rights are not exercisable until the Distribution Date and will expire
at the close of business on September 30, 2006, unless the Rights are earlier
redeemed or exchanged by the Company.
As soon as practicable after the Distribution Date, separate Certificates
evidencing the Rights ("Rights Certificates") will be mailed to holders of
record of Company Common Stock as of the close of business on the Distribution
Date and, thereafter, the separate Rights Certificates alone will represent the
Rights.
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In the event (a "Flip-In Event") that (i) a person becomes an Acquiring
Person (other than pursuant to a Flip-Over Event (as defined below)), (ii) a
majority of the independent directors of the Company declares a person to be an
Adverse Person, (iii) the Company is the surviving corporation in a merger with
an Acquiring Person and shares of Company Common Stock shall remain outstanding,
(iv) an Acquiring Person or an Adverse Person engages in one or more
"self-dealing" transactions specified in the Rights Agreement, or (v) during
such time as there is an Acquiring Person or an Adverse Person, an event occurs
which results in such Acquiring Person's or Adverse Person's ownership interest
being increased by more than 1% (E.G., by means of a reverse stock split or
recapitalization), THEN, in each such case, each holder of a Right will
thereafter have the right to receive, upon exercise, Units of Preferred Stock
(or, in certain circumstances, Company Common Stock, cash, property or other
securities of the Company) having a value equal to two times the exercise price
of the Right. The exercise price is the Purchase Price multiplied by the number
of Units of Preferred Stock issuable upon exercise of a Right prior to the Flip-
In Event. Notwithstanding the foregoing, following the occurrence of any Flip-
In Event all Rights that are, or (under certain circumstances specified in the
Rights Agreement) were, beneficially owned by any Acquiring Person or Adverse
Person (or by certain related parties) will be null and void.
In the event (a "Flip-Over Event") that, at any time following the Stock
Acquisition Date, (i) the Company is acquired in a merger or other business
combination transaction and the Company is not the surviving corporation (other
than a merger described in the preceding paragraph), (ii) any person
consolidates or merges with the Company and all or part of the Company Common
Stock is converted or exchanged for securities, cash or property of any other
Person, or (iii) 50% or more of the Company's assets or earning power is sold or
transferred, THEN, in each such case, each holder of a Right (except Rights
which previously have been voided as described above) shall thereafter have the
right to receive, upon exercise, common stock of the Acquiring Person or Adverse
Person having a value equal to two times the exercise price of the Right.
The Purchase Price payable, and the number of Units of Preferred Stock
issuable, upon exercise of the Rights are subject to adjustment from time to
time to prevent dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Preferred Stock, (ii) if
holders of the Preferred Stock are granted certain rights or warrants to
subscribe for Preferred Stock or convertible securities at less than the current
market price of the Preferred Stock, or (iii) upon the distribution to the
holders of the Preferred Stock of evidences of indebtedness, cash or assets
(excluding regular quarterly cash dividends) or of subscription rights or
warrants (other than those referred to above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. The Company is not required to issue fractional Units. In lieu thereof,
an adjustment in cash may be made based on the market price of the Preferred
Stock prior to the date of exercise.
At any time prior to the Distribution Date, a majority of the independent
directors of the Company may redeem the Rights in whole, but not in part, at a
price of $.01 per Right (the "Redemption Price"), subject to adjustment in
certain events, payable, at the election of such
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majority of the independent directors, in cash, shares of Company Common
Stock or such other form of consideration as the independent directors may
determine. Immediately upon effectiveness of the action of a majority of the
independent directors ordering the redemption of the Rights, the Rights will
terminate and the only right of the holders of Rights will be to receive the
Redemption Price.
At any time prior to the Distribution Date, the Company may exchange the
Rights (other than Rights owned by an Acquiring Person or an Adverse Person, or
an affiliate or an associate of an Acquiring Person or an Adverse Person, which
will have become void), in whole or in part, for Units of Preferred Stock at an
exchange ratio determined as provided in the Rights Agreement.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends. Although the distribution of the Rights should
not be taxable to stockholders or to the Company, stockholders may, depending
upon the circumstances, recognize taxable income in the event that the Rights
become exercisable for Units of Preferred Stock (or other consideration) or are
exchanged as provided in the preceding paragraph.
Any of the provisions of the Rights Agreement may be amended without the
approval of the holders of Company Common Stock at any time prior to the
Distribution Date. After the Distribution Date, the provisions of the Rights
Agreement may be amended in order to cure any ambiguity, defect or
inconsistency, to make changes which do not adversely affect the interests of
holders of Rights (excluding the interests of any Acquiring Person or Adverse
Person), or to shorten or lengthen any time period under the Rights Agreement;
PROVIDED, HOWEVER, that no amendment to adjust the time period governing
redemption shall be made at such time as the Rights are not redeemable.
The Units of Preferred Stock that may be acquired upon exercise of the
Rights will be nonredeemable and subordinate to any other shares of preferred
stock that may be issued by the Company. Each Unit of Preferred Stock will have
a minimum preferential quarterly dividend of $.01 per Unit or any higher per
share dividend declared on the Company Common Stock.
In the event of liquidation of the Company, the holder of a Unit of
Preferred Stock will receive a preferred liquidation payment equal to $1.00 per
Unit.
Each Unit of Preferred Stock will have one vote, voting together with the
Company Common Stock.
In the event of any merger, consolidation or other transaction in which
shares of Company Common Stock are exchanged, each Unit of Preferred Stock will
be entitled to receive the per share amount paid in respect of each share of
Company Common Stock.
The rights of holders of the Preferred Stock to dividends, liquidation and
voting, and in the event of mergers and consolidations, are protected by
customary antidilution provisions.
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Because of the nature of the Preferred Stock's dividend, liquidation and
voting rights, the economic value of one Unit of Preferred Stock that may be
acquired upon the exercise of each Right should approximate the economic value
of one share of Company Common Stock.
The Rights may have certain anti-takeover effects. The Rights will cause
substantial dilution to a person or group that attempts to acquire the Company
on terms not approved by a majority of the independent directors of the Company,
unless the offer is conditioned on a substantial number of Rights being
acquired. However, the Rights should not interfere with any merger or other
business combination approved by a majority of the independent directors because
the Rights may be redeemed by the Company at $.01 per Right at any time on or
prior to the tenth business day following the Stock Acquisition Date (subject to
extension by a majority of the independent directors); PROVIDED, HOWEVER, that
the rights will cease to be redeemable if any person or group acquires
beneficial ownership of 40% or more of the outstanding Company Common Stock.
Thus, the Rights are intended to encourage persons who may seek to acquire
control of the Company to initiate such an acquisition through negotiations with
the Board of Directors. However, the effect of the Rights may be to discourage a
third party from making a partial tender offer or otherwise attempting to obtain
a substantial equity position in the equity securities of, or seeking to obtain
control of, the Company. To the extent any potential acquirors are deterred by
the Rights, the Rights may have the effect of preserving incumbent management in
office.
A copy of the Rights Agreement between the Company and the Rights Agent
specifying the terms of the Rights is attached as Exhibit 7.4 and is
incorporated herein by reference. The foregoing description of the Rights does
not purport to be complete and is qualified in its entirety by reference to the
full text of the Rights Agreement.
BYLAW AMENDMENTS
Also on September 17, 1996, the Company amended its bylaws to elect to
have the Maryland Control Share Statute apply to acquisitions of stock in the
Company, and to increase the percentage number of shares required to be held
by stockholders of the Company in order to call a special meeting of
stockholders from 10% to 50%. A copy of the Restated Bylaws of the Company
(as amended through September 17, 1996) is attached as Exhibit 7.6
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
Exhibit 7.1 Amended and Restated Agreement and Plan of Merger, dated as
of September 17, 1996, among ROC Communities, Inc., Chateau
Properties, Inc. and R Acquisition Sub, Inc.
Exhibit 7.2 First Amendment, dated as of September 17, 1996, to the
Stock Option Agreement between Chateau Properties, Inc., as
issuer, and ROC Communities, Inc., as grantee.
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Exhibit 7.3 First Amendment, dated as of September 17, 1996, to the
Agreement and Irrevocable Proxy by and between C.G. Kellogg,
Tamara D. Fischer and John A. Boll and ROC Communities, Inc.
Exhibit 7.4 Rights Agreement, dated as of September 18, 1996, by and
between ROC Communities, Inc. and KeyBank National
Association, as Rights Agent (including the form of Rights
Certificate as Exhibit A, the Summary Description of Rights
and Preferred Stock as Exhibit B, and the form of Articles
Supplementary classifying and designating the Preferred
Stock as Exhibit C).
Exhibit 7.5 Articles Supplementary to the Articles of Incorporation of
ROC Communities, Inc. classifying and designating the Series
A Junior Participating Preferred Stock.
Exhibit 7.6 Restated Bylaws of ROC Communities, Inc. (as amended through
September 17, 1996).
Exhibit 7.7 Press Release issued by ROC Communities, Inc. on September
18, 1996 announcing that the Company had entered into the
Amended Merger Agreement.
Exhibit 7.8 Press Release issued by ROC Communities, Inc. on September
18, 1996 announcing the adoption of the Rights plan and the
amendment of the Bylaws.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report Form 8-K to be signed on its behalf by
the undersigned, hereunto duly authorized.
September 20, 1996
ROC COMMUNITIES, INC.
By: /s/ GARY P. MCDANIEL
--------------------------------------
Gary P. McDaniel
President and Chief Executive Officer
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EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
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Exhibit 7.1 Amended and Restated Agreement and Plan of Merger, dated as of
September 17, 1996, among ROC Communities, Inc., Chateau
Properties, Inc. and R Acquisition Sub, Inc.
Exhibit 7.2 First Amendment, dated as of September 17, 1996, to the Stock
Option Agreement between Chateau Properties, Inc., as issuer,
and ROC Communities, Inc., as grantee.
Exhibit 7.3 First Amendment, dated as of September 17, 1996, to the Agreement
and Irrevocable Proxy by and between C.G. Kellogg, Tamara D.
Fischer and John A. Boll and ROC Communities, Inc.
Exhibit 7.4 Rights Agreement, dated as of September 18, 1996, by and between
ROC Communities, Inc. and KeyBank National Association, as Rights
Agent (including the form of Rights Certificate as Exhibit A, the
Summary Description of Rights and Preferred Stock as Exhibit B,
and the form of Articles Supplementary classifying and
designating the Preferred Stock as Exhibit C).
Exhibit 7.5 Articles Supplementary to the Articles of Incorporation of ROC
Communities, Inc. classifying and designating the Series A Junior
Participating Preferred Stock.
Exhibit 7.6 Restated Bylaws of ROC Communities, Inc. (as amended through
September 17, 1996).
Exhibit 7.7 Press Release issued by ROC Communities, Inc. on September 18,
1996 announcing that the Company had entered into the Amended
Merger Agreement.
Exhibit 7.8 Press Release issued by ROC Communities, Inc. on September 18,
1996 announcing the adoption of the Rights plan and the amendment
of the Bylaws.
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EXHIBIT 7.1
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AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
Dated as of September 17, 1996,
Among
CHATEAU PROPERTIES, INC.,
ROC COMMUNITIES, INC.,
And
R ACQUISITION SUB, INC.
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n TABLE OF CONTENTS
Page
ARTICLE I
The Merger
SECTION 1.1 The Merger............................................... 3
SECTION 1.2 Closing.................................................. 3
SECTION 1.3 Effective Time........................................... 3
SECTION 1.4 Effects of the Merger.................................... 3
SECTION 1.5 Charters and By-laws..................................... 4
(a) Chateau.................................................. 4
(b) ROC...................................................... 4
SECTION 1.6 Directors................................................ 4
SECTION 1.7 Officers................................................. 4
SECTION 1.8 Principal Executive Office............................... 4
SECTION 1.9 Name..................................................... 5
ARTICLE II
Effect of the Merger on the Capital Stock of the
Constituent Corporations; Exchange of Certificates
SECTION 2.1 Effect on Capital Stock.................................. 5
(a) Conversion of Stock...................................... 5
(b) Conversion of Shares of Common Stock of RSub............. 5
SECTION 2.2 Exchange of Certificates................................. 6
(a) Exchange Agent........................................... 6
(b) Provision of Shares...................................... 6
(c) Exchange Procedure....................................... 6
(d) Record Dates; Distributions with Respect to Unexchanged
Shares................................................... 7
(e) No Further Ownership Rights in ROC Stock................. 7
(f) No Liability............................................. 7
(g) No Fractional Shares..................................... 8
(h) Withholding Rights....................................... 8
ARTICLE III
Representations and Warranties
SECTION 3.1 Representations and Warranties of ROC.................... 9
(a) Organization, Standing and Corporate Power of ROC........ 9
(b) ROC Subsidiaries......................................... 9
(c) Capital Structure........................................ 10
(d) Authority; Noncontravention; Consents.................... 11
(e) SEC Documents; Financial Statements; Undisclosed
Liabilities.............................................. 12
(f) Absence of Certain Changes or Events..................... 13
(g) Litigation............................................... 13
(h) Absence of Changes in Benefit Plans; ERISA Compliance.... 14
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Page
(i) Taxes.................................................... 15
(j) No Loans or Payments to Employees, Officers or
Directors................................................ 16
(k) Brokers; Schedule of Fees and Expenses................... 16
(l) Compliance with Laws..................................... 16
(m) Contracts; Debt Instruments.............................. 16
(n) Environmental Matters.................................... 17
(o) Tangible Property and Assets............................. 19
(p) Books and Records........................................ 19
(q) Opinion of Financial Advisor............................. 20
(r) State Takeover Statutes.................................. 20
(s) Registration Statement................................... 20
(t) Vote Required............................................ 20
SECTION 3.2 Representations and Warranties of Chateau................ 20
(a) Organization, Standing and Corporate Power of Chateau.... 20
(b) Chateau Subsidiaries..................................... 21
(c) Capital Structure........................................ 21
(d) Authority; Noncontravention; Consents.................... 23
(e) SEC Documents; Financial Statements; Undisclosed
Liabilities.............................................. 24
(f) Absence of Certain Changes or Events..................... 25
(g) Litigation............................................... 26
(h) Absence of Changes in Benefit Plans; ERISA Compliance.... 26
(i) Taxes.................................................... 27
(j) No Loans or Payments to Employees, Officers or
Directors................................................ 28
(k) Brokers; Schedule of Fees and Expenses................... 28
(l) Compliance with Laws..................................... 28
(m) Contracts; Debt Instruments.............................. 28
(n) Operating Partnership Agreement.......................... 29
(o) Environmental Matters.................................... 29
(p) Tangible Property and Assets............................. 30
(q) Books and Records........................................ 31
(r) Opinion of Financial Advisors............................ 31
(s) State Takeover Statutes.................................. 31
(t) Registration Statement................................... 32
(u) Vote Required............................................ 32
ARTICLE IV
Covenants
SECTION 4.1 Conduct of Business by ROC............................... 32
SECTION 4.2 Conduct of Business by Chateau........................... 34
SECTION 4.3 Other Actions............................................ 38
ARTICLE V
Additional Covenants
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Page
SECTION 5.1 Preparation of the Registration Statement and the Proxy
Statement; Stockholders Meetings......................... 38
SECTION 5.2 Access to Information; Confidentiality................... 40
SECTION 5.3 Best Efforts; Notification............................... 41
SECTION 5.4 Affiliates............................................... 42
SECTION 5.5 Tax Treatment............................................ 42
SECTION 5.6 No Solicitation of Transactions.......................... 42
SECTION 5.7 Public Announcements..................................... 43
SECTION 5.8 Listing.................................................. 43
SECTION 5.9 Letters of Accountants................................... 43
SECTION 5.10 Transfer and Gains Taxes................................. 44
SECTION 5.11 Benefit Plans and Other Employee Arrangements............ 44
(a) Benefit Plans............................................ 44
(b) Stock Incentive Plans.................................... 44
(c) Employment Agreements.................................... 45
(d) Cooperation.............................................. 45
SECTION 5.12 Indemnification.......................................... 45
SECTION 5.13 Operating Partnership Agreement Amendment................ 48
SECTION 5.14 By-laws Amendment........................................ 48
SECTION 5.15 Contribution Agreement................................... 48
SECTION 5.16 Private Placement of Common Stock of RSub................ 48
SECTION 5.17 Chateau Board of Directors............................... 48
SECTION 5.18 Provisions Relating to Certain ROC Indebtedness.......... 48
SECTION 5.19 Exemptions from Certain Provisions of the MGCL........... 49
SECTION 5.20 Percentage Ownership..................................... 49
SECTION 5.21 Share Issuance........................................... 49
ARTICLE VI
Conditions Precedent
SECTION 6.1 Conditions to Each Party's Obligation to Effect the
Merger................................................... 49
(a) Stockholder Approval..................................... 49
(b) Listing of Shares........................................ 49
(c) Registration Statement................................... 49
(d) No Injunctions or Restraints............................. 49
(e) Blue Sky Laws............................................ 50
(f) Opinion Related to REIT Status........................... 50
(g) The Investment Company Act Opinion....................... 50
(h) Evidence of Completion of Private Placement.............. 50
(i) Certain Actions and Consents............................. 50
SECTION 6.2 Conditions to Obligations of Chateau..................... 50
(a) Representations and Warranties........................... 50
(b) Performance of Obligations of ROC........................ 51
(c) Material Adverse Change.................................. 51
(d) Opinions Relating to REIT Status......................... 51
(f) Consents................................................. 52
(g) Certain ROC Indebtedness................................. 52
SECTION 6.3 Conditions to Obligation of ROC.......................... 52
(a) Representations and Warranties........................... 52
(b) Performance of Obligations of Chateau.................... 53
(c) Material Adverse Change.................................. 53
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Page
(d) Opinions Relating to REIT and Partnership Status......... 53
(e) Other Tax Opinion........................................ 54
(f) Consents................................................. 54
(g) Registration Rights Agreement............................ 54
(h) Chateau By-laws and Related Matters...................... 54
(i) Chateau Securityholder Letter Agreement.................. 54
ARTICLE VII
Board Actions
SECTION 7.1 Board Actions............................................ 55
ARTICLE VIII
Termination, Amendment and Waiver
SECTION 8.1 Termination.............................................. 56
SECTION 8.2 Expenses................................................. 58
SECTION 8.3 Effect of Termination.................................... 63
SECTION 8.4 Amendment................................................ 63
SECTION 8.5 Extension; Waiver........................................ 63
ARTICLE IX
General Provisions
SECTION 9.1 Nonsurvival of Representations and Warranties............ 64
SECTION 9.2 Notices.................................................. 64
SECTION 9.3 Interpretation........................................... 65
SECTION 9.4 Counterparts............................................. 65
SECTION 9.5 Entire Agreement; No Third-Party Beneficiaries........... 65
SECTION 9.6 GOVERNING LAW............................................ 65
SECTION 9.7 Assignment............................................... 65
SECTION 9.8 Enforcement.............................................. 66
ARTICLE X
Certain Definitions
SECTION 10.1 Certain Definitions...................................... 66
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Exhibits
A Form of Contribution Agreement
B Form of Operating Partnership Agreement Amendment
C Form of Registration Rights Agreement
D Form of Stock Option Agreement Amendment
E Form of Principal Proxy Agreement Amendments
F Chateau By-Law Amendments
G Terms of Employment Agreements
H Forms of Resale Agreement with ROC Affiliates
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AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER (the "AGREEMENT"),
dated as of September 17, 1996, among CHATEAU PROPERTIES, INC., a Maryland
corporation ("CHATEAU"), ROC COMMUNITIES, INC., a Maryland corporation ("ROC"),
and R ACQUISITION SUB, INC., a Maryland corporation and a subsidiary of Chateau
("RSUB").
RECITALS
(a) Certain terms used herein shall have the meanings assigned to
them in Article X.
(b) Pursuant to an agreement and plan of merger dated as of July 17,
1996, among Chateau, ROC, RSub and Chateau Communities, Inc., a Maryland
corporation (the "ORIGINAL AGREEMENT"), the Boards of Directors of Chateau and
ROC determined that it was advisable and in the best interest of their
respective companies and their stockholders to consummate the strategic business
combination involving ROC and Chateau described in the Original Agreement.
(c) 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 amend and restate the terms of the Original Agreement and to
proceed with the strategic business combination involving the two companies on
the terms described in this Agreement, pursuant to which ROC will merge with
RSub and will be the surviving corporation in such merger (the "MERGER") 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 Merger
Consideration (as defined below).
(d) In connection with the Merger, the following additional
transactions will be effected (the Merger, together with the other documents,
agreements and transactions contemplated by this Agreement, being referred to
collectively herein as the "TRANSACTIONS"): (i) ROC, Chateau 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 Merger 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 will 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 Merger) of the Common Stock, par value $.01
per share, of Chateau (the "COMMON STOCK"). In addition, in connection
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with and as an integral part of the Merger, certain OP Unit holders shall
transfer at least that number of OP Units and other property to Chateau in
exchange for common stock of Chateau such that ROC stockholders and transferring
OP Unit holders will when taken together own at least 80% of the issued and
outstanding voting shares of Chateau immediately following the consummation of
the Merger.
(e) As a condition to, and simultaneously with the execution of, the
Original Agreement, there was executed and delivered (i) the Chateau Stock
Option Agreement pursuant to which Chateau granted to ROC an option exercisable
upon the occurrence of certain events and (ii) the ROC Stock Option Agreement
pursuant to which ROC granted to the Operating Partnership an option exercisable
upon the occurrence of certain events. As a condition to, and simultaneously
with the execution of, this Agreement, the Option Agreements will be amended as
provided in EXHIBIT D hereto. The Chateau Option Agreement and the ROC Option
Agreement as so amended are referred to herein as the "CHATEAU OPTION AGREEMENT"
and the "ROC OPTION AGREEMENT" and together as the "OPTION AGREEMENTS."
(f) As a condition to, and simultaneously with the execution of, the
Original Agreement, Agreements and Irrevocable Proxies were executed and
delivered by the ROC Principals and the Chateau Principals (each as defined in
the Original Agreement). As a condition to, and simultaneously with the
execution of, this Agreement, the Agreements and Irrevocable Proxies will be
amended as provided in EXHIBIT E hereto. The Agreements and Irrevocable Proxies
executed by the ROC Principals as so amended are referred to herein as the "ROC
PRINCIPAL PROXIES" and the Agreements and Irrevocable Proxies executed by the
Chateau Principals as so amended are referred to herein as the "CHATEAU
PRINCIPAL PROXIES."
(g) As a condition to the willingness of each of Chateau and ROC to
enter into this Agreement, holders of units of limited partner interest ("OP
UNITS") in the Operating Partnership holding in excess of 50% of the outstanding
OP Units have (i) consented to the Operating Partnership Agreement Amendment,
and (ii) expressed in writing to ROC their intent to exchange, subject to
certain conditions, certain of their OP Units for shares of Common Stock on or
prior to the record date for the Chateau Stockholders Meeting (as hereinafter
defined).
(h) For federal income tax purposes it is intended that the Merger
and the transfer of OP Units by the holders thereof be viewed as an integrated
transaction and together qualify as tax-free transfers by the stockholders of
ROC and the transferring OP Unit holders to Chateau in exchange for shares of
Common Stock pursuant to Section 351 of the Internal Revenue Code of 1986, as
amended (the "CODE").
(i) ROC, as the surviving corporation in the Merger with RSub,
intends that, following the Merger, it shall continue to be
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subject to taxation as a real estate investment trust (a "REIT") within the
meaning of the Code.
(j) The parties intend that this Agreement shall in all respects
amend, restate and supersede the Original Agreement.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties agree as
follows:
ARTICLE I
THE MERGER
SECTION 1.1 THE MERGER. 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). Following the Merger, the separate corporate
existence of RSub shall cease and ROC shall continue as the surviving
corporation and shall succeed to and assume all the rights and obligations of
RSub in accordance with the MGCL.
SECTION 1.2 CLOSING. The closing of the Merger 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 file the articles of merger or other appropriate documents for the 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 Merger. The Merger shall become effective at such time as the Articles of
Merger 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 Merger become effective being,
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 MERGER. The Merger shall have the
effects set forth in the MGCL.
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SECTION 1.5 CHARTERS AND BY-LAWS.
(a) CHATEAU. The Charter of Chateau shall not be affected by the
Merger (the "CHARTER"). The By-laws of Chateau as in effect as of the date
hereof shall be amended, effective at the Effective Time, as provided in EXHIBIT
F hereto.
(b) ROC. 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
Merger; provided, that, such Charter shall be amended such that following the
Merger, after giving effect thereto, the ownership of ROC Common Stock by
Chateau shall not violate the ownership limit described in the ROC Charter.
SECTION 1.6 DIRECTORS. Effective at the Effective Time, two of the
seven directors of Chateau then in office shall resign from the Chateau Board of
Directors and, in accordance with the By-law amendments specified in EXHIBIT F,
the remaining Chateau directors then in office shall increase the size of the
Chateau Board from seven to ten directors. The five vacancies on the Chateau
Board shall be filled by the vote of the remaining Chateau directors then in
office with five nominees selected by the ROC Board of Directors such that such
five nominees as well as the five directors of Chateau then in office shall
constitute all of the members of the Chateau Board of Directors immediately
following the Effective Time. Effective at the Effective Time, the Board of
Directors of ROC, as the surviving corporation to the merger with RSub, will be
configured as follows: three of the directors of ROC shall resign and these
vacancies shall be filled by the vote of the remaining ROC directors with three
nominees selected by the Chateau Board of Directors.
SECTION 1.7 OFFICERS. The officers of Chateau 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, as of the Effective Time, be employed by Chateau and/or
the Operating Partnership 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 Merger shall be chosen by the Board
of Directors of ROC as reconstituted by Chateau in accordance with Section 1.6
above.
SECTION 1.8 PRINCIPAL EXECUTIVE OFFICE. The principal executive
office of Chateau following the Effective Date shall be in Englewood, Colorado.
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SECTION 1.9 NAME. The Board of Directors of Chateau will, at the
first annual meeting of stockholders of Chateau following the Merger, submit to
a vote of the stockholders of Chateau, a proposal, which shall be recommended by
the Board, to change the name of the Company to "Chateau Communities, Inc." If
the stockholders of Chateau approve such name change, Chateau will change its
symbol on the New York Stock Exchange to appropriately comport with the name
change.
ARTICLE II
Effect of the Merger on the Capital Stock of the
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 2.1 EFFECT ON CAPITAL STOCK. By virtue of the Merger and
without any action on the part of the holder of any shares of 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 Chateau 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
canceled 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
"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) Notwithstanding the foregoing, the parties understand that
the rights of each stockholder of Chateau under this Section 2.1(a) will be
subject to the ownership limitations and other related provisions contained in
the Chateau 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 Chateau 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
ROC, as the surviving corporation in the Merger with RSub.
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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 ROC Stock.
(b) PROVISION OF SHARES. Chateau shall provide to the Exchange Agent
on or before the Effective Time, for the benefit of the holders of ROC Stock,
sufficient shares of Common Stock issuable in exchange for the issued and
outstanding shares of 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 ROC Stock (the "ROC 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 ROC Certificates
shall pass, only upon delivery of the ROC Certificates to the Exchange Agent and
shall be in a form and have such other provisions as Chateau may reasonably
specify) and (ii) instructions for use in effecting the surrender of the ROC
Certificates in exchange for the Merger Consideration. Upon surrender of a ROC
Certificate for cancellation to the Exchange Agent or to such other agent or
agents as may be appointed by Chateau, 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 ROC Certificate shall be entitled to receive
in exchange therefor the Merger Consideration and any dividends or other
distributions to which such holder is entitled pursuant to Section 2.2(d), and
the ROC Certificate so surrendered shall forthwith be canceled. In the event of
a transfer of ownership of ROC Stock which is not registered in the transfer
records of ROC, payment may be made to a person other than the person in whose
name the ROC Certificate so surrendered is registered if such ROC 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 ROC Certificate or establish to the satisfaction of
Chateau that such tax or taxes have been paid or are not applicable. Until
surrendered as contemplated by this Section 2.2, each ROC Certificate shall be
deemed at any time after the Effective Time to represent only the right to
receive upon such surrender the Merger Consideration, without interest, into
which the shares theretofore represented by such ROC 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 Merger Consideration upon the surrender of any ROC
Certificate or on any cash payable pursuant to Section 2.2(d) or Section 2.2(g).
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(d) RECORD DATES; DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES.
(i) From the date of this Agreement, ROC and Chateau shall
cooperate to establish and maintain record and payment dates for regular
quarterly cash dividends on their respective capital stock, such that the record
and payment dates, respectively, for each of ROC and Chateau occur on the same
calendar date.
(ii) No dividends or other distributions with respect to ROC
Stock with a record date after the Effective Time shall be paid to the holder of
any unsurrendered ROC 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
ROC Certificate in accordance with this Article II. Subject to the effect of
applicable abandoned property, escheat or similar laws, following surrender of
any such ROC Certificate there shall be paid to the holder of such ROC
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 ROC 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 ROC STOCK. All Merger
Consideration paid upon the surrender of ROC 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 ROC Stock theretofore represented by such ROC Certificates, subject,
however, to the obligation of Chateau 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 ROC on such 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 ROC of the shares of ROC Stock which were outstanding
immediately prior to the Effective Time. If, after the Effective Time, ROC
Certificates are properly presented to Chateau they shall be canceled and
exchanged as provided in this Article II.
(f) NO LIABILITY. None of 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
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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 Chateau, upon demand, and any holders of
ROC Certificates who have not theretofore complied with Section 2.2(c) shall
thereafter look only to Chateau 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 ROC
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
Chateau.
(ii) Notwithstanding any other provision of this Agreement, each
holder of shares of ROC Stock exchanged in the Merger who would otherwise have
been entitled to receive a fraction of a share of Common Stock (after taking
into account all ROC 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 ROC
Certificates. Chateau 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 ROC Certificates in lieu of any fractional shares of Common
Stock, the Exchange Agent shall make available such amounts to such holders of
ROC Certificates without interest.
(h) WITHHOLDING RIGHTS. Chateau 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 Common Stock or ROC Stock
such amounts as Chateau or the Exchange Agent is required to deduct and withhold
with respect to the making of such payment under the Code, or any
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provision of state, local or foreign tax law. To the extent that amounts are so
withheld by Chateau 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 ROC Stock, in respect of which such deduction and withholding was
made by Chateau 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 (as defined below) 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 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 and as provided in Section 4.1(e), 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
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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 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 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).
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(d) AUTHORITY; NONCONTRAVENTION; CONSENTS. ROC has the requisite
corporate power and authority to enter into this Agreement and, subject to
approval of the 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 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
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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 stockholders of the Merger, this Agreement and the other Transactions
contemplated by this Agreement and the approval by Chateau stockholders of the
issuance of the Merger Consideration to the ROC stockholders (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) and Section
14 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 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 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
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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, (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
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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, 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
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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 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.
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(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
Chateau.
(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 an amended
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.
(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 properties identified in SCHEDULE 3.1(m) to the ROC
Disclosure Letter are manufactured housing communities owned by various entities
affiliated with the Windsor Corporation (collectively the "WINDSOR ENTITIES")
and managed by ROC pursuant to that certain Master Property Management Agreement
dated July 31, 1990 ("WINDSOR AGREEMENT") between the Windsor Entities and
Windsor Asset Management, Inc. ("WAMI"), the terms of which Windsor Agreement
have been replaced by the terms of that certain Master Agreement dated November
15, 1991 between ROC Properties, Inc. and WAMI (the "AMENDED WINDSOR
AGREEMENT"), which
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Amended Windsor Agreement has an initial term through November 30, 1998 is
valid, binding and in full force and effect without amendment or modification
(except as set forth herein), and is enforceable against the Windsor Entities
and ROC in accordance with its terms.
(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 Environmental
Law in connection with the conduct of the business or operations of
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ROC or any ROC Subsidiary or with respect to any treatment, storage, recycling,
transportation, disposal or "release" as defined in 42 U.S.C. Section 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
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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 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.
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(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 that had previously been
made available to Chateau in connection with the execution of the Original
Agreement, contained, as of the date of the Original Agreement, 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 dated September 17, 1996 of
which will be provided to Chateau, with regard to the fairness of the Merger to
the stockholders of ROC from a financial point of view.
(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 Merger, this Agreement or any of the Transactions.
(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 or necessary to make
the statements 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 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
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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 (as defined below), taken as a whole (a "CHATEAU MATERIAL ADVERSE
EFFECT").
(b) CHATEAU SUBSIDIARIES. SCHEDULE 3.2(b) to the Chateau Disclosure
Letter 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 and as provided in Section 4.2(e), 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 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 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 Common Stock and no shares of Chateau Preferred
Stock were issued and outstanding, (ii) 366,600 shares of Common Stock were
available for grant under Chateau's 1993 Long Term Incentive Plan (the "CHATEAU
PLAN"), (iii) 619,150 shares of Common Stock were reserved for issuance upon
exercise of outstanding stock options to purchase shares of Common Stock granted
to Chateau employees and directors under the Chateau Plan (the "CHATEAU STOCK
OPTIONS"), and
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(iv) 8,836,310 shares of Common Stock were reserved for issuance upon exchange
of OP Units for shares of 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 Common Stock on a one-for-one
basis into an aggregate of 5,046,303 shares of 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 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
Operating Partnership.
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(d) AUTHORITY; NONCONTRAVENTION; CONSENTS. Chateau has the requisite
corporate power and authority to enter into this Agreement and, subject to
approval by the requisite vote of the holders of the Common Stock required to
approve the issuance of the Merger Consideration to the ROC stockholders (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 the issuance of the Merger Consideration to the ROC
stockholders 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, 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
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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 the SEC of (x) the Proxy Statement and the Registration
Statement and (y) such reports under Section 13(a) and Section 14 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 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
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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 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 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, (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
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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, 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
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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 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
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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.
(k) BROKERS; SCHEDULE OF FEES AND EXPENSES. No broker, investment
banker, financial advisor or other person, other than Merrill Lynch & Co.
("MERRILL LYNCH") and Goldman Sachs & Co. ("GOLDMAN"), the fees and expenses of
which, as set forth in separate letter agreements between Chateau and Merrill
Lynch and Chateau and Goldman, respectively, 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.
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(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 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
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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.
(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
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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.
(iii) The minute books and other records of corporate or
partnership proceedings of Chateau and each Chateau Subsidiary that had
previously been made available to ROC in connection with the execution of the
Original Agreement, contained, as of the date of the Original Agreement, 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 ADVISORS. Chateau has received the opinion
of each of Merrill Lynch and Goldman, satisfactory to Chateau, a signed version
of each of which will be provided to ROC, with regard to the fairness of the
Merger and the issuance of the Merger Consideration to the ROC stockholders 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 or any of the Transactions.
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(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 holders representing a
majority of the shares of Common Stock present (in person or represented by
proxy) at the Chateau Stockholders Meeting (as herein defined) (assuming the
total vote cast represents at least a majority of the outstanding shares of
Common Stock as of the record date for the Chateau Stockholders Meeting) is the
only vote of the holders of any class or series of Chateau's capital stock
necessary (under applicable law, rules of the NYSE or otherwise) to approve the
issuance of the Merger Consideration to the ROC stockholders.
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,
(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;
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(b) except (i) as permitted under Section 4.1(e), (ii) for the
adoption by ROC of a stockholder's rights plan (which plan can be withdrawn upon
consummation of the Merger and does not materially and adversely affect, in the
reasonable judgment of the ROC Board, the prospects for consummation of the
Merger and the other Transactions or the economic impact of the Merger on the
Chateau stockholders) and the issuance of rights or securities by ROC under such
plan, (iii) for the ROC Option Agreement and the exercise of outstanding ROC
Stock Options, or (iv) for the issuance of up to 1,000,000 shares of capital
stock by ROC in a cash transaction subject to Section 5.21, 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 or amendments
to the Charter or By-Laws of ROC that do not materially and adversely affect, in
the reasonable judgment of the ROC Board, the prospects for consummation of the
Merger and the other Transactions or the economic impact of the Merger on the
Chateau stockholders, amend the Charter, By-laws, partnership agreement or other
comparable charter or organizational documents of ROC or any ROC Subsidiary;
(d) except as permitted by Section 4.1(e), 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 $10,000,000, without providing to Chateau in each case 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 $20,000,000, 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
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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 indebtedness of ROC or a ROC
Subsidiary or any combination thereof in excess of $40,000,000, 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);
(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,
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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 Common Stock (which may be
increased to an amount not in excess of $.425 per share of 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,
(ii) except for a one-time 3.16% Common Stock dividend (and corresponding
adjustment of outstanding OP Units in accordance with the Operating Partnership
Agreement) to be declared by Chateau to its stockholders of record on any date
on or prior to the record date established for the Chateau Stockholders Meeting
to approve the issuance of the Merger Consideration to the ROC stockholders (the
payment of which, however, being conditioned on the Chateau Stockholder Approval
having been obtained) or 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 for the repurchase by Chateau of up to
1,500,000 shares of its Common Stock or 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, (ii) Chateau's dividend reinvestment plan, (iii) Section 4.2(e), (iv)
the Chateau Option Agreement, (v) for the adoption (with the consent of ROC
which shall not be unreasonably withheld or delayed) by Chateau of a
stockholder's rights plan and
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the issuance of rights or securities by Chateau under such plan, (vi) the
issuance of shares of Common Stock by Chateau to its or its Subsidiaries'
existing equity owners of up to the number of shares, if any, that may be
repurchased by Chateau as permitted under Section 4.2(a)(ii) above (at an
average price per share at least equal to the average price per share paid on
such repurchase), (vii) the exercise of outstanding Chateau Stock Options or
(viii) 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 or except for
By-law amendments that are consented to by ROC (which consent shall not be
unreasonably withheld or delayed), amend the Charter, By-laws, partnership
agreement or other comparable charter or organizational documents of Chateau or
any Chateau Subsidiary;
(d) except as permitted by Section 4.2(e), 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 $10,000,000, 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 $20,000,000, 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
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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 of $40,000,000, 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 or by a severance plan that,
by its terms, terminates upon consummation of the Merger, 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) except as provided in this Agreement or by a severance plan that,
by its terms, terminates upon consummation of the Merger, 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.
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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 Merger set forth in
Article VI not being satisfied.
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 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 (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 Merger. ROC shall use its best efforts to mail the
Proxy Statement to the ROC stockholders as promptly as practicable after the
Registration Statement is declared effective; provided that ROC may delay the
mailing of the Proxy Statement to the ROC Stockholders until the condition
specified in Section 6.3(i) has been satisfied. Further, Chateau shall
establish a record date for the Chateau Stockholders Meeting as soon as
practicable following the obtainment of the ROC Stockholder Approval at the ROC
Stockholders Meeting and use its best efforts to mail the Proxy Statement to the
Chateau stockholders as soon as practicable thereafter. 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, and Chateau shall file with the
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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 issuance of
the Merger Consideration to the ROC stockholders; 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 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 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 Merger, 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 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 Merger 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
Merger 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
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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 Merger (after giving effect thereto),
Chateau'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 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 obtainment of
the ROC Stockholder Approval, 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 issuance of the Merger
Consideration to the ROC stockholders; 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, 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
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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) 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 Merger 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 Merger, 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 Merger, this Agreement or any of the other
Transactions and (ii) if any Takeover Statute becomes applicable to the Merger,
this
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Agreement or any other Transaction, take all action necessary so that the Merger
and the other Transactions may be consummated as promptly as practicable on the
terms contemplated by this Agreement and otherwise to minimize the effect of
such Takeover Statute on the Merger 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 shall
deliver to Chateau a list identifying all persons who are, at the time this
Agreement is submitted for approval to the stockholders of ROC, an "affiliate"
of ROC for purposes of Rule 145 under the Securities Act. ROC shall use its
best efforts to cause each of such affiliate 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 (a) to cause the Merger and the transfer of OP Units and
other property by the holders thereof to be viewed as an integrated transaction
and together to qualify for federal income tax purposes as tax-free transfers by
the stockholders of ROC and the transferring OP Unit holders of their shares of
ROC Stock and OP Units and other property to Chateau in exchange for shares of
Common Stock under Section 351 of the Code, and (b) to obtain the opinion of
counsel referred to in Section 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 or
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,
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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 (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 Merger, 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. Chateau will promptly prepare and submit to
the NYSE a supplemental listing application covering the Common Stock issuable
in the Merger. Prior to the Effective Time, Chateau shall use its best efforts
to have NYSE approve for listing, upon official notice of issuance, the Common
Stock to be issued in the Merger.
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.
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(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.
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 or the Operating Partnership (or their
respective successors or assigns) shall provide benefits to former employees of
ROC and its Subsidiaries that are not materially less favorable in the aggregate
to such employees than those provided under the ROC Benefit Plans, as in effect
on the date of this Agreement. With respect to any Chateau Benefit Plan which
is an "employee benefit plan" as defined in Section 3(3) of ERISA in which
employees of ROC or its 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 or its
Subsidiaries shall be treated as service with Chateau 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 Chateau, on the other hand (or is not otherwise
recognized for such purposes under the benefit plans of Chateau 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
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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
shall be assumed by Chateau and shall be deemed to constitute an option to
acquire, on the same terms and conditions as were applicable under such ROC
Stock Option, the same number of shares of Common Stock as the holder of such
ROC Stock Option would have been entitled to receive pursuant to the Merger had
such holder exercised such ROC 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 divided by the number of full shares
of Common Stock deemed to be purchasable pursuant to such ROC Stock Option;
PROVIDED, HOWEVER, that the number of shares of Common Stock that may be
purchased upon exercise of such ROC 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, Chateau shall adopt a new long-term
stock incentive plan (the "1996 CHATEAU PLAN") to be administered by a committee
appointed by the Board of Directors. The 1996 Chateau Plan shall provide for
grants of restricted stock, options and other incentive compensation to key
employees and directors of Chateau and its Subsidiaries (after giving effect to
the Merger as provided more fully in EXHIBIT G hereto).
(c) EMPLOYMENT AGREEMENTS. Chateau shall 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.
(a) (i) ROC shall, and, from and after the Effective Time, Chateau
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
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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 ROC
or Chateau, as the case may be, 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, prior to and after the Effective Time, 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 ("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 Chateau 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
(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
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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 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.
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(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).
(v) Chateau shall cause ROC's current officers' and directors'
liability insurance to be continuously maintained in full force and effect
without reduction of coverage for a period of four years after the Effective
Time (provided that Chateau may substitute therefor policies of at least the
same coverage and amounts containing terms and conditions which are not
materially less advantageous).
(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 and ROC.
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.
SECTION 5.14 BY-LAWS AMENDMENT. Chateau will, prior to the
Effective Time, adopt the By-law amendments to be effected at the Effective
Time, as contemplated by EXHIBIT F.
SECTION 5.15 CONTRIBUTION AGREEMENT. Immediately following the
Effective Time, Chateau, 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 CHATEAU BOARD OF DIRECTORS. Chateau covenants that,
contemporaneously with the Effective Time, (i) two of the seven directors of
Chateau then in office shall resign from the Chateau Board of Directors and, in
accordance with the By-law amendments specified in EXHIBIT F, the remaining
Chateau directors then in office shall increase the size of the Chateau Board
from seven to ten directors, and (ii) the five vacancies on the Chateau Board
shall be filled by the vote of the remaining Chateau directors then in office
with five nominees selected by the ROC Board of Directors such that such five
nominees as well as the five directors of Chateau then in office shall
constitute all of the members of the Chateau Board of Directors at the Effective
Time.
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
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specified in Section 6.2(f) 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 Chateau shall adopt an
irrevocable resolution to the effect that 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. and from the
control share provisions of Section 3-701 ET SEQ. of the MGCL or any successor
or similar statutory provisions.
SECTION 5.20 PERCENTAGE OWNERSHIP. Chateau agrees that, upon
consummation of the Merger, stockholders of Chateau who had been or are then
holders of OP Units will not then represent more than 34.0% of the outstanding
shares of Common Stock.
SECTION 5.21 SHARE ISSUANCE. (a) ROC agrees that prior to January
17, 1997 and for the period during the term of this Agreement occurring after
the date of the ROC Stockholders Meeting, it will not issue any shares of
capital stock in a cash transaction as provided in Section 4.1(b)(iv) unless it
first obtains the prior consent of Chateau (which consent shall not be
unreasonably withheld or delayed).
(b) Following January 17, 1997 (but only on a date that is on or prior
to the date of the ROC Stockholders Meeting), ROC may issue such shares without
obtaining the consent of Chateau. However, prior to effecting such issuance,
ROC shall notify Chateau of its intention to effect the issuance, specifying in
such notice (the "ISSUANCE NOTICE") the number and minimum price of the shares
it proposes to issue, and such issuance may give rise to termination rights in
favor of Chateau as specified in Section 8.1(n).
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligation of ROC and Chateau to effect the Merger 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 Merger.
(c) REGISTRATION STATEMENT. The Registration Statement shall have
become effective under the Securities Act and shall not
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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 Merger or any of the other Transactions shall be in effect.
(e) BLUE SKY LAWS. Chateau 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 Timmis & Inman, subject to
certificates, letters and assumptions, reasonably satisfactory to Chateau and
ROC that following the Merger (after giving effect thereto), Chateau'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 Chateau 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.
(h) EVIDENCE OF COMPLETION OF PRIVATE PLACEMENT. Each of ROC and
Chateau shall have received reasonably satisfactory evidence of the completion
of the Private Placement referred to in Section 5.16.
(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.
SECTION 6.2 CONDITIONS TO OBLIGATIONS OF CHATEAU. The obligations
of Chateau to issue the Merger Consideration to the ROC stockholders 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
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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 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 Merger (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 Merger (after giving effect thereto), the Financing Partnership
will be treated for federal
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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 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 Chateau in exchange for
shares of Common Stock, and the transfer by holders of OP Units pursuant to the
CS Letter Agreement (as defined below) shall be treated for federal income tax
purposes as a tax-free transfer by such holders of their OP Units in exchange
for shares of Common Stock under Section 351 of the Code, and no gain or loss
will be recognized by ROC, its stockholders or such holders who transfer OP
Units pursuant to the CS Letter Agreement as a result of such transfers, except
to the extent provided in Sections 357(c) and 1245 of the Code.
(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 ROC, Chateau 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.
Notwithstanding the foregoing, Chateau shall not be obligated to
effect the 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.
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SECTION 6.3 CONDITIONS TO OBLIGATION OF ROC. The obligation of ROC
to effect the 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
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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.
(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 Merger (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 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 Chateau in exchange for
shares of Common Stock, and the transfer by holders of OP Units pursuant to the
CS Letter Agreement shall be treated for federal income tax purposes as a tax-
free transfer by such holders of their OP Units in exchange for shares of Common
Stock, under Section 351 of the Code, and no gain or loss will be recognized by
ROC, its stockholders or holders who transfer OP Units pursuant to the CS Letter
Agreement as a result of such transfers, except to the extent provided in
Sections 357(c) or 1245 of the Code.
(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) REGISTRATION RIGHTS AGREEMENT. Chateau shall have duly executed
and delivered the Registration Rights Agreement substantially in the form
attached as EXHIBIT C hereto.
(h) CHATEAU BY-LAWS AND RELATED MATTERS. ROC shall be reasonably
satisfied that the Chateau By-laws, effective at the Effective Time, have been
amended 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 effective at the Effective
Time.
(i) CHATEAU SECURITYHOLDER LETTER AGREEMENT. Holders of OP Units
who, together with the ROC stockholders and other
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transferors, will satisfy the 80% test described below upon completion of the
Merger (such OP Unit holders being referred to herein as the "TRANSFERRING
HOLDERS"), shall have entered into a letter agreement with ROC (the "CS LETTER
AGREEMENT"), pursuant to which such Transferring Holders will agree with ROC to
act with ROC, the ROC stockholders and other transferors specified in the CS
Letter Agreement to transfer to Chateau on or prior to the Effective Time a
sufficient number of OP Units and other property in exchange for shares of
Common Stock such that such shares when taken together with the number of shares
of Common Stock to be issued to the ROC stockholders pursuant to the Merger and
the number of shares of Common Stock owned by such Transferring Holders and any
other transferors making transfers pursuant to the CS Letter Agreement will
together constitute, based on the number of outstanding shares of capital stock
of Chateau expected by the Transferring Holders to be outstanding at the
Effective Time (which number shall be specified in the CS Letter Agreement), at
least 80% of the total combined voting power of all classes of Chateau stock
entitled to vote upon consummation of the Merger. Each Transferring Holder
shall agree in the CS Letter Agreement to exchange (i) a specified number of OP
Units at or prior to the record date for the Chateau Stockholders Meeting and
(ii) a specified number of OP Units on the Effective Day of the Merger. The CS
Letter Agreement shall provide that the obligation of any Transferring Holder to
transfer any OP Units to Chateau shall be conditioned upon (x) the obtainment of
the ROC Stockholder Approval and (y) the delivery, prior to the date of
exchange, of an opinion of Timmis & Inman, subject to certificates, letters and
assumptions deemed reasonably appropriate by such counsel, to the effect that
the transfer of OP Units pursuant to the CS Letter Agreement shall be treated
for federal income tax purposes as a tax-free transfer by such transferors of
such OP Units in exchange for shares of Common Stock under Section 351 of the
Code and no gain or loss will be recognized as a result of such transfers,
except to the extent provided under Sections 357(c) or 1245 of the Code (an
approved form of which opinion shall be attached to the CS Letter Agreement).
The CS Letter Agreement shall further provide that the obligation of any
Transferring Holder to transfer any OP Units to Chateau on the Effective Day
shall be conditioned upon the concurrent consummation of the Merger. Further,
John Boll, Edward Allen and C.G. Kellogg shall agree in the CS Letter Agreement
with Gary P. McDaniel that, for a period of three years following the Effective
Time, they will vote all shares of Common Stock held by them in favor of the
Group B nominees as specified in the amendments to the By-laws to be adopted in
accordance with EXHIBIT F hereto.
Notwithstanding the foregoing, ROC shall not be obligated to effect
the 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.
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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 and OP Unit holders any information
required to be disclosed under applicable law;
(b) in response to an unsolicited request therefor, participate in
discussions or 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 (i) for ROC, this Agreement and the
Merger and (ii) for Chateau, the issuance of the Merger Consideration to the ROC
stockholders in the Merger) 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 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 the 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,
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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 Merger shall have become final and nonappealable;
(e) by either Chateau or ROC, if the Merger 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 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 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
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
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of the issuance of the Merger Consideration to the ROC stockholders 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
issuance of the Merger Consideration to the ROC stockholders 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 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 Common Stock, as the case may be, as
reported on the NYSE consolidated tape on the Trading Day in question;
(m) by ROC if the condition specified in Section 6.3(i) has not been
satisfied on or prior to the later of November 16, 1996 or ten days after the
SEC has cleared the Proxy Statement for mailing, or if (A) on or prior to the
record date for the Chateau Stockholders Meeting any of the Transferring Holders
that have executed the CS Letter Agreement has failed to exchange the shares it
has agreed to exchange by that date under such agreement and such shares have
not been replaced by shares held by other OP Unit holders or (B) ten days after
the date that each of the OP Unit holders that has as of the date of this
Agreement expressed its intent to exchange its OP Units for shares of Common
Stock as contemplated by this Agreement withdraws such intention in writing; and
(n) by Chateau if (i) within five business days after ROC delivers
the Issuance Notice as contemplated by Section 5.21, Chateau provides written
notice to ROC to the effect that if ROC proceeds with the issuance contemplated
by the Issuance Notice Chateau will terminate this Agreement, (ii) ROC, in spite
of such
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notice from Chateau, proceeds with the issuance, and (iii) Chateau notifies ROC
in writing of the termination of this Agreement within five business days after
ROC notifies Chateau of the closing of the issuance.
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 the Original Agreement and prior to
termination of this Agreement, 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 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 BREAK-UP 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
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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 the Original Agreement and 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 $4,000,000
(such amount not to exceed such $4,000,000 being referred to in this Section
8.2(b) or (c) as the "EXPENSE FEE BASE AMOUNT") and (ii) the sum of (A) the
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
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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 by ROC
pursuant to Section 8.1(m), then Chateau shall pay to ROC up to $2,000,000 in
out-of-pocket expenses incurred in connection with the Original Agreement, this
Agreement or the other Transactions (including, without limitation, all
attorneys', accountants' and investment banking fees and expenses). 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), (k) or (m) and, in the
case of Section 8.1(c), (g) or (m) within 12 months following termination of
this Agreement, 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 Chateau's stockholders as the 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 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 reduced
by the amount, if any, paid by Chateau to ROC in accordance with the first
sentence of this Section 8.2(d) (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
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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 (other than those expenses, if any, reimbursed under the first sentence
of this Section 8.2(d)) incurred in connection with the Original Agreement and
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 $4,000,000 (such amount not to exceed such
$4,000,000 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.
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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 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 Break-Up 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 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
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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
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 or RSub, to
Chateau Properties, Inc.
19500 Hall Road
Clinton Township, MI 48038
Attn: C.G. ("Jeff") Kellogg
Fax: (810) 286-1496
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with a copy to:
Timmis & Inman L.L.P.
300 Talon Centre
Detroit, MI 48207
Attn: Henry J. Brennan, III
Fax: (313) 396-4229
and
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, NY 10004
Attn: Arthur Fleischer
Fax: (212) 859-4000
(b) if to ROC, to
ROC Communities, Inc.
6430 S. Quebec Street
Englewood, CO 80111
Attn: Gary P. McDaniel
Fax: (303) 741-3715
with a copy to:
Rogers & Wells
200 Park Avenue
New York, NY 10166
Attn: Jay L. Bernstein, Esq.
Fax: (212) 878-8375
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 (including the Original Agreement) and
understandings, both written and oral, between the parties with respect to the
subject matter of this Agreement and, (b) except for
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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 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 the Original
Agreement.
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"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 the Original
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, 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
R ACQUISITION SUB, INC.
By: /s/ C.G. Kellogg
------------------------------
Name: C.G. Kellogg
Title: President
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EXHIBIT 7.2
<PAGE>
FIRST AMENDMENT TO THE
STOCK OPTION AGREEMENT
FIRST AMENDMENT TO THE STOCK OPTION AGREEMENT, dated as of September 17,
1996, among ROC COMMUNITIES, INC., a Maryland corporation ("Grantee"), and
CHATEAU PROPERTIES, INC., a Maryland corporation ("Issuer").
This Agreement amends the Stock Option Agreement, dated as of July 17,
1996, among Grantee and Issuer (the "Original Stock Option Agreement") as
follows: all references to the Merger Agreement in the Original Stock Option
Agreement shall hereinafter be deemed to refer to the Amended and Restated
Agreement and Plan of Merger, dated as of the date hereof, among Issuer,
Grantee, and a merger subsidiary of Issuer (the "Amended Merger Agreement")
and all references to the Mergers in the Original Stock Option Agreement
shall be deemed to refer to the Merger contemplated by the Amended Merger
Agreement.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of
the date first written above.
ROC COMMUNITIES, INC. (Grantee)
By: /s/ Gary P. McDaniel
---------------------------------
Name: Gary P. McDaniel
Title: President & CEO
CHATEAU PROPERTIES, INC. (Issuer)
By: /s/ C.G. Kellogg
---------------------------------
Name: C.G. Kellogg
Title: President
2
<PAGE>
EXHIBIT 7.3
<PAGE>
FIRST AMENDMENT TO THE AGREEMENT
AND IRREVOCABLE PROXY
FIRST AMENDMENT TO THE AGREEMENT AND IRREVOCABLE PROXY, dated as of
September 17, 1996, by and between C.G. Kellogg, Tamara D. Fischer and John
A. Boll, certain principal stockholders of Chateau Properties, Inc. (the
"Chateau Stockholders"), and ROC COMMUNITIES, INC., a Maryland corporation
("ROC").
This Agreement amends the Agreement and Irrevocable Proxy, dated as of
July 17, 1996, by and between the Chateau Stockholders and ROC (the "Initial
Chateau Proxy") as follows: all references to the Merger Agreement in the
Original Chateau Proxy shall hereinafter be deemed to refer to the Amended
and Restated Agreement and Plan of Merger, dated as of the date hereof, among
ROC, Chateau, and a merger subsidiary of Chateau (the "Amended Merger
Agreement") and all references to the Mergers in the Initial Chateau Proxy
shall be deemed to refer to the Merger contemplated by the Amended Merger
Agreement.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of
the date first written above.
ROC COMMUNITIES, INC. (Issuer)
By: /s/ Gary P. McDaniel
--------------------------------------
Name: Gary P. McDaniel
Title: President & CEO
CHATEAU STOCKHOLDERS
/s/ C.G. Kellogg
- ------------------------------------------
C.G. Kellogg
/s/ Tamara D. Fischer
- ------------------------------------------
Tamara D. Fischer
/s/ John A. Boll
- ------------------------------------------
John A. Boll
<PAGE>
EXHIBIT 7.4
<PAGE>
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
ROC COMMUNITIES, INC.
and
KEYBANK NATIONAL ASSOCIATION
Rights Agent
--------------------
RIGHTS AGREEMENT
Dated as of September 18, 1996
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
PAGE
----
SECTION 1. Certain Definitions......................................... 1
SECTION 2. Appointment of Rights Agent................................. 5
SECTION 3. Issue of Rights Certificates................................ 5
SECTION 4. Form of Rights Certificates................................. 7
SECTION 5. Countersignature and Registration........................... 8
SECTION 6. Transfer, Split Up, Combination and Exchange of Rights
Certificates; Mutilated, Destroyed, Lost or Stolen
Rights Certificates........................................ 8
SECTION 7. Exercise of Rights; Purchase Price; Expiration Date
of Rights.................................................. 9
SECTION 8. Cancellation and Destruction of Rights Certificates......... 11
SECTION 9. Reservation and Availability of Capital Stock............... 11
SECTION 10. Preferred Stock Record Date................................. 12
SECTION 11. Adjustment of Purchase Price, Number and Kind of Shares
or Number of Rights........................................ 12
SECTION 12. Certificate of Adjusted Purchase Price or Number of
Shares..................................................... 22
SECTION 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.............................................. 22
SECTION 14. Fractional Rights and Fractional Shares..................... 25
SECTION 15. Rights of Action............................................ 26
SECTION 16. Agreement of Rights Holders................................. 26
SECTION 17. Rights Certificate Holder Not Deemed a Shareholder.......... 27
SECTION 18. Concerning the Rights Agent................................. 27
SECTION 19. Merger or Consolidation or Change of Name of Rights Agent... 28
SECTION 20. Duties of Rights Agent...................................... 28
SECTION 21. Change of Rights Agent...................................... 30
SECTION 22. Issuance of New Rights Certificates......................... 31
SECTION 23. Redemption and Termination.................................. 31
SECTION 24. Notice of Certain Events.................................... 32
SECTION 25. Notices..................................................... 33
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SECTION 26. Supplements and Amendments.................................. 33
SECTION 27. Successors.................................................. 34
SECTION 28. Determinations and Actions by the Board of Directors, Etc... 34
SECTION 29. Benefits of this Agreement.................................. 34
SECTION 30. Severability................................................ 35
SECTION 31. Governing Law............................................... 35
SECTION 32. Counterparts................................................ 35
SECTION 33. Captions.................................................... 35
SECTION 34. Exchange.................................................... 35
EXHIBIT A. Form of Rights Certificate.................................. A-1
EXHIBIT B. Summary of Rights and Preferred Stock....................... B-1
EXHIBIT C. Form of Articles Supplementary for Preferred Stock.......... C-1
ii
<PAGE>
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of September 18, 1996 (the "AGREEMENT"),
between ROC Communities, Inc., a Maryland corporation (the "COMPANY"), and
KeyBank National Association, a national banking association (the "RIGHTS
AGENT").
WHEREAS, effective September 17, 1996 (the "RIGHTS DIVIDEND DECLARATION
DATE"), the Board of Directors of the Company authorized and declared a
distribution of one preferred stock purchase right ("RIGHT") for each share
of common stock, par value $.01 per share, of the Company (the "COMPANY
COMMON STOCK") outstanding at the Close of Business on September 30, 1996
(the "RECORD DATE"), and has authorized the issuance of one Right (as such
number may hereinafter be adjusted pursuant hereto) for each share of Company
Common Stock issued between the Record Date (whether originally issued or
delivered from the Company's treasury) and, except as otherwise provided in
Section 22, the Distribution Date, each Right initially representing the
right to purchase, upon the terms and subject to the conditions hereinafter
set forth, one Unit of Preferred Stock (each as hereinafter defined);
NOW, THEREFORE, in consideration of the premises and the mutual
agreements set forth herein, the parties hereby agree as follows:
SECTION 1. CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms have the meanings indicated:
"ACQUIRING PERSON" shall mean any Person (other than the Company, any
Subsidiary of the Company, any employee benefit plan maintained by the
Company or any of its Subsidiaries or any trustee or fiduciary with respect
to such a plan acting in such capacity) who or which, alone or together with
all Affiliates and Associates of such Person, shall be the Beneficial Owner
of 15% or more of the shares of Company Common Stock then outstanding, which
shares were acquired by such Person other than pursuant to a Permitted Offer;
PROVIDED, HOWEVER, that the term "Acquiring Person" shall not include any
Person who is the Beneficial Owner of 15% or more of the Company Common Stock
then outstanding by virtue of ownership of Company Common Stock by such
Person's Affiliates and/or Associates, which Affiliates and/or Associates are
deemed to be Affiliates and/or Associates solely by reason of each of them
being directors or officers of the Company or members of a slate of
directors, proposed by management, standing for election to such Board.
Notwithstanding the foregoing, (i) no Person shall become an "Acquiring
Person" as a result of an acquisition of Company Common Stock which, by
reducing the number of shares of the Company Common Stock outstanding,
increases the proportionate number of shares Beneficially Owned by such
Person to 15% or more of the Company Common Stock then outstanding; PROVIDED,
HOWEVER, that if a Person shall become the Beneficial Owner of 15% or more of
the Company Common Stock by reason of share purchases by the Company and
shall, after such share purchases by the Company, become the Beneficial Owner
of any additional Company Common Stock other than as a direct or indirect
result of any corporate action taken by the Company, then such Person shall
be deemed to be an "Acquiring Person"; and (ii) if a majority of the
Independent Directors determines in good faith that a Person who would
otherwise be an "Acquiring Person," as defined pursuant to the first sentence
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of this definition, has become such inadvertently (including, without
limitation, because (a) such Person was unaware that it Beneficially Owned
15% or more of the Company Common Stock or (b) such Person was aware of the
extent of such Beneficial Ownership but such Person acquired Beneficial
Ownership of such shares of Company Common Stock without the intention to
change or influence the control of the Company and without actual knowledge
of the consequences of such Beneficial Ownership under this Agreement), and
such Person divests itself as promptly as practicable of a sufficient number
of shares of Company Common Stock so that such Person would no longer be an
"Acquiring Person," as defined pursuant to the first sentence of this
definition, then such Person shall not be deemed to be, or have been, an
"Acquiring Person" for any purposes of this Agreement, and no Stock
Acquisition Date shall be deemed to have occurred. All questions as to
whether a Person who would otherwise be an Acquiring Person has become such
inadvertently shall be determined in good faith by a majority of the
Independent Directors, which determination shall be conclusive for all
purposes.
"ADVERSE PERSON" shall mean any Person declared to be an Adverse Person
by a majority of the Independent Directors upon determination that the
criteria set forth in Section 11(a)(ii)(B) apply to such Person.
"AFFILIATE" and "ASSOCIATE" shall have the respective meanings ascribed
to such terms in Rule 12b-2 of the General Rules and Regulations under the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), as in
effect on the date hereof.
A Person shall be deemed the "BENEFICIAL OWNER" of, and shall be deemed
to "beneficially own," any securities:
(i) of which such Person or any of such Person's Affiliates or
Associates is considered to be a "beneficial owner" under Rule 13d-3 of the
General Rules and Regulations under the Exchange Act (the "EXCHANGE ACT
REGULATIONS") as in effect on the date hereof; PROVIDED, HOWEVER, that a
Person shall not be deemed the "Beneficial Owner" of, or to "beneficially
own," any securities under this subparagraph (i) as a result of an
agreement, arrangement or understanding to vote such securities if such
agreement, arrangement or understanding (A) arises solely from a revocable
proxy given in response to a proxy or consent solicitation made pursuant
to, and in accordance with, the applicable provisions of the Exchange Act
and the Exchange Act Regulations, and (B) is not reportable by such Person
on Schedule 13D under the Exchange Act (or any comparable or successor
report);
(ii) which are beneficially owned, directly or indirectly, by any
other Person (or any Affiliate or Associate of such other Person) with
which such Person (or any of such Person's Affiliates or Associates) has
any agreement, arrangement or understanding (whether or not in writing),
for the purpose of acquiring, holding, voting (except pursuant to a
revocable proxy as described in the proviso to subparagraph (i) of this
paragraph (c)) or disposing of such securities; or
(iii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire (whether such
right is exercisable immediately or only after the passage of time or upon
the satisfaction of conditions) pursuant to any
2
<PAGE>
agreement, arrangement or understanding (whether or not in writing) or upon
the exercise of conversion rights, exchange rights, rights, warrants or
options, or otherwise; PROVIDED, HOWEVER, that under this definition a
Person shall not be deemed the "Beneficial Owner" of, or to "beneficially
own," (A) securities tendered pursuant to a tender or exchange offer made
in accordance with Exchange Act Regulations by such Person or any of such
Person's Affiliates or Associates until such tendered securities are
accepted for purchase or exchange, (B) securities that may be issued upon
exercise of Rights at any time prior to the occurrence of a Triggering
Event, or (C) securities that may be issued upon exercise of Rights from
and after the occurrence of a Triggering Event, which Rights were acquired
by such Person or any of such Person's Affiliates or Associates prior to
the Distribution Date or pursuant to Section 3(c) or Section 22 hereof (the
"ORIGINAL RIGHTS") or pursuant to Section 11(i) hereof in connection with
an adjustment made with respect to any Original Rights.
Notwithstanding the foregoing, nothing contained in this definition
shall cause a Person ordinarily engaged in business as an underwriter of
securities to be the "Beneficial Owner" of, or to "beneficially own," any
securities acquired in a BONA FIDE firm commitment underwriting pursuant to
an underwriting agreement with the Company.
"BUSINESS DAY" shall mean any day other than a Saturday, Sunday or a day
on which banking institutions in New York City are authorized or obligated by
law or executive order to close.
"CLOSE OF BUSINESS" on any given date shall mean 5:00 p.m., New York
City time, on such date; PROVIDED, HOWEVER, that if such date is not a
Business Day it shall mean 5:00 p.m., New York City time, on the next
succeeding Business Day.
"COMMON STOCK" of any Person other than the Company shall mean the
capital stock of such Person with the greatest voting power, or, if such
Person shall have no capital stock, the equity securities or other equity
interest having power to control or direct the management of such Person.
"COMPANY COMMON STOCK" has the meaning set forth in the Whereas Clause.
"DISTRIBUTION DATE" has the meaning set forth in Section 3(a).
"EXPIRATION DATE" shall mean the earliest of (i) the Final Expiration
Date, (ii) the time at which the Rights are redeemed (or deemed redeemed) as
provided in Section 23 hereof and (iii) the time at which all Rights then
outstanding and exercisable are exchanged (or deemed exchanged) pursuant to
Section 34 hereof.
"FINAL EXPIRATION DATE" shall mean the Close of Business on September 30,
2006.
"40% PERSON" shall mean any Person (other than the Company, any Subsidiary
of the Company, any employee benefit plan maintained by the Company or any of
its Subsidiaries or any trustee or fiduciary with respect to such a plan acting
in such capacity) who or which, alone
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<PAGE>
or together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of 40% or more of the shares of Company Common Stock then
outstanding, which shares were acquired by such Person other than pursuant to
a Permitted Offer; PROVIDED, HOWEVER, that the term "40% Person" shall not
include any Person who is the Beneficial Owner of 40% or more of the Company
Common Stock then outstanding by virtue of ownership of Company Common Stock
by such Person's Affiliates and/or Associates, which Affiliates and/or
Associates are deemed to be Affiliates and/or Associates solely by reason of
each of them being directors or officers of the Company or members of a slate
of directors, proposed by management, standing for election to such Board.
"INDEPENDENT DIRECTOR" shall mean a member of the Board of Directors of
the Company who is not, and has never been, an officer or employee of the
Company, who is not an Acquiring Person or an Affiliate or Associate of an
Acquiring Person or a representative or nominee of an Acquiring Person or of
any such Affiliate or Associate, and who either (i) was a member of the Board
of Directors of the Company prior to the date hereof or (ii) subsequently
became a director of the Company and whose election or nomination for
election is approved or recommended by a vote of a majority of the Board of
Directors of the Company, which majority includes a majority of the
Independent Directors then on the Board of Directors or (iii) has been a
member of the Board of Directors of the Company for at least 24 months.
"PERMITTED OFFER" shall mean a tender or exchange offer by any Person
for all outstanding shares of Company Common Stock which a majority of the
Independent Directors determines, based upon the advice of a nationally
recognized investment banking firm and such other advice as the Independent
Directors deem appropriate, is fair from a financial point of view to the
stockholders of the Company (other than such Person) and otherwise in the
best interests of the Company and its stockholders (other than such Person).
A Permitted Offer will cease to be such if, prior to the acquisition of
Beneficial Ownership of any Company Common Stock pursuant thereto, a majority
of the Independent Directors so determines, and in such event the tender or
exchange offer shall be deemed for purposes of Section 3 commenced on the
date of such determination.
"PERSON" shall mean any individual, partnership, firm, corporation,
association, trust, unincorporated organization or other entity, as well as
any syndicate or group deemed to be a person under Section 14(d)(2) of the
Exchange Act.
"PREFERRED STOCK" shall mean the Series A Junior Participating Preferred
Stock, par value $.01 per share, of the Company having such voting powers,
designation, preferences and relative, participating, optional or other
special rights and qualifications, limitations and restrictions as are
described in the form of Articles Supplementary attached as EXHIBIT C hereto.
"PURCHASE PRICE" has the meaning set forth in Section 7(b).
"RECORD DATE" has the meaning set forth in the Whereas Clause.
"RIGHT" has the meaning set forth in the Whereas Clause.
"RIGHTS CERTIFICATE" has the meaning set forth in Section 3(a).
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<PAGE>
"RIGHTS DIVIDEND DECLARATION DATE" has the meaning set forth in the
Whereas Clause.
"SECTION 11(a)(ii) EVENT" shall mean any event described in Section
11(a)(ii)(A), (B), (C) or (D) hereof.
"SECTION 13 EVENT" shall mean any event described in clause (x), (y) or
(z) of Section 13(a) hereof.
"STOCK ACQUISITION DATE" shall mean the first date of public
announcement (including, without limitation, the filing of any report
pursuant to Section 13(d) of the Exchange Act) by the Company or an Acquiring
Person that an Acquiring Person has become such or by the Company that an
Adverse Person has become such.
"SUBSIDIARY" shall mean, with reference to any Person, any other Person
of which an amount of voting securities or equity interests sufficient to
elect at least a majority of the directors or equivalent governing body of
such other Person is beneficially owned, directly or indirectly, by such
first-mentioned Person, or otherwise controlled by such first-mentioned
Person.
"SUMMARY OF RIGHTS" has the meaning set forth in Section 3(b).
"TRIGGERING EVENT" shall mean any Section 11(a)(ii) Event or any Section
13 Event.
"UNIT" has the meaning set forth in Section 7(b).
SECTION 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints
the Rights Agent to act as agent for the Company in accordance with the terms
and conditions hereof, and the Rights Agent hereby accepts such appointment.
With the consent of the Rights Agent, the Company may from time to time
appoint such co-rights agents as it may deem necessary or desirable.
SECTION 3. ISSUE OF RIGHTS CERTIFICATES. (a) Until the earliest of
(i) the Close of Business on the tenth Business Day after the Stock
Acquisition Date, (ii) the Close of Business on the tenth Business Day (or
such later date as may be determined by action of a majority of the
Independent Directors prior to such time) after the date that a tender or
exchange offer (other than a Permitted Offer) by any Person (other than the
Company, any Subsidiary of the Company, any employee benefit plan maintained
by the Company or any of its Subsidiaries or any trustee or fiduciary with
respect to such a plan acting in such capacity) is first published or sent or
given within the meaning of Rule 14d-4(a) of the Exchange Act Regulations or
any successor rule, if upon consummation thereof such Person would be the
Beneficial Owner of 15% or more of the shares of Company Common Stock then
outstanding, and (iii) the first date of public announcement (including,
without limitation, the filing of any report pursuant to Section 13(d) of the
Exchange Act) by the Company or a 40% Person that a 40% Person has become
such (the earliest of (i), (ii) and (iii) above being the "DISTRIBUTION
DATE"), (x) the Rights will be evidenced (subject to the provisions of
paragraph (b) of this Section 3) by the certificates for shares of Company
Common Stock registered in the names of the holders of shares of Company
Common Stock as of and subsequent to the Record Date (which certificates for
shares
5
<PAGE>
of Company Common Stock shall be deemed also to be certificates for Rights)
and not by separate certificates, and (y) the Rights will be transferable
only in connection with the transfer of the underlying shares of Company
Common Stock (including a transfer to the Company). As soon as practicable
after the Distribution Date, the Rights Agent will send, by first-class,
insured, postage-prepaid mail, to each record holder of shares of Company
Common Stock as of the Close of Business on the Distribution Date, at the
address of such holder shown on the records of the Company, one or more
rights certificates, in substantially the form attached hereto as EXHIBIT A
hereto (the "RIGHTS CERTIFICATES"), evidencing one Right for each share of
Company Common Stock so held, subject to adjustment as provided herein. In
the event that an adjustment in the number of Rights per share of Company
Common Stock has been made pursuant to Section 11(p) hereof, at the time of
distribution of the Rights Certificates, the Company may make the necessary
and appropriate rounding adjustments (in accordance with Section 14(a)
hereof) so that Rights Certificates representing only whole numbers of Rights
are distributed and cash is paid in lieu of any fractional Rights. As of and
after the Distribution Date, the Rights will be evidenced solely by such
Rights Certificates.
(b) As promptly as practicable following the Record Date, the Company
will send a copy of a Summary of Rights and Preferred Stock, in a form which
may be appended to certificates that represent shares of Company Common
Stock, in substantially the form of EXHIBIT B attached hereto (the "SUMMARY
OF RIGHTS"), by first-class, postage-prepaid mail, to each record holder of
shares of Company Common Stock as of the Close of Business on the Record
Date, at the address of such holder shown on the records of the Company.
(c) Rights shall, without any further action, be issued in respect of
all shares of Company Common Stock which are issued (including any shares of
Company Common Stock held in treasury) after the Record Date but prior to the
earlier of the Distribution Date and the Expiration Date. Certificates,
representing such shares of Company Common Stock, issued after the Record
Date shall bear the following legend:
"This certificate also evidences and entitles the holder
hereof to certain Rights as set forth in the Rights
Agreement between ROC Communities, Inc. (the "Company") and
KeyBank National Association (the "RIGHTS AGENT") dated as
of September 18, 1996, as it may be amended from time to
time (the "RIGHTS AGREEMENT"), the terms of which are hereby
incorporated herein by reference and a copy of which is on
file at the principal executive offices of the Company.
Under certain circumstances, as set forth in the Rights
Agreement, such Rights will be evidenced by separate
certificates and will no longer be evidenced by this
certificate. The Company will mail to the holder of this
certificate a copy of the Rights Agreement, as in effect on
the date of mailing, without charge promptly after receipt
of a written request therefor. Under certain circumstances
set forth in the Rights Agreement, Rights issued to, or held
by, any Person who is, was or becomes an Acquiring Person or
an Adverse Person or any Affiliate or Associate thereof (as
such terms are defined in the Rights Agreement), whether
currently held by or on behalf of such Person
6
<PAGE>
or by any subsequent holder, may become null and void
and nontransferable."
With respect to certificates representing shares of Company Common Stock
(whether or not such certificates include the foregoing legend or have appended
to them the Summary of Rights), until the earlier of the Distribution Date and
the Expiration Date, the Rights associated with the shares of Company Common
Stock represented by such certificates shall be evidenced by such certificates
alone and registered holders of the shares of Company Common Stock shall also be
the registered holders of the associated Rights, and the transfer of any of such
certificates shall also constitute the transfer of the Rights associated with
the shares of Company Common Stock represented by such certificates.
SECTION 4. FORM OF RIGHTS CERTIFICATES. (a) The Rights Certificates (and
the form of election to purchase and the form of assignment to be printed on the
reverse side thereof) shall each be substantially in the form set forth in
EXHIBIT A attached hereto and may have such marks of identification or
designation and such legends, summaries or endorsements printed thereon as the
Company may deem appropriate and as are not inconsistent with the provisions of
this Agreement, or as may be required to comply with any applicable law or any
rule or regulation thereunder or with any rule or regulation of any stock
exchange or automated quotation system on which the Rights may from time to time
be listed or to conform to usage. Subject to the provisions of Section 11 and
Section 22 hereof, the Rights Certificates, whenever distributed, shall be dated
as of the Record Date and on their face shall entitle the holders thereof to
purchase such number of Units of Preferred Stock as shall be set forth therein
at the price set forth therein, but the amount and type of securities, cash or
other assets that may be acquired upon the exercise of each Right and the
Purchase Price thereof shall be subject to adjustment as provided herein.
(b) Any Rights Certificate issued pursuant hereto that represents Rights
beneficially owned by: (i) an Acquiring Person or any Associate or Affiliate of
an Acquiring Person, (ii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) which becomes a transferee after the Acquiring Person
becomes such, or (iii) a transferee of an Acquiring Person (or of any such
Associate or Affiliate) which becomes a transferee prior to or concurrently with
the Acquiring Person becoming such and which receives such Rights pursuant to
either (A) a transfer (whether or not for consideration) from the Acquiring
Person (or any such Associate or Affiliate) to holders of equity interests in
such Acquiring Person (or such Associate or Affiliate) or to any Person with
whom such Acquiring Person (or such Associate or Affiliate) has any continuing
agreement, arrangement or understanding regarding either the transferred Rights,
shares of Company Common Stock or the Company or (B) a transfer which a majority
of the Independent Directors has determined to be part of a plan, arrangement or
understanding which has as a primary purpose or effect the avoidance of Section
7(e) hereof shall, upon the written direction of a majority of the Independent
Directors, contain (to the extent feasible) the following legend:
"The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring
Person or an Affiliate or Associate of an Acquiring Person or an
Adverse Person (as such terms are defined in the Rights
Agreement). Accordingly, this
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Rights Certificate and the Rights represented hereby may become null
and void and nontransferable in the circumstances specified in
Section 7(e) of such Agreement."
SECTION 5. COUNTERSIGNATURE AND REGISTRATION. (a) Rights Certificates
shall be executed on behalf of the Company by its Chairman of the Board, the
President or one of its Vice Presidents under its corporate seal reproduced
thereon attested by its Secretary, Treasurer or one of its Assistant
Secretaries. The signature of any of these officers on the Rights Certificates
may be manual or facsimile. Rights Certificates bearing the manual or facsimile
signatures of the individuals who were at any time the proper officers of the
Company shall bind the Company, notwithstanding that such individuals or any of
them have ceased to hold such offices prior to the countersignature of such
Rights Certificates or did not hold such offices at the date of such Rights
Certificates. No Rights Certificate shall be entitled to any benefit under this
Agreement or be valid for any purpose unless there appears on such Rights
Certificate a countersignature duly executed by the Rights Agent by manual
signature of an authorized signatory, and such countersignature upon any Rights
Certificate shall be conclusive evidence, and the only evidence, that such
Rights Certificate has been duly countersigned as required hereunder.
(b) Following the Distribution Date, the Rights Agent will keep or cause
to be kept, at its office designated for surrender of Rights Certificates upon
exercise or transfer, books for registration and transfer of the Rights
Certificates issued hereunder. Such books shall show the name and address of
each holder of the Rights Certificates, the number of Rights evidenced on its
face by each Rights Certificate and the date of each Rights Certificate.
SECTION 6. TRANSFER, SPLIT UP, COMBINATION AND EXCHANGE OF RIGHTS
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN RIGHTS CERTIFICATES. (a)
Subject to the provisions of Sections 4(b), 7(e) and 14 hereof, at any time
after the Close of Business on the Distribution Date, and at or prior to the
Close of Business on the Expiration Date, any Rights Certificate or Certificates
may be transferred, split up, combined or exchanged for another Rights
Certificate or Certificates, entitling the registered holder to purchase a like
number of Units of Preferred Stock (or, following a Triggering Event, other
securities, cash or other assets, as the case may be) as the Rights Certificate
or Certificates surrendered then entitled such holder to purchase. Any
registered holder desiring to transfer, split up, combine or exchange any Rights
Certificate or Certificates shall make such request in writing delivered to the
Rights Agent, and shall surrender the Rights Certificate or Certificates to be
transferred, split up, combined or exchanged at the office of the Rights Agent
designated for such purpose. Neither the Rights Agent nor the Company shall be
obligated to take any action whatsoever with respect to the transfer of any such
surrendered Rights Certificate until the registered holder shall have completed
and executed the certificate set forth in the form of assignment on the reverse
side of such Rights Certificate and shall have provided such additional evidence
of the identity of the Beneficial Owner (or former Beneficial Owner) of the
Rights represented by such Rights Certificate or Affiliates or Associates
thereof as the Company shall reasonably request; whereupon the Rights Agent
shall, subject to the provisions of Section 4(b), Section 7(e) and Section 14
hereof, countersign and deliver to the Person entitled thereto a Rights
Certificate or Rights Certificates, as the case may be, as so requested. The
Company may require payment
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of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer, split up, combination or exchange of
Rights Certificates.
(b) If a Rights Certificate shall be mutilated, lost, stolen or destroyed,
then upon request by the registered holder of the Rights represented thereby and
upon payment to the Company and the Rights Agent of all reasonable expenses
incident thereto, there shall be issued, in exchange for and upon cancellation
of the mutilated Rights Certificate, or in substitution for the lost, stolen or
destroyed Rights Certificate, a new Rights Certificate, in substantially the
form of the prior Rights Certificate, of like tenor and representing the
equivalent number of Rights, but, in the case of loss, theft or destruction,
only upon receipt of evidence satisfactory to the Company and the Rights Agent
of such loss, theft or destruction of such Rights Certificate and, if requested
by the Company or the Rights Agent, indemnity also satisfactory to it.
SECTION 7. EXERCISE OF RIGHTS; PURCHASE PRICE; EXPIRATION DATE OF RIGHTS.
(a) Prior to the Expiration Date, the registered holder of any Rights
Certificate may, subject to the provisions of Sections 7(e) and 9(c) hereof,
exercise the Rights evidenced thereby in whole or in part at any time after the
Distribution Date upon surrender of the Rights Certificate, with the form of
election to purchase and the certificate on the reverse side thereof duly
executed, to the Rights Agent at the office of the Rights Agent designated for
such purpose, together with payment of the aggregate Purchase Price (as
hereinafter defined) for the number of Units of Preferred Stock (or, following a
Triggering Event, other securities, cash or other assets, as the case may be)
for which such surrendered Rights are then exercisable.
(b) The purchase price for each one one-thousandth of a share (each such
one one-thousandth of a share being a "UNIT") of Preferred Stock upon exercise
of Rights shall be $70.00, subject to adjustment from time to time as provided
in Sections 11 and 13(a) hereof (such purchase price, as so adjusted, being the
"PURCHASE PRICE"), and shall be payable in accordance with paragraph (c) below.
(c) As promptly as practicable following the occurrence of the
Distribution Date, the Company shall deposit with a corporation in good standing
organized under the laws of the United States or any State of the United States,
which is authorized under such laws to exercise corporate trust or stock
transfer powers and is subject to supervision or examination by federal or state
authority (such institution being the "DEPOSITARY AGENT"), certificates
representing the Preferred Stock that may be acquired upon exercise of the
Rights and shall cause such Depositary Agent to enter into an agreement pursuant
to which the Depositary Agent shall issue receipts representing Units of the
Preferred Stock so deposited. Upon receipt of a Rights Certificate representing
exercisable Rights, with the form of election to purchase and the certificate
duly executed, accompanied by payment, with respect to each Right so exercised,
of the Purchase Price for the Units of Preferred Stock (or, following a
Triggering Event, other securities, cash or other assets, as the case may be) to
be purchased thereby as set forth below and an amount equal to any applicable
transfer tax or evidence satisfactory to the Company of payment of such tax, the
Rights Agent shall, subject to Section 20(k) hereof, thereupon promptly (i)
requisition from the Depositary Agent depositary receipts representing such
number of Units of Preferred Stock as are to be purchased and the Company will
direct the Depositary Agent to comply with such request, (ii) requisition from
the Company the amount of cash, if any, to be paid in lieu of fractional shares
in accordance with Section 14 hereof, (iii) after receipt of such
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<PAGE>
depositary receipts, cause the same to be delivered to or upon the order of
the registered holder of such Rights Certificate, registered in such name or
names as may be designated by such holder, and (iv) after receipt thereof,
deliver such cash, if any, to or upon the order of the registered holder of
such Rights Certificate. In the event that the Company is obligated to issue
Company Common Stock, other securities of the Company, pay cash and/or
distribute other property pursuant to Section 11(a) hereof, the Company will
make all arrangements necessary so that such Company Common Stock, other
securities, cash and/or other property are available for distribution by the
Rights Agent, if and when appropriate. The payment of the Purchase Price (as
such amount may be reduced pursuant to Section 11(a)(iii) hereof) may be made
in cash or by certified or bank check or money order payable to the order of
the Company.
(d) In case the registered holder of any Rights Certificate shall exercise
less than all the Rights evidenced thereby, a new Rights Certificate evidencing
the Rights remaining unexercised shall be issued by the Rights Agent and
delivered to, or upon the order of, the registered holder of such Rights
Certificate, registered in such name or names as may be designated by such
holder, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, from and
after the first occurrence of any Section 11(a)(ii) Event, any Rights
beneficially owned by (i) an Acquiring Person or an Adverse Person, or an
Associate or Affiliate of an Acquiring Person or an Adverse Person, (ii) a
transferee of an Acquiring Person or an Adverse Person (or of any such Associate
or Affiliate) which becomes a transferee after the Acquiring Person or Adverse
Person becomes such, or (iii) a transferee of an Acquiring Person or an Adverse
Person (or of any such Associate or Affiliate) which becomes a transferee prior
to or concurrently with the Acquiring Person or Adverse Person becoming such and
which receives such Rights pursuant to either (A) a transfer (whether or not for
consideration) from the Acquiring Person or Adverse Person (or any such
Associate or Affiliate) to holders of equity interests in such Acquiring Person
or Adverse Person (or any such Associate or Affiliate) or to any Person with
whom the Acquiring Person or Adverse Person (or such Associate or Affiliate) has
any continuing agreement, arrangement or understanding regarding the transferred
Rights, shares of Company Common Stock or the Company or (B) a transfer which a
majority of the Independent Directors has determined to be part of a plan,
arrangement or understanding which has as a primary purpose or effect the
avoidance of this Section 7(e), shall be null and void without any further
action, and no holder of such Rights shall have any rights whatsoever with
respect to such Rights, whether under any provision of this Agreement or
otherwise. The Company shall use all reasonable efforts to ensure that the
provisions of this Section 7(e) and Section 4(b) hereof are complied with, but
shall have no liability to any holder of Rights or any other Person as a result
of its failure to make any determination under this Section 7(e) or such Section
4(b) with respect to any Acquiring Person or Adverse Person or any Affiliate,
Associate or transferee of any Acquiring Person or Adverse Person.
(f) Notwithstanding anything in this Agreement or any Rights Certificate
to the contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder upon the occurrence of
any purported exercise by such registered holder unless such registered holder
shall have (i) completed and executed the certificate following the form of
election to purchase set forth on the reverse side of the Rights Certificate
surrendered for such exercise, and (ii) provided such additional evidence of the
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identity of the Beneficial Owner (or former Beneficial Owner) of the Rights
represented by such Rights Certificate or Affiliates or Associates thereof as
the Company shall reasonably request.
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHTS CERTIFICATES. All
Rights Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or any of its
agents, be delivered to the Rights Agent for cancellation or in cancelled form,
or, if surrendered to the Rights Agent, shall be cancelled by it, and no Rights
Certificates shall be issued in lieu thereof except as expressly permitted by
this Agreement. The Company shall deliver to the Rights Agent for cancellation
and retirement, and the Rights Agent shall so cancel and retire, any Rights
Certificates acquired by the Company otherwise than upon the exercise thereof.
The Rights Agent shall deliver all cancelled Rights Certificates to the Company,
or shall, at the written request of the Company, destroy such cancelled Rights
Certificates, and in such case shall deliver a certificate of destruction
thereof to the Company.
SECTION 9. RESERVATION AND AVAILABILITY OF CAPITAL STOCK. (a) The
Company shall at all times prior to the Expiration Date cause to be reserved and
kept available, out of its authorized and unissued shares of Preferred Stock,
the number of shares of Preferred Stock that, as provided in this Agreement,
will be sufficient to permit the exercise in full of all outstanding Rights.
Upon the occurrence of any events resulting in an increase in the aggregate
number of shares of Preferred Stock (or other equity securities of the Company)
issuable upon exercise of all outstanding Rights above the number then reserved,
the Company shall make appropriate increases in the number of shares so
reserved.
(b) If the Units of Preferred Stock to be issued and delivered upon the
exercise of the Rights may be listed on any national securities exchange, the
Company shall during the period from the Distribution Date through the
Expiration Date use its best efforts to cause all securities reserved for such
issuance to be listed on such exchange upon official notice of issuance upon
such exercise.
(c) The Company shall use its best efforts (i) as soon as practicable
following the occurrence of a Section 11(a)(ii) Event and a determination by the
Company in accordance with Section 11(a)(iii) hereof of the consideration to be
delivered by the Company upon exercise of the Rights or, if so required by law,
as soon as practicable following the Distribution Date (such date being the
"REGISTRATION DATE"), to file a registration statement on an appropriate form
under the Securities Act of 1933, as amended (the "SECURITIES ACT"), with
respect to the securities that may be acquired upon exercise of the Rights (the
"REGISTRATION STATEMENT"), (ii) to cause the Registration Statement to become
effective as soon as practicable after such filing, (iii) to cause the
Registration Statement to continue to be effective (and to include a prospectus
complying with the requirements of the Securities Act) until the earlier of (A)
the date as of which the Rights are no longer exercisable for the securities
covered by the Registration Statement and (B) the Expiration Date, and (iv) to
take as soon as practicable following the Registration Date such action as may
be required to ensure that any acquisition of securities upon exercise of the
Rights complies with any applicable state securities or "blue sky" laws.
(d) The Company shall take such action as may be necessary to ensure that
all Units of Preferred Stock (and, following the occurrence of a Triggering
Event, any other securities
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<PAGE>
that may be delivered upon exercise of Rights) shall be, at the time of
delivery of the certificates or depositary receipts for such securities, duly
and validly authorized and issued and fully paid and non-assessable.
(e) The Company shall pay any documentary, stamp or transfer tax imposed
in connection with the issuance or delivery of the Rights Certificates or upon
the exercise of Rights; PROVIDED, HOWEVER, the Company shall not be required to
pay any such tax imposed in connection with the issuance or delivery of Units of
Preferred Stock, or any certificates or depositary receipts for such Units of
Preferred Stock (or, following the occurrence of a Triggering Event, any other
securities, cash or assets, as the case may be) to any person other than the
registered holder of the Rights Certificates evidencing the Rights surrendered
for exercise. The Company shall not be required to issue or deliver any
certificates or depositary receipts for Units of Preferred Stock (or, following
the occurrence of a Triggering Event, any other securities, cash or assets, as
the case may be) to, or in a name other than that of, the registered holder upon
the exercise of any Rights until any such tax shall have been paid (any such tax
being payable by the holder of such Rights Certificate at the time of surrender)
or until it has been established to the Company's satisfaction that no such tax
is due.
SECTION 10. PREFERRED STOCK RECORD DATE. Each Person in whose name any
certificate for Units of Preferred Stock (or, following the occurrence of a
Triggering Event, other securities) is issued upon the exercise of Rights shall
for all purposes be deemed to have become the holder of record of the Units of
Preferred Stock (or, following the occurrence of a Triggering Event, other
securities) represented thereby on, and such certificate shall be dated, the
date upon which the Rights Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any applicable transfer
taxes) was made; PROVIDED, HOWEVER, that if the date of such surrender and
payment is a date upon which the Preferred Stock (or, following the occurrence
of a Triggering Event, other securities) transfer books of the Company are
closed, such Person shall be deemed to have become the record holder of such
securities on, and such certificate shall be dated, the next succeeding Business
Day on which the Preferred Stock (or, following the occurrence of a Triggering
Event, other securities) transfer books of the Company are open; and FURTHER
PROVIDED that if delivery of Units of Preferred Stock is delayed pursuant to
Section 9(c) hereof, such Persons shall be deemed to have become the record
holders of such Units of Preferred Stock only when such Units first become
deliverable. Prior to the exercise of the Rights evidenced thereby, the holder
of a Rights Certificate shall not be entitled to any rights of a stockholder of
the Company with respect to securities for which the Rights shall be
exercisable, including, without limitation, the right to vote, to receive
dividends or other distributions or to exercise any preemptive rights, and shall
not be entitled to receive any notice of any proceedings of the Company, except
as provided herein.
SECTION 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF SHARES OR
NUMBER OF RIGHTS. The Purchase Price, the number and kind of securities covered
by each Right and the number of Rights outstanding are subject to adjustment
from time to time as provided in this Section 11.
(a) (i) In the event the Company shall at any time after the date of this
Agreement (A) declare a dividend on the Preferred Stock payable in shares
(or fractional shares) of Preferred Stock, (B) subdivide the outstanding
Preferred Stock, (C) combine
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the outstanding Preferred Stock into a smaller number of shares, or (D)
issue any shares of its capital stock in a reclassification of the
Preferred Stock (including any such reclassification in connection with
a consolidation or merger in which the Company is the continuing or
surviving corporation), except as otherwise provided in this Section
11(a), the Purchase Price in effect at the time of the record date for
such dividend or of the effective date of such subdivision, combination
or reclassification, and the number and kind of Units of Preferred Stock
or capital stock, as the case may be, issuable on such date upon
exercise of the Rights, shall be proportionately adjusted so that the
holder of any Right exercised after such time shall be entitled to
receive, upon payment of the Purchase Price then in effect, the
aggregate number and kind of Units of Preferred Stock or capital stock,
as the case may be, which, if such Right had been exercised immediately
prior to such date, such holder would have owned upon such exercise and
been entitled to receive by virtue of such dividend, subdivision,
combination or reclassification. If an event occurs which would require
an adjustment under both this Section 11(a)(i) and Section 11(a)(ii)
hereof, the adjustment provided for in this Section 11(a)(i) shall be in
addition to, and shall be made prior to, any adjustment required
pursuant to Section 11(a)(ii) hereof.
(ii) In the event:
(A) any Person shall become an Acquiring Person, other than
pursuant to any transaction which constitutes a Section 13 Event; or
(B) a majority of the Independent Directors shall declare by
resolution any Person to be an Adverse Person, upon a determination
that such Person, alone or together with its Affiliates and
Associates, has, at any time after this Agreement has been filed with
the Securities and Exchange Commission as an exhibit to a filing under
the Exchange Act, become the Beneficial Owner of a number of shares of
Company Common Stock which the Independent Directors determine to be
substantial (which number of shares shall in no event represent less
than 10% of the outstanding shares of Company Common Stock) and a
determination by the Independent Directors, after reasonable inquiry
and investigation, including consultation with such persons as such
directors shall deem appropriate and consideration of such factors
selected by such directors as are permitted by applicable law, that
(a) such Beneficial Ownership by such Person is intended to cause the
Company to repurchase the shares of Common Stock beneficially owned by
such Person or to cause pressure on the Company to take action or
enter into a transaction or series of transactions intended to provide
such Person with short-term financial gain under circumstances where
the Independent Directors determine that the best long-term interests
of the Company would not be served by taking such action or entering
into such transaction or series of transactions at that time, or (b)
such Beneficial Ownership is causing or reasonably likely to cause a
material adverse impact (including, but not limited to, impairment of
relationships with customers or impairment of the Company's ability to
maintain its competitive position) on the business or prospects of the
Company, on the Company's employees, customers or suppliers or on the
communities in which the Company operates or is located; or
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(C) any Acquiring Person (for purposes of this Section
11(a)(ii)(C) and of Section 11(a)(ii)(D), the term "Acquiring Person"
shall be deemed to include an Adverse Person) or any Associate or
Affiliate of any Acquiring Person, at any time after the date of this
Agreement, directly or indirectly, (1) shall merge into the Company or
otherwise combine with the Company and the Company shall be the
continuing or surviving corporation of such merger or combination and
Company Common Stock shall remain outstanding and unchanged, (2)
shall, in one transaction or a series of transactions, transfer any
assets to the Company or to any of its Subsidiaries in exchange (in
whole or in part) for shares of Company Common Stock, for other equity
securities of the Company or any such Subsidiary, or for securities
exercisable for or convertible into shares of equity securities of the
Company or any of its Subsidiaries (whether Company Common Stock or
otherwise) or otherwise obtain from the Company or any of its
Subsidiaries, with or without consideration, any additional shares of
such equity securities or securities exercisable for or convertible
into such equity securities (other than pursuant to a PRO RATA
distribution to all holders of Company Common Stock), (3) shall sell,
purchase, lease, exchange, mortgage, pledge, transfer or otherwise
acquire or dispose of, in one transaction or a series of transactions,
to, from or with the Company or any of its Subsidiaries or any
employee benefit plan maintained by the Company or any of its
Subsidiaries or any trustee or fiduciary with respect to such a plan
acting in such capacity, assets (including securities) on terms and
conditions less favorable to the Company or such Subsidiary or plan
than those that could have been obtained in arm's-length negotiations
with an unaffiliated third party, other than pursuant to a transaction
set forth in Section 13(a) hereof, (4) shall sell, purchase, lease,
exchange, mortgage, pledge, transfer or otherwise acquire or dispose
of, in one transaction or a series of transactions, to, from or with
the Company or any of the Company's Subsidiaries or any employee
benefit plan maintained by the Company or any of its Subsidiaries or
any trustee or fiduciary with respect to such a plan acting in such
capacity (other than transactions, if any, consistent with those
engaged in, as of the date hereof, by the Company and such Acquiring
Person or such Associate or Affiliate), assets (including securities)
having an aggregate fair market value of more than $5,000,000, other
than pursuant to a transaction set forth in Section 13(a) hereof, (5)
shall sell, purchase, lease, exchange, mortgage, pledge, transfer or
otherwise acquire or dispose of, in one transaction or a series of
transactions, to, from or with the Company or any of its Subsidiaries
or any employee benefit plan maintained by the Company or any of its
Subsidiaries or any trustee or fiduciary with respect to such a plan
acting in such capacity, any material trademark or material service
mark, other than pursuant to a transaction set forth in Section 13(a)
hereof, (6) shall receive, or any designee, agent or representative of
such Acquiring Person or any Affiliate or Associate of such Acquiring
Person shall receive, any compensation from the Company or any of its
Subsidiaries other than compensation for full-time employment as a
regular employee at rates in accordance with the Company's (or its
Subsidiaries') past practices, or (7) shall receive the benefit,
directly or indirectly (except proportionately as a holder of Company
Common Stock or as required by law or governmental regulation), of any
loans, advances, guarantees, pledges or other financial assistance or
any tax
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credits or other tax advantage provided by the Company or any
of its Subsidiaries or any employee benefit plan maintained by the
Company or any of its Subsidiaries or any trustee or fiduciary with
respect to such a plan acting in such capacity; or
(D) during such time as there is an Acquiring Person, there
shall be any reclassification of securities (including any reverse
stock split), or recapitalization of the Company, or any merger or
consolidation of the Company with any of its Subsidiaries or any other
transaction or series of transactions involving the Company or any of
its Subsidiaries, other than a transaction or transactions to which
the provisions of Section 13(a) apply (whether or not with or into or
otherwise involving an Acquiring Person), which has the effect,
directly or indirectly, of increasing by more than 1% the
proportionate share of the outstanding shares of any class of equity
securities of the Company or any of its Subsidiaries that is directly
or indirectly beneficially owned by any Acquiring Person or any
Associate or Affiliate of any Acquiring Person;
THEN, immediately upon the date of the occurrence of an event
described in Section 11(a)(ii)(A)-(D) hereof (a "SECTION 11(a)(ii)
EVENT"), proper provision shall be made so that each holder of a Right
(except as provided below and in Section 7(e) hereof) shall thereafter
have the right to receive, upon exercise thereof at the then current
Purchase Price in accordance with the terms of this Agreement, in lieu
of the number of Units of Preferred Stock for which a Right was
exercisable immediately prior to the first occurrence of a Section
11(a)(ii) Event, such number of Units of Preferred Stock as shall
equal the result obtained by (x) multiplying the then current Purchase
Price by the then number of Units of Preferred Stock for which a Right
was exercisable immediately prior to the first occurrence of a Section
11(a)(ii) Event (such product thereafter being, for all purposes of
this Agreement other than Section 13 hereof, the "PURCHASE PRICE"),
and (y) dividing that product by 50% of the then current market price
(determined pursuant to Section 11(d) hereof) per Unit of Preferred
Stock on the date of such first occurrence (such number of Units of
Preferred Stock being the "ADJUSTMENT SHARES"); PROVIDED that the
Purchase Price and the number of Adjustment Shares shall be further
adjusted as provided in this Agreement to reflect any Section
11(a)(ii) Event occurring after the initial occurrence of a Section
11(a)(ii) Event.
(iii) In lieu of issuing Units of Preferred Stock in accordance
with Section 11(a)(ii) hereof, the Company, acting by resolution of a
majority of the Independent Directors, may (and in the event that the
number of shares of Preferred Stock which are authorized by the Company's
Articles of Incorporation but not outstanding or reserved for issuance for
purposes other than upon exercise of the Rights is not sufficient to permit
the exercise in full of the Rights in accordance with Section 11(a)(ii),
the Company, acting by resolution of a majority of the Independent
Directors, shall): (A) determine the excess of (1) the value of the
Adjustment Shares issuable upon the exercise of a Right (the "CURRENT
VALUE") over (2) the Purchase Price (such excess being the "SPREAD"), and
(B) with respect to each Right (subject to Section 7(e)), make
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adequate provision to substitute for such Adjustment Shares, upon payment
of the applicable Purchase Price, (1) cash, (2) a reduction in the Purchase
Price, (3) Company Common Stock or other equity securities of the Company
(including, without limitation, shares, or units of shares, of preferred
stock (such other shares being "PREFERRED STOCK EQUIVALENTS")), (4) debt
securities of the Company, (5) other assets, or (6) any combination of the
foregoing, having an aggregate value equal to the Current Value, where such
aggregate value has been determined by a majority of the Independent
Directors after receiving advice from a nationally recognized investment
banking firm selected by a majority of the Independent Directors which has
not performed any services for the Company or any Subsidiary of the Company
in the prior five years; PROVIDED, HOWEVER, that if pursuant to the
introductory clause of this Section 11(a)(iii) the Company shall have
elected or been required to deliver value pursuant to clause (B) above and
shall not have made adequate provision to deliver such value within thirty
days following the later of (x) the first occurrence of a Section 11(a)(ii)
Event and (y) the date on which the Company's right of redemption pursuant
to Section 23(a) expires (the later of (x) and (y) being referred to herein
as the "SECTION 11(a)(iii) TRIGGER DATE"), then the Company shall be
obligated to deliver, upon the surrender for exercise of a Right and
without requiring payment of the Purchase Price, Units of Preferred Stock
(to the extent available) and then, if necessary, cash, which Units of
Preferred Stock and/or cash shall have an aggregate value equal to the
Spread. To the extent that the Company determines that some action need be
taken pursuant to the first sentence of this Section 11(a)(iii), the
Company shall provide, subject to Section 7(e) hereof, that such action
shall apply uniformly to all outstanding Rights. For purposes of this
Section 11(a)(iii), the value of a Unit of Preferred Stock shall be the
current market price (as determined pursuant to Section 11(d) hereof) per
Unit of Preferred Stock on the Section 11(a)(iii) Trigger Date and the
value of any preferred stock equivalent shall be deemed to have the same
value as the Preferred Stock on such date.
(b) In the event the Company shall fix a record date for the issuance
of rights, options or warrants to all holders of Preferred Stock entitling
them to subscribe for or purchase (for a period expiring within forty-five
calendar days after such record date) shares (or fractional shares) of
Preferred Stock (or shares having substantially the same rights, privileges
and preferences as shares of Preferred Stock ("EQUIVALENT PREFERRED
STOCK")) or securities convertible into Preferred Stock or Equivalent
Preferred Stock at a price per share of Preferred Stock or per share of
Equivalent Preferred Stock (or having a conversion price per share, if a
security convertible into Preferred Stock or Equivalent Preferred Stock)
less than the current market price (as determined pursuant to Section 11(d)
hereof) per share of Preferred Stock on such record date, then the Purchase
Price to be in effect after such record date shall be determined by
multiplying the Purchase Price in effect immediately prior to such record
date by a fraction, the numerator of which shall be the sum of the number
of shares of Preferred Stock outstanding on such record date plus the
number of shares of Preferred Stock which the aggregate offering price of
the total number of shares of Preferred Stock and/or Equivalent Preferred
Stock so to be offered (and/or the aggregate initial conversion price of
the convertible securities so to be offered) would purchase at such current
market price, and the denominator of which shall be the number of shares of
Preferred Stock outstanding on such record date plus the number of
additional shares of Preferred Stock
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and/or Equivalent Preferred Stock to be offered for subscription or
purchase (or into which the convertible securities so to be offered are
initially convertible). In the event such subscription price may be paid
by delivery of consideration part or all of which may be in a form other
than cash, the value of such consideration shall be as determined in good
faith by a majority of the Independent Directors, whose determination shall
be described in a statement filed with the Rights Agent and shall be
binding on the Rights Agent and the holders of the Rights. Shares of
Preferred Stock owned by or held for the account of the Company or any
Subsidiary shall not be deemed outstanding for the purpose of any such
computation. Such adjustment shall be made successively whenever such a
record date is fixed, and in the event that such rights or warrants are
not so issued, the Purchase Price shall be adjusted to be the Purchase
Price which would then be in effect if such record date had not been fixed.
(c) In the event the Company shall fix a record date for a
distribution to all holders of shares of Preferred Stock (including any
such distribution made in connection with a consolidation or merger in
which the Company is the continuing corporation) of evidences of
indebtedness, cash (other than a regular quarterly cash dividend paid out
of funds legally available therefor), assets (other than a dividend payable
in shares of Preferred Stock, but including any dividend payable in stock
other than Preferred Stock) or subscription rights or warrants (excluding
those referred to in Section 11(b) hereof), then the Purchase Price to be
in effect after such record date shall be determined by multiplying the
Purchase Price in effect immediately prior to such record date by a
fraction, the numerator of which shall be the current market price (as
determined pursuant to Section 11(d) hereof) per share of Preferred Stock
on such record date less the fair market value (as determined in good faith
by a majority of the Independent Directors, whose determination shall be
described in a statement filed with the Rights Agent and shall be binding
on the Rights Agent and the holder of the Rights) of the cash, assets or
evidences of indebtedness so to be distributed or of such subscription
rights or warrants distributable in respect of a share of Preferred Stock,
and the denominator of which shall be such current market price (as
determined pursuant to Section 11(d) hereof) per share of Preferred Stock.
Such adjustments shall be made successively whenever such a record date is
fixed, and in the event that such distribution is not so made, the Purchase
Price shall be adjusted to be the Purchase Price which would have been in
effect if such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, the
"current market price" per share of Company Common Stock or Common
Stock on any date shall be deemed to be the average of the daily
closing prices per share of such shares for the ten consecutive
Trading Days (as such term is hereinafter defined) immediately prior
to such date; PROVIDED, HOWEVER, if prior to the expiration of such
requisite ten Trading Day period the issuer announces either (A) a
dividend or distribution on such shares payable in such shares or
securities convertible into such shares (other than the Rights), or
(B) any subdivision, combination or reclassification of such shares,
then, following the ex-dividend date for such dividend or the record
date for such subdivision, as the case may be, the "current market
price" shall be properly adjusted to take into account such event.
The closing price for each day shall be, if the shares are listed and
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admitted to trading on a national securities exchange, as reported in
the principal consolidated transaction reporting system with respect
to securities listed on the principal national securities exchange on
which such shares are listed or admitted to trading or, if such shares
are not listed or admitted to trading on any national securities
exchange, the last quoted price or, if not so quoted, the average of
the high bid and low asked prices in the over-the-counter market, as
reported by the Nasdaq Stock Market ("Nasdaq") or such other system
then in use, or, if on any such date such shares are not quoted by any
such organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in such
shares selected by a majority of the Independent Directors. If on any
such date no market maker is making a market in such shares, the fair
value of such shares on such date as determined in good faith by a
majority of the Independent Directors shall be used. If such shares
are not publicly held or not so listed or traded, "current market
price" per share shall mean the fair value per share as determined in
good faith by a majority of the Independent Directors, whose
determination shall be described in a statement filed with the Rights
Agent and shall be conclusive for all purposes. The term "TRADING
DAY" shall mean, if such shares are listed or admitted to trading on
any national securities exchange, a day on which the principal
national securities exchange on which such shares are listed or
admitted to trading is open for the transaction of business or, if
such shares are not so listed or admitted, a Business Day.
(ii) For the purpose of any computation hereunder, the "current
market price" per share of Preferred Stock shall be determined in the
same manner as set forth above for Company Common Stock in clause (i)
of this Section 11(d) (other than the fourth sentence thereof). If
the current market price per share of Preferred Stock cannot be
determined in the manner provided above or if the Preferred Stock is
not publicly held or listed or traded in a manner described in clause
(i) of this Section 11(d), the "current market price" per share of
Preferred Stock shall be conclusively deemed to be an amount equal to
1,000 (as such amount may be appropriately adjusted for such events as
stock splits, stock dividends and recapitalizations with respect to
Company Common Stock occurring after the date of this Agreement)
multiplied by the current market price per share of Company Common
Stock. If neither Company Common Stock nor Preferred Stock is
publicly held or so listed or traded, "current market price" per share
of the Preferred Stock shall mean the fair value per share as
determined in good faith by a majority of the Independent Directors
whose determination shall be described in a statement filed with the
Rights Agent and shall be binding on the Rights Agent and the holders
of the Rights.
(iii) For all purposes of this Agreement, the "current market
price" of a Unit of Preferred Stock shall be equal to the "current
market price" of one share of Preferred Stock divided by 1,000.
(e) Anything herein to the contrary notwithstanding, no adjustment in
the Purchase Price shall be required unless such adjustment would require
an increase or decrease of at least 1% in the Purchase Price; PROVIDED,
HOWEVER, that any adjustments
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which by reason of this Section 11(e) are not required to be made shall
be carried forward and taken into account in any subsequent adjustment.
All calculations under this Section 11 shall be made to the nearest cent
or to the nearest one-thousandth of a share of Company Common Stock or
Common Stock or other share or ten-thousandth of a share of Preferred
Stock, as the case may be. Notwithstanding the first sentence of this
Section 11(e), any adjustment required by this Section 11 shall be made
no later than the earlier of (i) three years from the date of the
transaction which mandates such adjustment and (ii) the Expiration Date.
(f) If as a result of an adjustment made pursuant to Section
11(a)(ii) or 13(a) hereof, the holder of any Right thereafter exercised
shall become entitled to receive any shares of capital stock other than
Preferred Stock, thereafter the number of such other shares so receivable
upon exercise of any Right and the Purchase Price thereof shall be subject
to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Preferred
Stock contained in Sections 11(a), (b), (c), (d), (e), (g), (h), (i), (j),
(k), (l) and (m), and the provisions of Sections 7, 9, 10, 13 and 14 hereof
with respect to the Preferred Stock shall apply on like terms to any such
other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of Units of Preferred
Stock (or other securities or amount of cash or combination thereof) that
may be acquired from time to time hereunder upon exercise of the Rights,
all subject to further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided
in Section 11(i), upon each adjustment of the Purchase Price as a result of
the calculations made in Sections 11(b) and (c), each Right outstanding
immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number
of Units of Preferred Stock (calculated to the nearest one ten-thousandth
of a Unit) obtained by (i) multiplying (x) the number of Units of Preferred
Stock covered by a Right immediately prior to this adjustment by (y) the
Purchase Price in effect immediately prior to such adjustment of the
Purchase Price, and (ii) dividing the product so obtained by the Purchase
Price in effect immediately after such adjustment of the Purchase Price.
(i) The Company may elect on or after the date of any adjustment of
the Purchase Price to adjust the number of Rights, in lieu of any
adjustment in the number of Units of Preferred Stock that may be acquired
upon the exercise of a Right. Each of the Rights outstanding after the
adjustment in the number of Rights shall be exercisable for the number of
Units of Preferred Stock for which a Right was exercisable immediately
prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest ten-thousandth) obtained by dividing the
Purchase Price in effect immediately prior to adjustment of the Purchase
Price by the Purchase Price in effect immediately after adjustment of the
Purchase Price. The Company shall make a public announcement of its
election to adjust the number of Rights, indicating the record date for the
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adjustment, and, if known at the time, the amount of the adjustment to be
made. This record date may be the date on which the Purchase Price is
adjusted or any day thereafter, but, if the Rights Certificates have been
issued, shall be at least ten days later than the date of such public
announcement. If Rights Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Section 11(i), the
Company shall, as promptly as practicable, cause to be distributed to
holders of record of Rights Certificates on such record date Rights
Certificates evidencing, subject to Section 14 hereof, the additional
Rights to which such holders shall be entitled as a result of such
adjustment, or, at the option of the Company, shall cause to be distributed
to such holders of record in substitution and replacement for the Rights
Certificates held by such holders prior to the date of adjustment, and upon
surrender thereof, if required by the Company, new Rights Certificates
evidencing all the Rights to which such holders shall be entitled after
such adjustment. Rights Certificates to be so distributed shall be issued,
executed and countersigned in the manner provided for herein (and may bear,
at the option of the Company, the adjusted Purchase Price) and shall be
registered in the names of the holders of record of Rights Certificates on
the record date specified in the public announcement.
(j) Irrespective of any adjustment or change in the Purchase Price or
the number of Units of Preferred Stock issuable upon the exercise of the
Rights, the Rights Certificates theretofore and thereafter issued may
continue to express the Purchase Price per Unit and the number of Units of
Preferred Stock which were expressed in the Initial Rights Certificates
issued hereunder.
(k) Before taking any action that would cause an adjustment reducing
the Purchase Price below the then par value of the number of Units of
Preferred Stock issuable upon exercise of the Rights, the Company shall
take any corporate action which may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue such
fully paid and non-assessable number of Units of Preferred Stock at such
adjusted Purchase Price.
(l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for
a specified event, the Company may elect to defer until the occurrence of
such event the issuance to the holder of any Right exercised after such
record date of that number of Units of Preferred Stock and shares of other
capital stock or securities of the Company, if any, issuable upon such
exercise over and above the number of Units of Preferred Stock and shares
of other capital stock or securities of the Company, if any, issuable upon
such exercise on the basis of the Purchase Price in effect prior to such
adjustment; PROVIDED, HOWEVER, that the Company shall deliver to such
holder a due bill or other appropriate instrument evidencing such holder's
right to receive such additional shares (fractional or otherwise) or
securities upon the occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Purchase Price, in
addition to those adjustments expressly required by this Section 11, as and
to the extent that in their good faith judgment a majority of the
Independent Directors shall determine to be advisable
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<PAGE>
in order that any (i) consolidation or subdivision of the Preferred Stock,
(ii) issuance wholly for cash of any shares of Preferred Stock at less
than the current market price, (iii) issuance wholly for cash of shares of
Preferred Stock or securities which by their terms are convertible into or
exchangeable for shares of Preferred Stock, (iv) stock dividends or (v)
issuance of rights, options or warrants referred to in this Section 11,
hereafter made by the Company to holders of its Preferred Stock, shall not
be taxable to such holders or shall reduce the taxes payable by such
holders.
(n) The Company shall not, at any time after the Distribution Date,
(i) consolidate with any other Person (other than a Subsidiary of the
Company in a transaction which complies with Section 11(o) hereof), (ii)
merge with or into any other Person (other than a Subsidiary of the Company
in a transaction which complies with Section 11(o) hereof), or (iii) sell
or transfer (or permit any Subsidiary to sell or transfer), in one
transaction, or a series of transactions, assets or earning power
aggregating more than 50% of the assets or earning power of the Company and
its Subsidiaries (taken as a whole) to any other Person or Persons (other
than the Company and/or any of its Subsidiaries in one or more transactions
each of which complies with Section 11(o) hereof), if (x) at the time of or
immediately after such consolidation, merger or sale there are any rights,
warrants or other instruments or securities outstanding or agreements in
effect which would substantially diminish or otherwise eliminate the
benefits intended to be afforded by the Rights or (y) prior to,
simultaneously with or immediately after such consolidation, merger or
sale, the Person which constitutes, or would constitute, the "Principal
Party" for purposes of Section 13(a) hereof shall have distributed or
otherwise transferred to its shareholders or other persons holding an
equity interest in such Person Rights previously owned by such Person or
any of its Affiliates and Associates; PROVIDED, HOWEVER, this Section 11(n)
shall not affect the ability of any Subsidiary of the Company to
consolidate with, merge with or into, or sell or transfer assets or earning
power to, any other Subsidiary of the Company.
(o) After the Distribution Date, the Company shall not, except as
permitted by Section 23 or Section 26 hereof, take (or permit any
Subsidiary to take) any action if at the time such action is taken it is
reasonably foreseeable that such action will diminish substantially or
otherwise eliminate the benefits intended to be afforded by the Rights.
(p) Anything in this Agreement to the contrary notwithstanding, in
the event that the Company shall at any time after the Rights Dividend
Declaration Date and prior to the Distribution Date (i) declare a dividend
on the outstanding shares of Company Common Stock payable in shares of
Company Common Stock, (ii) subdivide the outstanding shares of Company
Common Stock, (iii) combine the outstanding shares of Company Common Stock
into a smaller number of shares, or (iv) issue any shares of its capital
stock in a reclassification of Company Common Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), the number of Rights
associated with each share of Company Common Stock then outstanding, or
issued or delivered thereafter but prior to the Distribution Date, shall be
proportionately adjusted so that the number of Rights
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<PAGE>
thereafter associated with each share of Company Common Stock following any
such event shall equal the result obtained by multiplying the number of
Rights associated with each share of Company Common Stock immediately prior
to such event by a fraction the numerator of which shall be the total
number of shares of Company Common Stock outstanding immediately prior to
the occurrence of the event and the denominator of which shall be the total
number of shares of Company Common Stock outstanding immediately following
the occurrence of such event.
SECTION 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.
Whenever an adjustment is made as provided in Section 11 or Section 13 hereof,
the Company shall (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent, and with each transfer agent for the
Preferred Stock and the Company Common Stock, a copy of such certificate, and
mail a brief summary thereof to each holder of a Rights Certificate (or, if
prior to the Distribution Date, to each holder of a certificate representing
shares of Company Common Stock) in accordance with Section 25 hereof. The
Rights Agent shall be fully protected in relying on any such certificate and on
any adjustment therein contained and shall not be deemed to have knowledge of
any such adjustment unless and until it shall have received such certificate.
SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING
POWER. (a) In the event that, following the Stock Acquisition Date, directly
or indirectly, either (x) the Company shall consolidate with, or merge with and
into, any other Person (other than a Subsidiary of the Company in a transaction
which complies with Section 11(o) hereof), and the Company shall not be the
continuing or surviving corporation of such consolidation or merger, (y) any
Person (other than a Subsidiary of the Company in a transaction which complies
with Section 11(o) hereof) shall consolidate with, or merge with or into, the
Company, and the Company shall be the continuing or surviving corporation of
such consolidation or merger and, in connection with such consolidation or
merger, all or part of the outstanding shares of Company Common Stock shall be
converted into or exchanged for stock or other securities of any other Person or
cash or any other property, or (z) the Company shall sell or otherwise transfer
(or one or more of its Subsidiaries shall sell or otherwise transfer) to any
Person or Persons (other than the Company or any of its Subsidiaries in one or
more transactions each of which complies with Section 11(o) hereof), in one or
more transactions, assets or earning power aggregating more than 50% of the
assets or earning power of the Company and its Subsidiaries (taken as a whole)
(any such event being a "SECTION 13 EVENT"), then, and in each such case, proper
provision shall be made so that: (i) each holder of a Right, except as provided
in Section 7(e) hereof, shall thereafter have the right to receive, upon the
exercise thereof at the then current Purchase Price, such number of validly
authorized and issued, fully paid and non-assessable shares of Common Stock of
the Principal Party (as such term is hereinafter defined), which shares shall
not be subject to any liens, encumbrances, rights of first refusal, transfer
restrictions or other adverse claims, as shall be equal to the result obtained
by (1) multiplying the then current Purchase Price by the number of Units of
Preferred Stock for which a Right is exercisable immediately prior to the first
occurrence of a Section 13 Event (or, if a Section 11(a)(ii) Event has occurred
prior to the first occurrence of a Section 13 Event, multiplying the number of
such Units for which a Right would be exercisable hereunder but for the
occurrence of such Section 11(a)(ii) Event by the Purchase Price which would be
in effect hereunder but for such first occurrence) and (2) dividing that product
(which, following the first
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occurrence of a Section 13 Event, shall be the "PURCHASE PRICE" for all
purposes of this Agreement) by 50% of the current market price (determined
pursuant to Section 11(d) hereof) per share of the Common Stock of such
Principal Party on the date of consummation of such Section 13 Event; (ii)
such Principal Party shall thereafter be liable for, and shall assume, by
virtue of such Section 13 Event, all the obligations and duties of the
Company pursuant to this Agreement; (iii) the term "Company" shall thereafter
be deemed to refer to such Principal Party, it being specifically intended
that the provisions of Section 11 hereof shall apply only to such Principal
Party following the first occurrence of a Section 13 Event; (iv) such
Principal Party shall take such steps (including, but not limited to, the
reservation of a sufficient number of shares of its Common Stock) in
connection with the consummation of any such transaction as may be necessary
to ensure that the provisions of this Agreement shall thereafter be
applicable to its shares of Common Stock thereafter deliverable upon the
exercise of the Rights; and (v) the provisions of Section 11(a)(ii) hereof
shall be of no further effect following the first occurrence of any Section
13 Event.
(b) "PRINCIPAL PARTY" shall mean:
(i) in the case of any transaction described in clause (x) or (y) of
the first sentence of Section 13(a), (A) the Person that is the issuer of
any securities into which shares of Company Common Stock are converted in
such merger or consolidation, or, if there is more than one such issuer,
the issuer of Common Stock that has the highest aggregate current market
price (determined pursuant to Section 11(d) hereof) and (B) if no
securities are so issued, the Person that is the other party to such merger
or consolidation, or, if there is more than one such Person, the Person the
Common Stock of which has the highest aggregate current market price
(determined pursuant to Section 11(d) hereof); and
(ii) in the case of any transaction described in clause (z) of the
first sentence of Section 13(a), the Person that is the party receiving the
largest portion of the assets or earning power transferred pursuant to such
transaction or transactions, or, if each Person that is a party to such
transaction or transactions receives the same portion of the assets or
earning power transferred pursuant to such transaction or transactions or
if the Person receiving the largest portion of the assets or earning power
cannot be determined, whichever Person the Common Stock of which has the
highest aggregate current market price (determined pursuant to Section
11(d) hereof);
PROVIDED, HOWEVER, that in any such case, (1) if the Common Stock of such Person
is not at such time and has not been continuously over the preceding
twelve-month period registered under Section 12 of the Exchange Act ("REGISTERED
COMMON STOCK"), or such Person is not a corporation, and such Person is a direct
or indirect Subsidiary of another Person that has Registered Common Stock
outstanding, "Principal Party" shall refer to such other Person; (2) if the
Common Stock of such Person is not Registered Common Stock or such Person is not
a corporation, and such Person is a direct or indirect Subsidiary of another
Person but is not a direct or indirect Subsidiary of another Person which has
Registered Common Stock outstanding, "Principal Party" shall refer to the
ultimate parent entity of such first-mentioned Person; (3) if the Common Stock
of such Person is not Registered Common Stock or such Person is not a
corporation, and such Person is directly or indirectly controlled by more than
one Person, and
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one or more of such other Persons has Registered Common Stock outstanding,
"Principal Party" shall refer to whichever of such other Persons is the
issuer of the Registered Common Stock having the highest aggregate current
market price (determined pursuant to Section 11(d) hereof); and (4) if the
Common Stock of such Person is not Registered Common Stock or such Person is
not a corporation, and such Person is directly or indirectly controlled by
more than one Person, and none of such other Persons have Registered Common
Stock outstanding, "Principal Party" shall refer to whichever ultimate parent
entity is the corporation having the greatest shareholders equity or, if no
such ultimate parent entity is a corporation, shall refer to whichever
ultimate parent entity is the entity having the greatest net assets.
(c) The Company shall not consummate any Section 13 Event transfer unless
the Principal Party shall have a sufficient number of authorized shares of its
Common Stock which have not been issued or reserved for issuance to permit the
exercise in full of the Rights in accordance with this Section 13, and unless
prior thereto the Company and such Principal Party shall have executed and
delivered to the Rights Agent a supplemental agreement providing for the terms
set forth in paragraphs (a) and (b) of this Section 13 and further providing
that the Principal Party, at its own expense, will:
(i) (A) file on an appropriate form, as soon as practicable following
the execution of such agreement, a registration statement under the
Securities Act with respect to the Common Stock that may be acquired upon
exercise of the Rights, (B) cause such registration statement to remain
effective (and to include a prospectus complying with the requirements of
the Securities Act) until the Expiration Date, and (C) as soon as
practicable following the execution of such agreement, take such action as
may be required to ensure that any acquisition of such Common Stock upon
the exercise of the Rights complies with any applicable state security or
"blue sky" laws; and
(ii) use its best efforts either (A) to list (or continue the listing
of) the Common Stock of the Principal Party on a national securities
exchange or (B) to cause such Common Stock to be reported by NASDAQ or such
other transaction reporting system then in use; and
(iii) deliver to holders of the Rights historical financial statements
for the Principal Party and each of its Affiliates which comply in all
respects with the requirements for registration on Form 10 under the
Exchange Act.
(d) If the Principal Party which is to be a party to a transaction
referred to in this Section 13 has a provision in any of its authorized
securities or in its Certificate of Incorporation or By-laws or other
instrument governing its corporate affairs, which provision would have the
effect of (i) causing such Principal Party to issue, in connection with, or
as a consequence of, the consummation of a transaction referred to in this
Section 13, shares of Common Stock of such Principal Party at less than the
then current market price per share (determined pursuant to Section 11(d)
hereof) or securities exercisable for, or convertible into, Common Stock of
such Principal Party at less than such then current market price (other than
to holders of Rights pursuant to this Section 13) or (ii) providing for any
special payment, tax or similar provisions in connection with the issuance of
the Common Stock of such Principal Party pursuant to the provisions of this
Section 13; then, in such event, the Company shall not consummate any such
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transaction unless prior thereto the Company and such Principal Party shall
have executed and delivered to the Rights Agent a supplemental agreement
providing that the provision in question of such Principal Party shall have
been cancelled, waived or amended, or that the authorized securities shall be
redeemed, so that the applicable provision will have no effect in connection
with, or as a consequence of, the consummation of the proposed transaction.
(e) The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers. In the event that a
Section 13 Event shall occur at any time after the occurrence of a Section
11(a)(ii) Event, the Rights which have not theretofore been exercised shall
thereafter become exercisable in the manner described in Section 13(a).
(f) Notwithstanding anything in this Agreement to the contrary, the
provisions of this Section 13 shall not be applicable to a transaction described
in clause (x) or (y) of Section 13(a) if (i) such transaction is consummated
with a Person or Persons who acquired shares of Company Common Stock pursuant to
a Permitted Offer (or a wholly-owned Subsidiary of any such Person or Persons),
(ii) the price per share of Company Common Stock being offered in such
transaction is not less than the price per share of Company Common Stock paid to
all holders of Company Common Stock whose shares were purchased pursuant to such
Permitted Offer, and (iii) the form of consideration being offered to the
remaining holders of shares of Company Common Stock pursuant to such transaction
is the same as the form of consideration paid to holders of the Company Common
Stock pursuant to such Permitted Offer.
SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES. (a) The Company
shall not be required to issue fractions of Rights or to distribute Rights
Certificates which evidence fractional Rights. In lieu of such fractional
Rights, there shall be paid to the Persons to which such fractional Rights would
otherwise be issuable, an amount in cash equal to such fraction of the market
value of a whole Right. For purposes of this Section 14(a), the market value of
a whole Right shall be the closing price of the Rights for the Trading Day
immediately prior to the date on which such fractional Rights would have been
otherwise issuable. The closing price of the Rights for any day shall be, if
the Rights are listed or admitted to trading on a national securities exchange,
as reported in the principal consolidated transaction reporting system with
respect to securities listed on the principal national securities exchange on
which the Rights are listed or admitted to trading or, if the Rights are not
listed or admitted to trading on any national securities exchange, the last
quoted price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported by Nasdaq or such other
system then in use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights selected by a majority
of the Independent Directors. If on any such date no such market maker is
making a market in the Rights, the fair value of the Rights on such date as
determined in good faith by a majority of the Independent Directors shall be
used and such determination shall be described in a statement filed with the
Rights Agent and the holders of the Rights.
(b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions which are integral multiples of one
one-thousandth of a share of Preferred Stock) upon exercise of the Rights or to
distribute certificates which evidence such fractional shares of Preferred Stock
(other than fractions which are integral multiples of one
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one-thousandth of a share of Preferred Stock). In lieu of such fractional
shares of Preferred Stock that are not integral multiples of one
one-thousandth of a share, the Company may pay to the registered holders of
Rights Certificates at the time such Rights are exercised as herein provided
an amount in cash equal to the same fraction of the then current market price
of a share of Preferred Stock on the day of exercise, determined in
accordance with Section 11(d) hereof.
(c) The holder of a Right by the acceptance of the Rights expressly waives
his right to receive any fractional Rights or any fractional shares upon
exercise of a Right, except as permitted by this Section 14.
SECTION 15. RIGHTS OF ACTION. All rights of action in respect of this
Agreement, other than rights of action vested in the Rights Agent pursuant to
Section 18 hereof, are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of
certificates representing shares of Company Common Stock); and any registered
holder of a Rights Certificate (or, prior to the Distribution Date, of a
certificate representing shares of Company Common Stock), without the consent of
the Rights Agent or of the holder of any other Rights Certificate (or, prior to
the Distribution Date, of a certificate representing shares of Company Common
Stock), may, on his own behalf and for his own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Company or any
other Person to enforce, or otherwise act in respect of, his right to exercise
the Rights evidenced by such Rights Certificate in the manner provided in such
Rights Certificate and in this Agreement. Without limiting the foregoing or any
remedies available to the holders of Rights, it is specifically acknowledged
that the holders of Rights would not have an adequate remedy at law for any
breach of this Agreement and shall be entitled to specific performance of the
obligations hereunder and injunctive relief against actual or threatened
violations of the obligations hereunder of any Person subject to this Agreement.
SECTION 16. AGREEMENT OF RIGHTS HOLDERS. Every holder of a Right by
accepting the same consents and agrees with the Company and the Rights Agent and
with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable only
in connection with the transfer of Company Common Stock;
(b) after the Distribution Date, the Rights Certificates are transferable
only on the registry books of the Rights Agent if surrendered at the office of
the Rights Agent designated for such purposes, duly endorsed or accompanied by a
proper instrument of transfer and with the appropriate forms and certificates
duly executed;
(c) subject to Section 6(a) and Section 7(f) hereof, the Company and the
Rights Agent may deem and treat the person in whose name a Rights Certificate
(or, prior to the Distribution Date, the associated Company Common Stock
certificate) is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on the
Rights Certificates or the associated Company Common Stock certificate made by
anyone other than the Company or the Rights Agent) for all purposes whatsoever,
and neither the Company nor the Rights Agent, subject to the last sentence of
Section 7(e) hereof, shall be affected by any notice to the contrary; and
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(d) notwithstanding anything in this Agreement to the contrary, neither
the Company nor the Rights Agent shall have any liability to any holder of a
Right or any other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; PROVIDED, HOWEVER, the Company must use its best
efforts to have any such order, decree or ruling lifted or otherwise overturned
as promptly as practicable.
SECTION 17. RIGHTS CERTIFICATE HOLDER NOT DEEMED A STOCKHOLDER. No
holder, as such, of any Rights Certificate shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of the number of Units of
Preferred Stock or any other securities of the Company which may at any time be
issuable on the exercise of the Rights represented thereby, nor shall anything
contained herein or in any Rights Certificate be construed to confer upon the
holder of any Rights Certificate, as such, any of the rights of a stockholder of
the Company or any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or, except as provided in Section 24 hereof, to
receive notice of meetings or other actions affecting stockholders, or to
receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Rights Certificate shall have been exercised in
accordance with the provisions hereof.
SECTION 18. CONCERNING THE RIGHTS AGENT. (a) The Company agrees to pay
to the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses, including reasonable fees and disbursements of its counsel, incurred
in connection with the execution and administration of this Agreement and the
exercise and performance of its duties hereunder. The Company shall indemnify
the Rights Agent for, and hold it harmless against, any loss, liability, or
expense, incurred without negligence, bad faith or willful misconduct on the
part of the Rights Agent, for anything done or omitted by the Rights Agent in
connection with the acceptance and administration of this Agreement, including
the costs and expenses of defending against any claim of liability hereunder.
(b) The Rights Agent shall be protected and shall incur no liability for
or in respect of any action taken, suffered or omitted by it in connection with
its administration of this Agreement in reliance upon any Rights Certificate or
certificate for Preferred Stock or for other securities of the Company,
instrument of assignment or transfer, power of attorney, endorsement, affidavit,
letter, notice, direction, consent, certificate, statement or other paper or
document believed by it to be genuine and to have been signed, executed and,
where necessary, verified or acknowledged by the proper Person or Persons.
Anything in this Agreement to the contrary notwithstanding, in no event shall
the Rights Agent be liable for special, indirect or consequential loss or damage
of any kind whatsoever (including but not limited to lost profits), even if the
Rights Agent has been advised of the likelihood of such loss or damage and
regardless of the form of the action.
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SECTION 19. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
(a) Any corporation into which the Rights Agent or any successor Rights Agent
may be merged or with which it may be consolidated, or any corporation resulting
from any merger or consolidation to which the Rights Agent or any successor
Rights Agent shall be a party, or any corporation succeeding to the corporate
trust or shareholder services businesses of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under this Agreement
without the execution or filing of any document or any further act on the part
of any of the parties hereto; PROVIDED, HOWEVER, that such corporation would be
eligible for appointment as a successor Rights Agent under the provisions of
Section 21 hereof. In case at the time such successor Rights Agent shall
succeed to the agency created by this Agreement, any of the Rights Certificates
shall have been countersigned but not delivered, any such successor Rights Agent
may adopt the countersignature of a predecessor Rights Agent and deliver such
Rights Certificates so countersigned; and in case at that time any of the Rights
Certificates shall not have been countersigned, any successor Rights Agent may
countersign such Rights Certificates either in the name of the predecessor or in
the name of the successor Rights Agent; and in all such cases such Rights
Certificates shall have the full force provided in the Rights Certificates and
in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed and
at such time any of the Rights Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Rights Certificates so countersigned; and in case at that time
any of the Rights Certificates shall not have been countersigned, the Rights
Agent may countersign such Rights Certificates either in its prior name or in
its changed name; and in all such cases such Rights Certificates shall have the
full force provided in the Rights Certificates and in this Agreement.
SECTION 20. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the holders of Rights Certificates,
by their acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person and the
determination of "current market price") be proved or established by the Company
prior to taking or suffering any action hereunder, such fact or matter (unless
other evidence in respect thereof be specified herein) may be deemed to be
conclusively proved and established by a certificate signed by the Chairman of
the Board, the President, any Vice President, the Treasurer, any Assistant
Treasurer, the Secretary or any Assistant Secretary of the Company and delivered
to the Rights Agent; PROVIDED, HOWEVER, that so long as any Person is an
Acquiring Person hereunder, such certificate shall be signed and delivered by a
majority of the Independent Directors; and such certificate shall be full
authorization to the Rights Agent for any action taken or suffered in good faith
by it under the provisions of this Agreement in reliance upon such certificate.
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(c) The Rights Agent shall be liable hereunder only for its own
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Rights
Certificates or be required to verify the same (except as to its
countersignature on such Rights Certificates), but all such statements and
recitals are and shall be deemed to have been made by the Company only.
(e) The Rights Agent shall not have any responsibility for the validity of
this Agreement or the execution and delivery hereof (except the due execution
hereof by the Rights Agent) or for the validity or execution of any Rights
Certificate (except its countersignature thereof); nor shall it be responsible
for any breach by the Company of any covenant or failure by the Company to
satisfy conditions contained in this Agreement or in any Rights Certificate; nor
shall it be responsible for any adjustment required under the provisions of
Section 11 or Section 13 hereof or for the manner, method or amount of any such
adjustment or the ascertaining of the existence of facts that would require any
such adjustment (except with respect to the exercise of Rights evidenced by
Rights Certificates after receipt by the Rights Agent of the certificate
describing any such adjustment contemplated by Section 12); nor shall it by any
act hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any shares of Preferred Stock or any other
securities to be issued pursuant to this Agreement or any Rights Certificate or
as to whether any Units of Preferred Stock or any other securities will, when so
issued, be validly authorized and issued, fully paid and non-assessable.
(f) The Company shall perform, execute, acknowledge and deliver or cause
to be performed, executed, acknowledged and delivered all such further acts,
instruments and assurances as may reasonably be required by the Rights Agent for
the performance by the Rights Agent of its duties under this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board, the President, any Vice President, the Secretary, any
Assistant Secretary, the Treasurer or any Assistant Treasurer of the Company,
and to apply to such officers for advice or instructions in connection with its
duties, and it shall not be liable for any action taken or suffered to be taken
by it in good faith in accordance with instructions of any such officer;
PROVIDED, HOWEVER, that so long as any Person is an Acquiring Person hereunder,
the Rights Agent shall accept such instructions and advice only from a majority
of the Independent Directors and shall not be liable for any action taken or
suffered to be taken by it in good faith in accordance with such instructions of
the majority of the Independent Directors. Any application by the Rights Agent
for written instructions from the Company may, at the option of the Rights
Agent, set forth in writing any action proposed to be taken or omitted by the
Rights Agent under this Rights Agreement and the date on and/or after which such
action shall be taken or such omission shall be effective. The Rights Agent
shall not be liable for any action taken by, or omission of, the Rights Agent in
accordance with a proposal included in any such application on or after the date
specified in such application (which date shall not be less than five Business
Days after the date any such officer of the Company actually receives such
application, unless any such officer shall have consented in writing to an
earlier date) unless, prior to taking any such action (or the
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effective date in the case of an omission), the Rights Agent shall have
received written instructions in response to such application specifying the
action to be taken or omitted.
(h) The Rights Agent and any shareholder, director, officer or employee
of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or become pecuniarily interested in any transaction
in which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights
Agent under this Agreement. Nothing herein shall preclude the Rights Agent
from acting in any other capacity for the Company or for any other legal
entity.
(i) The Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or through
its attorneys or agents.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties or in the exercise of its rights hereunder if
the Rights Agent shall have reasonable grounds for believing that repayment of
such funds or adequate indemnification against such risk or liability is not
reasonably assured to it.
(k) If, with respect to any Rights Certificate surrendered to the Rights
Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been completed, not signed or indicates an affirmative response to clause 1
and/or 2 thereof, the Rights Agent shall not take any further action with
respect to such requested exercise or transfer without first consulting with the
Company. If such certificate has been completed and signed and shows a negative
response to clauses 1 and 2 of such certificate, unless previously instructed
otherwise in writing by the Company (which instructions may impose on the Rights
Agent additional ministerial responsibilities, but no discretionary
responsibilities), the Rights Agent may assume without further inquiry that the
Rights Certificate is not owned by a person described in Section 4(b) or Section
7(e) hereof and shall not be charged with any knowledge to the contrary.
(l) The Rights Agent shall have no duties or obligations other than those
specifically set forth in this Agreement, or as may subsequently be agreed to in
writing by the Company and the Rights Agent.
SECTION 21. CHANGE OF RIGHTS AGENT. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon thirty days' prior notice in writing mailed to the Company, and to each
transfer agent of the Preferred Stock and the Company Common Stock, by
registered or certified mail, and to the holders of the Rights Certificates by
first-class mail. The Company may remove the Rights Agent or any successor
Rights Agent upon thirty days' prior notice in writing, mailed to the Rights
Agent or successor Rights Agent, as the case may be, and to each transfer agent
of the Preferred Stock and the Company Common Stock, by registered or certified
mail, and to the holders of the Rights Certificates by first-class mail. If the
Rights Agent shall resign or be removed or shall otherwise become incapable of
acting, the Company shall appoint a successor to the Rights Agent. If the
Company shall fail to make such appointment within a period of thirty days after
giving notice of such removal or after it has been notified in writing of such
resignation or incapacity by the
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resigning or incapacitated Rights Agent or by the holder of a Rights
Certificate (who shall, with such notice, submit his Rights Certificate for
inspection by the Company), then any registered holder of any Rights
Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether
appointed by the Company or by such a court, shall be (a) a corporation
organized and doing business under the laws of the United States or any state
of the United States in good standing, shall be authorized to do business as
a banking institution in the State of New York, shall be authorized under
such laws to exercise corporate trust or stock transfer powers, shall be
subject to supervision or examination by federal or state authorities and
shall have at the time of its appointment as Rights Agent a combined capital
and surplus of at least $100,000,000 or (b) an Affiliate of a corporation
described in clause (a) of this sentence. After appointment, the successor
Rights Agent shall be vested with the same powers, rights, duties and
responsibilities as if it had been originally named as Rights Agent without
further act or deed; but the predecessor Rights Agent shall deliver and
transfer to the successor Rights Agent any property at the time held by it
hereunder, and execute and deliver any further assurance, conveyance, act or
deed necessary for the purpose. Not later than the effective date of any
such appointment, the Company shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Preferred Stock and
the Company Common Stock, and mail a notice thereof in writing to the
registered holders of the Rights Certificates. Failure to give any notice
provided for in this Section 21, however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent.
SECTION 22. ISSUANCE OF NEW RIGHTS CERTIFICATES. Notwithstanding any of
the provisions of this Agreement or the Rights to the contrary, the Company may,
at its option, issue new Rights Certificates evidencing Rights in such form as
may be approved by a majority of the Independent Directors to reflect any
adjustment or change made in accordance with the provisions of this Agreement in
the Purchase Price or the number or kind or class of shares or other securities
or property that may be acquired under the Rights Certificates. In addition, in
connection with the issuance or sale of shares of Company Common Stock following
the Distribution Date and prior to the Expiration Date, the Company (a) shall,
with respect to shares of Company Common Stock so issued or sold pursuant to the
exercise of stock options or under any employee plan or arrangement, or upon the
exercise, conversion or exchange of securities hereinafter issued by the
Company, and (b) may, in any other case, if deemed necessary or appropriate by a
majority of the Independent Directors, issue Rights Certificates representing
the appropriate number of Rights in connection with such issuance or sale;
PROVIDED, HOWEVER, that (i) no such Rights Certificate shall be issued if, and
to the extent that, the Company shall be advised by counsel that such issuance
would create a significant risk of material adverse tax consequences to the
Company or the person to whom such Rights Certificate would be issued, and (ii)
no such Rights Certificate shall be issued if, and to the extent that,
appropriate adjustment shall otherwise have been made in lieu of the issuance
thereof.
SECTION 23. REDEMPTION AND TERMINATION. (a) Subject to Section 30
hereof, the Company may, at its option, by action of a majority of the
Independent Directors, at any time prior to the earlier of (i) the Distribution
Date or (ii) the Final Expiration Date, redeem all but not less than all of the
then outstanding Rights at a redemption price of $.01 per Right, as such amount
may be appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such redemption price being
the "REDEMPTION
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PRICE"). The Company may, at its option, by action of a majority of the
Independent Directors, pay the Redemption Price in cash, shares of Company
Common Stock (based on the "current market price," as defined in Section
11(d) hereof, of the shares of Company Common Stock at the time of
redemption), or such other form of consideration as such majority of the
Independent Director deems appropriate.
(b) Immediately upon the action of a majority of the Independent Directors
ordering the redemption of the Rights, evidence of which shall be filed with the
Rights Agent, and without any further action and without any notice, the right
to exercise the Rights will terminate and the only right thereafter of the
holders of Rights shall be to receive the Redemption Price for each Right so
held. Promptly after the action of a majority of the Independent Directors
ordering the redemption of the Rights, the Company shall give notice of such
redemption to the Rights Agent and the holders of the then outstanding Rights by
mailing such notice to all such holders at each holder's last address as it
appears upon the registry books of the Rights Agent or, prior to the
Distribution Date, on the registry books of the transfer agent for Company
Common Stock. Any notice which is mailed in the manner herein provided shall be
deemed given, whether or not the holder receives the notice. Each such notice
of redemption will state the method by which the payment of the Redemption Price
will be made.
SECTION 24. NOTICE OF CERTAIN EVENTS. (a) In case the Company shall
propose, at any time after the Distribution Date, (i) to pay any dividend
payable in stock of any class to the holders of Preferred Stock or to make any
other distribution to the holders of Preferred Stock (other than a regular
quarterly cash dividend paid out of funds legally available therefor), (ii) to
offer to the holders of Preferred Stock rights or warrants to subscribe for or
to purchase any additional shares of Preferred Stock or shares of stock of any
class or any other securities, rights or options, (iii) to effect any
reclassification of its Preferred Stock (other than a reclassification involving
only the subdivision of outstanding shares of Preferred Stock), (iv) to effect
any consolidation or merger into or with any other Person (other than a
Subsidiary of the Company in a transaction which complies with Section 11(o)
hereof), or to effect any sale or other transfer (or to permit one or more of
its Subsidiaries to effect any sale or other transfer), in one or more
transactions, of more than 50% of the assets or earning power of the Company and
its Subsidiaries (taken as a whole) to any other Person or Persons (other than
the Company and/or any of its Subsidiaries in one or more transactions each of
which complies with Section 11(o) hereof), or (v) to effect the liquidation,
dissolution or winding up of the Company, then, in each such case, the Company
shall give to each holder of a Rights Certificate, to the extent feasible and in
accordance with Section 25 hereof, a notice of such proposed action, which shall
specify the record date for the purposes of such stock dividend, distribution of
rights or warrants, or the date on which such reclassification, consolidation,
merger, sale, transfer, liquidation, dissolution, or winding up is to take place
and the date of participation therein by the holders of the shares of Preferred
Stock, if any such date is to be fixed, and such notice shall be so given in the
case of any action covered by clause (i) or (ii) above at least twenty (20) days
prior to the record date for determining holders of the shares of Preferred
Stock for purposes of such action, and in the case of any such other action, at
least twenty (20) days prior to the date of the taking of such proposed action
or the date of participation therein by the holders of the shares of Preferred
Stock whichever shall be the earlier; PROVIDED, HOWEVER, no such notice shall be
required pursuant to this Section 24, if any Subsidiary of the Company effects a
consolidation or merger
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with or into, or effects a sale or other transfer of assets or earnings power
to, any other Subsidiary of the Company.
(b) In case any Section 11(a)(ii) Event hereof shall occur, then, in any
such case, (i) the Company shall as soon as practicable thereafter give to each
holder of a Rights Certificate, to the extent feasible and in accordance with
Section 25 hereof, a notice of the occurrence of such event, which shall specify
the event and the consequences of the event to holders of Rights under Section
11(a)(ii) hereof.
SECTION 25. NOTICES. All notices and other communications provided for
hereunder shall, unless otherwise stated herein, be in writing (including by
telex, telegram or cable) and mailed or sent or delivered, if to the Company, at
its address at:
ROC Communities, Inc.
c/o KeyCorp Shareholder Services, Inc.
6430 So. Quebec Street
Englewood, Colorado 80111
Attention: Gary P. McDaniel
Tel. No.: (303) 741-3707
Fax No.: (303) 741-3715
and if to the Rights Agent, at its address at:
KeyBank National Association
1515 Arapahoe Street
Suite 1505
Denver, Colorado 80202
Attention: Merryl Rapp
Tel. No.: (303) 629-7935
Fax No.: (303) 629-7916
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Distribution Date, to the holder of certificates representing
shares of Company Common Stock) shall be sufficiently given or made if sent by
first-class mail, postage-prepaid, addressed to such holder at the address of
such holder as shown on the registry books of the Company.
SECTION 26. SUPPLEMENTS AND AMENDMENTS. Prior to the Distribution Date
and subject to the penultimate sentence of this Section 26, the Company and the
Rights Agent shall, if the Company so directs, supplement or amend any provision
of this Agreement without the approval of any holders of certificates
representing shares of Company Common Stock. From and after the Distribution
Date and subject to the penultimate sentence of this Section 26, the Company and
the Rights Agent shall, if the Company so directs, supplement or amend this
Agreement without the approval of any holders of Rights Certificates in order
(i) to cure any ambiguity, (ii) to correct or supplement any provision contained
herein which may be defective or inconsistent with any other provisions herein,
(iii) to shorten or lengthen any time period hereunder, or (iv) to change or
supplement the provisions hereunder in any manner which the Company may deem
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necessary or desirable and which shall not adversely affect the interests of the
holders of Rights Certificates (other than an Acquiring Person or an Adverse
Person or an Affiliate or Associate of an Acquiring Person or an Adverse
Person); PROVIDED, HOWEVER, that this Agreement may not be supplemented or
amended to lengthen, pursuant to clause (iii) of this sentence, (A) subject to
Section 30 hereof, a time period relating to when the Rights may be redeemed at
such time as the Rights are not then redeemable, or (B) any other time period
unless such lengthening is for the purpose of protecting, enhancing or
clarifying the rights of, and/or the benefits to, the holders of Rights. Upon
the delivery of a certificate from an appropriate officer of the Company or, so
long as any Person is an Acquiring Person hereunder, from the majority of the
Independent Directors which states that the proposed supplement or amendment is
in compliance with the terms of this Section 26, the Rights Agent shall execute
such supplement or amendment. Notwithstanding anything contained in this
Agreement to the contrary, no supplement or amendment shall be made which
changes the Redemption Price, the Purchase Price, the Expiration Date or the
number of Units of Preferred Stock for which a Right is exercisable, or which
has the effect of exempting from any provision of this Agreement, or of
rendering any otherwise applicable provision of this Agreement in applicable to,
any acquisition by any Person of Beneficial Ownership of Company Common Stock or
any transaction between any Person, on the one hand, and the Company or any
Subsidiary of or successor to the Company, on the other hand, without in each
such case the approval of a majority of the Independent Directors. Prior to the
Distribution Date, the interests of the holders of Rights shall be deemed
coincident with the interests of the holders of Company Common Stock.
SECTION 27. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Rights Agent shall bind
and inure to the benefit of their respective successors and assigns hereunder.
SECTION 28. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS, ETC.
For all purposes of this Agreement, any calculation of the number of shares of
Company Common Stock outstanding at any particular time, including for purposes
of determining the particular percentage of such outstanding shares of Company
Common Stock of which any Person is the Beneficial Owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the Exchange Act
Regulations as in effect on the date hereof. Except as otherwise specifically
provided herein, the Board of Directors of the Company shall have the exclusive
power and authority to administer this Agreement and to exercise all rights and
powers specifically granted to the Board or to the Company, or as may be
necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power (i) to interpret the provisions of this
Agreement, and (ii) to make all determinations deemed necessary or advisable for
the administration of this Agreement. All such actions, calculations,
interpretations and determinations (including, for purposes of clause (y) below,
all omissions with respect to the foregoing) which are done or made by the Board
or by a majority of the Independent Directors in good faith shall (x) be final,
conclusive and binding on the Company, the Rights Agent, the holders of the
Rights and all other parties, and (y) not subject the Board or any member
thereof to any liability to the holders of the Rights.
SECTION 29. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall
be construed to give to any Person other than the Company, the Rights Agent and
the registered holders of the Rights Certificates (and, prior to the
Distribution Date, registered holders of shares of
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Company Common Stock) any legal or equitable right, remedy or claim under
this Agreement; but this Agreement shall be for the sole and exclusive
benefit of the Company, the Rights Agent and the registered holders of the
Rights Certificates (and, prior to the Distribution Date, registered holders
of shares of Company Common Stock).
SECTION 30. SEVERABILITY. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction or other
authority to be invalid, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated;
PROVIDED, HOWEVER, that notwithstanding anything in this Agreement to the
contrary, if any such term, provision, covenant or restriction is held by such
court or authority to be invalid, void or unenforceable and a majority of the
Independent Directors determines in its good faith judgment that severing the
invalid language from this Agreement would adversely affect the purpose or
effect of this Agreement and the Rights shall not then be redeemable, then the
right of redemption set forth in Section 23 hereof shall be reinstated and shall
not expire until the Close of Business on the tenth Business Day following the
date of such determination by a majority of the Independent Directors.
SECTION 31. GOVERNING LAW. This Agreement, each Right and each Rights
Certificate issued hereunder shall be governed by, and construed in accordance
with, the laws of the State of Maryland applicable to contracts executed in and
to be performed entirely in such State.
SECTION 32. COUNTERPARTS. This Agreement may be executed (including by
facsimile) in one or more counterparts, and by the different parties hereto in
separate counterparts, each of which when executed shall be deemed to be an
original, but all of which taken together shall constitute one and the same
instrument.
SECTION 33. CAPTIONS. The captions contained in this Agreement are for
descriptive purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 34. EXCHANGE. (a) The Company may at any time prior to the
Distribution Date, upon resolution of a majority of the Independent Directors,
exchange all or part of the then outstanding Rights (which shall not include
Rights that have become void pursuant to Section 7(e) hereof) for Units of
Preferred Stock at an exchange ratio specified in the following sentence, as
appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof. Subject to such adjustment, each
Right may be exchanged for that number of Units of Preferred Stock obtained by
dividing the Adjustment Spread (as defined below) by the then current market
price (determined pursuant to Section 11(d) hereof) per Unit of Preferred Stock
on the earlier of (i) the Stock Acquisition Date and (ii) the date on which a
tender or exchange offer (other than a Permitted Offer) by any Person (other
than the Company, any Subsidiary of the Company, any employee benefit plan
maintained by the Company or any of its Subsidiaries or any trustee or fiduciary
with respect to such a plan acting in such capacity) is first published or sent
or given within the meaning of Rule 14d-4(a) of the Exchange Act Regulations or
any successor rule, if upon consummation thereof such Person would be the
Beneficial Owner of 15% or more of the shares of Company Common Stock then
outstanding (such exchange ratio being the "EXCHANGE RATIO"). The "ADJUSTMENT
SPREAD" shall equal (x) the
35
<PAGE>
aggregate market price on the date of such event of the number of Adjustment
Shares determined pursuant to Section 11(a)(ii), minus (y) the Purchase Price.
(b) Immediately upon the action of a majority of the Independent Directors
ordering the exchange of any Rights pursuant to Section 34(a) and without any
further action and without any notice, the right to exercise such Rights shall
terminate and the only right thereafter of a holder of such Rights shall be to
receive that number of Units of Preferred Stock equal to the number of such
Rights held by such holder multiplied by the Exchange Ratio. The Company shall
promptly give public notice of any such exchange; PROVIDED, HOWEVER, that the
failure to give, or any defect in, such notice shall not affect the validity of
such exchange. The Company promptly shall mail a notice of any such exchange to
all of the holders of such Rights at their last addresses as they appear upon
the registry books of the Rights Agent. Any notice which is mailed in the
manner herein provided shall be deemed given, whether or not the holder receives
the notice. Each such notice of exchange shall state the method by which the
exchange of Units of Preferred Stock for Rights will be effected and, in the
event of any partial exchange, the number of Rights which will be exchanged.
Any partial exchange shall be effected PRO RATA based on the number of Rights
(other than Rights which have become void pursuant to the provisions of Section
7(e) hereof) held by each holder of Rights.
(c) In the event that the number of shares of Preferred Stock which are
authorized by the Company's Certificate of Incorporation but not outstanding or
reserved for issuance for purposes other than upon exercise of the Rights are
not sufficient to permit any exchange of Rights as contemplated in accordance
with this Section 34, the Company shall take all such action as may be necessary
to authorize additional shares of Preferred Stock for issuance upon exchange of
the Rights or make adequate provision to substitute (i) cash, (ii) Company
Common Stock or other equity securities of the Company, (iii) debt securities of
the Company, (iv) other assets, or (v) any combination of the foregoing, having
an aggregate value equal to the Adjustment Spread, where such aggregate value
has been determined by a majority of the Independent Directors.
(d) The Company shall not be required to issue fractions of Units of
Preferred Stock or to distribute certificates which evidence fractional Units.
In lieu of fractional Units, the Company may pay to the registered holders of
Rights Certificates at the time such Rights are exchanged as herein provided an
amount in cash equal to the same fraction of the current market price
(determined pursuant to Section 11(d) hereof) of one Unit of Preferred Stock.
36
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the date first above written.
ROC COMMUNITIES, INC.
By: /s/ GARY P. MCDANIEL
------------------------------------
Gary P. McDaniel
President and Chief Executive Officer
KEYBANK NATIONAL ASSOCIATION
By: /s/ MERRYL RAPP
------------------------------------
Merryl Rapp
Vice President/Manager
37
<PAGE>
EXHIBIT A
TO RIGHTS AGREEMENT
[Form of Rights Certificate]
Certificate No. R-_________ __________ Rights
NOT EXERCISABLE AFTER SEPTEMBER 30, 2006 OR EARLIER IF THE RIGHTS
EXPIRE UNDER CERTAIN CIRCUMSTANCES OR ARE REDEEMED OR EXCHANGED BY THE
COMPANY. THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE
COMPANY, AT $.01 PER RIGHT, ON THE TERMS SET FORTH IN THE RIGHTS
AGREEMENT. UNDER CERTAIN CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY
AN ACQUIRING PERSON OR AN ADVERSE PERSON (AS SUCH TERMS ARE DEFINED IN
THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY
BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS CERTIFICATE ARE
OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING
PERSON OR AN ADVERSE PERSON OR AN AFFILIATE OR ASSOCIATE OF AN
ACQUIRING PERSON OR AN ADVERSE PERSON (AS SUCH TERMS ARE DEFINED IN
THE RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE
RIGHTS REPRESENTED HEREBY MAY BECOME VOID IN THE CIRCUMSTANCES
SPECIFIED IN SECTION 7(e) OF SUCH AGREEMENT.] (1)
RIGHTS CERTIFICATE
ROC COMMUNITIES INC.
This certifies that ___________________________, or registered assigns, is
the registered holder of the number of Rights set forth above, each of which
entitles the registered holder thereof, subject to the terms and conditions of
the Rights Agreement, dated as of September 18, 1996 (the "RIGHTS AGREEMENT"),
between ROC Communities, Inc., a Maryland corporation (the "COMPANY"), and
KeyBank National Association, a national banking association, as Rights Agent
(the "RIGHTS AGENT"), to purchase from the Company at any time after the
Distribution Date and prior to the Expiration Date (each as defined in the
Rights Agreement), at the office of the Rights Agent, one one-thousandth of a
fully paid and non-assessable share of Series A Junior Participating Preferred
Stock, par value $.01 per share (the "PREFERRED STOCK"), of the Company
_____________
(1) The portion of the legend in brackets shall be inserted only if
applicable and shall replace the preceding sentence.
A-1
<PAGE>
at a purchase price (the "PURCHASE PRICE") of $70.00 per one one-thousandth
of a share (each such one one-thousandth of a share being a "UNIT") of
Preferred Stock, upon presentation and surrender of this Rights Certificate
with the Election to Purchase and related certificate duly executed.
Capitalized terms used but not defined in this Rights Certificate that are
defined in the Rights Agreement shall have the meanings ascribed to them in
the Rights Agreement.
Upon the occurrence of a Section 11(a)(ii) Event, if the Rights evidenced
by this Rights Certificate are beneficially owned by (i) an Acquiring Person or
an Adverse Person or an Affiliate or Associate of any such Acquiring Person or
Adverse Person, (ii) under certain circumstances specified in the Rights
Agreement, a transferee of any such Acquiring Person or Adverse Person, or
Associate or Affiliate of any such Acquiring Person or Adverse Person, or (iii)
under certain circumstances specified in the Rights Agreement, a transferee of a
person who, after such transfer, became an Acquiring Person or an Adverse
Person, or an Affiliate or Associate of an Acquiring Person or an Adverse
Person, such Rights shall become null and void and no holder hereof shall have
any right with respect to such Rights from and after the occurrence of such
Section 11(a)(ii) Event.
THE NUMBER OF RIGHTS EVIDENCED BY THIS RIGHTS CERTIFICATE (AND THE NUMBER
OF UNITS WHICH MAY BE PURCHASED UPON EXERCISE THEREOF) SET FORTH ABOVE, AND THE
PURCHASE PRICE PER UNIT SET FORTH ABOVE, ARE SUBJECT TO MODIFICATION AND
ADJUSTMENT UPON THE OCCURRENCE OF CERTAIN EVENTS AS PROVIDED IN THE RIGHTS
AGREEMENT.
In certain circumstances, the Rights evidenced hereby may entitle the
registered holder thereof to purchase capital stock of an entity other than the
Company or receive common stock, cash or other assets, all as provided in the
Rights Agreement.
This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement, which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Company and the holders of the Rights Certificates. Copies of
the Rights Agreement are on file at the principal office of the Company and are
available from the Company upon written request.
This Rights Certificate, with or without other Rights Certificates, upon
surrender at the office of the Rights Agent designated for such purpose, may be
exchanged for another Rights Certificate or Rights Certificates of like tenor
and date evidencing an aggregate number of Rights equal to the aggregate number
of Rights evidenced by the Rights Certificate or Rights Certificates
surrendered. If this Rights Certificate shall be exercised in part, the
registered holder shall be entitled to receive, upon surrender hereof, another
Rights Certificate or Rights Certificates for the number of whole Rights not
exercised.
Subject to the provisions of the Rights Agreement, at any time prior to the
earlier of (i) the Stock Acquisition Date or (ii) the Final Expiration Date, the
Rights evidenced by this Certificate may be redeemed by the Company at its
option at a redemption price of $.01 per Right, payable at the Company's option
in cash, common stock of the Company or other consideration, subject to
adjustment in certain events as provided in the Rights Agreement.
A-2
<PAGE>
No fractional shares of Preferred Stock will be issued upon the exercise of
any Right or Rights evidenced hereby (other than fractions which are integral
multiples of one one-thousandth of a share of Preferred Stock), but in lieu
thereof a cash payment will be made, as provided in the Rights Agreement.
No holder of this Rights Certificate, as such, shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of Preferred Stock or
of any other securities which may at any time be issuable on the exercise
hereof, nor shall anything contained in the Rights Agreement or herein be
construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting stockholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or otherwise, until
the Rights evidenced by this Rights Certificate shall have been exercised as
provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.
WITNESS the facsimile signature of the proper officers of the Company.
Dated as of ,
----------------- -----
ATTEST: ROC COMMUNITIES, INC.
By:
- ----------------------------------- --------------------------------
Name: Name:
Title: Title:
Countersigned:
KEYBANK NATIONAL ASSOCIATION,
as Rights Agent
By:
-------------------------------
Authorized Signatory
A-3
<PAGE>
[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if
such holder desires to transfer the Rights Certificate)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
- ------------------------------------------------------------------------------
(Please print name of transferee)
- ------------------------------------------------------------------------------
(Please print address of transferee)
this Rights evidenced by this Rights Certificate, together with all right, title
and interest therein, and does hereby irrevocably constitute and appoint _______
___________________, with full power of substitution, to transfer said Rights on
the books of the within-named Company.
Dated: ,
-------------- -----
Signature:
----------------------------
(Sign exactly as your name
appears on the other side
of this Rights Certificate)
Signature Guarantee:
--------------------------
A-4
<PAGE>
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are
not being sold, assigned and transferred by or on behalf of a Person who is or
was an Acquiring Person or an Adverse Person or an Affiliate or Associate of any
such Acquiring Person or Adverse Person (as such terms are defined in the Rights
Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned,
the undersigned [ ] did [ ] did not acquire the Rights evidenced by this
Rights Certificate from any Person who is, was or subsequently became an
Acquiring Person or an Adverse Person or an Affiliate or Associate of an
Acquiring Person or an Adverse Person.
Dated: ,
---------------- -----
Signature:
----------------------------
(Sign exactly as your name
appears on the other side of
this Rights Certificate)
Signature Guarantee:
-----------------------------
NOTICE
The signature to the foregoing Assignment and related Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
Signatures must be guaranteed by an approved eligible financial institution
acceptable to the Rights Agent in its sole discretion or by a participant in the
Securities Transfer Agents Medallion Program, the Stock Exchange Medallion
Program or the New York Stock Exchange Medallion Program.
In the event the certification set forth above is not completed, the
Company will deem the beneficial owner of the Rights evidenced by this Rights
Certificate to be an Acquiring Person or an Adverse Person or an Affiliate or
Associate thereof and, in the case of an Assignment, will affix a legend to that
effect on any Rights Certificates issued in exchange for this Rights
Certificate.
A-5
<PAGE>
FORM OF ELECTION TO PURCHASE
(To be executed by the registered holder if such holder
desires to exercise the Rights evidenced by this Rights Certificate)
To: ROC COMMUNITIES, INC.
The undersigned hereby irrevocably elects to exercise ________________
Rights evidenced by this Rights Certificate to purchase the Units of Preferred
Stock issuable upon the exercise of the Rights (or such other securities of the
Company or of any other person or other property which may be issuable upon the
exercise of the Rights) and requests that certificates for such Units be issued
in the name of and delivered to:
Please insert social security
or other identifying number:
------------------------
- ------------------------------------------------------------------------------
(Please print name)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
(Please print address)
If such number of Rights shall not be all of the Rights evidenced by this
Rights Certificate, a new Rights Certificate for the balance of such Rights
shall be registered in the name of and delivered to:
Please insert social security
or other identifying number:
----------------------------
- ------------------------------------------------------------------------------
(Please print name)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
(Please print address)
Dated: ,
---------------- -----
Signature:
-----------------------------
(Sign exactly as your name
appears on the other side of
this Rights Certificate)
Signature Guarantee:
----------------------------
A-6
<PAGE>
CERTIFICATE
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are
not beneficially owned or being exercised by or on behalf of a Person who is or
was an Acquiring Person or an Adverse Person or an Affiliate or Associate of any
such Acquiring Person or Adverse Person (as such terms are defined in the Rights
Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned,
the undersigned [ ] did [ ] did not acquire the Rights evidenced by this
Rights Certificate from any Person who is, was or subsequently became an
Acquiring Person or an Adverse Person or an Affiliate or Associate of an
Acquiring Person or an Adverse Person.
Dated: ,
---------------- -----
Signature:
----------------------------
(Sign exactly as your name
appears on the other side of
this Rights Certificate)
Signature Guarantee:
------------------------------
NOTICE
The signature to the foregoing Election to Purchase and related Certificate
must correspond to the name as written upon the face of this Rights Certificate
in every particular, without alteration or enlargement or any change whatsoever.
Signatures must be guaranteed by an approved eligible financial institution
acceptable to the Rights Agent in its sole discretion or by a participant in the
Securities Transfer Agents Medallion Program, the Stock Exchange Medallion
Program or the New York Stock Exchange Medallion Program.
In the event the certification set forth above is not completed, the
Company will deem the beneficial owner of the Rights evidenced by this Rights
Certificate to be an Acquiring Person or an Adverse Person or an Affiliate or
Associate thereof and, in the case of an exercise of less than all of the Rights
evidenced by this Rights Certificate, will affix a legend to that effect on any
Rights Certificates issued for the balance of such Rights in exchange for this
Rights Certificate.
A-7
<PAGE>
EXHIBIT B
TO RIGHTS AGREEMENT
SUMMARY OF
RIGHTS AND PREFERRED STOCK
On September 17, 1996, the Board of Directors of ROC Communities, Inc. (the
"COMPANY") declared a dividend of one right to purchase preferred stock
("RIGHT") for each outstanding share of the Company's Common Stock, par value
$.01 per share ("COMPANY COMMON STOCK"), to stockholders of record at the close
of business on September 30, 1996 (the "RECORD DATE") and for each share of
Company Common Stock issued (including shares distributed from the Company's
treasury) by the Company thereafter and prior to the Distribution Date (as
defined below). Each Right entitles the registered holder, subject to the terms
of the Rights Agreement (as defined below), to purchase from the Company one
one-thousandth of a share (a "UNIT") of Series A Junior Participating Preferred
Stock, par value $.01 per share ("PREFERRED STOCK"), of the Company, at a
purchase price of $70.00 per Unit (the "PURCHASE PRICE"), subject to adjustment.
The description and terms of the Rights are set forth in a Rights Agreement (the
"RIGHTS AGREEMENT") between the Company and KeyBank National Association, as
Rights Agent (the "RIGHTS AGENT").
Copies of the Rights Agreement and the Articles Supplementary for the
Preferred Stock have been filed with the Securities and Exchange Commission as
exhibits to a Registration Statement on Form 8-A dated September 19, 1996 (the
"FORM 8-A") and are publicly available. Copies of the Rights Agreement and the
Articles Supplementary are also available free of charge from the Company. This
summary description of the Rights and the Preferred Stock does not purport to be
complete and is qualified in its entirety by reference to all the provisions of
the Rights Agreement and the Articles Supplementary, including the definitions
therein of certain terms, which Rights Agreement and Articles Supplementary are
incorporated herein by reference.
DESCRIPTION OF THE RIGHTS
Initially, the Rights will attach to all certificates representing shares
of outstanding Company Common Stock, and no separate Rights certificates will be
distributed. The Rights will separate from the Company Common Stock and the
"DISTRIBUTION DATE" will occur upon the earlier of (i) 10 business days
following a public announcement (the date of such announcement being the "STOCK
ACQUISITION DATE") that (a) a person or group of affiliated or associated
persons (an "ACQUIRING PERSON") has acquired, obtained the right to acquire, or
otherwise obtained beneficial ownership of 15% or more of the then outstanding
shares of Company Common Stock or (b) a majority of the independent directors of
the Company has, in accordance with the criteria set forth in the Rights
Agreement, declared a person who beneficially owns at least 10% of the then
outstanding shares of Company Common Stock to be an "ADVERSE PERSON," (ii) 10
business days (or such later date as may be determined by action of the Board of
Directors prior to such time as any person becomes an Acquiring Person)
following the commencement of a tender offer or exchange offer that would result
in a person or group beneficially owning 15%
B-1
<PAGE>
or more of the then outstanding shares of Company Common Stock (other than a
tender or exchange offer for all outstanding shares of Common Stock at a
price and on terms that a majority of the independent directors of the
Company determines to be fair to and otherwise in the best interests of the
Company and its stockholders), and (iii) the date on which it is publicly
announced that a person or group has acquired beneficial ownership of 40% or
more of the then outstanding shares of Company Common Stock. Until the
Distribution Date, (i) the Rights will be evidenced by Company Common Stock
certificates and will be transferred with and only with such Company Common
Stock certificates, (ii) new Company Common Stock certificates issued after
the Record Date (including shares distributed from the Company's treasury)
will contain a notation incorporating the Rights Agreement by reference and
(iii) the surrender for transfer of any certificates evidencing outstanding
Company Common Stock will also constitute the transfer of the Rights
associated with the Company Common Stock evidenced by such certificates.
The Rights are not exercisable until the Distribution Date and will expire
at the close of business on September 30, 2006, unless the Rights are earlier
redeemed or exchanged by the Company.
As soon as practicable after the Distribution Date, separate Certificates
evidencing the Rights ("RIGHTS CERTIFICATES") will be mailed to holders of
record of Company Common Stock as of the close of business on the Distribution
Date and, thereafter, the separate Rights Certificates alone will represent the
Rights.
In the event (a "FLIP-IN EVENT") that (i) a person becomes an Acquiring
Person (other than pursuant to a Flip-Over Event (as defined below)), (ii) a
majority of the independent directors of the Company declares a person to be an
Adverse Person, (iii) the Company is the surviving corporation in a merger with
an Acquiring Person and shares of Company Common Stock shall remain outstanding,
(iv) an Acquiring Person or an Adverse Person engages in one or more
"self-dealing" transactions specified in the Rights Agreement, or (v) during
such time as there is an Acquiring Person or an Adverse Person, an event occurs
which results in such Acquiring Person's or Adverse Person's ownership interest
being increased by more than 1% (E.G., by means of a reverse stock split or
recapitalization), THEN, in each such case, each holder of a Right will
thereafter have the right to receive, upon exercise, Units of Preferred Stock
(or, in certain circumstances, Company Common Stock, cash, property or other
securities of the Company) having a value equal to two times the exercise price
of the Right. The exercise price is the Purchase Price multiplied by the number
of Units of Preferred Stock issuable upon exercise of a Right prior to the Flip-
In Event. Notwithstanding the foregoing, following the occurrence of any Flip-
In Event all Rights that are, or (under certain circumstances specified in the
Rights Agreement) were, beneficially owned by any Acquiring Person or Adverse
Person (or by certain related parties) will be null and void.
For example, at an exercise price of $70.00 per Right, each Right not owned
by an Acquiring Person or an Adverse Person (or by certain related parties)
following a Flip-In Event would entitle its holder to purchase $140.00 worth of
Preferred Stock (or other consideration, as noted above), based upon its then
current market price (determined based upon the market price of the Company
Common Stock), for $70.00. Assuming that the Preferred Stock had a
B-2
<PAGE>
current market price of $25.00 per Unit at such time, the holder of each
valid Right would be entitled to purchase 5.6 Units of Preferred Stock for
$70.00.
In the event (a "FLIP-OVER EVENT") that, at any time following the Stock
Acquisition Date, (i) the Company is acquired in a merger or other business
combination transaction and the Company is not the surviving corporation (other
than a merger described in the preceding paragraph), (ii) any person
consolidates or merges with the Company and all or part of the Company Common
Stock is converted or exchanged for securities, cash or property of any other
Person, or (iii) 50% or more of the Company's assets or earning power is sold or
transferred, THEN, in each such case, each holder of a Right (except Rights
which previously have been voided as described above) shall thereafter have the
right to receive, upon exercise, common stock of the Acquiring Person or Adverse
Person having a value equal to two times the exercise price of the Right. Flip-
In Events and Flip-Over Events are collectively referred to herein as
("TRIGGERING EVENTS").
The Purchase Price payable, and the number of Units of Preferred Stock
issuable, upon exercise of the Rights are subject to adjustment from time to
time to prevent dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Preferred Stock, (ii) if
holders of the Preferred Stock are granted certain rights or warrants to
subscribe for Preferred Stock or convertible securities at less than the current
market price of the Preferred Stock, or (iii) upon the distribution to the
holders of the Preferred Stock of evidences of indebtedness, cash or assets
(excluding regular quarterly cash dividends) or of subscription rights or
warrants (other than those referred to above).
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments amount to at least 1% of the Purchase
Price. The Company is not required to issue fractional Units. In lieu thereof,
an adjustment in cash may be made based on the market price of the Preferred
Stock prior to the date of exercise.
At any time prior to the Distribution Date, a majority of the independent
directors of the Company may redeem the Rights in whole, but not in part, at a
price of $.01 per Right (the "REDEMPTION PRICE"), subject to adjustment in
certain events, payable, at the election of such majority of the independent
directors, in cash, shares of Company Common Stock or such other form of
consideration as the independent directors may determine. Immediately upon
effectiveness of the action of a majority of the independent directors ordering
the redemption of the Rights, the Rights will terminate and the only right of
the holders of Rights will be to receive the Redemption Price.
At any time prior to the Distribution Date, the Company may exchange the
Rights (other than Rights owned by an Acquiring Person or an Adverse Person, or
an affiliate or an associate of an Acquiring Person or an Adverse Person, which
will have become void), in whole or in part, for Units of Preferred Stock at an
exchange ratio determined as provided in the Rights Agreement.
Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Company, including, without limitation, the right
to vote or to receive dividends. Although the distribution of the Rights should
not be taxable to stockholders or to
B-3
<PAGE>
the Company, stockholders may, depending upon the circumstances, recognize
taxable income in the event that the Rights become exercisable for Units of
Preferred Stock (or other consideration) or are exchanged as provided in the
preceding paragraph.
Any of the provisions of the Rights Agreement may be amended without the
approval of the holders of Company Common Stock at any time prior to the
Distribution Date. After the Distribution Date, the provisions of the Rights
Agreement may be amended in order to cure any ambiguity, defect or
inconsistency, to make changes which do not adversely affect the interests of
holders of Rights (excluding the interests of any Acquiring Person or Adverse
Person), or to shorten or lengthen any time period under the Rights Agreement;
PROVIDED, HOWEVER, that no amendment to adjust the time period governing
redemption shall be made at such time as the Rights are not redeemable.
DESCRIPTION OF PREFERRED STOCK
The Units of Preferred Stock that may be acquired upon exercise of the
Rights will be nonredeemable and subordinate to any other shares of preferred
stock that may be issued by the Company. Each Unit of Preferred Stock will have
a minimum preferential quarterly dividend of $.01 per Unit or any higher per
share dividend declared on the Company Common Stock.
In the event of liquidation of the Company, the holder of a Unit of
Preferred Stock will receive a preferred liquidation payment equal to $1.00 per
Unit.
Each Unit of Preferred Stock will have one vote, voting together with the
Company Common Stock.
In the event of any merger, consolidation or other transaction in which
shares of Company Common Stock are exchanged, each Unit of Preferred Stock will
be entitled to receive the per share amount paid in respect of each share of
Company Common Stock.
The rights of holders of the Preferred Stock to dividends, liquidation and
voting, and in the event of mergers and consolidations, are protected by
customary antidilution provisions.
Because of the nature of the Preferred Stock's dividend, liquidation and
voting rights, the economic value of one Unit of Preferred Stock that may be
acquired upon the exercise of each Right should approximate the economic value
of one share of Company Common Stock.
B-4
<PAGE>
EXHIBIT C
TO RIGHTS AGREEMENT
FORM OF
ARTICLES SUPPLEMENTARY
CLASSIFYING AND DESIGNATING A SERIES OF PREFERRED STOCK
AS
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
OF
ROC COMMUNITIES, INC.
Pursuant to Section 2-201 of the General Corporation Law
of the State of Maryland
We, Gary P. McDaniel and Roberta M. Hayhurst, being the President and the
Secretary, respectively, of ROC COMMUNITIES, INC., a corporation organized and
existing under the General Corporation Law of the State of Maryland (the
"Corporation"), in accordance with the provisions of Section 1-301 thereof, DO
HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by the
Amended and Restated Articles of Incorporation of the Corporation, on September
17, 1996 the Board of Directors adopted the following resolution creating a
series of 120,000 shares of Preferred Stock designated as Series A Junior
Participating Preferred Stock:
"RESOLVED, that pursuant to the authority vested in the
Board of Directors of the Corporation in accordance with the
provisions of its Amended and Restated Articles of
Incorporation, a series of Preferred Stock, par value $.01
per share, of the Corporation be, and it hereby is, created,
with such voting powers, preferences and relative,
participating, optional or other special rights, and such
qualifications, limitations or restrictions thereof, as
follows:
Section 1. DESIGNATION AND AMOUNT. There shall be a series of Preferred
Stock of the Corporation which shall be designated as "Series A Junior
Participating Preferred Stock," par value $.01 per share (hereinafter called
"Series A Preferred Stock"), and the number of shares constituting such series
shall be 120,000. Such number of shares may be increased or decreased by
resolution of the Board of Directors and by the filing of articles of amendment
pursuant to the provisions of the General Corporation Law of the State of
Maryland stating that such increase or reduction has been so authorized;
PROVIDED, HOWEVER, that no decrease shall reduce the number of shares of Series
A Preferred Stock to a number less than that of the shares then
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<PAGE>
outstanding plus the number of shares of Series A Preferred Stock issuable
upon exercise of outstanding rights, options or warrants or upon conversion
of outstanding securities issued by the Corporation.
Section 2. DIVIDENDS AND DISTRIBUTIONS.
(A) Subject to the prior and superior rights of the holders of
any shares of any series of Preferred Stock ranking prior and superior to the
shares of Series A Preferred Stock with respect to dividends, each holder of one
one-thousandth (1/1,000) of a share (a "Unit") of Series A Preferred Stock shall
be entitled to receive, when, as and if declared by the Board of Directors out
of funds legally available for the purpose, quarterly dividends payable in cash
to holders of record on the last business day of March, June, September and
December in each year (each such date being referred to herein as a "Quarterly
Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date
after the first issuance of a Unit of Series A Preferred Stock, in an amount per
Unit (rounded to the nearest cent) equal to the greater of (a) $.01 or (b)
subject to the provision for adjustment hereinafter set forth, the aggregate per
share amount of all cash dividends declared on shares of the common stock, par
value $.01 per share, of the Company (the "Common Stock") since the immediately
preceding Quarterly Dividend Payment Date, or, with respect to the first
Quarterly Dividend Payment Date, since the first issuance of a Unit of Series A
Preferred Stock, and (ii) subject to the provision for adjustment hereinafter
set forth, quarterly distributions (payable in kind) on each Quarterly Dividend
Payment Date in an amount per Unit equal to the aggregate per share amount of
all non-cash dividends or other distributions (other than a dividend payable in
shares of Common Stock or a subdivision of the outstanding shares of Common
Stock, by reclassification or otherwise) declared on shares of Common Stock
since the immediately preceding Quarterly Dividend Payment Date, or with respect
to the first Quarterly Dividend Payment Date, since the first issuance of a Unit
of Series A Preferred Stock. In the event the Corporation shall at any time
following September 17, 1996 (the "Rights Declaration Date") (i) declare any
dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock or (iii) combine the outstanding Common Stock into a
smaller number of shares, then in each such case the amount to which holders of
Units of Series A Preferred Stock were entitled immediately prior to such event
under clause (b) of the preceding sentence shall be adjusted by multiplying each
such amount by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.
(B) The Corporation shall declare a dividend or distribution
on Units of the Series A Preferred Stock as provided in paragraph (A) above
at the time it declares a dividend or distribution on the Common Stock (other
than a dividend payable in shares of Common Stock); PROVIDED, HOWEVER, that
in the event no dividend or distribution shall have been declared on the
Common Stock during the period between any Quarterly Dividend Payment Date
and the next subsequent Quarterly Dividend Payment Date, a dividend of $.01
per Unit on the Series A Preferred Stock shall nevertheless be payable on
such subsequent Quarterly Dividend Payment Date.
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(C) No dividend or distribution (other than a dividend
payable in shares of Common Stock) shall be paid or payable to the holders of
shares of Common Stock unless, prior thereto, all accrued but unpaid dividends
to the date of such dividend or distribution shall have been paid to the holders
of Units of Series A Preferred Stock.
(D) Dividends shall begin to accrue and be cumulative on
each outstanding Unit of Series A Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such Unit of Series A Preferred
Stock, unless the date of issue of such Unit is prior to the record date for the
first Quarterly Dividend Payment Date, in which case dividends on such Unit
shall begin to accrue from the date of issue of such shares, or unless the date
of issue is a Quarterly Dividend Payment Date or is a date after the record date
for the determination of holders of Units of Series A Preferred Stock entitled
to receive a quarterly dividend and before such Quarterly Dividend Payment Date,
in either of which events such dividends shall begin to accrue and be cumulative
from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall
not bear interest. Dividends paid on Units of Series A Preferred Stock in an
amount less than the total amount of such dividends at the time accrued and
payable on such Units shall be allocated PRO RATA on a Unit-by-Unit basis among
all such Units of Series A Preferred Stock at the time outstanding. The Board
of Directors may fix a record date for the determination of holders of Units of
Series A Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be no more than 30 days
prior to the date fixed for the payment thereof.
Section 3. VOTING RIGHTS. The holders of Units of Series A Preferred
Stock shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each Unit of Series A Preferred Stock shall entitle the holder thereof to
one vote on all matters submitted to a vote of the stockholders of the
Corporation. In the event the Corporation shall at any time following the
Rights Declaration Date (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding shares of Common Stock or
(iii) combine the outstanding Common Stock into a smaller number of shares, then
in each such case the number of votes per share to which holders of Units of
Series A Preferred Stock were entitled immediately prior to such event shall be
adjusted by multiplying such number by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) Except as otherwise provided herein or by law, the holders
of Units of Series A Preferred Stock and the holders of shares of Common Stock
and any other capital stock of the Corporation having general voting rights
shall vote together as one class on all matters submitted to a vote of
stockholders of the Corporation.
(C) (i) Whenever, at any time or times, dividends payable on
any Unit or Units of Series A Preferred Stock shall be in arrears in an amount
equal to at least two full quarterly dividends (whether or not declared and
whether or not consecutive), the holders of record of the outstanding Units of
Series A Preferred Stock shall have the exclusive right, voting separately as a
single class, to elect two directors of the Corporation at a special meeting
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of stockholders of the Corporation or at the Corporation's next annual
meeting of stockholders, and at each subsequent annual meeting of
stockholders, as provided below. At elections for such directors, the
holders of Units of Series A Preferred Stock shall be entitled to cast one
vote for each Unit of Series A Preferred Stock held.
(ii) Upon the vesting of such right of the holders of
Units of Series A Preferred Stock, the maximum authorized number of members of
the Board of Directors shall automatically be increased by two and the two
vacancies so created shall be filled by vote of the holders of the outstanding
Preferred Stock as hereinafter set forth. A special meeting of the stockholders
of the Corporation then entitled to vote shall be called by the Chairman or the
President or the Secretary of the Corporation, if requested in writing by the
holders of record of not less than 10% of the Units of Series A Preferred Stock
then outstanding. At such special meeting, or, if no such special meeting shall
have been called, then at the next annual meeting of stockholders of the
Corporation, the holders of the Units of Series A Preferred Stock shall elect,
voting as above provided, two directors of the Corporation to fill the aforesaid
vacancies created by the automatic increase in the number of members of the
Board of Directors. At any and all such meetings for such election, the holders
of a majority of the outstanding Units of Series A Preferred Stock shall be
necessary to constitute a quorum for such election, whether present in person or
by proxy, and such two directors shall be elected by the vote of at least a
plurality of Units held by such stockholders present or represented at the
meeting. Any director elected by holders of Units of Series A Preferred Stock
pursuant to this Section may be removed at any annual or special meeting, by
vote of a majority of the stockholders voting as a class who elected such
director, with or without cause. In case any vacancy shall occur among the
directors elected by the holders of Units of Series A Preferred Stock pursuant
to this Section, such vacancy may be filled by the remaining director so
elected, or his successor then in office, and the director so elected to fill
such vacancy shall serve until the next meeting of stockholders for the election
of directors. After the holders of Units of Series A Preferred Stock shall have
exercised their right to elect directors in any default period and during the
continuance of such period, the number of directors shall not be further
increased or decreased except by vote of the holders of Units of Series A
Preferred Stock as herein provided or pursuant to the rights of any equity
securities ranking senior to or pari passu with the Series A Preferred Stock.
(iii) The right of the holders of Units of Series A
Preferred Stock, voting separately as a class, to elect two members of the Board
of Directors of the Corporation as aforesaid shall continue until, and only
until, such time as all arrears in dividends (whether or not declared) on the
Units of Series A Preferred Stock shall have been paid or declared and set apart
for payment, at which time such right shall terminate, except as herein or by
law expressly provided, subject to revesting in the event of each and every
subsequent default of the character above-mentioned. Upon any termination of
the right of the holders of the Units of Series A Preferred Stock as a class to
vote for directors as herein provided, the term of office of all directors then
in office elected by the holders of Units of Series A Preferred Stock pursuant
to this Section shall terminate immediately. Whenever the term of office of the
directors elected by the holders of Units of Series A Preferred Stock pursuant
to this Section shall terminate and the special voting powers vested in the
holders of the Preferred Stock pursuant to this Section shall have expired, the
maximum number of members of the Board of Directors of the Corporation shall be
such number as may be provided for in the By-laws of the Corporation,
irrespective of any increase made pursuant to the provisions of this Section.
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(D) Except as set forth herein, holders of Units of Series
A Preferred Stock shall have no special voting rights and their consent shall
not be required (except to the extent they are entitled to vote with holders of
Common Stock as set forth herein) for taking any corporate action.
Section 4. CERTAIN RESTRICTIONS.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Units of Series A Preferred Stock as provided in
herein are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on outstanding Units of Series A
Preferred Stock outstanding shall have been paid in full, the Corporation shall
not:
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire for consideration
any shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either as to dividends
or upon liquidation, dissolution or winding up) with the Series A Preferred
Stock, except dividends paid ratably on the Units of Series A Preferred Stock
and all such parity stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of all such Units and all
such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series A Preferred Stock;
PROVIDED, HOWEVER, that the Corporation may at any time redeem, purchase or
otherwise acquire shares of any such parity stock in exchange for shares of any
stock of the Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series A Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any
Units of Series A Preferred Stock, except in accordance with a purchase offer
made in writing or by publication (as determined by the Board of Directors) to
all holders of such Units, upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other relative rights
and preferences of the respective series and classes, shall determine in good
faith will result in fair and equitable treatment among the respective series or
classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any Units or
shares of stock of the Corporation unless the Corporation could, under paragraph
(A) of this Section, purchase or otherwise acquire such Units or shares at such
time and in such manner.
Section 5. REACQUIRED SHARES. Any Units of Series A Preferred
Stock purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and cancelled promptly after the acquisition
thereof. All such Units shall, upon their cancellation,
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become authorized but unissued Units of Preferred Stock and may be reissued
as part of a new series of Preferred Stock to be created by resolution or
resolutions of the Board of Directors, subject to the conditions and
restrictions on issuance set forth herein.
Section 6. LIQUIDATION, DISSOLUTION OR WINDING UP.
(A) Upon any voluntary liquidation, dissolution or winding up of
the Corporation, no distribution shall be made to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Preferred Stock unless, prior thereto, the holders
of Units of Series A Preferred Stock shall have received $1.00 per Unit, plus an
amount equal to accrued and unpaid dividends and distributions thereon, whether
or not declared, to the date of such payment (the "Series A Liquidation
Preference"). Following the payment of the full amount of the Series A
Liquidation Preference, no additional distributions shall be made to the holders
of Units of Series A Preferred Stock unless, prior thereto, the holders of
shares of Common Stock shall have received an amount per share (the "Common
Adjustment") equal to the quotient obtained by dividing (i) the Series A
Liquidation Preference by (ii) 1 (as appropriately adjusted as set forth in
subparagraph C below to reflect such events as stock splits, stock dividends and
recapitalizations with respect to the Common Stock) (such number in clause (ii),
the "Adjustment Number"). Following the payment of the full amount of the
Series A Liquidation Preference and the Common Adjustment in respect of all
outstanding Units of Series A Preferred Stock and shares of Common Stock,
respectively, holders of Units of Series A Preferred Stock and holders of shares
of Common Stock shall receive their ratable and proportionate share of the
remaining assets to be distributed in the ratio, on a per Unit or share basis,
as the case may be, of the Adjustment Number to 1 with respect to such Units of
Series A Preferred Stock and shares of Common Stock, on a per Unit and a per
share basis, respectively.
(B) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series A Liquidation Preference and
the liquidation preferences of all other series of Preferred Stock, if any,
which rank on a parity with the Series A Preferred Stock, then such remaining
assets shall be distributed ratably to the holders of such parity shares in
proportion to their respective liquidation preferences.
(C) In the event the Corporation shall at any time following the
Rights Declaration Date (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding shares of Common Stock or
(iii) combine the outstanding Common Stock into a smaller number of shares, then
in each such case the Adjustment Number in effect immediately prior to such
event shall be adjusted by multiplying such Adjustment Number by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
Section 7. CONSOLIDATION, MERGER, ETC. In case the Corporation
shall enter into any consolidation, merger, combination or other transaction in
which the shares of Common Stock are exchanged for or converted into other stock
or securities, cash and/or any other property, then in any such case the Units
of Series A Preferred Stock shall at the same time be similarly exchanged for or
converted into an amount per Unit (subject to the provision for
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adjustment hereinafter set forth) equal the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is converted or
exchanged. In the event the Corporation shall at any time (i) declare any
dividend on Common Stock payable in shares of Common Stock, (ii) subdivide
the outstanding Common Stock or (iii) combine the outstanding Common Stock
into a smaller number of shares, then in each such case the amount set forth
in the preceding sentence with respect to the exchange or conversion of Units
of Series A Preferred Stock shall be adjusted by multiplying such amount by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to
such event.
Section 8. REDEMPTION. The Units of a Series A Preferred Stock shall
not be redeemable by the Corporation; PROVIDED, HOWEVER, that the foregoing
shall not limit the ability of the Corporation to purchase or otherwise deal in
such Units to the extent otherwise permitted hereby and by law.
Section 9. RANKING. The Series A Preferred Stock shall rank
junior to all other series of the Corporation's Preferred Stock (whether with or
without par value) as to the payment of dividends and the distribution of
assets, unless the terms of any such series shall provide otherwise.
Section 10. AMENDMENT. Neither these Articles Supplementary nor
the Articles of Incorporation of the Corporation may be amended in any manner
which would materially alter or change the powers, preferences or special rights
of the Series A Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of a majority or more of the outstanding Units
of Series A Preferred Stock, voting separately as a class.
Section 11. FRACTIONAL SHARES. Series A Preferred Stock may be
issued in Units or other fractions of a share, which Units or fractions shall
entitle the holder, in proportion to such holder's Units or fractional shares,
to exercise voting rights, receive dividends, participate in distributions and
to have the benefit of all other rights of holders of Series A Preferred Stock."
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IN WITNESS WHEREOF, these Articles Supplementary have been executed on
behalf of the Corporation by its President and attested by its Secretary this
18th day of September, 1996.
ROC COMMUNITIES, INC.
By:
--------------------------------
Gary P. McDaniel
President
(SEAL)
ATTEST:
By:
--------------------------------
Roberta M. Hayhurst
Secretary
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EXHIBIT 7.5
<PAGE>
ARTICLES SUPPLEMENTARY
CLASSIFYING AND DESIGNATING A SERIES OF PREFERRED STOCK
AS
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
OF
ROC COMMUNITIES, INC.
Pursuant to Section 2-201 of the General Corporation Law
of the State of Maryland
We, Gary P. McDaniel and Roberta M. Hayhurst, being the President and the
Secretary, respectively, of ROC COMMUNITIES, INC., a corporation organized and
existing under the General Corporation Law of the State of Maryland (the
"Corporation"), in accordance with the provisions of Section 1-301 thereof, DO
HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of Directors by the
Amended and Restated Articles of Incorporation of the Corporation, on September
17, 1996 the Board of Directors adopted the following resolution creating a
series of 120,000 shares of Preferred Stock designated as Series A Junior
Participating Preferred Stock:
"RESOLVED, that pursuant to the authority vested in the
Board of Directors of the Corporation in accordance with the
provisions of its Amended and Restated Articles of
Incorporation, a series of Preferred Stock, par value $.01
per share, of the Corporation be, and it hereby is, created,
with such voting powers, preferences and relative,
participating, optional or other special rights, and such
qualifications, limitations or restrictions thereof, as
follows:
Section 1. DESIGNATION AND AMOUNT. There shall be a series of Preferred
Stock of the Corporation which shall be designated as "Series A Junior
Participating Preferred Stock," par value $.01 per share (hereinafter called
"Series A Preferred Stock"), and the number of shares constituting such series
shall be 120,000. Such number of shares may be increased or decreased by
resolution of the Board of Directors and by the filing of articles of amendment
pursuant to the provisions of the General Corporation Law of the State of
Maryland stating that such increase or reduction has been so authorized;
PROVIDED, HOWEVER, that no decrease shall reduce the number of shares of Series
A Preferred Stock to a number less than that of the shares then outstanding plus
the number of shares of Series A Preferred Stock issuable upon exercise of
outstanding rights, options or warrants or upon conversion of outstanding
securities issued by the Corporation.
<PAGE>
Section 2. DIVIDENDS AND DISTRIBUTIONS.
(A) Subject to the prior and superior rights of the holders of
any shares of any series of Preferred Stock ranking prior and superior to the
shares of Series A Preferred Stock with respect to dividends, each holder of one
one-thousandth (1/1,000) of a share (a "Unit") of Series A Preferred Stock shall
be entitled to receive, when, as and if declared by the Board of Directors out
of funds legally available for the purpose, quarterly dividends payable in cash
to holders of record on the last business day of March, June, September and
December in each year (each such date being referred to herein as a "Quarterly
Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date
after the first issuance of a Unit of Series A Preferred Stock, in an amount per
Unit (rounded to the nearest cent) equal to the greater of (a) $.01 or (b)
subject to the provision for adjustment hereinafter set forth, the aggregate per
share amount of all cash dividends declared on shares of the common stock, par
value $.01 per share, of the Company (the "Common Stock") since the immediately
preceding Quarterly Dividend Payment Date, or, with respect to the first
Quarterly Dividend Payment Date, since the first issuance of a Unit of Series A
Preferred Stock, and (ii) subject to the provision for adjustment hereinafter
set forth, quarterly distributions (payable in kind) on each Quarterly Dividend
Payment Date in an amount per Unit equal to the aggregate per share amount of
all non-cash dividends or other distributions (other than a dividend payable in
shares of Common Stock or a subdivision of the outstanding shares of Common
Stock, by reclassification or otherwise) declared on shares of Common Stock
since the immediately preceding Quarterly Dividend Payment Date, or with respect
to the first Quarterly Dividend Payment Date, since the first issuance of a Unit
of Series A Preferred Stock. In the event the Corporation shall at any time
following September 17, 1996 (the "Rights Declaration Date") (i) declare any
dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock or (iii) combine the outstanding Common Stock into a
smaller number of shares, then in each such case the amount to which holders of
Units of Series A Preferred Stock were entitled immediately prior to such event
under clause (b) of the preceding sentence shall be adjusted by multiplying each
such amount by a fraction the numerator of which is the number of shares of
Common Stock outstanding immediately after such event and the denominator of
which is the number of shares of Common Stock that were outstanding immediately
prior to such event.
(B) The Corporation shall declare a dividend or distribution on
Units of the Series A Preferred Stock as provided in paragraph (A) above at the
time it declares a dividend or distribution on the Common Stock (other than a
dividend payable in shares of Common Stock); PROVIDED, HOWEVER, that in the
event no dividend or distribution shall have been declared on the Common Stock
during the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $.01 per Unit on the
Series A Preferred Stock shall nevertheless be payable on such subsequent
Quarterly Dividend Payment Date.
(C) No dividend or distribution (other than a dividend payable
in shares of Common Stock) shall be paid or payable to the holders of shares of
Common Stock unless, prior thereto, all accrued but unpaid dividends to the date
of such dividend or distribution shall have been paid to the holders of Units of
Series A Preferred Stock.
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<PAGE>
(D) Dividends shall begin to accrue and be cumulative on each
outstanding Unit of Series A Preferred Stock from the Quarterly Dividend Payment
Date next preceding the date of issue of such Unit of Series A Preferred Stock,
unless the date of issue of such Unit is prior to the record date for the first
Quarterly Dividend Payment Date, in which case dividends on such Unit shall
begin to accrue from the date of issue of such shares, or unless the date of
issue is a Quarterly Dividend Payment Date or is a date after the record date
for the determination of holders of Units of Series A Preferred Stock entitled
to receive a quarterly dividend and before such Quarterly Dividend Payment Date,
in either of which events such dividends shall begin to accrue and be cumulative
from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall
not bear interest. Dividends paid on Units of Series A Preferred Stock in an
amount less than the total amount of such dividends at the time accrued and
payable on such Units shall be allocated PRO RATA on a Unit-by-Unit basis among
all such Units of Series A Preferred Stock at the time outstanding. The Board
of Directors may fix a record date for the determination of holders of Units of
Series A Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall be no more than 30 days
prior to the date fixed for the payment thereof.
Section 3. VOTING RIGHTS. The holders of Units of Series A Preferred Stock
shall have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each Unit of Series A Preferred Stock shall entitle the holder thereof to
one vote on all matters submitted to a vote of the stockholders of the
Corporation. In the event the Corporation shall at any time following the
Rights Declaration Date (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding shares of Common Stock or
(iii) combine the outstanding Common Stock into a smaller number of shares, then
in each such case the number of votes per share to which holders of Units of
Series A Preferred Stock were entitled immediately prior to such event shall be
adjusted by multiplying such number by a fraction the numerator of which is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) Except as otherwise provided herein or by law, the holders of
Units of Series A Preferred Stock and the holders of shares of Common Stock and
any other capital stock of the Corporation having general voting rights shall
vote together as one class on all matters submitted to a vote of stockholders of
the Corporation.
(C) (i) Whenever, at any time or times, dividends payable on any
Unit or Units of Series A Preferred Stock shall be in arrears in an amount equal
to at least two full quarterly dividends (whether or not declared and whether or
not consecutive), the holders of record of the outstanding Units of Series A
Preferred Stock shall have the exclusive right, voting separately as a single
class, to elect two directors of the Corporation at a special meeting of
stockholders of the Corporation or at the Corporation's next annual meeting of
stockholders, and at each subsequent annual meeting of stockholders, as provided
below. At elections for such directors, the holders of Units of Series A
Preferred Stock shall be entitled to cast one vote for each Unit of Series A
Preferred Stock held.
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<PAGE>
(ii) Upon the vesting of such right of the holders of Units of
Series A Preferred Stock, the maximum authorized number of members of the Board
of Directors shall automatically be increased by two and the two vacancies so
created shall be filled by vote of the holders of the outstanding Preferred
Stock as hereinafter set forth. A special meeting of the stockholders of the
Corporation then entitled to vote shall be called by the Chairman or the
President or the Secretary of the Corporation, if requested in writing by the
holders of record of not less than 10% of the Units of Series A Preferred Stock
then outstanding. At such special meeting, or, if no such special meeting shall
have been called, then at the next annual meeting of stockholders of the
Corporation, the holders of the Units of Series A Preferred Stock shall elect,
voting as above provided, two directors of the Corporation to fill the aforesaid
vacancies created by the automatic increase in the number of members of the
Board of Directors. At any and all such meetings for such election, the holders
of a majority of the outstanding Units of Series A Preferred Stock shall be
necessary to constitute a quorum for such election, whether present in person or
by proxy, and such two directors shall be elected by the vote of at least a
plurality of Units held by such stockholders present or represented at the
meeting. Any director elected by holders of Units of Series A Preferred Stock
pursuant to this Section may be removed at any annual or special meeting, by
vote of a majority of the stockholders voting as a class who elected such
director, with or without cause. In case any vacancy shall occur among the
directors elected by the holders of Units of Series A Preferred Stock pursuant
to this Section, such vacancy may be filled by the remaining director so
elected, or his successor then in office, and the director so elected to fill
such vacancy shall serve until the next meeting of stockholders for the election
of directors. After the holders of Units of Series A Preferred Stock shall have
exercised their right to elect directors in any default period and during the
continuance of such period, the number of directors shall not be further
increased or decreased except by vote of the holders of Units of Series A
Preferred Stock as herein provided or pursuant to the rights of any equity
securities ranking senior to or pari passu with the Series A Preferred Stock.
(iii) The right of the holders of Units of Series A Preferred
Stock, voting separately as a class, to elect two members of the Board of
Directors of the Corporation as aforesaid shall continue until, and only until,
such time as all arrears in dividends (whether or not declared) on the Units of
Series A Preferred Stock shall have been paid or declared and set apart for
payment, at which time such right shall terminate, except as herein or by law
expressly provided, subject to revesting in the event of each and every
subsequent default of the character above-mentioned. Upon any termination of
the right of the holders of the Units of Series A Preferred Stock as a class to
vote for directors as herein provided, the term of office of all directors then
in office elected by the holders of Units of Series A Preferred Stock pursuant
to this Section shall terminate immediately. Whenever the term of office of the
directors elected by the holders of Units of Series A Preferred Stock pursuant
to this Section shall terminate and the special voting powers vested in the
holders of the Preferred Stock pursuant to this Section shall have expired, the
maximum number of members of the Board of Directors of the Corporation shall be
such number as may be provided for in the By-laws of the Corporation,
irrespective of any increase made pursuant to the provisions of this Section.
(D) Except as set forth herein, holders of Units of Series A
Preferred Stock shall have no special voting rights and their consent shall not
be required (except to the extent they are entitled to vote with holders of
Common Stock as set forth herein) for taking any corporate action.
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<PAGE>
Section 4. CERTAIN RESTRICTIONS.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Units of Series A Preferred Stock as provided in
herein are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on outstanding Units of Series A
Preferred Stock outstanding shall have been paid in full, the Corporation shall
not:
(i) declare or pay dividends on, make any other
distributions on, or redeem or purchase or otherwise acquire for consideration
any shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Series A Preferred Stock;
(ii) declare or pay dividends on or make any other
distributions on any shares of stock ranking on a parity (either as to dividends
or upon liquidation, dissolution or winding up) with the Series A Preferred
Stock, except dividends paid ratably on the Units of Series A Preferred Stock
and all such parity stock on which dividends are payable or in arrears in
proportion to the total amounts to which the holders of all such Units and all
such shares are then entitled;
(iii) redeem or purchase or otherwise acquire for
consideration shares of any stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series A Preferred Stock;
PROVIDED, HOWEVER, that the Corporation may at any time redeem, purchase or
otherwise acquire shares of any such parity stock in exchange for shares of any
stock of the Corporation ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Series A Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any
Units of Series A Preferred Stock, except in accordance with a purchase offer
made in writing or by publication (as determined by the Board of Directors) to
all holders of such Units, upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other relative rights
and preferences of the respective series and classes, shall determine in good
faith will result in fair and equitable treatment among the respective series or
classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any Units or
shares of stock of the Corporation unless the Corporation could, under paragraph
(A) of this Section, purchase or otherwise acquire such Units or shares at such
time and in such manner.
Section 5. REACQUIRED SHARES. Any Units of Series A Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and cancelled promptly after the acquisition thereof. All such
Units shall, upon their cancellation, become authorized but unissued Units of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
to be created by resolution or resolutions of the Board of Directors, subject to
the conditions and restrictions on issuance set forth herein.
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Section 6. LIQUIDATION, DISSOLUTION OR WINDING UP.
(A) Upon any voluntary liquidation, dissolution or winding up of
the Corporation, no distribution shall be made to the holders of shares of stock
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Preferred Stock unless, prior thereto, the holders
of Units of Series A Preferred Stock shall have received $1.00 per Unit, plus an
amount equal to accrued and unpaid dividends and distributions thereon, whether
or not declared, to the date of such payment (the "Series A Liquidation
Preference"). Following the payment of the full amount of the Series A
Liquidation Preference, no additional distributions shall be made to the holders
of Units of Series A Preferred Stock unless, prior thereto, the holders of
shares of Common Stock shall have received an amount per share (the "Common
Adjustment") equal to the quotient obtained by dividing (i) the Series A
Liquidation Preference by (ii) 1 (as appropriately adjusted as set forth in
subparagraph C below to reflect such events as stock splits, stock dividends and
recapitalizations with respect to the Common Stock) (such number in clause (ii),
the "Adjustment Number"). Following the payment of the full amount of the
Series A Liquidation Preference and the Common Adjustment in respect of all
outstanding Units of Series A Preferred Stock and shares of Common Stock,
respectively, holders of Units of Series A Preferred Stock and holders of shares
of Common Stock shall receive their ratable and proportionate share of the
remaining assets to be distributed in the ratio, on a per Unit or share basis,
as the case may be, of the Adjustment Number to 1 with respect to such Units of
Series A Preferred Stock and shares of Common Stock, on a per Unit and a per
share basis, respectively.
(B) In the event, however, that there are not sufficient assets
available to permit payment in full of the Series A Liquidation Preference and
the liquidation preferences of all other series of Preferred Stock, if any,
which rank on a parity with the Series A Preferred Stock, then such remaining
assets shall be distributed ratably to the holders of such parity shares in
proportion to their respective liquidation preferences.
(C) In the event the Corporation shall at any time following the
Rights Declaration Date (i) declare any dividend on Common Stock payable in
shares of Common Stock, (ii) subdivide the outstanding shares of Common Stock or
(iii) combine the outstanding Common Stock into a smaller number of shares, then
in each such case the Adjustment Number in effect immediately prior to such
event shall be adjusted by multiplying such Adjustment Number by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
Section 7. CONSOLIDATION, MERGER, ETC. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or converted into other stock or
securities, cash and/or any other property, then in any such case the Units of
Series A Preferred Stock shall at the same time be similarly exchanged for or
converted into an amount per Unit (subject to the provision for adjustment
hereinafter set forth) equal the aggregate amount of stock, securities, cash
and/or any other property (payable in kind), as the case may be, into which or
for which each share of Common Stock is converted or exchanged. In the event
the Corporation shall at any time (i) declare any dividend on Common Stock
payable in shares of Common Stock, (ii) subdivide the
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outstanding Common Stock or (iii) combine the outstanding Common Stock into a
smaller number of shares, then in each such case the amount set forth in the
preceding sentence with respect to the exchange or conversion of Units of Series
A Preferred Stock shall be adjusted by multiplying such amount by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
Section 8. REDEMPTION. The Units of a Series A Preferred Stock shall not
be redeemable by the Corporation; PROVIDED, HOWEVER, that the foregoing shall
not limit the ability of the Corporation to purchase or otherwise deal in such
Units to the extent otherwise permitted hereby and by law.
Section 9. RANKING. The Series A Preferred Stock shall rank junior to all
other series of the Corporation's Preferred Stock (whether with or without par
value) as to the payment of dividends and the distribution of assets, unless the
terms of any such series shall provide otherwise.
Section 10. AMENDMENT. Neither these Articles Supplementary nor the
Articles of Incorporation of the Corporation may be amended in any manner which
would materially alter or change the powers, preferences or special rights of
the Series A Preferred Stock so as to affect them adversely without the
affirmative vote of the holders of a majority or more of the outstanding Units
of Series A Preferred Stock, voting separately as a class.
Section 11. FRACTIONAL SHARES. Series A Preferred Stock may be issued in
Units or other fractions of a share, which Units or fractions shall entitle the
holder, in proportion to such holder's Units or fractional shares, to exercise
voting rights, receive dividends, participate in distributions and to have the
benefit of all other rights of holders of Series A Preferred Stock."
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IN WITNESS WHEREOF, these Articles Supplementary have been executed on
behalf of the Corporation by its President and attested by its Secretary this
18th day of September, 1996.
ROC COMMUNITIES, INC.
By: /S/ GARY P. MCDANIEL
--------------------------
Gary P. McDaniel
President
(SEAL)
ATTEST:
By: /s/ ROBERTA M. HAYHURST
------------------------
Roberta M. Hayhurst
Secretary
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EXHIBIT 7.6
<PAGE>
RESTATED BYLAWS
OF
ROC COMMUNITIES, INC.
(as amended through September 17, 1996)
ARTICLE I
OFFICES
Section 1. PRINCIPAL OFFICE. The principal office of the
Corporation shall be located at such place or places as the Board of Directors
may designate.
Section 2. ADDITIONAL OFFICES. The Corporation may have
additional offices at such places as the Board of Directors may from time to
time determine or the business of the Corporation may require.
ARTICLE II
STOCKHOLDERS
Section 1. PLACE. All meetings of stockholders shall be held at
the principal office of the Corporation or at such other place within the United
States as shall be stated in the notice of the meeting.
Section 2. ANNUAL MEETING. An annual meeting of the stockholders
for the election of directors and the transactions of any business within the
powers of the Corporation shall be held on a date and at a time set by the Board
of Directors during the month of May in each year commencing in 1994.
Section 3. SPECIAL MEETINGS. The president, chief executive
officer or Board of Directors may call special meetings of the stockholders.
Special meetings of stockholders shall also be called by the secretary upon the
written request of the holders of shares entitled to cast not less than fifty
percent of all the votes entitled to be cast at such meeting. Such request
shall state the purpose of such meeting and the matters proposed to be acted on
at such meeting. The secretary shall inform such stockholders of the reasonably
estimated cost of preparing and of mailing notice of the meeting and, upon
payment to the Corporation of such costs, the secretary shall give notice to
each stockholder entitled to notice of the meeting.
<PAGE>
Section 4. NOTICE. Not less than ten nor more than 90 days before
each meeting of stockholders, the secretary shall give to each stockholder
entitled to vote at such meeting and to each stockholder not entitled to vote
who is entitled to notice of the meeting written or printed notice stating the
time and place of the meeting and, in the case of a special meeting or as
otherwise may be required by statute, the purpose for which the meeting is
called, either by mail or by presenting it to such stockholder personally or by
leaving it at his residence or usual place of business. If mailed, such notice
shall be deemed to be given when deposited in the United States mail addressed
to the stockholder at his post office address as it appears on the records of
the Corporation, with postage thereon prepaid.
Section 5. SCOPE OF NOTICE. Any business of the Corporation may
be transacted at an annual meeting of stockholders without being specifically
designated in the notice, except such business as is required by statute to be
stated in such notice. No business shall be transacted at a special meeting of
stockholders except as specifically designated in the notice.
Section 6. QUORUM. At any meeting of stockholders, the presence
in person or by proxy of the stockholders entitled to cast a majority of all the
votes entitled to be cast at such meeting shall constitute a quorum; but this
section shall not affect any requirement under any statute or Charter of
Corporation for the vote necessary for the adoption of any measure. If,
however, such quorum shall not be present at any meeting of the stockholders,
the stockholders entitled to vote at such meeting, present in person or by
proxy, shall have power to adjourn the meeting from time to time to a date not
more than 120 days after the original record date without notice other than
announcement at the meeting. At such adjourned meeting at which a quorum shall
be present, any business may be transacted which might have been transacted at
the meeting as originally notified.
Section 7. VOTING. A plurality of all the votes cast at a meeting
of the stockholders duly called and at which a quorum is present shall be
sufficient to elect a director. Each share may be voted for as many individuals
as there are directors to be elected and for whose election the share is
entitled to be voted. A majority of the votes cast at a meeting of the
stockholders duly called and at which a quorum is present shall be sufficient to
approve any other matter which may properly come before the meeting, unless more
than a majority of the votes cast is required by statute or by the Charter of
Corporation. Unless otherwise provided in the Charter, each outstanding share,
regardless of class, shall be entitled to one vote on each matter submitted to a
vote at a meeting of stockholders.
Section 8. PROXIES. A stockholder may vote the stock owned of
record by him, either in person or by proxy executed in writing by the
stockholder or by his duly authorized
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attorney in fact. Such proxy shall be filed with the secretary of the
Corporation before or at the time of the meeting. No proxy shall be valid after
eleven months from the date of its execution, unless otherwise provided in the
proxy.
Section 9. VOTING OF STOCK BY CERTAIN HOLDERS. Stock registered
in the name of a corporation, partnership, trust or other entity, if entitled to
be voted, may be voted by the president or a vice president, a general partner
or trustee thereof, as the case may be, or a proxy appointed by any of the
foregoing individuals, unless some other person who has been appointed to vote
such stock pursuant to a bylaw or a resolution of the board of directors of such
corporation or other entity presents a certified copy of such bylaw or
resolution, in which case such person may vote such stock. Any director or
other fiduciary may vote stock registered in his name as such fiduciary, either
in person or by proxy.
Shares of stock of the Corporation directly or
indirectly owned by it shall not be voted at any meeting and shall not be
counted in determining the total number of outstanding shares entitled to be
voted at any given time, unless they are held by it in a fiduciary capacity, in
which case they may be voted and shall be counted in determining the total
number of outstanding shares at any given time.
The Board of Directors may adopt by resolution a
procedure by which a stockholder may certify in writing to the Corporation that
any shares of stock registered in the name of the stockholder are held for the
account of a specified person other than the stockholder. The resolution shall
set forth the class of stockholders who may make the certification, the purpose
for which the certification may be made, the form of certification and the
information to be contained in it, if the certification is with respect to a
record date or closing of the stock transfer books, the time after the record
date or closing of the stock transfer books, the time after the record date or
closing of the stock transfer books within which the certification must be
received by the Corporation; and any other provisions with respect to the
procedure which the Board of Directors considers necessary or desirable. On
receipt of such certification, the person specified in the certification shall
be regarded as, for the purposes set forth in the certification, the stockholder
of record of the specified stock in place of the stockholder who makes the
certification.
Section 10. EXEMPTION FROM CONTROL SHARE STATUTE. Title 3,
Subtitle 7 of the Corporations and Associations Article of the Annotated Code of
Maryland (or any successor statute) shall apply to any acquisition by any person
of stock of the Corporation.
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Section 11. INSPECTORS. At any meeting of stockholders, the
chairman of the meeting may, or upon the request of any stockholder shall,
appoint one or more persons as inspectors for such meeting. Such inspectors
shall ascertain and report the number of shares represented at the meeting based
upon their determination of the validity and effect of proxies, count all votes,
report the results and perform such other acts as are proper to conduct the
election and voting with impartiality and fairness to all the stockholders.
Each report of an inspector shall be in writing and
signed by him or by a majority of them if there is more than one inspector
acting at such meeting. If there is more than one inspector, the report of a
majority shall be the report of the inspectors. The report of the inspector or
inspectors on the number of shares represented at the meeting and the results of
the voting shall be PRIMA FACIE evidence thereof.
Section 12. NOMINATIONS AND STOCKHOLDER BUSINESS
(a) LIST OF STOCKHOLDERS. At each meeting of stockholders, a full,
true and complete list of all stockholders entitled to vote at such meeting,
showing the number and class of shares held by each and certified by the
transfer agent for such class or by the secretary, shall be furnished by the
secretary.
(b) ANNUAL MEETINGS OF STOCKHOLDERS.
(1) Nominations of persons for election to the Board of
Directors and the proposal of business to be considered by the stockholders may
be made at an annual meeting of stockholders (i) pursuant to the Corporation's
notice of meeting, (ii) by or at the direction of the Board of Directors or
(iii) by any stockholder of the Corporation who was a stockholder of record at
the time of giving of notice provided for in this Section 12(b), who is entitled
to vote at the meeting and who complied with the notice procedures set forth in
this Section 12(b).
(2) For nominations or other business to be properly brought
before an annual meeting by a stockholder pursuant to clause (iii) of paragraph
(b)(1) of this Section 12, the stockholder must have given timely notice thereof
in writing to the secretary of the Corporation. To be timely, a stockholder's
notice shall be delivered to the secretary at the principal executive offices of
the Corporation not less than 60 days nor more than 90 days prior to the first
anniversary of the preceding year's annual meeting; provided, however, that in
the event that the date of the annual meeting is advanced by more than 30 days
or delayed by more than 60 days from such anniversary date, notice by the
stockholder to be timely must be so delivered not earlier than the 90th day
prior to such annual meeting and not later than the close of business on the
later of the 60th day prior to such annual meeting or the tenth day
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following the day on which public announcement of the date of such meeting is
first made. Such stockholder's notice shall set forth (i) as to each person
whom the stockholder proposes to nominate for election or reelection as a
director, all information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors, or is otherwise
required, in each case pursuant to Regulation 14A under the Securities Exchange
Act of 1934, as amended (the "Exchange Act") (including such person's written
consent to being named in the proxy statement as a nominee and to serving as a
director if elected); (ii) as to any other business that the stockholder
proposes to bring before the meeting, a brief description of the business
desired to be brought before the meeting, the reasons for conducting such
business at the meeting and any material interest in such business of such
stockholder and of the beneficial owners, if any, on whose behalf the proposal
is made; and (iii) as to the stockholder giving the notice and the beneficial
owners, if any, on whose behalf the nomination or proposal is made, (x) the name
and address of such stockholder, as they appear on the Corporation's books, and
of such beneficial owners, if any, and (y) the class and number of shares of
stock of the Corporation which are owned beneficially and of record by such
stockholder and such beneficial owners, if any.
(3) Notwithstanding anything in the second sentence of paragraph
(b)(2) of this Section 12 to the contrary, in the event that the number of
directors to be elected to the Board of Directors is increased and there is no
public announcement naming all of the nominees for director or specifying the
size of the increased Board of Directors made by the Corporation at least 70
days prior to the first anniversary of the preceding year's annual meeting, a
stockholder's notice required by paragraph (b)(2) of this Section 12 shall also
be considered timely, but only with respect to nominees for any new positions
created by such increase, if it shall be delivered to the secretary at the
principal executive offices of the Corporation not later than the close of
business on the tenth day following the day on which such public announcement is
first made by the Corporation.
(c) SPECIAL MEETINGS OF STOCKHOLDERS.
(1) Only such business shall be conducted at a special meeting
of stockholders as shall have been brought before the meeting pursuant to the
Corporation's notice of meeting.
(2) Nominations of persons for election to the Board of
Directors may be made at a special meeting of stockholders at which directors
are to be elected (i) pursuant to the Corporation's notice of meeting, (ii) by
or at the direction of the Board of Directors or (iii) provided that the Board
of Directors has determined that directors shall be elected at such special
meeting, by any stockholder of the Corporation who (x)
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has given timely notice thereof meeting the requirements of Section 12(c)(3),
(y) is a stockholder of record at the time of giving of such notice, and (z) is
entitled to vote at the meeting.
(3) To be timely, a stockholder's notice referred to in Section
12(c)(2) must have been delivered to the secretary of the Corporation at the
principal executive offices of the Corporation not earlier than the 90th day
prior to such special meeting and not later than the close of business on the
later of the 60th day prior to such special meeting or the tenth day following
the day on which public announcement is made of the date of the special meeting
and of the nominees proposed by the Board of Directors to be elected at such
meeting. Such stockholder's notice shall set forth (i) as to each person whom
the stockholder proposes to nominate for election or reelection as a director,
all information relating to such person that is required to be disclosed in
solicitations of proxies for election of directors, or is otherwise required, in
each case pursuant to Regulation 14A under the Exchange Act (including such
person's written consent to being named in the proxy statement as a nominee and
to serving as a director if elected); and (ii) as to the stockholder giving the
notice and the beneficial owners, if any, on whose behalf the nomination or
proposal is made, (x) the name and address of such stockholder, as they appear
on the Corporation's books, and of such beneficial owners, if any, and (y) the
class and number of shares of stock of the Corporation which are owned
beneficially and of record by such stockholder and such beneficial owners, if
any.
(d) GENERAL.
(1) Only such persons who are nominated in accordance with the
procedures set forth in this Section 12 shall be eligible to serve as directors
and only such business shall be conducted at a meeting of stockholders as shall
have been brought before the meeting in accordance with the procedures set forth
in this Section 12. The presiding officer of the meeting shall have the power
and duty to determine whether a nomination or any business proposed to be
brought before the meeting was made in accordance with the procedures set forth
in this Section 12 and, if any proposed nomination or business is not in
compliance with this Section 12, to declare that such defective nomination or
proposal be disregarded.
(2) For purposes of this Section 12, "public announcement" shall
mean disclosure in a press release reported by the Dow Jones News Service,
Associated Press or comparable news service or in a document publicly filed by
the Corporation with the Securities and Exchange Commission pursuant to Sections
13, 14, or 15(d) of the Exchange Act.
(3) Notwithstanding the foregoing provisions of this Section 12,
a stockholder shall also comply with all
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applicable requirements of state law and of the Exchange Act and the rules and
regulations thereunder with respect to the matters set forth in this Section 12.
Nothing in this Section 12 shall be deemed to affect any rights of stockholders
to request inclusion of proposals in the Corporation's proxy statement pursuant
to Rule 14a-8 under the Exchange Act.
Section 13. INFORMAL ACTION BY STOCKHOLDERS. Any action required
or permitted to be taken at a meeting of stockholders may be taken without a
meeting if a consent in writing, setting forth such action, is signed by each
stockholder entitled to vote on the matter and any other stockholder entitled to
notice of a meeting of stockholders (but not vote thereat) has waived in writing
any right to dissent from such action, and such consent and waiver are filed
with the minutes of proceedings of the stockholders.
Section 14. VOTING BY BALLOT. Voting on any question or in any
election may be VIVA VOCE unless the presiding officer shall order or any
stockholder shall demand that voting be by ballot.
ARTICLE III
DIRECTORS
Section 1. GENERAL POWERS; QUALIFICATIONS. The business and
affairs of the Corporation shall be managed under the direction of its Board of
Directors. All powers of the Corporation may be exercised by or under authority
of the Board of Directors, except as conferred upon or reserved to the
stockholders by statute or by the Charter or these Bylaws.
Section 2. NUMBER, TENURE AND QUALIFICATIONS. At any regular
meeting or at any special meeting called for that purpose, a majority of the
entire Board of Directors may establish, increase or decrease the number of
directors, provided that the number thereof shall never be less than the minimum
number required by the Maryland General Corporation Law, nor more than 15, and
further provided that the tenure of office of a director shall not be affected
by any decrease in the number of directors. Each director shall hold office for
the term for which he is elected and until his successor is elected and
qualified.
Section 3. ANNUAL AND REGULAR MEETINGS. An annual meeting of the
Board of Directors shall be held immediately after and at the same place as the
annual meeting of stockholders, no notice other than this Bylaw being necessary.
The Board of Directors may provide, by resolution, the time and place, either
within or without the State of Maryland, for the holding of regular meetings of
the Board of Directors without other notice than such resolution.
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Section 4. SPECIAL MEETING. Special meetings of the Board of
Directors may be called by or at the request of the chairman of the board (or
any co-chairman of the board if more than one), president or by a majority of
the directors then in office. The person or persons authorized to call special
meetings of the Board of Directors may fix any place, either within or without
the State of Maryland, as the place for holding any special meeting of the Board
of Directors called by them.
Section 5. NOTICE. Notice of any special meeting shall be given
by oral notice to each director or written notice delivered personally,
transmitted by facsimile, telegraphed or mailed to each director at his business
or residence address. Notice shall be given at least five days prior to the
meeting; however, such five-day period may be reduced at the instruction of the
Chairman of the Board of Directors to the notice period specified by him. If
mailed, such notice shall be deemed to be given when deposited in the United
States mail properly addressed, with postage thereon prepaid. If given by
telegram, such notice shall be deemed to be given when the telegram is delivered
to the telegraph company. Neither the business to be transacted at, nor the
purpose of, any annual, regular or special meeting of the Board of Directors
need be stated in the notice, unless specifically required by statute or these
Bylaws.
Section 6. QUORUM. A majority of the directors shall constitute a
quorum for transaction of business at any meeting of the Board of Directors,
provided that, if less than a majority of such directors are present at said
meeting, a majority of the directors present may adjourn the meeting from time
to time without further notice, and provided further that if, pursuant to the
Charter of the Corporation or these Bylaws, the vote of a majority of a
particular group of directors is required for action, a quorum must also include
a majority of such group.
The Board of Directors present at a meeting which has been duly
called and convened may continue to transact business until adjournment,
notwithstanding the withdrawal of enough directors to leave less than a quorum.
Section 7. VOTING. The action of the majority of the directors
present at a meeting at which a quorum is present shall be the action of the
Board of Directors, unless the concurrence of a greater proportion is required
for such action by applicable statute, the Charter or these Bylaws.
Section 8. TELEPHONE MEETINGS. Directors may participate in a
meeting by means of a conference telephone or similar communications equipment
if all persons participating in the meeting can hear each other at the same
time. Participation in a meeting by these means shall constitute presence in
person at the meeting.
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Section 9. INFORMAL ACTION BY DIRECTORS. Any action required or
permitted to be taken at any meeting of the Board of Directors may be taken
without a meeting, if a consent in writing to such action is signed by each
director and such written consent is filed with the minutes of proceedings of
the Board of Directors.
Section 10. VACANCIES. If for any reason any or all the directors
cease to be directors, such event shall not terminate the Corporation or affect
these Bylaws or the powers of the remaining directors hereunder (even if fewer
than three directors remain). The stockholders of the Corporation shall elect a
successor to fill a vacancy on the Board of Directors which results from the
removal of a director for cause. Any vacancy on the Board of Directors for any
other reason other than an increase in the number of directors shall be filled
by a majority vote of the remaining directors, even if such majority is less
than a quorum. Any vacancy in the number of directors created by an increase in
the number of directors may be filled by a majority vote of the entire Board of
Directors. Any individual so elected as director shall hold office for the
unexpired term of the director he is replacing.
Section 11. COMPENSATION. Directors shall not receive any stated
salary for their services as directors but, by resolution of the Board of
Directors, may receive fixed sums per year and/or per meeting. Expenses of
attendance, if any, may be allowed to directors for attendance at each annual,
regular or special meeting of the Board of Directors or of any committee
thereof; but nothing herein contained shall be construed to preclude any
directors from serving the Corporation in any other capacity and receiving
compensation therefor.
Section 12. REMOVAL OF DIRECTORS. The stockholders may remove any
director for cause, in the manner provided in the Charter of the Corporation.
Section 13. LOSS OF DEPOSITS. No director shall be liable for any
loss which may occur by reason of the failure of the bank, trust company,
savings and loan association, or other institution with whom moneys or stock
have been deposited.
Section 14. SURETY BONDS. Unless required by law, no director
shall be obligated to give any bond or surety or other security for the
performance of any of his duties.
Section 15. RELIANCE. Each director, officer, employee and agent
of the Corporation shall, in the performance of his duties with respect to the
Corporation, be fully justified and protected with regard to any act or failure
to act in reliance in good faith upon the books of account or other records of
the Corporation, upon an opinion of counsel or upon reports made to the
Corporation by any of its officers or employees or by the advisers, accountants,
appraisers or other experts or consultants selected by the Board of Directors or
officers of the
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Corporation, regardless of whether such counsel or expert may also be a
director.
Section 16. CERTAIN RIGHTS OF DIRECTORS, OFFICERS, EMPLOYEES AND
AGENTS. The directors shall have no responsibility to devote their full time to
the affairs of the Corporation. Any director or officer, employee or agent of
the Corporation, in his personal capacity or in a capacity as an affiliate,
employee, or agent of any other person, or otherwise, may have business
interests and engage in business activities similar to or in addition to those
of or relating to the Corporation.
Section 17. PROHIBITED INVESTMENTS AND ACTIVITIES. The Corporation
shall not, without the approval of a majority of the Corporation's disinterested
directors, (i) acquire from or sell to any director, officer or employee of the
Corporation, or any entity in which a director, officer or employee of the
Corporation owns directly or indirectly more than a 1% interest or serves as a
general partner or controls an entity which serves as a general partner, or
acquire from or sell to any affiliate of any of the foregoing, any assets or
other property of the Corporation, (ii) make any loan to or borrow from any of
the foregoing persons, or (iii) engage in any other material transaction with
any of the foregoing persons. Any transaction of the type described above will
be in all respects on such terms as are, at the time of the transaction and
under the circumstances then prevailing, fair and reasonable to the Corporation.
ARTICLE IV
COMMITTEES
Section 1. NUMBER, TENURE AND QUALIFICATIONS. The Board of
Directors may appoint from among its members an Executive Committee, an Audit
Committee and other committees, composed of two or more directors, to serve at
the pleasure of the Board of Directors.
Section 2. POWERS. The Board of Directors may delegate to
committees appointed under Section 1 of this Article any of the powers of the
Board of Directors, except as prohibited by law.
Section 3. MEETINGS. In the absence of any member of any such
committee, the members thereof present at any meeting, whether or not they
constitute a quorum, may appoint another director to act in the place of such
absent member.
Section 4. TELEPHONE MEETINGS. Members of a committee of the
Board of Directors may participate in a meeting by means of a conference
telephone or similar communications equipment if all persons participating in
the meeting can hear
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each other at the same time. Participation in a meeting by these means shall
constitute presence in person at the meeting.
Section 5. INFORMAL ACTION BY COMMITTEES. Any action required or
permitted to be taken at any meeting of a committee of the Board of Directors
may be taken without a meeting, if a consent in writing to such action is signed
by each member of the committee and such written consent is filed with the
minutes of proceedings of such committee.
ARTICLE V
OFFICERS
Section 1. GENERAL PROVISIONS. The officers of the Corporation
shall include a chief executive officer, a president, a secretary and a
treasurer and may include a chairman of the board (or one or more co-chairmen of
the board), a vice chairman of the board, one or more vice presidents, a chief
operating officer, a chief financial officer, one or more assistant secretaries
and one or more assistant treasurers. In addition, the Board of Directors may
from time to time appoint such other officers with such powers and duties as
they shall deem necessary or desirable. The officers of the Corporation shall
be elected annually by the Board of Directors at the first meeting of the Board
of Directors held after each annual meeting of stockholders, except that the
chief executive officer may appoint one or more vice presidents, assistant
secretaries and assistant treasurers. If the election of officers shall not be
held at such meeting, such election shall be held as soon thereafter as may be
convenient. Each officer shall hold office until his successor is elected and
qualifies or until his death, resignation or removal in the manner hereinafter
provided. Any two or more offices except president and vice president may be
held by the same person. In its discretion, the Board of Directors may leave
unfilled any office except that of president, treasurer and secretary. Election
of an officer or agent shall not of itself create contract rights between the
Corporation and such officer or agent.
Section 2. REMOVAL AND RESIGNATION. Any officer or agent of the
Corporation may be removed by the Board of Directors if in its judgment the best
interests of the Corporation would be served thereby, but such removal shall be
without prejudice to the contract rights, if any, of the person so removed. Any
officer of the Corporation may resign at any time by giving written notice of
his resignation to the Board of Directors, the chairman of the board (or any co-
chairman of the board if more than one), the president or the secretary. Any
resignation shall take effect at any time subsequent to the time specified
therein or, if the time when it shall become effective is not specified therein,
immediately upon its receipt. The acceptance of a
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resignation shall not be necessary to make it effective unless otherwise stated
in the resignation.
Section 3. VACANCIES. A vacancy in any office may be filled by
the Board of Directors for the balance of the term.
Section 4. CHIEF EXECUTIVE OFFICER. The Board of Directors shall
designate a chief executive officer. In the absence of such designation, the
chairman of the board (or, if more than one, the co-chairmen of the board in the
order designated at the time of their election or, in the absence of any
designation, then in order of their election) shall be the chief executive
officer of the Corporation. The chief executive officer shall have general
responsibility for implementation of the policies of the Corporation, as
determined by the Board of Directors, and for the management of the business and
affairs of the Corporation.
Section 5. CHIEF OPERATING OFFICER. The Board of Directors may
designate a chief operating officer. The chief operating officer shall have the
responsibilities and duties as set forth by the Board of Directors or the chief
executive officer.
Section 6. CHIEF FINANCIAL OFFICER. The Board of Directors may
designate a chief financial officer. The chief financial officer shall have the
responsibilities and duties as set forth by the Board of Directors or the chief
executive officer.
Section 7. CHAIRMAN OF THE BOARD. The Board of Directors shall
designate a chairman of the board (or one or more co-chairmen of the board).
The chairman of the board shall preside over the meetings of the Board of
Directors and of the Stockholders at which he shall be present. If there be
more than one, the co-chairmen designated by the Board of Directors will perform
such duties. The chairman of the board shall perform other duties as may be
assigned to him or them by the Board of Directors.
Section 8. PRESIDENT. The president or chief executive officer,
as the case may be, shall in general supervise and control all of the business
and affairs of the Corporation. In the absence of a designation of a chief
operating officer by the Board of Directors, the president shall be the chief
operating officer. He may execute any deed, mortgage, bond, contract or other
instrument, except in cases where the execution thereof shall be expressly
delegated by the Board of Directors or by these Bylaws to some other officer or
agent of the Corporation or shall be required by law to be otherwise executed;
and in general shall perform all duties incident to the office of president and
such other duties as may be prescribed by the Board of Directors from time to
time.
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Section 9. VICE PRESIDENTS. In the absence of the president or in
the event of a vacancy in such office, the vice president (or in the event there
be more than one vice president, the vice presidents in the order designated at
the time of their election or, in the absence of any designation, then in the
order of their election) shall perform the duties of the president and when so
acting shall have all the powers of and be subject to all the restrictions upon
the president; and shall perform such other duties as from time to time may be
assigned to him by the president or by the Board of Directors. The Board of
Directors may designate one or more vice presidents as executive vice president
or as vice president for particular areas of responsibility.
Section 10. SECRETARY. The secretary shall (a) keep the minutes of
the proceedings of the stockholders, the Board of Directors and committee of the
Board of Directors in one or more books provided for that purpose; (b) see that
all notices are duly given in accordance with the provisions of these Bylaws or
as required by law; (c) be custodian of the trust records and of the seal of the
Corporation; (d) keep a register of the post office address of each stockholder
which shall be furnished to the secretary by such stockholder; (e) have general
charge of the share transfer books of the Corporation; and (f) in general
perform such other duties as from time to time may be assigned to him by the
chief executive officer, the president or by the Board of Directors.
Section 11. TREASURER. The treasurer shall have the custody of the
funds and securities of the Corporation and shall keep full and accurate
accounts of receipts and disbursements in books belonging to the Corporation and
shall deposit all moneys and other valuable effects in the name and to the
credit of the Corporation in such depositories as may be designated by the Board
of Directors. In the absence of designation of a chief financial officer by the
Board of Directors, the treasurer shall be the chief financial officer of the
Corporation.
The treasurer shall disburse the funds of the Corporation as may
be ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render to the president and Board of Directors, at the
regular meetings of the Board of Directors or whenever it may so require, an
account of all his transactions as treasurer and of the financial condition of
the Corporation.
If required by the Board of Directors, he shall give the
Corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the Board of Directors for the faithful performance of the
duties of his office and for the restoration to the Corporation, in came of his
death, resignation, retirement or removal from office, all books, papers,
vouchers, moneys and other property of whatever kind in his possession or under
his control belonging to the Corporation.
13
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Section 12. ASSISTANT SECRETARIES AND ASSISTANT TREASURERS. The
assistant secretaries and assistant treasurers, in general, shall perform such
duties as shall be assigned to them by the secretary or treasurer, respectively,
or by the president or the Board of Directors. The assistant treasurers shall,
if required by the Board of Directors, give bonds for the faithful performance
of their duties in such sums and with such surety or sureties as shall be
satisfactory to the Board of Directors.
Section 13. SALARIES. The salaries of the officers shall be fixed
from time to time by the Board of Directors and no officer shall be prevented
from receiving such salary by reason of the fact that he is also a director.
ARTICLE VI
CONTRACTS, LOANS, CHECKS AND DEPOSITS
Section 1. CONTRACTS. The Board of Directors may authorize any
officer or agent to enter into any contract or to execute and deliver any
instrument in the name of and on behalf of the Corporation and such authority
may be general or confined to specific instances. Any agreement, deed,
mortgage, lease or other document executed by one or more of the directors or by
an authorized person shall be valid and binding upon the Board of Directors and
upon the Corporation when authorized or ratified by the action of the Board of
Directors.
Section 2. CHECKS AND DRAFTS. All checks, drafts or other orders
for the payment of money, notes or other evidences of indebtedness issued in the
name of the Corporation shall be signed by such officer or officers, agent or
agents of the Corporation and in such manner shall from time to time be
determined by the Board of Directors.
ARTICLE VII
STOCK
Section 1. CERTIFICATES. Each stockholder shall be entitled to a
certificate or certificates which shall represent and certify the number of
shares of each class of stock held by him in the Corporation. Each certificate
shall be signed by the chief executive officer, the president or a vice
president and countersigned by the secretary or an assistant secretary or the
treasurer or an assistant treasurer and may be sealed with the seal, if any, of
the Corporation. The signatures may be either manual or facsimile.
Certificates shall be consecutively numbered; and if the Corporation shall, from
time to time, issue several classes of stock, each class may have its own number
series. A certificate is valid and may be issued whether or not
14
<PAGE>
an officer who signed it is still an officer when it is issued. Each
certificate representing shares which are restricted as to their transferability
or voting powers, which are preferred or limited as to their dividends or as to
their allocable portion of the assets upon liquidation or which are redeemable
at the option of the Corporation, shall have a statement of such restriction,
limitation, preference or redemption provision, or a summary thereof, plainly
stated on the certificate. In lieu of such statement or summary, the
Corporation may set forth upon the face or back of the certificate a statement
that the Corporation will furnish to any stockholder, upon request and without
charge, a full statement of such information.
Section 2. TRANSFEREE. Upon surrender to the Corporation or the
transfer agent of the Corporation of a stock certificate duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, the Corporation shall issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
The Corporation shall be entitled to treat the holder of record
of any share of stock as the holder in fact thereof and, accordingly, shall not
be bound to recognize any equitable or other claim to or interest in such share
on the part of any other person, whether or not it shall have express or other
notice thereof, except as otherwise provided by the laws of the State of
Maryland or the Charter of the Corporation.
Notwithstanding the foregoing, transfers of shares of any class
of stock will be subject in all respects to the charter of the Corporation and
all of the terms and conditions contained therein.
Section 3. LOST CERTIFICATE. The Board of Directors (or any
officer designated by it) may direct a new certificate to be issued in place of
any certificate previously issued by the Corporation alleged to have been lost,
stolen or destroyed upon the making of an affidavit of that fact by the person
claiming the certificate to be lost, stolen or destroyed. When authorizing the
issuance of a new certificate, the Board of Directors may, in its discretion and
as a condition precedent to the issuance thereof, require the owner of such
lost, stolen or destroyed certificate or his legal representative to advertise
the same in such manner as they shall require and/or to give bond, with
sufficient surety, to the Corporation to indemnify it against any loss or claim
which may arise as a result of the issuance of a new certificate.
Section 4. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE.
The Board of Directors may set, in advance, a record date for the purpose of
determining stockholders entitled to notice of or to vote at any meeting of
stockholders, or stockholders entitled to receive payment of any dividend or the
15
<PAGE>
allotment of any other rights, or in order to make a determination of
stockholders for any other proper purpose. Such date, in any case, shall not be
prior to the close of business on the day the record date is fixed and shall not
be more than 90 days and, in the case of a meeting of stockholders, not less
than ten days, before the date on which the meeting or particular action
requiring such determination of stockholders is to be held or taken.
In lieu of fixing a record date, the Board of Directors may
provide that the stock transfer books shall be closed for a stated period but
not longer than 20 days. If the stock transfer books are closed for the purpose
of determining stockholders entitled to notice of or to vote at a meeting of
stockholders, such books shall be closed for at least ten days before the date
of such meeting.
If no record date is fixed and the stock transfer books are not
closed for the determination of stockholders, (a) the record date for the
determination of stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day on which the notice of
meeting is mailed or the 30th day before the meeting, whichever is the closer
date to the meeting; and (b) the record date for the determination of
stockholders entitled to receive payment of a dividend or an allotment of any
other rights shall be the close of business on the day on which the resolution
of the directors, declaring the dividend or allotment of rights, is adopted.
When a determination of stockholders entitled to vote at any
meeting of stockholders has been made as provided in this section, such
determination shall apply to any adjournment thereof, except where the
determination has been made through the closing of the transfer books and the
stated period of closing has expired.
Section 5. STOCK LEDGER. The Corporation shall maintain at its
principal office or at the office of its counsel, accountants or transfer agent,
an original or duplicate share ledger containing the name and address of each
such stockholder and the number of shares of each class held by such
stockholder.
Section 6. FRACTIONAL STOCK; ISSUANCE OF UNITS. The Board of
Directors may issue fractional stock or provide for the issuance of scrip, all
on such terms and under such conditions as they may determine. Notwithstanding
any other provision of the Charter or these Bylaws, the Board of Directors may
issue units consisting of different securities of the Corporation. Any security
issued in a unit shall have the same characteristics as any identical securities
issued by the Corporation, except that the Board of Directors may provide that
for a specified period securities of the Corporation issued in such unit may be
transferred on the books of the Corporation only in such unit.
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ARTICLE VIII
ACCOUNTING YEAR
The Board of Directors shall have the power, from time to time, to fix
the fiscal year of the Corporation by a duly adopted resolution.
ARTICLE IX
DIVIDENDS
Section 1. DECLARATION. Dividends upon the stock of the
Corporation may be declared by the Board of Directors, subject to the provisions
of the law and the Charter of the Corporation. Dividends may be paid in cash,
property or stock of the Corporation, subject to the provisions of law and the
Charter.
Section 2. CONTINGENCIES. Before payment of any dividends, there
may be set aside out of any funds of the Corporation available for dividends
such sum or sums as the Board of Directors may from time to time, in its
absolute discretion, think proper as a reserve fund for contingencies, for
equalizing dividends, for repairing or maintaining any property of the
Corporation or for such other purpose as the Board of Directors shall determine
to be in the best interest of the Corporation, and the Board of Directors may
modify or abolish any such reserve in the manner in which it was created.
ARTICLE X
INVESTMENT POLICY
Subject to the provisions of the Charter of the Corporation, the Board
of Directors may from time to time adopt, amend, revise or terminate any policy
or policies with respect to investments by the Corporation as it shall deem
appropriate in its sole discretion.
ARTICLE XI
SEAL
Section 1. SEAL. The Board of Directors may authorize the
adoption of a seal by the Corporation. The seal shall have inscribed thereon
the name of the Corporation and the year of its organization. The Board of
Directors may authorize one or more duplicate seals and provide for the custody
thereof.
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Section 2. AFFIXING SEAL. Whenever the Corporation is required to
place its seal to a document, it shall be sufficient to meet the requirements of
any law, rule or regulation relating to the seal to place the word "(SEAL)"
adjacent to the signature of the person authorized to execute the document on
behalf of the Corporation.
ARTICLE XII
WAIVER OF NOTICE
Whenever any notice is required to be given pursuant to the Charter of
the Corporation or these Bylaws or pursuant to applicable law, a waiver thereof
in writing, signed by the person or persons entitled to such notice, whether
before or after the time stated therein, shall be deemed equivalent to the
giving of such notice. Neither the business to be transacted nor the purpose of
any meeting need be set forth in the waiver of notice of such meeting, except
where such person attends a meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
ARTICLE XIII
EXECUTION OF DOCUMENTS
To the extent that the execution of any document by a director,
executive officer or stockholder of the Corporation is required or permitted
hereunder, such execution shall be deemed to be given for all purposes hereunder
through (i) the direct execution of such document, or facsimile thereof, by such
person or (ii) the transmission by such person of an electronic mail message
("E-Mail") which is received at the principal office of the Corporation
indicating such person's consent or approval of such document or an action
contemplated therein. In the case of an E-Mail transmission, a facsimile of the
E-Mail shall be filed with the minutes of proceedings of the Board of Directors.
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EXHIBIT 7.7
<PAGE>
[LOGO]
PRESS RELEASE
FOR IMMEDIATE RELEASE
Contact: Cynthia Chase or Gary McDaniel
Vice President President
Corporate Communications Chief Executive Officer
(303)741-3707 (303)741-3707
ROC COMMUNITIES, INC. (RCI) ANNOUNCES
BOARD APPROVAL OF AMENDED MERGER
AGREEMENT WITH CHATEAU PROPERTIES
Englewood, CO -- September 18, 1996 -- ROC Communities, Inc. (NYSE RCI)
today announced that its Board of Directors has approved an amended merger
agreement between ROC and Chateau Properties, Inc. (NYSE CPI). The ROC Board
noted that the Board of Directors of Chateau has also approved the amended
merger agreement at a meeting today. Both ROC and Chateau have strongly
reaffirmed their commitment to complete the "merger of equals" between the two
companies as expeditiously as possible.
In connection with the amended merger agreement, Chateau has also
announced that certain holders of limited partnership interests ("OP Units")
in Chateau's operating partnership, including John A. Boll, Chateau's
Chairman, and Edward R. Allen, a director of Chateau have advised Chateau
that they intent to exercise their existing right to exchange up to
approximately 6 million OP Units for Chateau common shares and to vote such
shares in favor of the proposed merger. Other OP Unitholders may also
exchange OP Units for common shares and vote such shares in Chateau's
shareholder vote on the merger.
In announcing ROC's approval of the amended merger agreement, ROC's
Chairman, Gary P. McDaniel said, "We are pleased to move forward with this
important merger. The recent bids for Chateau reflect the great potential of
the ROC/Chateau combination. Our industry competitors clearly recognize the
power of this combination, which we believe will create the leading force in
our industry." McDaniel added "Our shareholders stand to benefit from the
combined strength of ROC and Chateau. We look forward to the proxy
solicitation
<PAGE>
and to completion of the merger."
The amended merger agreement makes various changes to the original merger
agreement signed by the parties on July 17, 1996, including the following:
- The technical legal structure of the merger will be modified such that
ROC will merge into a newly-formed subsidiary of Chateau;
- Consistent with the original merger agreement, each issued and
outstanding share of ROC will be converted into the right to receive
1.042 shares of Chateau. However, in connection with the amended
merger agreement, ROC has agreed to permit Chateau to complete an
approximately 3.2% stock and OP Unit dividend immediately prior to the
merger; and
- The amended merger agreement will require the vote of the holders of a
majority of the Chateau common shares voting (instead of the prior
requirement of two-thirds of Chateau's outstanding shares) and will
allow holders of Chateau's OP Units to convert those Units into
Chateau common shares on a tax-free basis.
The amended merger agreement, like the original merger agreement, provides
for a strategic "merger of equals" between ROC and Chateau and not for the
acquisition by Chateau of ROC or by ROC of Chateau. As in the original merger
agreement, the amended merger agreement provides that the management teams of
the two companies will be combined following the merger. The Chief Executive
Officer of the combined company will be Gary P. McDaniel, the current Chairman
and CEO of ROC. The President of the combined company will be O.G. "Jeff"
Kellogg, the current CEO and President of Chateau. The Chief Operating Officer
of the combined company will be James B. Grange and the Executive Vice President
of Acquisitions for the combined company will be Rees F. Davis, who both
currently hold like positions with ROC. The Chief Financial Officer for the
combined company will be Tamara D. Fischer, the current CFO of Chateau.
It is expected that the combined company will be renamed Chateau
Communities, Inc. following the merger and will be headquartered at ROC's
current offices in Englewood, Colorado. The Board of Directors of the combined
company will consist of five representatives from the current Board of ROC and
five representatives from the current Board of Chateau. The Board will be
chaired by John A. Boll, the current Chairman of Chateau. An eleventh Board
member will be nominated by the Board and elected at the first annual meeting of
shareholders for the combined company.
<PAGE>
The merger remains subject to approval by the shareholders for both
companies. However, as indicated above, the change in the legal structure of
the merger will reduce the vote requirement for approval by Chateau's
shareholders to a majority of those shares voting, provided that the total vote
cast represents over 50% in interest of the outstanding common shares of
Chateau. As in the original merger agreement, approval by ROC shareholders will
require a two-thirds vote of ROC shares outstanding.
Under the terms of the amended merger agreement, Chateau will be permitted
to repurchase up to 1.45 million of its outstanding common shares, which Chateau
has announced it intends to do through open market purchases, negotiated
transactions or a tender offer. Additionally, ROC may purchase up to 350,000
Chateau common shares in the open market or otherwise. Such purchases may occur
at any time.
From a procedural prospective, the shareholders of ROC will vote on the
merger first and, upon ROC shareholders' approval of the merger, Chateau's OP
Unitholders will complete the OP Unit exchange described above and participate
in Chateau's shareholder vote on the merger. The parties anticipate that,
subject to any unanticipated delays, both shareholder votes will occur in the
fourth calendar quarter of 1996 and that the merger, if approved by
shareholders, will be completed by the end of 1996.
ROC Communities, based in Englewood, Colorado, is one of the nation's
largest owner/operators of manufactured home communities. It currently owns 71
manufactured home communities in 23 states with a total of 20,829 residential
sites. In addition, it fee manages 36 manufactured home communities (7,276
homesites) owned by third parties.
###
<PAGE>
EXHIBIT 7.8
<PAGE>
[LOGO]
PRESS RELEASE
FOR IMMEDIATE RELEASE
Contact: Cynthia Chase or Gary McDaniel
Vice President President
Corporate Communications Chief Executive Officer
(303)741-3707 (303)741-3707
ROC COMMUNITIES, INC. (RCI)
ADOPTS STOCKHOLDER RIGHTS PLAN
Englewood, CO -- September 18, 1996 -- ROC Communities, Inc. (NYSE/RCI)
announced today that its Board of Directors adopted a Stockholder Rights Plan in
which preferred stock purchase rights will be distributed as a dividend at the
rate of one Right for each share of Common Stock held as of the close of
business on September 30, 1996.
Each Right will entitle stockholders to buy one one-thousandth of a newly
issued share of Series A Junior Participating Preferred Stock of ROC at an
exercise price of $70 per Unit, subject to adjustment. Each Unit will have
economic and voting rights substantially identical to the rights associated
with a share of ROC's Common Stock. The Rights will be exercisable only if a
person or group acquires beneficial ownership of 15% or more of ROC's
outstanding Common Stock or commences a tender or exchange offer (other than
an offer approved by the independent directors of ROC) upon consummation of
which a person or group would beneficially own 15% or more of ROC's
outstanding Common Stock.
If any person becomes the beneficial owner of 15% or more of ROC's
outstanding Common Stock, or if a holder of 15% or more of the Common Stock
engages in certain self-dealing transactions or a merger transaction in which
ROC is the surviving corporation and its Common Stock remains outstanding, then
each
--More--
<PAGE>
Right not owned by such person or certain related parties will entitle its
holder to purchase, at the Right's then-current exercise price, Units (or, in
certain circumstances, Common Stock, cash, property or other securities of
ROC) having a market value (determined based on the market value of the
Common Stock) equal to twice the then-current exercise price. In addition,
if ROC is involved in a merger or other business combination transaction with
another person after which its Common Stock does not remain outstanding, or
sells 50% or more of its assets or earning power to another person, each
Right will entitle its holder to purchase, at the Right's then-current
exercise price, shares of common stock of such other person having a market
value equal to twice the then-current exercise price.
The Rights Plan permits a majority of the independent directors of ROC to
reduce the Common Stock ownership threshold applicable to any person for
purposes of triggering the effects described in the three preceding
paragraphs from 15% to 10% (or any percentage in between) in the event that
they determine that such person has intentions which such directors in good
faith believe to be adverse to the interests of ROC and its stockholders.
ROC will generally be entitled to redeem the Rights of $.01 per right at
any time until the 10th business day following public announcement that a
person or group has acquired 15% or more of its Common Stock: provided,
however, that the Rights will immediately cease to be redeemable when any
person becomes the beneficial owner of 40% or more of ROC's Common Stock.
ROC also announced that it has amended its bylaws to elect to have the
Maryland Control Shares Statute apply to acquisitions of stock in ROC, and to
increase the percentage number of shares required to be held by stockholders
of ROC in order to call a special meeting of stockholders from 10% to 50%.
ROC Communities, based in Englewood, Colorado, in one of the nation's
largest owner/operators of manufactured home communities. It currently owns 71
manufactured home communities in 23 states with a total of 20,829 residential
sites. In addition, it fee manages 36 manufactured home communities (7,276
homesites) owned by third parties.
###
6430 South Quebeck Street * Englewood, Colorado * 80111
