<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------
SCHEDULE 13D
(RULE 13d-101)
UNDER THE SECURITIES EXCHANGE ACT OF 1934
NHP Incorporated
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, par value $.01 per share
- --------------------------------------------------------------------------------
(Title of Class of Securities)
62913E 10 5
- --------------------------------------------------------------------------------
(CUSIP Number)
Terry Considine
Apartment Investment and Management Company
1873 South Bellaire Street, 17th Floor
Denver, Colorado 80222-4348
(303) 757-8101
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
Copy to:
Rod A. Guerra
Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue, Suite 3400
Los Angeles, California 90071-3144
(213) 687-5000
May 5, 1997
- --------------------------------------------------------------------------------
(Date of Event Which Requires
Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box: / /
(Continued on following pages)
(Page 1 of 24 Pages)
<PAGE>
CUSIP No. 62913E 10 5 13D Page 2 of 24 Pages
1 NAME OF REPORTING PERSONS
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
84-1259577
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) / /
(b) / /
3 SEC USE ONLY
4 SOURCE OF FUNDS
BK, OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) / /
6 CITIZENSHIP OR PLACE OF ORGANIZATION
MARYLAND
NUMBER 7 SOLE VOTING POWER
OF SHARES 6,496,073
BENEFI- 8 SHARED VOTING POWER
CIALLY -0-
OWNED BY 9 SOLE DISPOSITIVE POWER
EACH RE- 6,496,073
PORTING 10 SHARED DISPOSITIVE POWER
PERSON -0-
WITH
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
6,496,073
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES / /
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
51.3%
14 TYPE OF REPORTING PERSON
CO
<PAGE>
CUSIP No. 62913E 10 5 13D Page 3 of 24 Pages
1 NAME OF REPORTING PERSONS
AIMCO-LP, INC.
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
EIN 84-1299717
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) / /
(b) / /
3 SEC USE ONLY
4 SOURCE OF FUNDS
BK, OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) / /
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
NUMBER 7 SOLE VOTING POWER
OF SHARES 6,496,073
BENEFI- 8 SHARED VOTING POWER
CIALLY -0-
OWNED BY 9 SOLE DISPOSITIVE POWER
EACH RE- 6,496,073
PORTING 10 SHARED DISPOSITIVE POWER
PERSON -0-
WITH
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
6,496,073
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES / /
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
51.3%
14 TYPE OF REPORTING PERSON
CO
<PAGE>
CUSIP No. 62913E 10 5 13D Page 4 of 24 Pages
1 NAME OF REPORTING PERSONS
AIMCO GP, INC.
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
84-1299715
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) / /
(b) / /
3 SEC USE ONLY
4 SOURCE OF FUNDS
BK, OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) / /
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
NUMBER 7 SOLE VOTING POWER
OF SHARES 6,496,073
BENEFI- 8 SHARED VOTING POWER
CIALLY -0-
OWNED BY 9 SOLE DISPOSITIVE POWER
EACH RE- 6,496,073
PORTING 10 SHARED DISPOSITIVE POWER
PERSON -0-
WITH
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
6,496,073
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES / /
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
51.3%
14 TYPE OF REPORTING PERSON
CO
<PAGE>
CUSIP No. 62913E 10 5 13D Page 5 of 24 Pages
1 NAME OF REPORTING PERSONS
AIMCO PROPERTIES, L.P.
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
84-127561
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) / /
(b) / /
3 SEC USE ONLY
4 SOURCE OF FUNDS
BK, OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) / /
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
NUMBER 7 SOLE VOTING POWER
OF SHARES 6,496,073
BENEFI- 8 SHARED VOTING POWER
CIALLY -0-
OWNED BY 9 SOLE DISPOSITIVE POWER
EACH RE- 6,496,073
PORTING 10 SHARED DISPOSITIVE POWER
PERSON -0-
WITH
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
6,496,073
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES / /
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
51.3%
14 TYPE OF REPORTING PERSON
CO
<PAGE>
CUSIP No. 62913E 10 5 13D Page 6 of 24 Pages
1 NAME OF REPORTING PERSONS
AIMCO/NHP HOLDINGS, INC.
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
91-1806147
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) / /
(b) / /
3 SEC USE ONLY
4 SOURCE OF FUNDS
BK, OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) / /
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
NUMBER 7 SOLE VOTING POWER
OF SHARES 6,496,073
BENEFI- 8 SHARED VOTING POWER
CIALLY -0-
OWNED BY 9 SOLE DISPOSITIVE POWER
EACH RE- 6,496,073
PORTING 10 SHARED DISPOSITIVE POWER
PERSON -0-
WITH
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
6,496,073
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES / /
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
51.3%
14 TYPE OF REPORTING PERSON
CO
<PAGE>
CUSIP No. 62913E 10 5 13D Page 7 of 24 Pages
1 NAME OF REPORTING PERSONS
TERRY CONSIDINE
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
###-##-####
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) / /
(b) / /
3 SEC USE ONLY
4 SOURCE OF FUNDS
BK, OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) / /
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
NUMBER 7 SOLE VOTING POWER
OF SHARES 6,496,073
BENEFI- 8 SHARED VOTING POWER
CIALLY -0-
OWNED BY 9 SOLE DISPOSITIVE POWER
EACH RE- 6,496,073
PORTING 10 SHARED DISPOSITIVE POWER
PERSON -0-
WITH
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
6,496,073
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES / /
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
51.3%
14 TYPE OF REPORTING PERSON
IN
<PAGE>
CUSIP No. 62913E 10 5 13D Page 8 of 24 Pages
1 NAME OF REPORTING PERSONS
PETER KOMPANIEZ
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
###-##-####
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) / /
(b) / /
3 SEC USE ONLY
4 SOURCE OF FUNDS
BK, OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) / /
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
NUMBER 7 SOLE VOTING POWER
OF SHARES 6,496,073
BENEFI- 8 SHARED VOTING POWER
CIALLY -0-
OWNED BY 9 SOLE DISPOSITIVE POWER
EACH RE- 6,496,073
PORTING 10 SHARED DISPOSITIVE POWER
PERSON -0-
WITH
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
6,496,073
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES / /
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
51.3%
14 TYPE OF REPORTING PERSON
IN
<PAGE>
ITEM 1. SECURITY AND ISSUER.
This statement on Schedule 13D (the "Schedule 13D") relates to the
common stock, par value $.01 per share (the "NHP Common Stock"), of NHP
Incorporated, a Delaware corporation ("NHP"). The principal executive office of
NHP is located at 8065 Leesburg Pike, Suite 400, Vienna, Virginia 22182-2738.
ITEM 2. IDENTITY AND BACKGROUND.
This Schedule 13D is filed by Apartment Investment and Management
Company, a Maryland corporation ("AIMCO"), AIMCO-LP, Inc., a Delaware
corporation and a wholly owned subsidiary of AIMCO ("AIMCO-LP"), AIMCO
Properties, L.P., a Delaware limited partnership ("AIMCO Properties"), AIMCO/NHP
Holdings, Inc., a Delaware corporation ("ANHI"), Terry Considine and Peter
Kompaniez (collectively, the "Reporting Persons"). The general partner of AIMCO
Properties is AIMCO-GP, Inc., a Delaware corporation and a wholly owned
subsidiary of AIMCO ("AIMCO-GP"). Messrs. Considine and Kompaniez own all of
the outstanding common stock of ANHI.
The principal business of AIMCO, AIMCO-LP, AIMCO-GP and AIMCO
Properties is the ownership and management of multifamily apartment properties.
The principal business of ANHI is its investment in NHP Common Stock. Mr.
Considine's principal occupation is Chairman of the Board, President and Chief
Executive Officer of AIMCO. Mr. Kompaniez's principal occupation is Vice
Chairman of AIMCO. Messrs. Considine and Kompaniez are both United States
citizens. The address of the principal business and principal office of AIMCO,
AIMCO-LP, AIMCO-GP, AIMCO Properties and ANHI, and the business address of
Messrs. Considine and Kompaniez, is 1873 South Bellaire Street, 17th Floor,
Denver, Colorado 80222-4348.
The name, business address, citizenship, present principal occupation
or employment, and the name, principal business and address of any corporation
or other organization in which such employment is conducted, of each executive
officer and director of AIMCO, AIMCO-LP, AIMCO-GP and ANHI are set forth on
Schedules A, B, C and D, respectively, attached hereto.
During the last five years, none of the Reporting Persons nor any
other person or entity controlling any of such persons, nor, to the best of any
of their knowledge, any of the other persons listed on Schedules A, B, C or D
attached hereto, (i) has been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) or (ii) has been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and as
a result of such proceeding was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or mandating activities
subject to, Federal or State securities laws or finding any violation with
respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
On May 5, 1997, pursuant to a Stock Purchase Agreement, dated as of
April 16, 1997 (the "Stock Purchase Agreement"), by and among AIMCO, Demeter
Holdings Corporation, a Massachusetts corporation ("Demeter"), and Capricorn
Investors, L.P., a Delaware limited partnership ("Capricorn"), AIMCO acquired
2,866,073 shares of NHP Common Stock from Demeter, Capricorn and two of
Capricorn's limited partners, The Peter and Pamela Mullin Family Charitable
Foundation and The Nash Family Foundation (together with Demeter and Capricorn,
collectively, the "Sellers"), in exchange for 2,142,857 shares of Class A Common
Stock, par value $.01 per share ("AIMCO Common Stock"), of AIMCO. AIMCO
contributed such shares of NHP Common Stock to its wholly owned subsidiary,
AIMCO-LP. AIMCO-LP contributed such shares of NHP Common Stock to AIMCO
Properties in exchange for additional partnership interests in AIMCO Properties.
AIMCO Properties contributed such shares of NHP Common Stock to ANHI in exchange
for 95,000 shares of Series A Preferred Stock, par value $.01 per share ("ANHI
Preferred Stock"), of ANHI.
9
<PAGE>
On May 5, 1997, pursuant to the Stock Purchase Agreement, ANHI
acquired 3,630,000 shares of NHP Common Stock from Demeter for $72.6 million in
cash. Such cash consideration was obtained by ANHI from the proceeds of a loan
(the "Loan") made pursuant to a Credit Agreement, dated as of May 5, 1997 (the
"Credit Agreement"), by and among ANHI, Bank of America National Trust and
Savings Association ("BofA"), as lender, Smith Barney Mortgage Capital Group,
Inc., as lender (together with BofA, the "Lenders"), and BofA, as agent. A copy
of the Credit Agreement is attached hereto as Exhibit 2 and incorporated herein
by this reference.
In addition, pursuant to the Stock Purchase Agreement, the Sellers are
entitled to receive the shares of common stock ("NFS Stock") of NHP Financial
Services, Ltd., a Delaware corporation and a wholly owned subsidiary of NHP
("NFS"), that are expected to be distributed in respect of the rights (the
"Rights") attached to the shares of NHP Common Stock acquired pursuant to the
Stock Purchase Agreement; provided, however, that if the distribution of NFS
Stock has not occurred prior to September 1, 1997, at the request of Demeter or
Capricorn, the Sellers may receive an additional cash amount equal to the
product of (x) the number of shares of NHP Common Stock so acquired, and (y)
$3.05.
ITEM 4. PURPOSE OF TRANSACTION.
The purpose of the acquisition of the shares of NHP Common Stock by
the Reporting Persons is the acquisition of control of NHP. It is expected that
an additional 434,049 shares of NHP Common Stock will also be acquired by the
Reporting Persons pursuant to the Stock Purchase Agreement. A copy of the Stock
Purchase Agreement is attached hereto as Exhibit 3 and incorporated herein by
this reference.
AIMCO has entered into an Agreement and Plan of Merger, dated as of
April 21, 1997 (the "Merger Agreement"), by and among AIMCO, AIMCO/NHP
Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of AIMCO
("Merger Sub"), and NHP, which provides for the merger (the "Merger") of Merger
Sub with and into NHP, with NHP surviving as a wholly owned subsidiary of AIMCO.
In the Merger, each issued and outstanding share of NHP Common Stock, except
shares issued and held in NHP's treasury or owned by AIMCO or Merger Sub, would
be converted into, at the election of the holder, either (i) the right to
receive 0.37383 shares of AIMCO Common Stock and $10 in cash, or (ii) the right
to receive 0.74766 shares of AIMCO Common Stock. In the Merger, each
outstanding Right would be converted, in accordance with its terms, into the
right to receive one third of a share of NFS Stock. Upon consummation of the
Merger, the NHP Common Stock would cease to be authorized to be quoted on the
Nasdaq Stock Market and would be eligible for termination of registration
pursuant to Section 12(g)(4) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). A copy of the Merger Agreement is attached hereto as
Exhibit 4 and incorporated herein by this reference.
Pursuant to the Stock Purchase Agreement Michael Eisenson, Timothy
Palmer and Herbert S. Winokur, Jr. have resigned as directors of NHP. The
Merger Agreement provides for the appointment of three executive officers of
AIMCO, Terry Considine, Peter Kompaniez and Thomas Toomey, to fill the vacancies
created as a result of such resignations.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
ANHI owns 6,496,073 shares of NHP Common Stock, which represent
approximately 51.3% of the shares of NHP Common Stock outstanding as of March 7,
1997. ANHI has the sole power to vote and the sole power to dispose of such
shares of NHP Common Stock.
Messrs. Considine and Kompaniez, as the owners of all of the
outstanding shares of common stock of ANHI, may be deemed to have acquired
beneficial ownership of the 6,496,073 shares of NHP Common Stock owned by ANHI,
which represent approximately 51.3% of the shares of NHP Common Stock
outstanding as of March 7, 1997.
10
<PAGE>
Pursuant to Rule 13d-5(b)(1) of the Exchange Act, AIMCO, AIMCO-LP and
AIMCO Properties, and AIMCO-GP, as the general partner of AIMCO Properties, may
be deemed to have acquired beneficial ownership of the 6,496,073 shares of NHP
Common Stock owned by ANHI, which represent approximately 51.3% of the shares of
NHP Common Stock outstanding as of March 7, 1997.
No other person is known by the Reporting Persons to have the right
to receive or the power to direct the receipt of dividends from, or the proceeds
from the sale of, the shares of NHP Common Stock acquired by the Reporting
Persons.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
There are no contracts, arrangements, understandings or relationship
among the persons named in Item 2 or between such persons and any person with
respect to any securities of NHP, except as set forth in Items 2, 3 and 4, and
as described below.
Pursuant to a Letter Agreement, dated as of May 5, 1997 (the "Letter
Agreement"), by and among AIMCO, AIMCO Properties and ANHI, ANHI has agreed
that, subject to certain exceptions, in the event that the Lenders exercise
their acceleration remedy pursuant to an event of default under the Credit
Agreement, ANHI will sell its holdings of NHP Common Stock to the extent
necessary to satisfy the obligations to the Lenders under the Credit Agreement
within 10 business days of receiving notice of such event of default. A copy of
the Letter Agreement is attached hereto as Exhibit 5 and incorporated herein by
this reference.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
EXHIBIT DESCRIPTION
- ------- -----------
1 Joint Filing Agreement
2 Credit Agreement, dated as of May 5, 1997, by and among AIMCO/NHP
Holdings, Inc., Bank of America National Trust and Savings
Association, as lender, Smith Barney Mortgage Capital Group, Inc,
as lender, and Bank of America National Trust and Savings
Association, as agent.
3 Stock Purchase Agreement, dated as of April 16, 1997, by and
among Apartment Investment and Management Company, Demeter
Holdings Corporation and Capricorn Investors, L.P.
4 Agreement and Plan of Merger, dated as of April 21, 1997, by and
among Apartment Investment and Management Company, AIMCO/NHP
Acquisition Corp. and NHP Incorporated.
5 Letter Agreement, dated as of May 5, 1997, by and among Apartment
Investment and Management Company, AIMCO Properties, L.P. and
AIMCO/NHP Holdings, Inc.
11
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
APARTMENT INVESTMENT AND MANAGEMENT
COMPANY
Date: May 15, 1997 By: /s/ Peter Kompaniez
------------------------------
Peter Kompaniez
Vice Chairman
12
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
AIMCO-LP, INC.
Date: May 15, 1997 By: /s/ Peter Kompaniez
------------------------------
Peter Kompaniez
Vice President
13
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
AIMCO-GP, INC.
Date: May 15, 1997 By: /s/ Peter Kompaniez
------------------------------
Peter Kompaniez
Vice President
14
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
AIMCO PROPERTIES, L.P.
By: AIMCO-GP, INC.,
General Partner
Date: May 15, 1997 By: /s/ Peter Kompaniez
------------------------------
Peter Kompaniez
Vice President
15
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
AIMCO/NHP HOLDINGS, INC.
Date: May 15, 1997 By: /s/ Peter Kompaniez
------------------------------
Peter Kompaniez
Vice President
16
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date: May 15, 1997 /s/ PETER KOMPANIEZ
------------------------------
PETER KOMPANIEZ
17
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date: May 15, 1997 /s/ TERRY CONSIDINE
------------------------------
TERRY CONSIDINE
18
<PAGE>
SCHEDULE A
DIRECTORS AND EXECUTIVE OFFICERS
OF APARTMENT INVESTMENT AND MANAGEMENT COMPANY
The name and present principal occupation or employment, and name,
principal business and address of any corporation or other organization in which
such employment is conducted, of each executive officer and director of
Apartment Investment and Management Company are set forth below. Unless
otherwise indicated, each individual's business address is the address of
Apartment Investment and Management Company, 1873 South Bellaire Street, 17th
Floor, Denver, Colorado 80222-4348, and each individual is a United States
citizen.
NAME AND BUSINESS ADDRESS PRESENT PRINCIPAL OCCUPATION
Terry Considine* Chairman of the Board of Directors, President and
Chief Executive Officer, Apartment Investment and
Management Company
Peter K. Kompaniez* Vice Chairman of the Board of Directors, Apartment
Investment and Management Company
Steven D. Ira Executive Vice President -- START, Apartment
Investment and Management Company
Thomas W. Toomey Executive Vice President -- Finance and
Administration, Apartment Investment and
Management Company
David L. Williams Executive Vice President -- Property Operations,
Apartment Investment and Management Company
Leeann Morein Senior Vice President, Chief Financial Officer and
Secretary, Apartment Investment and Management
Company
Patricia K. Heath Vice President and Chief Accounting Officer,
Apartment Investment and Management Company
Harry G. Alcock Vice President -- Acquisitions, Apartment
Investment and Management Company
Richard S. Ellwood* President, R.S. Ellwood & Co., Incorporated, a
20 Bingham Avenue real estate investment banking firm with its
Rumson, New Jersey 07760 address at 20 Bingham Avenue, Rumson, New
Jersey 07760.
J. Landis Martin* President and Chief Executive Officer, NL
1999 Broadway, Suite 4300 Industries, Inc., a manufacturer of specialty
Denver, Colorado 80202 chemicals with its address at 16825 Northchase
Drive, Suite 1200, Houston, Texas 77210.
Thomas L. Rhodes* President, National Review, Inc., the publisher of
215 Lexington Avenue the NATIONAL REVIEW magazine, with its address
4th Floor at 215 Lexington Avenue, 4th Floor, New York,
New York, New York 10016 New York 10016.
- ------------------------------
* Director of Apartment Investment and Management Company.
19
<PAGE>
NAME AND BUSINESS ADDRESS PRESENT PRINCIPAL OCCUPATION
John D. Smith* President, John D. Smith Developments, a real
3400 Peachtree Road, estate development firm with its address at 3400
Suite 831 Peachtree Road, Suite 831, Atlanta, Georgia 30326
Atlanta, Georgia 30326
- ------------------------------
* Director of Apartment Investment and Management Company.
20
<PAGE>
SCHEDULE B
DIRECTORS AND EXECUTIVE OFFICERS
OF AIMCO-LP, INC.
The name and present principal occupation or employment, and name,
principal business and address of any corporation or other organization in which
such employment is conducted, of each executive officer and director of
AIMCO-LP, Inc. are set forth below. Unless otherwise indicated, each
individual's business address is the address of Apartment Investment and
Management Company, 1873 South Bellaire Street, 17th Floor, Denver, Colorado
80222-4348, and each individual is a United States citizen.
NAME AND BUSINESS ADDRESS PRESENT PRINCIPAL OCCUPATION
Terry Considine* Chairman of the Board of Directors, President
and Chief Executive Officer, Apartment
Investment and Management Company
Peter K. Kompaniez* Vice Chairman of the Board of Directors,
Apartment Investment and Management Company
Leeann Morein Senior Vice President, Chief Financial
Officer and Secretary, Apartment Investment
and Management Company
- ------------------------------
* Director of AIMCO-LP, Inc.
21
<PAGE>
SCHEDULE C
DIRECTORS AND EXECUTIVE OFFICERS
OF AIMCO-GP, INC.
The name and present principal occupation or employment, and name,
principal business and address of any corporation or other organization in which
such employment is conducted, of each executive officer and director of
AIMCO-GP, Inc. are set forth below. Unless otherwise indicated, each
individual's business address is the address of Apartment Investment and
Management Company, 1873 South Bellaire Street, 17th Floor, Denver, Colorado
80222-4348, and each individual is a United States citizen.
NAME AND BUSINESS ADDRESS PRESENT PRINCIPAL OCCUPATION
Terry Considine* Chairman of the Board of Directors, President
and Chief Executive Officer, Apartment
Investment and Management Company
Peter K. Kompaniez* Vice Chairman of the Board of Directors,
Apartment Investment and Management Company
Leeann Morein Senior Vice President, Chief Financial
Officer and Secretary, Apartment Investment
and Management Company
- ------------------------------
* Director of AIMCO-GP, Inc.
22
<PAGE>
SCHEDULE D
DIRECTORS AND EXECUTIVE OFFICERS
OF AIMCO/NHP HOLDINGS, INC.
The name and present principal occupation or employment, and name,
principal business and address of any corporation or other organization in which
such employment is conducted, of each executive officer and director of the
AIMCO/NHP Holdings, Inc. are set forth below. Unless otherwise indicated, each
individual's business address is the address of Apartment Investment and
Management Company, 1873 South Bellaire Street, 17th Floor, Denver, Colorado
80222-4348, and each individual is a United States citizen.
NAME AND BUSINESS ADDRESS PRESENT PRINCIPAL OCCUPATION
Terry Considine* Chairman of the Board of Directors, President
and Chief Executive Officer, Apartment
Investment and Management Company
Peter K. Kompaniez* Vice Chairman of the Board of Directors,
Apartment Investment and Management Company
Thomas W. Toomey Executive Vice President -- Finance and
Administration, Apartment Investment and
Management Company
Leeann Morein Senior Vice President, Chief Financial
Officer and Secretary, Apartment Investment
and Management Company
Patricia K. Heath Vice President and Chief Accounting Officer,
Apartment Investment and Management Company
Harold G. Alcock Vice President -- Acquisitions, Apartment
Investment and Management Company
David Williams Executive Vice President -- Property
Operations, Apartment Investment and
Management Company
- ----------------------------------------
* Director of AIMCO/NHP Holdings, Inc.
23
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EXHIBIT INDEX
EXHIBIT DESCRIPTION PAGE
- ------- ----------- ----
1 Joint Filing Agreement
2 Credit Agreement, dated as of May 5, 1997, by and among
AIMCO/NHP Holdings, Inc., Bank of America National
Trust and Savings Association, as lender, Smith Barney
Mortgage Capital Group, Inc, as lender, and Bank of
America National Trust and Savings Association, as
agent.
3 Stock Purchase Agreement, dated as of April 16, 1997,
by and among Apartment Investment and Management
Company, Demeter Holdings Corporation and Capricorn
Investors, L.P.
4 Agreement and Plan of Merger, dated as of April 21,
1997, by and among Apartment Investment and Management
Company, AIMCO/NHP Acquisition Corp. and NHP
Incorporated.
5 Letter Agreement, dated as of May 5, 1997, by and among
Apartment Investment and Management Company, AIMCO
Properties, L.P. and AIMCO/NHP Holdings, Inc.
24
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EXHIBIT 1
JOINT FILING AGREEMENT
In accordance with Rule 13d-1(f) under the Securities Exchange Act of 1934,
as amended, each of the persons named below agreed to the joint filing on behalf
of each of them of a Statement on Schedule 13D (including amendments thereto)
with respect to the common stock, par value $.01 per share, of NHP Incorporated,
a Delaware corporation, and further agrees that this Joint Filing Agreement be
included as an exhibit to such filings provided that, as contemplated by Section
13d-1(f)(1)(ii), no person shall be responsible for the completeness or accuracy
of the information concerning the other persons making the filing, unless such
person knows or has reason to believe that such information is inaccurate. This
Joint Filing Agreement may be executed in any number of counterparts, all of
which taken together shall constitute one and the same instrument.
Date: May 15, 1997
APARTMENT INVESTMENT AND MANAGEMENT
COMPANY
By: /s/ Peter Kompaniez
-----------------------------------
Peter Kompaniez
Vice Chairman
AIMCO-LP, INC.
By: /s/ Peter Kompaniez
-----------------------------------
Peter Kompaniez
Vice President
AIMCO PROPERTIES, L.P.
By: AIMCO-GP, INC.,
General Partner
By: /s/ Peter Kompaniez
-----------------------------------
Peter Kompaniez
Vice President
/s/ TERRY CONSIDINE
-----------------------------------
TERRY CONSIDINE
/s/ PETER KOMPANIEZ
-----------------------------------
PETER KOMPANIEZ
<PAGE>
AIMCO-GP, INC.
/s/ Peter Kompaniez
-----------------------------------
Peter Kompaniez
Vice President
<PAGE>
CREDIT AGREEMENT
(ACQUISITION SUB FACILITY)
among
AIMCO/NHP Holdings, Inc.,
a Delaware corporation,
Bank of America National Trust and Savings Association,
as the Agent,
and
Bank of America National Trust and Savings Association
and
Smith Barney Mortgage Capital Group, Inc.
as the initial Lenders
May 5, 1997
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.01 Defined Terms. . . . . . . . . . . . . . . . . . . . 1
1.02 Other Definitional Provisions. . . . . . . . . . . .15
1.03 Accounting Principles1 . . . . . . . . . . . . . . . 6
ARTICLE II THE FACILITY . . . . . . . . . . . . . . . . . . . . . . . . .16
2.01 Amounts and Terms of Commitments . . . . . . . . . .16
2.02 Note . . . . . . . . . . . . . . . . . . . . . . . .16
2.03 Procedures for Borrowings. . . . . . . . . . . . . .17
2.04 Conversion and Continuation Elections. . . . . . . .19
2.05 Optional Prepayments . . . . . . . . . . . . . . . .20
2.06 Mandatory Prepayments of Loans . . . . . . . . . . .20
2.07 Application of Proceeds. . . . . . . . . . . . . . .21
2.08 Repayment. . . . . . . . . . . . . . . . . . . . . .21
2.09 Interest . . . . . . . . . . . . . . . . . . . . . .21
2.10 Fees . . . . . . . . . . . . . . . . . . . . . . . .22
2.11 Computation of Fees and Interest . . . . . . . . . .22
2.12 Payments by the Company. . . . . . . . . . . . . . .23
2.13 Payments by the Lenders to the Agent . . . . . . . .23
2.14 Sharing of Payments, Etc.. . . . . . . . . . . . . .24
ARTICLE III TAXES, YIELD PROTECTION AND ILLEGALITY . . . . . . . . . . . .24
3.01 Taxes. . . . . . . . . . . . . . . . . . . . . . . .24
3.02 Illegality . . . . . . . . . . . . . . . . . . . . .27
3.03 Increased Costs and Reduction of Return. . . . . . .28
3.04 Funding Losses . . . . . . . . . . . . . . . . . . .28
3.05 Inability to Determine Rates . . . . . . . . . . . .29
3.06 Certificates of Lender . . . . . . . . . . . . . . .29
3.07 Survival . . . . . . . . . . . . . . . . . . . . . .29
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ARTICLE IV CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . .29
4.01 Conditions of First Loan . . . . . . . . . . . . . .29
4.02 Conditions to Each Loan, Continuation or Conversion.32
ARTICLE V REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . .32
5.01 Existence and Power. . . . . . . . . . . . . . . . .32
5.02 Authorization; No Conflict . . . . . . . . . . . . .33
5.03 Governmental Authorization . . . . . . . . . . . . .33
5.04 Binding Effect . . . . . . . . . . . . . . . . . . .33
5.05 Litigation . . . . . . . . . . . . . . . . . . . . .33
5.06 Subsidiaries; Interests in Other Entities. . . . . .34
5.07 Taxes. . . . . . . . . . . . . . . . . . . . . . . .34
5.08 Employees. . . . . . . . . . . . . . . . . . . . . .34
5.09 Collateral Documents . . . . . . . . . . . . . . . .34
5.10 Regulated Entities . . . . . . . . . . . . . . . . .34
5.11 Use of Proceeds. . . . . . . . . . . . . . . . . . .35
5.13 No Default . . . . . . . . . . . . . . . . . . . . .35
5.14 NHP. . . . . . . . . . . . . . . . . . . . . . . . .35
5.15 Full Disclosure. . . . . . . . . . . . . . . . . . .35
ARTICLE VI AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . .35
6.01 Financial Information. . . . . . . . . . . . . . . .36
6.02 Certificates; Other Information. . . . . . . . . . .36
6.03 Notices. . . . . . . . . . . . . . . . . . . . . . .36
6.04 Preservation of Existence, Etc.. . . . . . . . . . .37
6.06 Payment of Obligations . . . . . . . . . . . . . . .37
6.07 Compliance with Laws . . . . . . . . . . . . . . . .38
6.08 Use of Proceeds. . . . . . . . . . . . . . . . . . .38
6.09 Inspection of Property and Books and Records . . . .38
6.10 Further Assurances . . . . . . . . . . . . . . . . .38
6.11 Solvency . . . . . . . . . . . . . . . . . . . . . .39
ARTICLE VII NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . .39
7.01 Liens. . . . . . . . . . . . . . . . . . . . . . . .39
7.02 Indebtedness . . . . . . . . . . . . . . . . . . . .39
7.03 Contingent Obligations . . . . . . . . . . . . . . .40
7.04 Lease Obligations. . . . . . . . . . . . . . . . . .40
7.05 Disposition of Properties. . . . . . . . . . . . . .40
7.06 Consolidations and Mergers . . . . . . . . . . . . .40
7.07 Liquidations; Issuances of Stock . . . . . . . . . .41
2
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7.08 Changes in Business Investments. . . . . . . . . . .42
7.09 Restricted Payments. . . . . . . . . . . . . . . . .42
7.10 Transactions with Affiliates . . . . . . . . . . . .42
ARTICLE VIII EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . . . .42
8.01 Event of Default . . . . . . . . . . . . . . . . . .42
8.02 Remedies . . . . . . . . . . . . . . . . . . . . . .44
8.03 Rights Not Exclusive . . . . . . . . . . . . . . . .45
8.04 Certain Requirements in Order to Pursue
the Guaranty . . . . . . . . . . . . . . . . . . .45
ARTICLE IX THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . . .45
9.01 Appointment and Authorization. . . . . . . . . . . .45
9.02 Delegation of Duties . . . . . . . . . . . . . . . .46
9.03 Liability of Agent . . . . . . . . . . . . . . . . .46
9.04 Reliance by Agent. . . . . . . . . . . . . . . . . .46
9.05 Notice of Default. . . . . . . . . . . . . . . . . .47
9.06 Credit Decision. . . . . . . . . . . . . . . . . . .47
9.07 Indemnification. . . . . . . . . . . . . . . . . . .48
9.08 Agent in Individual Capacity . . . . . . . . . . . .48
9.09 Successor Agents . . . . . . . . . . . . . . . . . .49
9.10 Collateral Matters . . . . . . . . . . . . . . . . .49
ARTICLE X MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . .49
10.01 Amendments and Waivers . . . . . . . . . . . . . . .49
10.02 Notices. . . . . . . . . . . . . . . . . . . . . . .50
10.03 No Waiver; Cumulative Remedies . . . . . . . . . . .51
10.04 Costs and Expenses . . . . . . . . . . . . . . . . .51
10.05 Indemnity. . . . . . . . . . . . . . . . . . . . . .52
10.06 Marshalling; Payments Set Aside. . . . . . . . . . .52
10.07 Successors and Assigns . . . . . . . . . . . . . . .52
10.08 Assignments, Participations, etc.. . . . . . . . . .52
10.09 Setoff . . . . . . . . . . . . . . . . . . . . . . .54
10.10 Notification of Addresses, Lending Offices, etc. . .55
10.11 Counterparts . . . . . . . . . . . . . . . . . . . .55
10.12 Severability . . . . . . . . . . . . . . . . . . . .55
10.13 No Third Parties Benefited . . . . . . . . . . . . .55
10.14 Time . . . . . . . . . . . . . . . . . . . . . . . .55
10.15 Governing Law. . . . . . . . . . . . . . . . . . . .55
10.16 Waiver of Jury Trial . . . . . . . . . . . . . . . .55
10.17 Arbitration. . . . . . . . . . . . . . . . . . . . .56
10.18 Notice of Claims; Claims Bar . . . . . . . . . . . .56
10.19 Entire Agreement . . . . . . . . . . . . . . . . . .57
3
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10.20 Interpretation . . . . . . . . . . . . . . . . . . .57
10.21 Relationship . . . . . . . . . . . . . . . . . . . .57
10.22 Consent to Jurisdiction and Service of Process . . .57
4
<PAGE>
CREDIT AGREEMENT
(Acquisition Sub Facility)
This CREDIT AGREEMENT is entered into as of May 5, 1997, AIMCO/NHP
HOLDINGS, INC., a Delaware corporation (the "Company"), the lenders from time to
time party to this Agreement (the "Lenders"), BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION ("BofA"), as one of the Lenders, SMITH BARNEY MORTGAGE
CAPITAL GROUP, INC., as one of the Lenders, and BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as Agent (the "Agent").
IN CONSIDERATION OF the mutual agreements, provisions and covenants
contained herein, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
1.01 DEFINED TERMS. Capitalized terms used but not defined herein
shall have the meanings set forth in the Operating Partnership Credit Agreement.
In addition to the terms defined elsewhere in this Agreement, the following
terms have the following meanings:
"AFFILIATE" means, as to any Person, any other Person which, directly
or indirectly, is in control of, is controlled by, or is under common control
with, such Person. A Person shall be deemed to control another Person if the
controlling Person possesses, directly or indirectly, the power to direct or
cause the direction of the management and policies of the other Person, whether
through the ownership of voting securities, by contract or otherwise. Without
limitation, any director, executive officer or beneficial owner of five percent
(5%) or more of the equity of a Person shall, for the purposes of this
Agreement, be deemed to control the other Person. In no event shall any Lender
be deemed an "Affiliate" of the Company.
"AGENT" means Bank of America National Trust and Savings Association,
in its capacity as Agent, and any successor Agent appointed hereunder.
"AGENT-RELATED PERSONS" has the meaning specified in Section 9.03.
"AGGREGATE COMMITMENT" means the combined Commitments of the Lenders,
in the amount of up to $76,000,000.
"AGREEMENT" means this Credit Agreement, as amended, supplemented or
modified from time to time.
"AIMCO GROSS ASSET VALUE" shall have the meaning set forth in the REIT
Guaranty Documents.
"APPLICABLE LIBOR MARGIN", with respect to LIBOR Loans, shall mean
2.50%.
"APPLICABLE MARGIN" means
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(a) with respect to Base Rate Loans, 1.0%; and
(b) with respect to LIBOR Loans, the Applicable LIBOR Margin.
"ASSIGNEE" has the meaning specified in Section 10.08(a).
"ASSIGNMENT AND ACCEPTANCE" has the meaning specified in Section
10.08(a).
"ATTORNEY COSTS" means and includes all reasonable fees and
disbursements of any law firm or other external counsel, the allocated cost of
internal legal services and all disbursements of internal counsel.
"BANKRUPTCY CODE" means the Federal Bankruptcy Reform Act of 1978 (12
U.S.C. Section 101, ET. SEQ.), as amended from time to time.
"BASE RATE" means the higher of:
(a) the annual rate of interest publicly announced from time to
time by the Reference Lender as its "reference" rate. The "reference" rate is a
rate set based upon various factors including the Reference Lender's costs and
desired return, general economic conditions, and other factors, and is used as
reference points for pricing some loans. Any change in the Base Rate shall take
effect on the day specified in the public announcement of such change; or
(b) one-half of one percent (0.5%) per annum above the latest
Federal Funds Rate.
"BASE RATE LOAN" means a Loan that bears interest based on the Base
Rate.
"BOFA" means Bank of America National Trust and Savings Association,
other than in its capacity as the Agent hereunder.
"BORROWING NOTICE" means a notice given by the Company to the Agent
pursuant to Section 2.03, in substantially the form of EXHIBIT A.
"BRIDGE LOAN AGREEMENT" means that certain Amended and Restated Credit
Agreement (Bridge Loan Facility) dated as of May 5, 1997, by and among the
Operating Partnership, BofA as the agent and the lenders party thereto which
provides, inter alia, that the lenders party thereto will make available to the
Operating Partnership a credit facility in the amount of up to Twenty-Five
Million Dollars ($25,000,000.00), as the same may be amended, supplemented, or
modified from time to time.
"BUSINESS DAY" means any day other than a Saturday, Sunday or other
day on which commercial lenders are authorized or required by law to close in
New York City or the city in which the Agent's office charged with
administration of the Loans is located; except in cases in which it relates to
any LIBOR Loan, in which cases "Business Day" means such a day on which dealings
are carried on in the London dollar interbank market.
"CAPITAL ADEQUACY REGULATION" means any guideline, request or
directive of any central lender or other Governmental Authority having
jurisdiction, or any other law, rule or regulation, whether or not having the
force of law, regarding capital adequacy of any Lender or of any corporation
controlling a Lender.
"CAPITAL LEASE" means any leasing or similar arrangement which, in
accordance with GAAP, is classified as a capital lease.
2
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"CAPITAL LEASE OBLIGATIONS" means, with respect to any Person, the
amount at which such Person's obligations under Capital Leases are required to
be carried on the balance sheet of such Person in accordance with GAAP.
"CASH EQUIVALENTS" means:
(a) securities issued or fully guaranteed or insured by the United
States Government or any agency thereof and backed by the full faith and credit
of the United States having maturities of not more than six months from the date
of acquisition;
(b) certificates of deposit, time deposits, demand deposits,
eurodollar time deposits, repurchase agreements, reverse repurchase agreements,
or bankers' acceptances, having in each case a tenor of not more than three (3)
months, issued by the Agent, or by any U.S. commercial bank (or any branch or
agency of a non-U.S. bank licensed to conduct business in the U.S.) having
combined capital and surplus of not less than $100,000,000 whose short-term
securities are rated at least A-1 by S&P and P-1 by Moody's; PROVIDED, HOWEVER,
such Investments may not be made in amounts with any bank that is owed
Indebtedness in excess of $50,000 by the Company or in excess of $1,000,000, the
REIT, the Operating Partnership or any Subsidiary (other than the Obligations)
unless such bank waives in writing (in form and substance satisfactory to the
Requisite Lenders) its right to set-off such Investment against such
Indebtedness;
(c) demand deposits on deposit in accounts maintained at commercial
lenders having membership in the FDIC and in amounts not exceeding the maximum
amounts of insurance thereunder; and
(d) commercial paper of an issuer rated at least A-1 by S&P or P-1 by
Moody's and in either case having a tenor of not more than three (3) months.
"CLOSING DATE" means the date on which all conditions precedent set
forth in Section 4.01 are satisfied or waived by all Lenders; said date shall
occur no later than the earlier of (i) May 7, 1997 or (ii) the "Closing Date"
under (and as such term is defined in) the Operating Partnership Credit
Agreement.
"CODE" means the Internal Revenue Code of 1986, as amended from time
to time, and any regulations promulgated thereunder.
"COLLATERAL" means all property interests, now owned or hereafter
acquired, in or upon which a Lien now or hereafter exists in favor of the Agent
on behalf of the Lenders hereunder or under the Collateral Documents.
"COLLATERAL DOCUMENTS" means, collectively, (a) the Stock Pledge
Agreements and all security agreements, and other similar agreements executed by
the REIT and the Common Stockholders in favor of the Lenders or the Agent for
the benefit of the Lenders as security for the REIT Guaranty Documents now or
hereafter delivered to the Lenders or the Agent pursuant to or in connection
with the transactions contemplated hereby, (b) all financing statements (or
comparable documents) now or hereafter filed in accordance with the UCC (or
comparable law) relating thereto, (c) any other documents executed in order to
establish, perfect or protect any of the liens or security interests granted in
any of the foregoing, and (d) any amendments, supplements, modifications,
renewals, replacements, consolidations, substitutions and extensions of any of
the foregoing.
"COMMITMENT", with respect to each Lender, shall mean that Lender's
Commitment as specified in SCHEDULE 1.01.
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"COMMITMENT EXPIRATION DATE" means (i) the date on which the
Commitments of the Lenders hereunder have been terminated in accordance with the
terms set forth herein; (ii) the date on which each Lender has funded the entire
amount of its Commitment, (iii) the date on which the Company shall have
acquired all of the NHP Stock pursuant to the NHP Stock Purchase Agreement;
(iv) any date on which the NHP Stock Purchase Agreement is terminated; or
(v) October 1, 1997.
"COMMITMENT PERCENTAGE" means, as to any Lender, the percentage
equivalent of such Lender's Commitment divided by the Aggregate Commitment.
"COMMON STOCKHOLDERS" means Terry Considine and Peter K. Kompaniez.
"CONTINGENT OBLIGATION" means, as to any Person, (a) any Guaranty
Obligation of that Person, and (b) any direct or indirect obligation or
liability, contingent or otherwise, of that Person, (i) in respect of any letter
of credit or similar instrument issued for the account of that Person or as to
which that Person is otherwise liable for reimbursement of drawings, (ii) as a
partner or joint venturer in any partnership or joint venture, (iii) to purchase
any materials, supplies or other Property from, or to obtain the services of,
another Person if the relevant contract or other related document or obligation
requires that payment for such materials, supplies or other Property, or for
such services, shall be made regardless of whether delivery of such materials,
supplies or other Property is ever made or tendered, or such services are ever
performed or tendered, or (iv) incurred pursuant to any Rate Contract. The
amount of any Contingent Obligation shall (subject, in the case of Guaranty
Obligations, to the last sentence of the definition of "Guaranty Obligation") be
deemed equal to the maximum reasonably anticipated liability in respect thereof.
"CONTRACTUAL OBLIGATION" means, as to any Person, any provision of any
security issued by such Person or of any agreement, undertaking, contract,
mortgage, deed of trust, indenture, or other instrument, document or agreement
to which such Person is a party or by which it or any of its Property is bound.
"DEFAULT" means any event or circumstance which, with the giving of
notice, the lapse of time, or both, would (if not cured or otherwise remedied)
constitute an Event of Default.
"DISPOSITION" means the sale, lease, conveyance, transfer or other
disposition of (whether in one or a series of transactions) any Property,
including accounts and notes receivable (with or without recourse) and
sale-leaseback transactions, but otherwise excluding Permitted Liens.
"DOLLARS", "DOLLARS" and "$" each mean lawful money of the United
States.
"DOMESTIC LENDING OFFICE" means, with respect to each Lender, the
office of that Lender designated as such on the signature pages hereto or such
other office of a Lender as it may from time to time specify in writing to the
Company and the Agent.
"ELIGIBLE ASSIGNEE" means (a) a commercial bank organized under the
laws of the United States, or any state thereof, and having a combined capital
and surplus of at least $100,000,000, (b) a commercial bank organized under the
laws of any other country which is a member of the Organization for Economic
Cooperation and Development (the "OECD"), or a political subdivision of any such
country, and having a combined capital and surplus of at least $100,000,000,
provided that such commercial bank is acting through a branch or agency located
in the country in which it is organized or another country which is also a
member of the OECD, and (c) any Lender Affiliate.
4
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"EVENT OF DEFAULT" means any of the events or circumstances specified
in Section 8.01.
"EXCHANGE ACT" means the Securities and Exchange Act of 1934, and
regulations promulgated thereunder.
"EXCLUDED PROCEEDS" shall have the meaning set forth in the Guaranty.
"FEDERAL FUNDS RATE" means, for any period, the rate set forth in the
weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Board (including any such
successor, "H.15(519)") for such day opposite the caption "Federal Funds
(Effective)". If on any relevant day such rate is not yet published in
H.15(519), the rate for such day will be the rate set forth in the daily
statistical release designated as the Composite 3:30 p.m. Quotations for U.S.
Government Securities, or any successor publication, published by the Federal
Reserve Bank of New York (including any such successor, the "Composite 3:30 p.m.
Quotation") for such day under the caption "Federal Funds Effective Rate". If
on any relevant day the appropriate rate for such previous day is not yet
published in either H.15(519) or the Composite 3:30 p.m. Quotations, the rate
for such day will be the arithmetic mean of the rates for the last transaction
in overnight Federal funds arranged prior to 9:00 a.m. (New York time) on that
day by each of three (3) leading brokers of Federal funds transactions in New
York City selected by the Agent.
"FEDERAL RESERVE BOARD" means the Board of Governors of the Federal
Reserve System or any successor thereof.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board (or agencies with similar functions of
comparable stature and authority within the accounting profession), or in such
other statements by such other entity as may be in general use by significant
segments of the U.S. accounting profession, which are applicable to the
circumstances as of the date of determination.
"GOVERNMENTAL AUTHORITY" means any nation or government, any state or
other political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to government,
and any corporation or other entity owned or controlled, through stock or
capital ownership or otherwise, by any of the foregoing.
"GP CORP" means AIMCO-GP, Inc., a Delaware corporation.
"GUARANTOR EVENT OF DEFAULT" means an "Event of Default" (as such term
is defined in the REIT Guaranty Documents).
"GUARANTY OBLIGATION" means, as applied to any Person, any direct or
indirect liability of that Person with respect to any Indebtedness, lease,
dividend, letter of credit or other obligation (the "primary obligation") of
another Person (the "primary obligor"), including any obligation of that Person,
whether or not contingent, (a) to purchase, repurchase or otherwise acquire such
primary obligations or any Property constituting direct or indirect security
therefor, or (b) to advance or provide funds (i) for the payment or discharge of
any such primary obligation, or (ii) to maintain working capital or equity
capital of the primary obligor or otherwise to maintain the net worth or
solvency or any balance sheet item, level of income or financial condition of
the primary obligor, or (c) to purchase securities, other Properties or services
primarily for the purpose of assuring the owner of any such primary obligation
of the ability of the primary obligor to make payment of such primary
obligation,
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or (d) otherwise to assure or hold harmless the holder of any such primary
obligation against loss in respect thereof. The amount of any Guaranty
Obligation shall be deemed equal to the stated or determinable amount of the
primary obligation in respect of which such Guaranty Obligation is made or, if
not stated or if indeterminable, the maximum reasonably anticipated liability in
respect thereof.
"INDEBTEDNESS" of any Person means without duplication, (a) all
indebtedness for borrowed money, (b) all obligations issued, undertaken or
assumed as the deferred purchase price of Property or services, (c) all
reimbursement obligations with respect to surety bonds, letters of credit,
bankers' acceptances and similar instruments (in each case, to the extent
material or non-contingent), (d) all obligations evidenced by notes, bonds,
debentures or similar instruments, including obligations so evidenced incurred
in connection with the acquisition of Properties, (e) all indebtedness created
or arising under any conditional sale or other title retention agreement, or
incurred as financing, in either case with respect to Properties acquired by the
Person (even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
properties), (f) all Capital Lease Obligations, (g) all net obligations with
respect to Rate Contracts, (h) all obligations to purchase, redeem, or acquire
any Stock of such Person or its Affiliates that, by its terms or by the terms of
any security into which it is convertible or exchangeable, is, or upon the
happening of any event or the passage of time would be, required to be redeemed
or repurchased by such Person or its Affiliates, including at the option of the
holder, in whole or in part, or has, or upon the happening of an event or
passage of time would have, a redemption or similar payment due, before June 30,
2001, (i) all indebtedness referred to in clauses (a) through (h) above secured
by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien upon or in Properties
(including accounts and contract rights) owned by such Person, even though such
Person has not assumed or become liable for the payment of such Indebtedness,
and (j) all Guaranty Obligations in respect of indebtedness or obligations of
others of the kinds referred to in clauses (a) through (h) above.
"INDEMNIFIED LIABILITIES" has the meaning specified in Section 10.05.
"INDEMNIFIED PERSON" has the meaning specified in Section 10.05.
"INITIAL LOAN" shall mean the Loans made by all Lenders on the Closing
Date in the aggregate amount of $72,600,000.00.
"INSOLVENCY PROCEEDING" means (a) any case, action or proceeding
before any court or other Governmental Authority relating to bankruptcy,
reorganization, insolvency, liquidation, receivership, dissolution, winding-up
or relief of debtors, or (b) any general assignment for the benefit of
creditors, composition, marshalling of assets for creditors or other, similar
arrangement in respect of its creditors generally or any substantial portion of
its creditors; in each case as undertaken under U.S. Federal, State or foreign
law.
"INTEREST PAYMENT DATE" means each of July 3, 1997 and October 3,
1997.
"INTEREST PERIOD" means, with respect to any LIBOR Loan, the period
commencing on the Business Day on which the Loan is disbursed or on the Pricing
Conversion Date on which the Loan is continued as or converted to the LIBO Rate
and ending on the date one (1), two (2) or three (3) months thereafter, as
selected by the Company in its Borrowing Notice or Notice of
Conversion/Continuation; PROVIDED that:
(a) if any Interest Period would otherwise end on a day that is not a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day unless the result of such extension would be to carry such Interest
Period into another
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calendar month, in which event such Interest Period shall end on the immediately
preceding Business Day;
(b) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period) shall end on the last
Business Day of the calendar month at the end of such Interest Period; and
(c) no Interest Period for any Loan shall extend beyond the Maturity
Date.
"INTRA-COMPANY DEBT" means Indebtedness (whether book-entry or
evidenced by a term, demand or other note or other instrument) owed by the
Operating Partnership, the REIT or any of their respective Subsidiaries to any
Subsidiary, and incurred or assumed for the purpose of capitalizing a Subsidiary
of the REIT or the Operating Partnership. As of the date hereof, Intra-Company
Debt includes the Indebtedness listed in SCHEDULE 1.01C attached to the
Operating Partnership Credit Agreement and Indebtedness of the Subsidiaries
under the promissory notes of Subsidiaries assigned to the Operating Partnership
and described on SCHEDULE 7.02 attached to the Operating Partnership Credit
Agreement.
"INVESTMENT" means (a) any purchase or acquisition of any capital
stock, equity interest, asset, obligation or other security of or any interest
in, any Person, (b) any advance, loan, extension of credit or capital
contribution to any Person, (c) any purchase, lease, or other acquisition of
Property for investment purposes or for the purpose of resale or leasing to
another Person, and (d) any contingent or other agreement to do any of the
foregoing.
"IRS" means the Internal Revenue Service or any agency successor
thereto.
"KNOWLEDGE OF THE COMPANY" means the actual knowledge (after
reasonable inquiry) of any of the officers of the Company, the Operating
Partnership or the REIT and each other Person with executive responsibility for
any aspect of the Company's, the Operating Partnership's or the REIT's business.
"LENDER" means each of the lenders party to this Agreement, and
includes BofA in its individual capacity.
"LENDER AFFILIATE" means a Person that is engaged primarily in the
business of commercial lending and is a Subsidiary of a Lender or of a Person of
which a Lender is a Subsidiary.
"LENDING OFFICE" means, with respect to any Lender, the office or
offices of the Lender specified as its "Lending Office" opposite its name on the
signature pages hereto, or such other office or offices of the Lender as it may
from time to time specify in writing to the Company and the Agent.
"LIBO RATE" means, for each Interest Period for any LIBOR Loan, an
interest rate per annum (rounded upward to the nearest 1/100th of 1%) determined
pursuant to the following formula:
LIBO Rate = LIBOR
-------------------------
---
1.00 - Reserve Percentage
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Where,
(i) "LIBOR" means the per annum rate of interest, rounded
upward, if necessary, to the nearest 1/16th of one percent (0.0625%), at which
the Reference Lender's London branch, London, England, would offer U.S. dollar
deposits in amounts and for periods comparable to those of the applicable LIBOR
Loan and Interest Period to major banks in the London U.S. dollar inter-bank
market at approximately 11:00 a.m., London time, on the first Business Day after
the Borrowing Notice or Notice of Conversion/Continuation for such LIBOR Loan is
delivered to the Agent; and
(ii) "RESERVE PERCENTAGE" means the total of the maximum reserve
percentages from time to time for determining the reserves to be maintained by
member banks of the Federal Reserve System for Eurocurrency Liabilities, as
defined in Federal Reserve Board Regulation D, whether or not applicable to any
Lender. The Reserve Percentage shall be expressed in decimal form and rounded
upward, if necessary, to the nearest 1/100th of one percent, and shall include
marginal, emergency, supplemental, special and other reserve percentages.
"LIBOR LOAN" means a Loan that bears interest based on the LIBO Rate.
"LIEN" means any mortgage, deed of trust, security agreement, pledge,
hypothecation, assignment, charge or deposit arrangement, encumbrance, lien
(statutory or other) or preference, priority or other security interest or
preferential arrangement of any kind or nature whatsoever (including those
created by, arising under or evidenced by any conditional sale or other title
retention agreement, the interest of a lessor under a Capital Lease, any
financing lease having substantially the same economic effect as any of the
foregoing, or the filing of any financing statement naming the owner of the
asset to which such lien relates as debtor, under the UCC or any comparable law)
and any contingent or other agreement to provide any of the foregoing.
"LOAN" has the meaning specified in Section 2.01(a).
"LOAN DOCUMENTS" means this Agreement, the Note, the Collateral
Documents, the REIT Guaranty Documents, and all other documents delivered to the
Agent or the Lenders in connection therewith.
"MANAGEMENT ENTITY" shall mean each of the following Persons and any
successor thereto which conducts the management business described in the SEC
Report, as well as any Subsidiary of the Operating Partnership or the REIT which
is engaged in the business of managing multi-family apartment projects or other
real estate projects: Property Asset Management Services, L.P., a Delaware
limited partnership, Property Asset Management Services, Inc., a Delaware
corporation, Property Asset Management Services-CA, LLC, a California limited
liability company; each of the "Service LLC's" referred to in the SEC Report;
and any Subsidiary formed to conduct the management business currently conducted
by NHP.
"MATERIAL ADVERSE EFFECT" means either: (a) in the case of the
Company, a material adverse change in, or a material adverse effect upon, any of
(i) the assets, operations, business, condition (financial or otherwise), or
prospects of the Company, or (ii) the ability of the Company to perform under
any Loan Document and avoid any Event of Default (other than, in either such
case, resulting from the sale or pledge of the NHP Stock or any change in the
market value thereof); (b) in the case of the Operating Partnership, the REIT
and their
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respective Subsidiaries, a material adverse change in, or a material adverse
effect upon, any of (i) the assets, operations, business, condition (financial
or otherwise), or prospects of the Operating Partnership, the REIT and their
respective Subsidiaries, taken as a whole, (ii) the ability of the Operating
Partnership, the REIT and their respective Subsidiaries party thereto to perform
under any Loan Document and avoid any Event of Default, or (iii) the ability of
the Operating Partnership, the REIT and their respective Subsidiaries party
thereto to perform under the REIT Guaranty Documents; or (c) a material adverse
effect upon the ability to consummate the transactions under the NHP Merger
Agreement.
"MATURITY DATE" shall mean the Scheduled Maturity Date, subject to
earlier acceleration as provided herein.
"MAXIMUM DISBURSEMENT AMOUNT" shall mean, in relation to any requested
Subsequent Loan, an amount (rounded down to the nearest $100,000 in the case of
the first Subsequent Loan, and rounded up to the nearest $100,000 in the case of
the second Subsequent Loan) equal to the lesser of (i) 55.8824% of the purchase
price (at not more than $20.00 per share) payable under the NHP Stock Purchase
Agreement for the shares of NHP Stock proposed to be acquired in part with the
proceeds of such Subsequent Loan, (ii) the cash portion proposed to be paid by
the Company of the purchase price for such shares of NHP Stock payable pursuant
to the NHP Stock Purchase Agreement (the amount of which cash portion shall be
calculated based upon a valuation of the portion of the purchase price payable
for such shares of NHP Stock in the form of Stock of the REIT at the greater of
$26.75 per share or the fair market value thereof, as determined in good faith
by the Company, at the time of such payment) and (iii) the remaining unfunded
Aggregate Commitment of the Lenders.
"MERGER SUB" means AIMCO/NHP Acquisition Corp., a Delaware
corporation.
"MOODY'S" shall mean Moody's Investors Service, a Delaware
corporation, and its successors and assigns.
"NET ISSUANCE PROCEEDS" shall have the meaning set forth in the REIT
Guaranty Documents.
"NET SALE PROCEEDS" shall have the meaning set forth in the REIT
Guaranty Documents.
"NHP" means NHP, Incorporated, a Delaware corporation.
"NHP COMBINATION DATE" means the date on which the Company, the REIT,
any of their Subsidiaries shall have acquired one hundred percent (100%) of the
common stock of NHP or shall have consummated a merger with NHP, whichever is
the earlier.
"NHP MERGER AGREEMENT" means that certain Agreement and Plan of
Merger, dated April 21, 1997, entered into among the REIT, the Merger Sub and
NHP.
"NHP STOCK" means the shares of stock in NHP owned by the Company from
time to time.
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"NHP STOCK PURCHASE AGREEMENT" means that certain Stock Purchase
Agreement dated as of April 16, 1997, among the REIT and the NHP Shareholders.
"NHP-RELATED REAL ESTATE ACQUISITION AGREEMENT" means the Real Estate
Acquisition Agreement to be entered into among the NHP Shareholders and Phemus
Corporation, as the sellers, the Operating Partnership and the REIT.
"NHP REVOLVING CREDIT AGREEMENT" means that certain Revolving Credit
Agreement, dated as of August 18, 1995, among NHP and its subsidiaries, The
First National Bank of Boston, as Lead Agent, and Fleet Bank of Massachusetts,
National Association, and Morgan Guaranty Trust Company of New York, as
Co-Agents, as amended by that certain First Amendment thereto, dated as of
November 10, 1995, that certain Consent and Amendment Agreement, dated as of
March 27, 1996, and that certain Amendment No. 2 thereto, dated as of February
11, 1997.
"NHP SHAREHOLDERS" means Demeter Holdings Corporation and Capricorn
Investors, L.P.
"NOTE" means a promissory note of the Company payable to the order of
a Lender in substantially the form of EXHIBIT B, evidencing the aggregate
indebtedness of the Company to such Lender resulting from Loans made by such
Lender.
"NOTICE OF CONVERSION/CONTINUATION" means a notice given by the
Company to the Agent pursuant to Section 2.04, in substantially the form of
EXHIBIT C.
"NOTICE OF LIEN" means any "notice of lien" or similar document
intended to be filed or recorded with any court, registry, recorder's office,
central filing office or other Governmental Authority for the purpose of
evidencing, creating, perfecting or preserving the priority of a Lien securing
obligations owing to a Governmental Authority.
"OBLIGATIONS" means all Loans, and other Indebtedness, advances,
debts, liabilities, obligations, covenants and duties owed by the Company, the
REIT, the Operating Partnership or any of their respective Subsidiaries to the
Agent, any Lender, or any other Person required to be indemnified under any Loan
Document, of any kind or nature, present or future, whether or not evidenced by
any note, guaranty or other instrument, arising under this Agreement or under
any other Loan Document, whether or not for the payment of money, whether
arising by reason of an extension of credit, loan, guaranty, indemnification or
in any other manner, whether direct or indirect (including those acquired by
assignment), absolute or contingent, due or to become due, now existing or
hereafter arising and however acquired.
"OPERATING PARTNERSHIP" means AIMCO Properties, L.P., a Delaware
limited partnership
"OPERATING PARTNERSHIP CREDIT AGREEMENT" means that certain Amended
and Restated Credit Agreement (Secured Revolver-to-Term Facility) dated as of
May 5, 1997, by and among the Operating Partnership, BofA as the agent and a
lender and the other lenders named therein, as the same may be amended,
supplemented, or modified from time to time.
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"ORDINARY COURSE OF BUSINESS" means, in respect of any transaction
involving a Person, the ordinary course of such Person's business, substantially
as intended to be conducted by any such Person as of the Closing Date (which, in
the case of the REIT, shall be as reflected in the SEC Report), and undertaken
by such Person in good faith and not for purposes of evading any covenant or
restriction in any Contractual Obligation of such Person.
"ORGANIZATIONAL DOCUMENTS" means: (a) for any corporation, the
certificate or articles of incorporation, the bylaws, any supplementary
articles, certificate of determination or instrument relating to the rights of
preferred shareholders, and all duly adopted resolutions of the board of
directors (or any committee thereof) of such corporation; (b) for any
partnership, the partnership agreement, the certificate and/or statement of
partnership and all duly adopted authorizations of the partners thereof; (c) for
any limited liability company, the articles of organization and operating
agreement therefor and duly adopted authorizations or resolutions of the members
thereof; and (d) for any trust, the declaration or agreement of trust.
"OTHER TAXES" has the meaning specified in Section 3.01(b).
"OUTSTANDING AMOUNT" means the aggregate principal amount of all
outstanding Loans from time to time.
"PARTICIPANT" has the meaning specified in Section 10.08(d).
"PAYMENT OFFICE" means the address for payments set forth on the
signature page hereto in relation to the Agent or such other address as the
Agent may from time to time specify in accordance with Section 10.02.
"PERSON" means an individual, partnership, corporation, business
trust, joint stock company, trust, limited liability company, unincorporated
association, joint venture or governmental authority.
"PROPERTY" means any estate or interest in any kind of property or
asset, whether real, personal or mixed, and whether tangible or intangible.
"REFERENCE LENDER" means BofA.
"REIT" means Apartment Investment and Management Company, a Maryland
corporation.
"REIT GUARANTY DOCUMENTS" shall mean a guaranty of the Obligations, in
the form of EXHIBIT D attached hereto, and such other documents relating to such
guaranty as the Agent may require, duly executed by the REIT and the Operating
Partnership and together with all Collateral Documents.
"REQUIREMENT OF LAW" means, as to any Person, any law (statutory or
common), treaty, rule or regulation or determination of an arbitrator or of a
Governmental Authority, in each case applicable to or binding upon the Person or
any of its Property or to which the Person or any of its Property is subject.
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"REQUISITE LENDERS" means, as of any date of determination, (a) if
there is only one Lender hereunder having a minimum Commitment of $5,000,000,
that Lender, and (b) if there are two (2) or more Lenders hereunder each having
a minimum Commitment of $5,000,000, then two (2) or more Lenders (for purposes
of counting Lenders, BofA and all affiliates of BofA collectively count as one
Lender, and in order to qualify as one of the two (2) necessary Lenders, a
Lender must hold a minimum Commitment of $5,000,000), holding at least sixty-six
and two-thirds percent (66-2/3%) of the outstanding balance of the Loans, or, if
there are no Loans outstanding, having at least sixty-six and two-thirds percent
(66-2/3%) of the Aggregate Commitment.
"RESPONSIBLE OFFICER" means, in relation to the REIT, the Chief
Executive Officer or the Vice Chairman of the REIT, and, in relation to the
Operating Partnership, the Chief Executive Officer or any Vice President of the
general partner of the Operating Partnership, in its capacity as the general
partner of the Company, and/or any other officer of the REIT or the general
partner of the Operating Partnership having substantially the same authority and
responsibility, or, with respect to financial matters, the Chief Financial
Officer or the Treasurer of the REIT or the general partner, respectively, or
any other officer having substantially the same authority and responsibility;
and in relation to the Company means the president, vice president, treasurer or
chief financial officer.
"S&P" shall mean Standard & Poor's Ratings Group and its successors
and assigns.
"SBI" shall mean Smith Barney Mortgage Capital Group, Inc.
"SCHEDULED MATURITY DATE" means the earlier of: (a) six months after
the Closing Date or (b) ten (10) days after the NHP Combination Date.
"SEC" means the Securities and Exchange Commission, or any successor
thereto.
"SEC REPORT" means the Annual Report of the REIT on Form 10-K filed
with the SEC for the year ending December 31, 1996.
"SOLVENT" means, as to any Person at any time, that (a) the fair value
of the Property of such Person is greater than the amount of such Person's
liabilities (including disputed, contingent and unliquidated liabilities) as
such value is established and liabilities evaluated for purposes of Section
101(31) of the Bankruptcy Code and, in the alternative, for purposes of the
Uniform Fraudulent Transfer Act; (b) the present fair saleable value of the
Property of such Person is not less than the amount that will be required to pay
the probable liability of such Person on its debts as they become absolute and
matured; (c) such Person is able to realize upon its Property and pay its debts
and other liabilities (including disputed, contingent and unliquidated
liabilities) as they mature in the normal course of business; (d) such Person
does not intend to, and does not believe that it will, incur debts or
liabilities beyond such Person's ability to pay as such debts and liabilities
mature; and (e) such Person is not engaged in business or a transaction, and is
not about to engage in business or a transaction, for which such Person's
property would constitute unreasonably small capital.
"STOCK" means all shares, options, warrants, interests, participations
or other equivalents (regardless of how designated) of or in a corporation or
equivalent entity, whether voting or nonvoting, including common stock,
preferred stock, perpetual preferred stock or
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any other "equity security" (as such term is defined in Rule 3a11-1 of the
General Rules and Regulations promulgated by the SEC under the Exchange Act).
"STOCK PLEDGE AGREEMENT" means a stock pledge agreement in
substantially the form of EXHIBIT E, duly executed and delivered by the REIT and
the Common Stockholders and pledging their interests in the Company as security
for the REIT Guaranty Documents.
"SUBSIDIARY" of a Person means any corporation, association,
partnership, joint venture, trust or other business entity of which more than
fifty percent (50%) of the Stock or other equity or beneficial interests (in the
case of Persons other than corporations) is owned or controlled directly or
indirectly by the Person, or one or more of the Subsidiaries of the Person, or a
combination thereof (regardless of whether such Stock or other interests are
entitled to voting rights).
"SUBSEQUENT LOAN" means any Loan made subsequent to the Initial Loans.
"TAXES" has the meaning specified in Section 3.01(a).
"UCC" means the Uniform Commercial Code as in effect in any relevant
jurisdiction.
"UNITED STATES" and "U.S." each mean the United States of America.
"UNITS" shall mean the units of limited partnership interest in the
Operating Partnership issued and outstanding from time to time.
1.02 OTHER DEFINITIONAL PROVISIONS
(a) DEFINED TERMS. Unless otherwise specified herein or therein, all
terms defined in this Agreement shall have the defined meanings when used in any
certificate or other document made or delivered pursuant hereto. The meaning of
defined terms shall be equally applicable to the singular and plural forms of
the defined terms. Terms (including uncapitalized terms) not otherwise defined
herein but defined in the UCC shall have the meanings set forth therein.
(b) THE AGREEMENT. The words "hereof", "herein", "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement; and
section, schedule and exhibit references are to this Agreement unless otherwise
specified.
(c) CERTAIN COMMON TERMS.
(i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other writings,
however evidenced.
(ii) The term "including" is not limiting and means "including
without limitation."
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(iii) The term "ratably" means, at any time that Loans may be
outstanding, in accordance with the amount of the outstanding Loans of the
respective Lenders; and, at any time that no Loans are outstanding, in
accordance with the outstanding Commitments of the respective Lenders.
(d) PERFORMANCE; TIME. Whenever any performance obligation hereunder
(other than a payment obligation) is stated to be due or required to be
satisfied on a day other than a Business Day, such performance shall be made or
satisfied on the next succeeding Business Day. In the computation of periods of
time from a specified date to a later specified date, the word "from" means
"from and including"; the words "to" and "until" each mean "to but excluding,"
and the word "through" means "to and including". If any provision of this
Agreement refers to any action taken or to be taken by any Person, or which such
Person is prohibited from taking, such provision shall be interpreted to
encompass any and all means, direct or indirect, of taking, or not taking, such
action.
(e) CONTRACTS. Unless otherwise expressly provided herein,
references to agreements and other contractual instruments shall be deemed to
include all subsequent amendments and other modifications thereto, but only to
the extent such amendments and other modifications are not prohibited by the
terms of any Loan Document.
(f) LAWS. References to any statute or regulation are to be
construed as including all statutory and regulatory provisions consolidating,
amending or replacing the statute or regulation.
(g) CAPTIONS. The captions and headings of this Agreement are for
convenience of reference only and shall not affect the construction of this
Agreement.
(h) INDEPENDENCE OF PROVISIONS. The parties acknowledge that this
Agreement and other Loan Documents may use several different limitations, tests
or measurements to regulate the same or similar matters, and that such
limitations, tests and measurements are cumulative and must each be performed,
except as expressly stated to the contrary in this Agreement.
1.03 ACCOUNTING PRINCIPLES
(a) GAAP. Unless the context otherwise clearly requires, all
accounting terms not expressly defined herein shall be construed, and all
financial computations required under this Agreement shall be made, in
accordance with GAAP, consistently applied.
(b) FISCAL YEAR; QUARTER. References herein to "fiscal year" and
"fiscal quarter" refer to such fiscal periods of the Company.
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ARTICLE II
THE FACILITY
2.01 AMOUNTS AND TERMS OF COMMITMENTS
(a) THE LOANS. Each Lender severally agrees, on the terms and
conditions hereinafter set forth, to make loans to the Company (each such loan,
a "Loan") from time to time on any Business Day during the period from the
Closing Date to the Commitment Expiration Date, in an aggregate amount not to
exceed at any time the amount set forth opposite such Lender's name in SCHEDULE
2.01 (such amount as the same may be reduced or increased as a result of one or
more assignments pursuant to Section 10.08, such Lender's "Commitment").
(b) USAGE. The Company shall use the proceeds of the Loans to pay
the cash portion of the acquisition price for the NHP Stock payable under the
NHP Stock Purchase Agreement and for no other purpose.
2.02 NOTE. The Loan made by each Lender shall be evidenced by a Note
dated the Closing Date payable to the order of that Lender in an amount equal to
its Commitment.
2.03 PROCEDURES FOR BORROWINGS
(a) INITIAL LOANS.
(i) BORROWING NOTICE. The Initial Loans shall be made upon the
irrevocable written notice (including notice via facsimile confirmed immediately
by a telephone call) of the Company in the form of a Borrowing Notice delivered
to each Lender, subject to the following:
(A) DESIGNATION OF INTEREST RATE. The Initial Loans shall
be made as Base Rate Loans. On the Closing Date the Company shall deliver to
the Agent a Notice of Conversion/Continuation requesting the conversion of the
entire amount of such Loans to a LIBOR Loan as of a date no later than the
fourth (4th) Business Day after the date such Loan is disbursed.
(B) TIMING OF NOTICE. The Borrowing Notice for the Initial
Loans shall be submitted to and received by each Lender prior to 12:00 noon
(California time) on the specified borrowing date.
(ii) FUNDING OF COMMITMENT. Each Lender shall directly fund in
accordance with the Company's written instructions its Commitment Percentage of
the Initial Loans described in the initial Borrowing Notice on the borrowing
date specified therein by wire transfer of immediately available funds. The
Agent is not responsible for the receipt of funds transferred by SBI, and is
authorized to assume that SBI has funded on the same date as BofA funds an
amount equal to the funds advanced by BofA.
(b) SUBSEQUENT LOANS.
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(i) BORROWING NOTICE FOR A SUBSEQUENT LOAN. Each Subsequent
Loan shall be made upon the irrevocable written notice (including notice via
facsimile confirmed immediately by a telephone call) of the Company in the
form of a Borrowing Notice for a Subsequent Loan, as follows:
(A) DESIGNATION OF INTEREST RATE. The Company shall have the right to
elect that a Subsequent Loan be made as a LIBOR Loan or a Base Rate Loan;
PROVIDED that after giving effect to such Subsequent Loan there shall not be
more than three (3) different LIBOR Loans outstanding; and provided further
that, except as otherwise provided in Section 2.04(a), if the Company elects
that a Subsequent Loan be made as a Base Rate Loan, on the date such Loan is
disbursed, Company shall deliver to the Agent a Notice of
Conversion/Continuation requesting the conversion of the entire amount of
such Loans to a LIBOR Loan as of a date no later than the fourth (4th)
Business Day after the date such Loan is disbursed.
(B) TIMING OF NOTICE. Each Borrowing Notice for a Subsequent Loan shall
be submitted to and received by the Agent prior to 9:00 a.m. (California
time) (A) at least three (3) Business Days prior to the specified borrowing
date, in the case of LIBOR Loans; and (B) at least one (1) Business Day prior
to the specified borrowing date, in the case of Base Rate Loans.
(C) CONTENTS OF NOTICE. Each Borrowing Notice for a Subsequent Loan shall
set forth the following information with respect to the Subsequent Loan subject
thereto:
(I) a single, specific borrowing date, which shall be a Business Day;
(II) a single, exact amount for the Subsequent Loan, which for any LIBOR
Loan, shall be in an aggregate minimum principal amount of $1,000,000 or any
multiple of $100,000 in excess thereof (except for the final disbursement);
(III) whether the Subsequent Loan is to be made as a LIBOR Loan or a Base
Rate Loan;
(IV) if the Subsequent Loan is to be made as a LIBOR Loan, the applicable
Interest Period. If a Borrowing Notice for a Subsequent Loan shall fail to
specify the applicable Interest Period for any LIBOR Loan requested, the Agent
is hereby irrevocably instructed and authorized by the Company and the Lenders
that the applicable Interest Period shall be thirty (30) days; and
(V) a calculation of the Maximum Disbursement Amount relating to the NHP
Stock to be acquired with the requested Subsequent Loan.
(ii) NOTICE TO LENDERS. Upon receipt of a Borrowing Notice
for a Subsequent Loan conforming with the terms of Section 2.03(b), the Agent
shall promptly notify each Lender thereof and of the amount of such Lender's
Commitment Percentage of the Subsequent Loan described therein.
(iii) FUNDING OF COMMITMENT. Each Lender shall make the
amount of its Commitment Percentage of the Subsequent Loan described in any
Borrowing Notice for a Subsequent Loan available to the Agent for the account
of the Company at the Payment Office by 9:00 a.m. (California time) on the
borrowing date specified therein in funds
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immediately available to the Agent; provided, that in no event shall the amount
funded by any Lender exceed the Maximum Disbursement Amount for the requested
Subsequent Loan. Unless any applicable condition specified in Article IV has
not been satisfied, such funds shall then be made available to the Company by
the Agent at such office by crediting the account of the Company with the
aggregate of the amounts made available to the Agent by the Lenders (in like
funds as received by the Agent).
(iv) FREQUENCY OF BORROWINGS. No more than two (2) Borrowing
Notices for Subsequent Loans may be given. No Subsequent Loan shall be
requested or disbursed subsequent to the Commitment Expiration Date. Amounts
prepaid may not be reborrowed.
2.04 CONVERSION AND CONTINUATION ELECTIONS.
(a) NOTICE OF CONVERSION/CONTINUATION. Each conversion or
continuation of an outstanding Loan shall be made upon the irrevocable
written notice (including notice via facsimile confirmed immediately by a
telephone call) of the Company in the form of a Notice of
Conversion/Continuation, as follows:
(i) DESIGNATION OF INTEREST RATE. The Company shall have the
right to make the following elections with respect to the conversion or
continuation of any outstanding Loan:
(A) to convert, on any Business Day, any Base Rate Loan,
in a minimum principal amount of $1,000,000 or an integral multiple of
$100,000 in excess thereof, into a LIBOR Loan; or
(B) to continue, on the last day of any Interest Period
with respect to a LIBOR Loan (or, on any other day of any Interest Period,
upon payment of any loss or expense incurred or sustained by any Lender with
respect to the early termination of such LIBOR Loan prior to the last day of
the Interest Period as provided in Section 3.04), such LIBOR Loan (or any
part thereof in a minimum principal amount of $1,000,000 or an integral
multiple of $100,000 in excess thereof) for a subsequent Interest Period;
PROVIDED, that unless the Agent shall otherwise agree in writing, the Company
may not elect to have any outstanding LIBOR Loan or Base Rate Loan (or any
portion thereof) continued as or converted into a LIBOR Loan if (A) a Default
or Event of Default shall exist, (B) after giving effect to such continuation
or conversion there shall be more (i) than three (3) different LIBOR Loans
outstanding or (ii) the aggregate outstanding principal amount of all LIBOR
Loans shall have been reduced, by payment or prepayment, to less than
$1,000,000.
(ii) TIMING OF NOTICE. Each Notice of Conversion/Continuation
shall be submitted to and received by the Agent prior to 9:00 a.m.
(California time) at least three (3) Business Days prior to the date on which
the requested conversion or continuation is to become effective.
(A) the date on which the requested conversion or
continuation is to become effective, which shall be a Business Day;
(B) the amount of the Loan to be converted or continued;
and
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(C) the applicable Interest Period for the LIBOR Loan
into which such Loan is to be converted or which is to be continued.
(b) AUTOMATIC CONVERSIONS.
(i) Except as provided in Sections 2.04 (b)(ii), 3.02 and
3.05, any outstanding LIBOR Loan shall, effective on the last day of the
applicable Interest Period for such Loan, automatically convert to a LIBOR
Loan having a one month Interest Period, unless the Company shall have
delivered to the Agent at least three (3) Business Days prior to the last day
of the Interest Period for such outstanding LIBOR Loan a Notice of
Conversion/ Continuation requesting the conversion of such Loan to a LIBOR
Loan having a longer Interest Period. In the event of any such automatic
conversion, the Company shall be deemed to have delivered to the Agent a
Notice of Conversion/Continuation requesting such Loan for such thirty (30)
day Interest Period, and the Company hereby releases the Agent and the
Lenders from any claims or liabilities as a result of their reliance upon
such instructions.
(ii) Any outstanding LIBOR Loan shall automatically convert to
a Base Rate Loan, effective on the last day of the applicable Interest
Period, if as of such date:
(A) DEFAULT; EVENT OF DEFAULT. A Default or Event of
Default shall exist; or
(B) FAILURE TO MAINTAIN MINIMUM LOANS. If the aggregate
outstanding principal amount of LIBOR Loans having the same Interest Period
shall have been reduced, by payment, prepayment, or partial conversion to be
less than $1,000,000.
(c) NOTICE TO LENDERS. Upon receipt of a Notice of
Conversion/Continuation conforming with the terms of Section 2.04(a), or an
automatic conversion pursuant to Section 2.04(b), the Agent shall promptly
notify each Lender thereof. All conversions and continuations shall be made
pro rata according to the respective outstanding principal amounts of the
Loans converted or continued.
2.05 OPTIONAL PREPAYMENTS. Subject to Section 3.04, the Company
may, at any time and from time to time, ratably prepay Loans in whole or in
part, in an aggregate minimum amount of $1,000,000 or an integral multiple of
$100,000 in excess thereof.
2.06 MANDATORY PREPAYMENTS OF LOANS.
(a) On July 3, 1997, the Company shall prepay the Loan in an amount
equal to the lesser of (i) 4.75% of the increase in AIMCO Gross Asset Value,
if any, from March 31, 1997 to June 30, 1997 (other than any increase
resulting from Excluded Proceeds or the consummation of the acquisition by
the Company of the NHP Stock and the formation of the Company) or (ii) the
sum of the Net Issuance Proceeds plus Net Sale Proceeds (other than Excluded
Proceeds) received during such period. (b) On October 3, 1997, the
Company shall prepay the Loan in an amount equal to (i) the lesser of (A)
4.75% of the increase in AIMCO Gross Asset Value, if any, from March 31, 1997
to September 30, 1997 (other than any increase resulting from Excluded
Proceeds or the consummation of the acquisition by the Company of the NHP
Stock and the formation of the Company) or (B) the sum of the Net Issuance
Proceeds plus Net Sale
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Proceeds (other than Excluded Proceeds) received during such period minus (ii)
the amount of any prepayment under Section 2.06 (a) above.
2.07 APPLICATION OF PROCEEDS. Unless otherwise instructed by the
Company, any prepayments pursuant to Section 2.05 or Section 2.06 made (i) on
a day other than the last day of an Interest Period for any Loan shall be
applied first to any Base Rate Loans then outstanding and then to any LIBOR
Loans then outstanding, in the inverse order of such LIBOR Loans' stated
maturities and (ii) on the last day of an Interest Period for any LIBOR Loan
shall be applied first to such maturing LIBOR Loan, then to any Base Rate
Loans outstanding, and then to any other LIBOR Loans then outstanding, in the
inverse order of such LIBOR Loans' stated maturities.
2.08 REPAYMENT. Subject to Section 2.06, the Company shall repay
all Obligations on the Maturity Date.
2.09 INTEREST.
(a) RATES. Subject to Section 2.09(c), each Loan shall bear
interest on the outstanding principal amount thereof from the date such Loan
is made until the date such Loan becomes due, at a rate per annum equal to
the LIBO Rate or the Base Rate, as the case may be, PLUS the Applicable
Margin.
(b) PAYMENT DATES. Interest on each Loan shall be payable in
arrears on each Interest Payment Date and the Maturity Date. Interest shall
also be payable on the date of any prepayment of Loans pursuant to Section
2.05 or Section 2.06 for the portion of the Loans so prepaid. During the
existence of any Event of Default, interest shall be payable on demand.
(c) DEFAULT RATES. While any Event of Default exists or after
acceleration and during the continuation thereof, the Company shall pay
interest on all outstanding Obligations at a rate per annum which is
determined by increasing the Applicable Margin by three percent (3%) per
annum; PROVIDED, HOWEVER, that, on and after the expiration of the Interest
Period applicable to any LIBOR Loan outstanding on the date of occurrence of
such Event of Default or acceleration, the outstanding Obligations shall,
during the continuation of such Event of Default or after acceleration, bear
interest at a fluctuating rate per annum equal to the Base Rate plus the
Applicable Margin plus three percent (3%); and provided further, that in the
event the Obligations remain unpaid after the Scheduled Maturity Date, the
Company shall pay interest on all outstanding Obligations at a rate per annum
which is determined by increasing the Applicable Margin by three and one-half
percent (3.50%) per annum (at all times during the first three months after
the Scheduled Maturity Date) and by five and one-half percent (5.50%) per
annum (at all times after the first three months after the Scheduled Maturity
Date) until all Obligations are paid in full. The increased rates applicable
under this Section shall apply after as well as before judgment to the extent
permitted by law.
(d) LIMITATIONS FOR APPLICABLE LAW. Anything herein to the
contrary notwithstanding, payments of interest shall not be required, for any
period for which interest is computed hereunder, to the extent (but only to
the extent) that contracting for or receiving such payments by the respective
Lender would be contrary to the provisions of any law applicable to such
Lender limiting the highest rate of interest which may be lawfully contracted
for, charged or received by such Lender, and in such event the Company shall
pay such Lender interest at the highest rate permitted by applicable law.
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2.10 FEES.
(a) FACILITY FEES. Upon the due execution and delivery of this
Agreement by the Company, the Agent and each of the Lenders which are the
initial Lenders party to this Agreement, the Company shall pay to the Agent
for the account of each Lender ratably an amount equal to 1.50% of the
Aggregate Commitment of the initial Lenders as a facility fee.
(b) ADDITIONAL FACILITY FEES. On the Scheduled Maturity Date, if
the Loans have not been paid in full on or prior to such date, the Company
shall pay to the Agent for the account of each Lender ratably an amount equal
to 2.00% of the Outstanding Amount on such date as an additional facility
fee. On the date which is three months after the Scheduled Maturity Date, if
the Loans have not been paid in full on or prior to such date, the Company
shall pay to the Agent for the account of each Lender ratably an amount equal
to an additional 2.00% of the Outstanding Amount on such date as an
additional facility fee. Nothing contained herein shall be deemed to extend
the Maturity Date.
2.11 COMPUTATION OF FEES AND INTEREST.
(a) COMPUTATION PERIOD. All computations of fees and interest
under this Agreement shall be made on the basis of a 360-day year and actual
days elapsed, except that interest on Base Rate Loans shall be computed on
the basis of a 365/366 day year and actual days elapsed. Interest and fees
shall accrue during each period for which interest or fees are computed from
the first day thereof to the last day thereof.
(b) NOTICE. The Agent shall, with reasonable promptness, notify
the Company and the Lenders of each determination of a LIBO Rate, PROVIDED
that no failure to do so shall relieve the Company of any obligation
hereunder. Any change in the interest rate on a Loan resulting from a change
in the Reserve Percentage (as defined in the definition of "LIBO Rate") shall
become effective as of the opening of business on the day on which such
change becomes effective. The Agent shall with reasonable promptness notify
the Company and the Lenders of the effective date and the amount of each such
change, PROVIDED that no failure to do so shall relieve the Company of any
obligation hereunder. Each determination of an interest rate by the Agent
pursuant to any provision of this Agreement shall be conclusive and binding
on the Company and the Lenders in the absence of manifest error.
(c) DETAIL OF CALCULATION. The Agent shall, at the request of the
Company or any Lender, deliver to the Company or such Lender, as the case may
be, a statement showing the quotations used by the Agent in determining any
interest rate.
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2.12 PAYMENTS BY THE COMPANY.
(a) TERMS OF PAYMENTS. All payments (including prepayments) to be
made by the Company on account of principal, interest, fees and other amounts
required hereunder shall be made without setoff or counterclaim and shall,
except as otherwise expressly provided herein, be made to the Agent for the
ratable account of the Lenders at the Payment Office, in dollars and in
immediately available funds, no later than 9:00 a.m. (California time) on the
date specified herein. The Agent shall promptly distribute to each Lender
such Lender's Commitment Percentage (or other applicable share as expressly
provided herein) of such principal, interest, fees or other amounts (in like
funds as received). Any payment which is received by the Agent later than
9:00 a.m. (California time) shall be deemed to have been received on the
immediately succeeding Business Day, and any applicable interest or fee shall
continue to accrue.
(b) BUSINESS DAYS. Whenever any payment hereunder shall be stated
to be due on a day other than a Business Day, such payment shall be made on
the next succeeding Business Day, and such extension of time shall be
included in the computation of interest or fees, as the case may be; subject
to the provisions set forth in the definition of "Interest Period."
(c) RELIANCE OF AGENT ON PAYMENTS BY THE COMPANY. Unless the Agent
shall have received notice from the Company prior to the date on which any
payment is due to the Lenders hereunder that the Company will not make such
payment in full, the Agent may assume that the Company has made such payment
in full to the Agent on such date, and the Agent may (but shall not be
required to), in reliance upon such assumption, cause to be distributed to
each Lender on such due date the amount then due such Lender. If and to the
extent the Company shall not have made such payment in full to the Agent,
each Lender shall repay to the Agent on demand such amount distributed to
such Lender, together with interest thereon for each day from the date such
amount is distributed to such Lender until the date such Lender repays such
amount to the Agent, at the Federal Funds Rate as in effect for each such day.
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2.13 PAYMENTS BY THE LENDERS TO THE AGENT.
(a) RELIANCE OF AGENT ON PAYMENTS BY THE LENDERS. Unless the Agent
shall have received notice from a Lender on the Closing Date that such Lender
will not make available to the Agent for the account of the Company the
amount of that Lender's Commitment Percentage of the Loan to be funded on
such date, the Agent may assume that each Lender has made such amount
available to the Agent on the borrowing date, and the Agent may (but shall
not be required to), in reliance upon such assumption, make available to the
Company a corresponding amount on such date. If and to the extent any Lender
shall not have made its full amount available to the Agent and the Agent in
such circumstances has made available to the Company such amount, that Lender
shall on the next Business Day following the date of such borrowing make such
amount available to the Agent, together with interest at the Federal Funds
Rate for and determined as of each day during such period. A certificate of
the Agent submitted to any Lender with respect to amounts owing under this
Section 2.13(a) shall be conclusive, absent manifest error. If such amount
is so made available, such payment to the Agent shall constitute such
Lender's Loan (as of the date of the borrowing) for all purposes of this
Agreement. If such amount is not made available to the Agent on the next
Business Day following the borrowing date, the Agent shall notify the Company
of such failure to fund and, upon demand by the Agent, the Company shall pay
such amount to the Agent for the Agent's account, together with interest
thereon for each day elapsed since the date of such borrowing, at a rate per
annum equal to the interest rate applicable at the time to the Loans
comprising such borrowing, and the Company may exercise any rights and
remedies it may have against the Lender that so failed to fund.
(b) OBLIGATIONS OF AGENT; LENDER. The failure of any Lender to
make any Loan on any date of borrowing shall not relieve any other Lender of
any obligation hereunder to make a Loan on the date of such borrowing, but no
Lender shall be responsible for the failure of any other Lender to make the
Loan to be made by such other Lender on the date of any borrowing.
2.14 SHARING OF PAYMENTS, ETC. If, other than as expressly
contemplated elsewhere herein, any Lender shall obtain on account of the
Loans made by it any payment (whether voluntary, involuntary, through
exercise of any right of setoff, or otherwise) in excess of its Commitment
Percentage of payments on account of the Loans obtained by all the Lenders,
such Lender shall forthwith (a) notify the Agent of such fact, and (b)
purchase from the other Lenders such participations in the Loans made by them
as shall be necessary to cause such purchasing Lender to share the excess
payment ratably with each of them; PROVIDED, HOWEVER, that if all or any
portion of such excess payment is thereafter recovered from the purchasing
Lender, such purchase shall to that extent be rescinded and each other Lender
shall repay to the purchasing Lender the purchase price paid thereto together
with a percentage (calculated by dividing (i) the amount of such paying
Lender's required repayment by (ii) the total amount so recovered from the
purchasing Lender) of any interest or other amount paid or payable by the
purchasing Lender in respect of the total amount so recovered. The Company
agrees that any Lender so purchasing a participation from another Lender
pursuant to this Section 2.14 may, to the fullest extent permitted by law,
exercise all of such purchasing Lender's rights of payment (including the
right of setoff, but subject to Section 10.09) with respect to such
participation as fully as if such purchasing Lender were the direct creditor
of the Company in the amount of such participation. The Agent shall keep
records (which shall be conclusive and binding in the absence of manifest
error) of participations purchased pursuant to this Section 2.14 and shall in
each case notify the Lenders following any such purchases.
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ARTICLE III
TAXES, YIELD PROTECTION AND ILLEGALITY
3.01 TAXES.
(a) Subject to Section 3.01(g), any and all payments by the Company
to the Agent or the Lenders under this Agreement shall be made free and clear
of, and without deduction or withholding for, any and all present or future
taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding such taxes (including income
taxes or franchise taxes) as are imposed on or measured by the recipient's
net income by the jurisdiction under the laws of which the recipient is
organized or maintains a Lending Office, or otherwise does business, or any
political subdivision thereof (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities being hereinafter referred
to as "Taxes").
(b) In addition, the Company shall pay any present or future stamp
or documentary taxes or any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or from the
execution, delivery, recordation or registration of, or otherwise with
respect to, this Agreement or any other Loan Documents (hereinafter referred
to as "Other Taxes").
(c) The Company shall indemnify and hold harmless the Agent and
each Lender for the full amount of Taxes or Other Taxes (including any Taxes
or Other Taxes imposed by any jurisdiction on amounts payable under this
Section 3.01) paid by the Agent or such Lender and any liability (including
penalties, interest, additions to tax and expenses) arising therefrom or with
respect thereto, whether or not such Taxes or Other Taxes were correctly or
legally asserted. Payment under this indemnification shall be made within
thirty (30) days from the date the Agent or any Lender makes written demand
therefor.
(d) If the Company shall be required by law to deduct or withhold
any Taxes or Other Taxes from or in respect of any sum payable hereunder to
the Agent or any Lender, then, subject to Section 3.01(g):
(i) the sum payable shall be increased as necessary so that,
after making all required deductions (including deductions applicable to
additional sums payable under this Section 3.01) the Agent or such Lender, as
the case may be, receives an amount equal to the sum it would have received
had no such deductions been made;
(ii) the Company shall make such deductions; and
(iii) the Company shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with applicable
law.
(e) Within 30 days after the date of any payment by the Company of
Taxes or Other Taxes, the Company shall furnish to the Agent the original or
a certified copy of a receipt evidencing payment thereof, or other evidence
of payment satisfactory to the Agent.
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(f) Each Lender which is a foreign Person (i.e., a Person other
than a United States Person for United States Federal income tax purposes)
agrees that:
(i) such Lender shall, no later than the Closing Date (or, in
the case of a Lender which becomes a party hereto pursuant to Section 10.08
after the Closing Date, the date upon which such Lender becomes a party
hereto), deliver to the Company through the Agent two (2) accurate and
complete signed originals of Internal Revenue Service Form 4224 or any
successor thereto ("Form 4224"), or two (2) accurate and complete signed
originals of Internal Revenue Service Form 1001 or any successor thereto
("Form 1001"), as appropriate, in each case indicating that the Lender is on
the date of delivery thereof entitled to receive payments of principal,
interest and fees under this Agreement free from withholding of United States
Federal income tax;
(ii) if at any time such Lender makes any changes
necessitating a new form, such Lender shall with reasonable promptness
deliver to the Company through the Agent in replacement for, or in addition
to, the forms previously delivered by such Lender hereunder, two (2) accurate
and complete signed originals of Form 4224, or two (2) accurate and complete
signed originals of Form 1001, as appropriate, in each case indicating that
such Lender is on the date of delivery thereof entitled to receive payments
of principal, interest and fees under this Agreement free from withholding of
United States Federal income tax;
(iii) such Lender shall, before or promptly after the
occurrence of any event (including the passing of time but excluding any
event mentioned in (ii) above) requiring a change in or renewal of the most
recent Form 4224 or Form 1001 previously delivered by such Lender, deliver to
the Company through the Agent two (2) accurate and complete original signed
copies of Form 4224 or Form 1001, as appropriate, in replacement of the forms
previously delivered by such Lender; and
(iv) such Lender shall, promptly upon the Company's reasonable
request to that effect, deliver to the Company such other forms or similar
documentation as may be required from time to time by any applicable law,
treaty, rule or regulation in order to establish such Lender's tax status for
withholding purposes.
(g) The Company shall not be required to pay any additional amounts
in respect of United States Federal or state income tax pursuant to Section
3.01(d) to any Lender or any duly appointed assignee for the account of any
Lending Office of such Lender or assignee:
(i) if the obligation to pay such additional amounts arises
as a result of a failure by such Lender or assignee to comply with its
obligations under Section 3.01(f) in respect of such Lending Office;
(ii) if such Lender or assignee shall have delivered to the
Company a Form 4224 in respect of such Lending Office pursuant to Section
3.01(f), and such Lender or assignee shall not at any time be entitled to
exemption from deduction or withholding of United States Federal income tax
in respect of payments by the Company hereunder for any reason other than a
change in United States law or regulations or in the official interpretation
of such law or regulations by any governmental authority charged with the
interpretation or administration thereof (whether or not having the force of
law) after the date of delivery of such Form 4224; or
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(iii) if such Lender or assignee shall have delivered to the
Company a Form 1001 in respect of such Lending Office pursuant to Section
3.01(f), and such Lender or assignee shall not at any time be entitled to
reduction, partial exemption or exemption from deduction or withholding of
United States federal income tax in respect of payments by the Company
hereunder for the account of such Lending Office for any reason other than a
change in United States law or regulations or any applicable tax treaty or
regulations or in the official interpretation of such law, treaty or
regulations by any governmental authority charged with the interpretation or
administration thereof (whether or not having the force of law) after the
date of delivery of such Form 1001.
(h) If, at any time, the Company requests any Lender to deliver any
forms or other documentation pursuant to Section 3.01(f)(iv), then the
Company shall, on demand of such Lender, through the Agent reimburse such
Lender for any costs and expenses (including Attorney Costs) reasonably
incurred by such Lender in the preparation or delivery of such forms or other
documentation.
(i) If the Company is required to pay additional amounts to the
Agent or any Lender pursuant to Section 3.01(d), then such Lender shall use
its reasonable best efforts (consistent with legal and regulatory
restrictions) to change the jurisdiction of its Lending Office so as to
eliminate any such additional payment by the Company which may thereafter
accrue if such change in the judgment of such Lender is not otherwise
disadvantageous to such Lender.
3.02 ILLEGALITY.
(a) If any Lender shall determine that the introduction of any
Requirement of Law or any change therein or in the interpretation or
administration thereof has made it unlawful, or that any central bank or
other Governmental Authority has asserted that it is unlawful, for such
Lender or its Lending Office to make LIBOR Loans, then, on notice thereof by
such Lender to the Company through the Agent, the obligation of such Lender
to make LIBOR Loans shall be suspended until such Lender shall have notified
the Agent and the Company that the circumstances giving rise to such
determination no longer exist.
(b) If any Lender shall reasonably determine that it is unlawful to
maintain any LIBOR Loan, the Company shall notify Lender that the Company
shall either (i) prepay in full all LIBOR Loans of such lender then
outstanding, together with interest accrued thereon, or (ii) elect to convert
in accordance with Section 2.04 all LIBOR Loans then outstanding, after
payment to such Lender of all interest accrued thereon, into Base Rate Loans,
either on the last day of the Interest Period thereof if such Lender may
lawfully continue to maintain such LIBOR Loans to such day, or immediately if
such Lender may not lawfully continue to maintain such LIBOR Loans, together
with any amounts required to be paid in connection therewith pursuant to
Section 3.04.
(c) If the obligation of any Lender to make or maintain LIBOR Loans
has been terminated, the Company may elect, by giving notice to such Lender
through the Agent, that all Loans which would otherwise be made by such
Lender as LIBOR Loans shall instead be made as Base Rate Loans.
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3.03 INCREASED COSTS AND REDUCTION OF RETURN.
(a) If any Lender shall determine that, due to either (i) the
introduction of or any change in or in the interpretation of any Requirement
of Law or (ii) the compliance with any guideline or request from any central
bank or other Governmental Authority (whether or not having the force of
law), there shall be any increase in the cost to such Lender of agreeing to
make or of making, funding or maintaining any LIBOR Loans hereunder, then the
Company shall be liable for, and shall from time to time, upon written demand
therefor by such Lender (with a copy of such demand to the Agent), which
demand shall set forth the basis of such increased cost in reasonable detail,
pay to the Agent for the account of such Lender, such additional amounts as
are sufficient to compensate such Lender for such increased costs.
(b) If any Lender shall have reasonably determined that (i)
the introduction of any Capital Adequacy Regulation, (ii) any change in any
Capital Adequacy Regulation, (iii) any change in the interpretation or
administration of any Capital Adequacy Regulation by any central bank or
other Governmental Authority charged with the interpretation or
administration thereof, or (iv) compliance with any Capital Adequacy
Regulation by such Lender (or its Lending Office) or any corporation
controlling such Lender, effects or would effect an increase in the amount of
capital required or expected to be maintained by such Lender or any
corporation controlling such Lender (taking into consideration such Lender's
or such corporation's policies with respect to capital adequacy and such
Lender's desired return on capital), then, upon written demand of such Lender
(with a copy to the Agent), which demand shall set forth in reasonable detail
the basis for any such increase in required capital, the Company shall
immediately pay to such Lender, from time to time as specified by such
Lender, additional amounts sufficient to compensate such Lender for such
increase.
(c) If any Lender shall have determined that any of the events
described in Sections 3.03(a) or 3.03(b) affects or would affect an increase
in cost or reduction of return resulting in additional Obligations hereunder,
such Lender shall, with reasonable promptness, notify the Company and the
Agent of such determination, PROVIDED that no failure to do so shall relieve
the Company of any Obligation hereunder.
3.04 FUNDING LOSSES. The Company agrees to reimburse each Lender
for, and to hold each Lender harmless from, any loss or expense that such
Lender may sustain or incur as a consequence of:
(a) the failure of the Company to make any required payment or
prepayment of principal of any LIBOR Loan or Base Rate Loan (including
payments to be made after any acceleration thereof);
(b) the failure of the Company to borrow, continue or convert
a Loan after the Company has given (or is deemed to have given) a Borrowing
Notice or a Notice of Conversion/Continuation;
(c) the failure of the Company to make any prepayment after
the Company has given a notice in accordance with Section 2.05;
(d) the prepayment of a LIBOR Loan on a day which is not the
last day of the Interest Period with respect thereto; or
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(e) the conversion of any LIBOR Loan to a Base Rate Loan on a
day that is not the last day of the Interest Period with respect thereto;
such amount or amounts to include an amount equal to the excess, if any, of
(a) the amount of interest that would have accrued on the amount not paid,
not borrowed, not prepaid, prepaid, or converted for the period from the date
of such failure to pay, failure to borrow, failure to prepay, prepayment, or
conversion to the last day of then current Interest Period (or in the case of
a failure to borrow, the Interest Period which would have commenced on the
date of such failure) at the interest rate applicable to that LIBOR Loan,
over (b) the amount of interest that would accrue to the Lender on such
amount at the LIBO Rate in effect on such date by placing such amount on
deposit for a comparable period with leading lenders in the London interbank
market.
3.05 INABILITY TO DETERMINE RATES. If the Agent shall have
determined that for any reason adequate and reasonable means do not exist for
ascertaining the LIBO Rate for any requested Interest Period with respect to
a proposed LIBOR Loan or that the LIBO Rate applicable pursuant to Section
2.09(a) for any requested Interest Period with respect to a proposed LIBOR
Loan does not adequately and fairly reflect the cost to such Lenders of
funding such Loan, the Agent will forthwith give notice of such determination
to the Company and each Lender. Thereafter, the obligation of the Lenders to
make or maintain LIBOR Loans hereunder shall be suspended until the Agent
revokes such notice in writing. Upon receipt of such notice, the Company may
revoke any Borrowing Notice or Notice of Conversion/Continuation then
submitted by it. If the Company does not revoke such notice, the Lenders
shall make, convert or continue the Loans, as proposed by the Company, in the
amount specified in the applicable notice submitted by the Company, but such
Loans shall be made, converted or continued as Base Rate Loans instead of
LIBOR Loans.
3.06 CERTIFICATES OF LENDERS. Any Lender claiming reimbursement or
compensation pursuant to this Article III, shall deliver to the Company (with
a copy to the Agent) a certificate setting forth in reasonable detail a
summary of the basis of such demand and the amount payable to such Lender
hereunder.
3.07 SURVIVAL. The agreements and obligations of the Company in
this Article III shall survive the payment of all other obligations.
ARTICLE IV
CONDITIONS PRECEDENT
4.01 CONDITIONS OF FIRST LOAN. The obligation of each Lender to
make its Loan hereunder on the Closing Date is subject to the condition that
the Agent shall have received, on or before the Closing Date, the following,
in the case of agreements, documents and other instruments, in form and
substance satisfactory to the Agent, each Lender and their respective counsel
in their sole discretion and in sufficient copies for each Lender:
(a) CREDIT AGREEMENT AND NOTES. This Agreement executed by
the Company, the Agent and each of the Lenders, and Notes executed by the
Company in favor of each of the Lenders; the Notes shall be dated the Closing
Date;
(b) REIT GUARANTY DOCUMENTS. The REIT Guaranty Documents
executed by the REIT and the Operating Partnership; the Stock Pledge
Agreement executed
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by the REIT and the Common Stockholders; and delivery to the Agent of all
original shares of the Stock in the Company together with endorsements
thereof in blank;
(c) SUBORDINATION AGREEMENT. Such subordination agreements
relating to the Intra-Company Debt as the Requisite Lenders may require, in
form and substance satisfactory to the Requisite Lenders;
(d) RESOLUTIONS; INCUMBENCY.
(i) Certified copies of the resolutions of the boards of
directors of the Company, the REIT, GP Corp and the other corporations party
(whether directly or as general partners) to the Loan Documents, authorizing
their execution, delivery and performance thereof, including, in the case of
GP Corp, a resolution approving and authorizing in its capacity as the
general partner of the Company the execution, delivery and performance by the
Company of this Agreement and the other Loan Documents to be delivered
hereunder and the borrowing of the Loans; and
(ii) A certificate of the Secretary or Assistant
Secretary of the Company, the REIT, GP Corp and the other corporations party
(whether directly or as general partners) to the Loan Documents certifying
the names and true signatures of the officers of such Persons authorized to
execute and deliver, as applicable, this Agreement and all other Loan
Documents to be delivered hereunder;
(e) ORGANIZATIONAL DOCUMENTS. Each of the following documents:
(i) certified copies of the Organizational Documents of
the Company, the REIT, GP Corp, the Operating Partnership and, if requested
by Lender, any Subsidiary thereof as in effect on the Closing Date, and, in
the case of corporate or limited liability company articles or a certificate
of limited partnership, certified as of a recent date by the secretary of
state of the state of organization; and
(ii) a good-standing certificate for the Company, the
REIT, GP Corp, the Operating Partnership and, if requested by Lender, any
Subsidiary thereof, from the secretary of state of the state of organization
thereof, dated as of recent date;
(f) CERTIFICATE. A certificate signed by a duly authorized
Responsible Officer of the Company, the REIT and the Operating Partnership,
dated as of the Closing Date, stating that:
(i) the representations and warranties of the Company
contained in Article V hereof and of the Company, the REIT and the Operating
Partnership contained in the Loan Documents are true and correct on and as of
such date, as though made on and as of such date;
(ii) no Default or Event of Default exists or would result
from the initial borrowing; and
(iii) all conditions precedent set forth in this Section
4.01 have been satisfied (other than those based solely on the approval of the
Agent, the Lenders, or the Requisite Lenders);
(g) LEGAL OPINIONS. The Agent shall have received favorable
opinions of counsel to the Company and the parties signatory to the REIT
Guaranty Documents and the Stock Pledge Agreement, and addressed to the Agent
and the Lenders, which comply with the opinion requirements set forth on EXHIBIT
F in a form approved by Agent;
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(h) DOCUMENTATION REGARDING THE NHP STOCK PURCHASE AGREEMENT,
THE MERGER AGREEMENT AND THE REAL ESTATE ASSETS. The Agent shall have
received copies of the NHP Stock Purchase Agreement and the NHP Merger
Agreement, each certified by a duly authorized Responsible Officer as being
true, correct and complete, together with (i) evidence that all material
conditions precedent (including, without limitation, all governmental
approval contingencies) under the NHP Stock Purchase Agreement to the
consummation of the sale of at least 6,496,071 shares of the NHP Stock
thereunder shall, upon funding of the initial Loans hereunder, be satisfied
and that the balance of the consideration for such Stock (consisting of
shares of Stock in the REIT having a value of at least $60,000,000 based on
the current market value thereof) shall have been issued to the NHP
Shareholders; and (ii) evidence of the approval of the NHP Merger Agreement
by the Board of Directors of NHP;
(i) COSTS; EXPENSES; FEES. Payment of all costs, expenses, and
accrued and unpaid fees (including legal fees and expenses) to the extent then
due and payable on the Closing Date, including any arising under Sections 2.10,
3.01 and 10.04;
(j) SBI ENGAGEMENT LETTER. The REIT and SBI shall have entered
into a separate engagement letter relating to the retention of SBI for certain
underwriting and other services; and
(k) OTHER DOCUMENTS. Such other approvals, opinions, or
documents as the Agent or the Requisite Lenders may reasonably request.
4.02 CONDITIONS TO EACH LOAN, CONTINUATION OR CONVERSION. The
obligation of each Lender to make its Initial Loan or any Subsequent Loan and
any continuation or conversion thereof is subject to the satisfaction of the
following conditions precedent:
(a) BORROWING NOTICE. The Agent shall have received a
Borrowing Notice or Notice of Conversion/Continuation in compliance with the
terms of Section 2.03 or Section 2.04, as applicable;
(b) REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by the Company, the REIT, the Operating Partnership and the
Common Stockholders contained in the Loan Documents, including Article V of
this Agreement, shall be true and correct on and as of the date such Loan is
made, with the same effect as if made on and as of such date; and
(c) NO EXISTING DEFAULT. No Default or Event of Default shall
exist or shall result from the making, continuation or conversion of such
Loan.
(d) DISBURSEMENT LIMIT. The requested Subsequent Loan shall
not exceed the Maximum Disbursement Amount for the NHP Stock to be acquired
therewith;
(e) NO MATERIAL ADVERSE EFFECT. No act, omission, change,
occurrence or event which has a Material Adverse Effect shall have occurred
since the Closing Date.
Each Borrowing Notice and Notice of Continuation/Conversion submitted by the
Company hereunder shall constitute a representation and warranty by the
Company hereunder, as of the date of such notice and as of the date of the
making, continuation or conversion of the corresponding Loan, that the
conditions in this Section 4.02 have been satisfied.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to the Agent and each Lender
that:
5.01 EXISTENCE AND POWER. The Company is a Delaware corporation,
the Operating Partnership is a Delaware limited partnership, the REIT is a
Maryland corporation, and each of the Company, the Operating Partnership and
the REIT:
(a) ORGANIZATION. Is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization;
(b) POWER AND AUTHORITY. Has the power and authority and all
governmental licenses, authorizations, consents and approvals to own its
Properties, to carry on its business and to execute, deliver, and perform its
obligations under, the Organizational Documents of the Company and the Loan
Documents to which it is a party;
(c) DUE QUALIFICATION. Is duly qualified as a foreign
corporation, partnership, trust or other organization, and licensed and in
good standing under the laws of each jurisdiction where its ownership, lease
or operation of its Properties or the conduct of its business requires such
qualification; and
(d) COMPLIANCE WITH LEGAL REQUIREMENTS. Is in compliance with
all Requirements of Law applicable to it.
5.02 AUTHORIZATION; NO CONFLICT. The execution, delivery and
performance by the Company, the Operating Partnership and the REIT of this
Agreement, any other Loan Document to which such Person is party, and the
Organizational Documents for the Company have been duly authorized by all
necessary partnership, corporate or other organizational action, and do not
and will not:
(a) ORGANIZATIONAL DOCUMENTS. Contravene the terms of any of
such Person's Organizational Documents;
(b) CONTRACTUAL OBLIGATIONS. Conflict with, or result in any
breach or contravention of, or the creation of any Lien (other than pursuant
to the Loan Documents) under, any document evidencing any Contractual
Obligation to which such Person is a party or any order, injunction, writ or
decree of any Governmental Authority to which such Person or its Properties
are subject; or
(c) REQUIREMENTS OF LAW. Violate any Requirement of Law
applicable to it.
5.03 GOVERNMENTAL AUTHORIZATION. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority (except for recordings in connection with the Liens
granted to the Agent under the Collateral Documents) is necessary or required
in connection with the execution, delivery or performance by, or enforcement
against, the Company, the Operating Partnership or the REIT of this
Agreement, any other Loan Document or the Organizational Documents for the
Company.
5.04 BINDING EFFECT. This Agreement and each other Loan Document to
which the Company, the Operating Partnership or the REIT is a party
constitute the legal, valid and binding obligations of such Person,
enforceable against such Person in accordance with their respective terms,
except as enforceability may be limited by applicable bankruptcy,
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insolvency, or similar laws affecting the enforcement of creditors' rights
generally or by equitable principles relating to enforceability.
5.05 LITIGATION. There are no actions, suits, proceedings, claims
or disputes pending, or to the Knowledge of the Company, threatened or
contemplated, at law, in equity, in arbitration or before any Governmental
Authority, (a) against the Company, the Operating Partnership, the REIT, any
Management Entity, any of their Subsidiaries or any of their respective
Properties, which purport to affect or pertain to this Agreement, or any
other Loan Document, or any of the transactions contemplated hereby or
thereby, or (b) which purports to affect or pertain to the NHP Stock Purchase
Agreement or the NHP Merger Agreement or the NHP-Related Real Estate
Acquisition Agreement as of the date hereof or the Closing Date or, if the
same would have a Material Adverse Effect, after the Closing Date. No
injunction, writ, temporary restraining order or any other order of any
nature has been issued by any court or other Governmental Authority
purporting to enjoin or restrain the execution, delivery and performance of
this Agreement any other Loan Document, the NHP Stock Purchase Agreement, the
NHP Merger Agreement or the NHP-Related Real Estate Acquisition Agreement, or
directing that the transactions provided for herein or therein not be
consummated as herein or therein provided, remains in effect as of the date
hereof or the Closing Date or, if the same would have a Material Adverse
Effect, after the Closing Date.
5.06 SUBSIDIARIES; INTERESTS IN OTHER ENTITIES. Except for the NHP
Stock, the Company has no interest in any corporation, partnership or other
entity.
5.07 TAXES. The Company has filed all Federal and other material
tax returns and reports required to be filed. All tax returns filed by the
Company are complete and correct; the Company has paid all Federal and other
material taxes, assessments, fees and other governmental charges for which
they are liable (whether or not reflected on any tax returns) and have fully
satisfied any taxes, assessments, fees, and other governmental charges levied
or imposed upon them or their Properties, income or assets or otherwise due
and payable, except those which are being contested in good faith by
appropriate proceedings and for which adequate reserves have been provided in
accordance with GAAP and no Notice of Lien has been filed or recorded; there
is no proposed tax assessment against the Company which would, if the
assessment were made, have a Material Adverse Effect; and (iv) the Company
has no primary, secondary or other liability for taxes of any kind arising
with respect to any individual, trust, corporation, partnership or other
entity as to which the Company is directly or indirectly liable for taxes of
any kind incurred by such individual or entity either as a transferee, or
pursuant to Treasury Regulations section 1.1502-6, or pursuant to any other
Requirement of Law. The Company is not a party to any tax sharing agreement.
5.08 EMPLOYEES. The Company has no employees.
5.09 COLLATERAL DOCUMENTS. When executed, delivered and recorded
pursuant hereto, the Collateral Documents shall be effective to create in
favor of the Agent, for the benefit of the Lenders, legal, valid and
enforceable first-priority Liens in the Collateral and the proceeds thereof.
All action shall have been taken that is necessary or appropriate to perfect
the Agent's Lien, for the benefit of the Lenders, in the Collateral. All
representations and warranties of any other Person party to any Collateral
Documents that are contained therein are true and correct.
5.10 REGULATED ENTITIES. The Company is not (a) an "investment
company" within the meaning of the Investment Company Act of 1940; or (b)
subject to regulation under the Public Utility Holding Company Act of 1935,
the Federal Power Act, the Interstate Commerce Act, any state public
utilities code, or any other Federal or state statute or regulation limiting
its ability to incur Indebtedness.
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5.11 USE OF PROCEEDS. The proceeds of the Loans are intended to be
and shall be used solely for the purposes set forth in and permitted by
Sections 2.01(b) and Section 6.08.
5.12 [Intentionally deleted]
5.13 NO DEFAULT. No Default or Event of Default exists or would
result from the incurring of any Obligations by the Company, the REIT or the
Operating Partnership. Neither the Company, nor the REIT, nor the Operating
Partnership, nor any Management Entity, nor any of their Subsidiaries is in
default under or with respect to any Contractual Obligation in any respect
which, individually or together with all such other defaults, would reasonably
be expected to have a Material Adverse Effect.
5.14 NHP. All of the representations and warranties set forth in
the NHP Stock Purchase Agreement and the Merger Agreement given by the REIT or
the Operating Partnership or, to the best knowledge of the Company, given by any
other Person are true and correct.
5.15 FULL DISCLOSURE. None of the representations or warranties
made by the Company, the Operating Partnership, the REIT, or any other Person
(other than the Agent and the Lenders) in the Loan Documents or by the Company,
the Operating Partnership or the REIT in the NHP Stock Purchase Agreement or the
NHP Merger Agreement as of the date such representations and warranties are made
or deemed made, and none of the statements contained in each exhibit, report,
statement or certificate furnished by or on behalf of any such Person in
connection therewith, contains any untrue statement of a material fact or omits
any material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they are
made, not misleading. There is no fact, to the Knowledge of the Company, which
would have a Material Adverse Effect which has not been disclosed herein or in
other documents, certificates and statements furnished to the Agent and each
Lender hereunder or pursuant hereto. In the course of the due diligence of NHP
by the REIT, the Operating Partnership and the Company in connection with the
transactions contemplated by the NHP Stock Purchase Agreement and the NHP Merger
Agreement, no material adverse information concerning NHP or its assets,
operations, business, condition (financial or otherwise) or prospects was
discovered which is not publicly disclosed in the reports and statements filed
by NHP with the SEC or otherwise previously disclosed to the Lenders in writing
by the REIT. The copies of all documents delivered to the Agent and/or the
Lenders from time to time in connection with this Agreement are and shall be
true and complete copies of the originals thereof and have not been or shall not
be amended except as disclosed to the Agent and/or the Lenders, as applicable.
ARTICLE VI
AFFIRMATIVE COVENANTS
The Company covenants and agrees that, so long as any Lender shall
have any Commitment hereunder, or any Loan or other obligation shall remain
unpaid or unsatisfied, unless the Requisite Lenders waive compliance in writing:
6.01 FINANCIAL INFORMATION. The Company shall deliver to the
Agent and to each Lender, in form and detail satisfactory to the Agent and the
Lenders:
(a) FINANCIAL STATEMENTS. Such balance sheets, statements
of operations, stockholders' equity (where applicable) and cash flows, as the
Agent or any Lender may reasonably request from time to time; and
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(b) FINANCIAL STATEMENTS AND OTHER INFORMATION FOR NHP. Until
the NHP Combination Date, within five (5) days after the receipt thereof by
the Company, the Operating Partnership, the REIT or any Subsidiary thereof,
such periodic, quarterly, annual and special financial statements, reports,
press releases, proxy statements and other information as may be received by
any such Person in its capacity as a shareholder in NHP or under the NHP
Merger Agreement; and within five (5) days after the delivery of any thereof
by any such Person, copies of any reports, proxy statements, tender or
exchange offers or other information provided by such Person to NHP or to the
shareholders thereof or to the SEC in respect of such Person's ownership of
or intentions or proposals with respect to NHP; and within five (5) days
after the Company, the Operating Partnership, the REIT or any Subsidiary
obtains Knowledge, information concerning the progress of the merger with NHP
and of the approvals of the shareholders of NHP and the REIT required to be
obtained as a condition thereto and as to satisfaction of any other material
condition to such merger; and within five (4) days after the execution
thereof, a copy of the NHP-Related Real Estate Acquisition Agreement.
6.02 CERTIFICATES; OTHER INFORMATION. The Company shall furnish to
the Agent with sufficient copies for each Lender:
(a) OFFICERS' CERTIFICATES. Within forty-five (45) days after
the end of each fiscal quarter, a compliance certificate, substantially in
the form of EXHIBIT G, signed by at least two (2) Responsible Officers
stating that, to the best of such officers' knowledge, the Company during
such period has observed or performed all of its covenants and other
agreements, and satisfied every condition contained in this Agreement and the
other Loan Documents to be observed, performed or satisfied by it, and that
such officers have no knowledge of any Default or Event of Default except as
specified in such certificate;
(b) ACCOUNTANTS' REPORTS. Promptly after the same are
received, copies of all reports which the independent certified public
accountants of the Company deliver to the Company; and
(c) OTHER INFORMATION. Promptly, such additional financial
and other information as the Agent may or any Lender from time to time
reasonably request.
6.03 NOTICES. The Company shall promptly (and in no event later
than ten (10) days after the Company has reason to know of the same) notify
the Agent and each Lender of:
(a) DEFAULT; EVENT OF DEFAULT. The occurrence of any Default
or Event of Default, and of the occurrence or existence of any event or
circumstance that is likely to become a Default or Event of Default. Each
notice under Section 6.03(a) shall describe with particularity the clause or
provision of this Agreement this or other Loan Document that has been
breached or violated.;
(b) LITIGATION. The commencement of, or any material
development in, any litigation, arbitration or proceeding (a) affecting the
Company or (b) which, if adversely determined, would reasonably be expected
to have a material adverse effect on the ability to consummate the
transactions under the NHP Merger Agreement;
(c) MATERIAL ADVERSE EFFECTS. The occurrence of any act,
omission, change or event which has a Material Adverse Effect subsequent to
the date of the most recent financial statements of the Company delivered to
the Agent pursuant to Section 6.01(a).
(d) MATERIAL TRANSACTIONS. The consummation of any material
Disposition of any Property or of any other material transaction by the
Company;
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(e) ACCOUNTING CHANGES. Any change in the Company's
accounting policies or financial reporting practices;
(f) LEGAL COMPLIANCE. Any material notice received from any
Governmental Authority asserting that the Company is not in compliance with
any Requirements of Law; and
(g) CROSS-DEFAULT. Any notice received by the Company, the
Operating Partnership, the REIT, any Management Entity or any of their
Subsidiaries of any default under any Indebtedness or Guaranty Obligation
described in Section 8.01(e). Each notice pursuant to this section shall be
accompanied by a written statement, signed by at least two (2) Responsible
Officers, setting forth details of the occurrence referred to therein and the
provisions of this Agreement affected, and stating what action the Company,
the Operating Partnership or the REIT proposes to take with respect thereto.
6.04 PRESERVATION OF EXISTENCE, ETC. Except as permitted under
Sections 7.06 and 7.07 below, the Company shall (a) preserve and maintain in
full force and effect its corporate or other organizational existence and
good standing under the laws of its state or jurisdiction of organization,
and (b) preserve and maintain in full force and effect all rights,
privileges, qualifications, permits, licenses and franchises necessary or
desirable in the normal conduct of its business.
6.05 [Intentionally deleted]
6.06 PAYMENT OF OBLIGATIONS. The Company shall pay and discharge as
the same shall become due and payable and otherwise comply with, all their
respective obligations and liabilities, including (a) all tax liabilities,
assessments and governmental charges or levies upon it or its Properties,
unless the same are being contested in good faith by appropriate proceedings
and adequate reserves in accordance with GAAP are being maintained by the
Company or such Person, (b) all lawful claims which, if unpaid, would by law
become a Lien upon its Properties, (c) all Indebtedness, as and when due and
payable, but subject to any subordination provisions contained in any
instrument or agreement evidencing such Indebtedness, and (d) all Contractual
Obligations.
6.07 COMPLIANCE WITH LAWS. The Company shall comply with all
Requirements of Law and all orders of any Governmental Authority having
jurisdiction over it or its business, including, without limitation, all
securities laws and regulations.
6.08 USE OF PROCEEDS. The Company shall use the proceeds of the
Loans solely in accordance with Section 2.01(b) above.
6.09 INSPECTION OF PROPERTY AND BOOKS AND RECORDS. The Company
shall maintain proper books of record and account, in which full, true and
correct entries in conformity with GAAP consistently applied shall be made of
all financial transactions and matters involving the Properties and business
of the Company. The Company shall permit representatives of the Agent or any
Lender to examine their respective corporate, financial and operating
records, and make copies thereof or abstracts therefrom, and to discuss their
respective affairs, finances and accounts with their respective directors,
officers, and independent public accountants, all at the expense of the
Company and at any time during normal business hours and as often as may be
reasonably desired, upon no less than forty-eight (48) hours advance notice
to the Company; PROVIDED, HOWEVER, when an Event of Default exists, the Agent
or any Lender may visit and inspect at the expense of the Company such
Properties at any time during business hours and without advance notice.
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6.10 FURTHER ASSURANCES.
(a) FULL DISCLOSURE. The Company will ensure that all other
written information, exhibits and reports furnished to any Agent or Lender by
the Company do not contain any untrue statement of a material fact and do not
and will not omit to state any material fact or any fact necessary to make
the statements contained therein not misleading in light of the circumstances
in which made, and will promptly disclose to the Agent and the Lenders and
correct any defect or error that may be discovered therein or in any Loan
Document or in the execution, acknowledgment or recordation thereof.
(b) FURTHER ACTS. Promptly upon request by the Agent or the
Requisite Lenders, the Company shall (and shall cause the REIT and the
Operating Partnership to) do, execute, acknowledge, deliver, record,
re-record, file, re-file, register and re-register, any and all such further
acts, security agreements, assignments, estoppel certificates, financing
statements and continuations thereof, termination statements, notices of
assignment, transfers, certificates, assurances and other instruments that
the Agent or such Lenders, as the case may be, may reasonably require from
time to time in order (i) to carry out more effectively the purposes of this
Agreement or any other Loan Document, (ii) to subject to the Liens created by
any of the Collateral Documents any of the Collateral, (iii) to perfect and
maintain the validity, effectiveness and priority of any of the Collateral
Documents and the Liens intended to be created thereby, and (iv) to better
assure, convey, grant, assign, transfer, preserve, protect and confirm to the
Agent and Lenders the rights granted or now or hereafter intended to be
granted under any Loan Document, or any other document executed in connection
herewith or therewith.
6.11 SOLVENCY. The Company shall at all times be Solvent.
ARTICLE VII
NEGATIVE COVENANTS
The Company hereby covenants and agrees that, so long as any Lender
shall have any Commitment hereunder, or any Loan or other Obligation shall
remain unpaid or unsatisfied, unless the Requisite Lenders waive compliance
in writing:
7.01 LIENS. The Company shall not, directly or indirectly, make,
create, incur, assume or suffer to exist any Lien upon or with respect to any
part of its Property, whether now owned or hereafter acquired, consisting of
cash or Cash Equivalents, other than Liens arising solely by virtue of any
statutory or common-law provision relating to banker's liens, rights of
setoff or similar rights and remedies as to deposit accounts or other funds
maintained with a creditor depository institution and as to which Liens
waivers have been obtained to the extent required in the definition of "Cash
Equivalents"; PROVIDED that (a) such deposit account is not a dedicated cash
collateral account and is not subject to restrictions against access by the
depositor in excess of those set forth by regulations promulgated by the
Federal Reserve Board, and (b) such deposit account is not intended by the
depositor to provide collateral to the depository institution.
7.02 INDEBTEDNESS. The Company shall not create, incur, assume,
suffer to exist, or otherwise become or remain directly or indirectly liable
with respect to, any Indebtedness except the following ("PERMITTED
INDEBTEDNESS"):
(a) CERTAIN INDEBTEDNESS. Indebtedness incurred pursuant to
this Agreement;
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(b) ACCOUNTS PAYABLE. Accounts payable to trade creditors for
goods and services and current operating liabilities (not the result of the
borrowing of money) incurred in the Ordinary Course of Business in accordance
with customary terms and paid within the specified time, unless contested in
good faith by appropriate proceedings and reserved for in accordance with GAAP;
(c) CONTINGENT OBLIGATIONS. Indebtedness consisting of
Contingent Obligations permitted by Section 7.03; and
(d) OTHER INDEBTEDNESS. Other Indebtedness incurred by the
Company provided that either (i) the proceeds of such Indebtedness are used
to pay in full all of the outstanding Obligations or (ii) in any other case,
Lenders holding Commitment Percentages aggregating at least 75% shall have
approved the terms of such Indebtedness proposed to be incurred by the
Company and all of the Net Issuance Proceeds of such Indebtedness are used to
prepay the outstanding Obligations in compliance with Section 2.05 of this
Agreement.
7.03 CONTINGENT OBLIGATIONS. The Company shall not create, incur,
assume or suffer to exist any Contingent Obligations except endorsements for
collection or deposit in the Ordinary Course of Business and except those
arising from the acquisition of the NHP Stock or under the NHP Merger Agreement
or arising in connection with the transactions contemplated hereby.
7.04 LEASE OBLIGATIONS. The Company shall not create or suffer to
exist any obligations for the payment of rent for any Property under a lease or
agreement to lease that is not a Capital Lease.
7.05 DISPOSITION OF PROPERTIES. The Company shall not, directly or
indirectly, make any Disposition of any Property, or enter into any agreement to
do so, unless such Disposition is at fair market value (as determined in good
faith by the Company's Board of Directors) and is for consideration consisting
exclusively of cash or Cash Equivalents; provided, however, that, so long as no
Event of Default is then continuing hereunder or would result therefrom, the
Company may make a Disposition of the NHP Stock to the Merger Sub for
consideration other than cash or Cash Equivalents immediately prior to and
solely in connection with the consummation of the merger described in the NHP
Merger Agreement and following satisfaction of all material conditions precedent
thereto, so long as, if the Obligations are not to be paid in full effective
upon the consummation of such merger, (i) the Merger Sub shall assume all of the
Obligations of the Company under the Loan Documents pursuant to an assumption
agreement in form and substance reasonably satisfactory to the Agent and the
Requisite Lenders in their discretion (which assumption obligations shall be
part of the debts, liabilities and duties assumed by the surviving entity in
such merger); (ii) there shall be no material adverse effect therefrom upon the
Agent or the Lenders, in the reasonable opinion of the Agent and the Requisite
Lenders; (iii) the REIT, the Operating Partnership and the Common Stockholders
shall ratify and reaffirm their obligations under the REIT Guaranty Documents in
form and substance reasonably satisfactory to the Agent and the Requisite
Lenders in their discretion in connection therewith; and (iv) the Agent and the
Lenders bear no cost or expense in connection with such matters.
7.06 CONSOLIDATIONS AND MERGERS. The Company shall not merge or
consolidate with or into any Person; provided, however, that the Agent and the
Lenders shall agree to permit the Company to be consolidated with or merged
into a special purpose Subsidiary of the REIT as the surviving entity solely in
connection with the consummation of the merger under the NHP Merger Agreement,
so long as: (i) no Event of Default is then continuing hereunder; (ii) there
shall be no material adverse effect therefrom upon the Agent or the Lenders, in
the reasonable opinion of the Agent and the Requisite Lenders; (iii) such
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surviving entity assumes all of the Obligations of the Company under the Loan
Documents pursuant to an assumption agreement in form and substance reasonably
satisfactory to the Agent and the Requisite Lenders in their discretion and
executes all such documents and takes such other actions as may be necessary to
maintain, preserve, perfect and protect the rights and interests of the Agent
and the Lenders arising under the Loan Documents; (iv) the Operating
Partnership, the REIT and the Common Stockholders reaffirm and ratify in writing
all of their respective obligations under the Loan Documents in connection with
such merger or consolidation, in form and substance reasonably satisfactory to
the Agent and the Requisite Lenders in their discretion; (v) the Agent and the
Lenders receive such favorable legal opinions from counsel to the Company, the
REIT, the Operating Partnership and such surviving entity in connection with
such matters as they may reasonably request; and (vi) the Agent and the Lenders
bear no cost or expense in connection with such matters.
7.07 LIQUIDATIONS; ISSUANCES OF STOCK.
(a) The Company shall not liquidate, wind-up or dissolve, or
amend its Organizational Documents in any respect; provided, however, that the
Agent and the Lenders shall agree to permit all of the assets of the Company to
be transferred to the REIT or a special purpose Subsidiary of the REIT in
connection with the liquidation of the Company solely in connection with the
consummation of the merger under the NHP Merger Agreement, so long as: (i) no
Event of Default is then continuing hereunder; (ii) there shall be no material
adverse effect therefrom upon the Agent or the Lenders, in the reasonable
opinion of the Agent and the Requisite Lenders; (iii) such transferee assumes
the Obligations of the Company under the Loan Documents pursuant to an
assumption agreement in form and substance reasonably satisfactory to the Agent
and the Requisite Lenders in their discretion; (iv) the Operating Partnership,
the REIT and the Common Stockholders reaffirm and ratify in writing all of their
respective obligations under the REIT Guaranty Documents in connection with such
transfer and liquidation, in form and substance reasonably satisfactory to the
Agent and the Requisite Lenders in their discretion and such Persons and such
transferee execute all such other documents and take such other actions as may
be necessary to maintain, preserve, perfect and protect the rights and interests
of the Agent and the Lenders under the Loan Documents; (v) the Agent and the
Lenders receive such favorable legal opinions from counsel to the Company, the
REIT, the Operating Partnership and such transferee in connection with such
matters as they may reasonably request; and (vi) the Agent and the Lenders bear
no cost or expense in connection with such matters.
(b) The Company shall not issue any Stock to any Person other
than the Operating Partnership or a Common Stockholder on the date hereof and
only if such Person has pledged such Stock to the Agent for the ratable benefit
of the Lenders pursuant to the Stock Pledge Agreement or an amendment thereto;
provided, however, that the Agent and the Lenders shall agree to permit the
Stock of the Company pledged to them under the Stock Pledge Agreement to be
transferred to the REIT or a special purpose Subsidiary of the REIT subject to
the security interests and all other rights in their favor created under the
Stock Pledge Agreement solely in connection with the consummation of the merger
under the NHP Merger Agreement, so long as: (i) no Event of Default is then
continuing hereunder; (ii) there shall be no material adverse effect therefrom
upon the Agent or the Lenders, in the reasonable opinion of the Agent and the
Requisite Lenders; (iii) such transferee assumes the Obligations of a Pledgor
(as such term is defined in the Stock Pledge Agreement) pursuant to an
assumption agreement in form and substance reasonably satisfactory to the Agent
and the Requisite Lenders in their discretion and executes all such documents
and takes such other actions as may be necessary to maintain, preserve, perfect
and protect the rights and interests of the Agents and the Lenders in the Stock
so transferred and arising under the Stock Pledge Agreement; (iv) the Company,
the Operating Partnership, the REIT and the Common Stockholders reaffirm and
ratify in writing all of their respective obligations under the Loan Documents
in connection with such transfer, in form and substance reasonably satisfactory
to
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the Agent and the Requisite Lenders in their discretion and execute all such
other documents and take such other actions as may be necessary to maintain,
preserve, perfect and protect the rights and interests of the Agent and the
Lenders under the Loan Documents; (v) the Agent and the Lenders receive such
favorable legal opinions from counsel to the Company, the REIT, the Operating
Partnership and such transferee in connection with such matters as they may
reasonably request; and (vi) the Agent and the Lenders bear no cost or expense
in connection with such matters.
7.08 INVESTMENTS. The Company shall not directly or indirectly own
or acquire any assets or make any Investments (or incur any Contractual
Obligation or enter into any letter of intent to make any Investments) other
than:
(a) cash and Cash Equivalents;
(b) NHP Stock; and
(c) promissory notes delivered to the Company by the Common
Stockholders in exchange for Stock.
7.09 RESTRICTED PAYMENTS. The Company shall not declare or make, or
permit any of their respective Subsidiaries to declare or make, any distribution
of any Properties, including cash, rights or obligations, on account of any
Stock, or purchase, redeem or otherwise acquire for value any of its Stock, now
or hereafter outstanding to any Person (all of the foregoing, collectively,
"distributions").
7.10 TRANSACTIONS WITH AFFILIATES. The Company shall not enter into
any transaction with any Affiliate of the Company or of the REIT, the Operating
Partnership or any of their Subsidiaries, except (a) for the transactions under
NHP Stock Purchase Agreement or the NHP Merger Agreement or as expressly
permitted by this Agreement, or (b) in the Ordinary Course of Business and
pursuant to the reasonable requirements of the business of the Company or such
Person; in each case (a) and (b), upon fair and reasonable terms no less
favorable to the Company than would obtain in a comparable arm's-length
transaction with a Person not such an Affiliate.
ARTICLE VIII
EVENTS OF DEFAULT
8.01 EVENT OF DEFAULT. Any of the following shall constitute an
"Event of Default":
(a) NON-PAYMENT. The Company shall fail to pay, (i) when and as
required to be paid herein, any amount of principal of any Loan, or (ii) within
five days after the same shall become due, any amount of interest on any Loan or
any fee or other amount payable hereunder or pursuant to any other Loan
Document; or
(b) REPRESENTATION OR WARRANTY. Any representation or warranty by
the Company, the REIT, the Operating Partnership or any Common Stockholder made
or deemed made herein, in any Loan Document, or in any certificate, document or
financial or other statement by the Company, the REIT, the Operating
Partnership, any Common Stockholder, or any Responsible Officer, furnished at
any time under this Agreement, or in or under any Loan Document, shall prove to
have been incorrect in any material respect on or as of the date made or deemed
made; or
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(c) SPECIFIC DEFAULTS. The Company shall fail to perform or
observe any term, covenant or agreement contained in Section 6.08 and/or in
Article VII; or
(d) OTHER DEFAULTS. The Company, the REIT, the Operating
Partnership or any Common Stockholder shall fail to perform or observe any other
term or covenant contained in this Agreement or any Loan Document (other than as
set forth elsewhere in this Section 8.01), and such default shall continue
uncured for a period of 10 days after the earlier of (i) the date upon which a
Responsible Officer knew or received written notice of such failure or (ii) the
date upon which written notice thereof is given to the Company by Agent or any
Lender; or
(e) CROSS-DEFAULT. The Company shall fail, after any applicable
cure period:
(A) to make any payment (and which uncured failure to pay is
continuing) in respect of any Indebtedness or Guaranty Obligation when due which
in the aggregate exceeds $500,000 (whether by scheduled maturity, required
prepayment, acceleration, demand, or otherwise), other than a payment with
respect to Intra-Company Debt where the obligee has not commenced pursuing its
remedies; or
(B) to perform or observe any other condition or covenant, or any
other event shall occur or condition exist, under any agreement or instrument
relating to any such Indebtedness or Guaranty Obligation, if the effect of such
failure, event or condition is to cause, or to permit the holder or holders of
such Indebtedness or the beneficiary or beneficiaries of such Indebtedness (or a
trustee or agent on behalf of such holder or holders or beneficiary or
beneficiaries) to cause, such Indebtedness to be declared to be due and payable
prior to its stated maturity, or such Guaranty Obligation to become payable or
cash collateral in respect thereof to be demanded; or
(C) to perform or observe any condition or covenant of the
subordination agreement in favor of the lenders relating to the Intra-Company
Debt; or
(f) BANKRUPTCY OR INSOLVENCY. The Company, the REIT, the Operating
Partnership, any of their Subsidiaries or any Management Entity or, at any time
prior to the NHP Combination Date, NHP shall (i) become insolvent, or generally
fail to pay, or admit in writing its inability to pay, its debts as they become
due, subject to applicable grace periods, if any, whether at stated maturity or
otherwise; (ii) voluntarily cease to conduct its business in the ordinary
course; (iii) commence any Insolvency Proceeding with respect to itself; or
(iv) take any action to effectuate or authorize any of the foregoing; or
(g) INVOLUNTARY PROCEEDINGS. (i) Any Insolvency Proceeding shall be
commenced or filed against the Company, the REIT, the Operating Partnership, any
of their Subsidiaries, or any Management Entity or, at any time prior to the NHP
Combination Date, NHP or any writ, judgment, warrant of attachment, execution or
similar process, shall be issued or levied against a substantial part of such
Person's Properties, and any such proceeding or petition shall not be dismissed,
or such writ, judgment, warrant of attachment, execution or similar process
shall not be released, vacated or fully bonded within sixty (60) days after
commencement, filing or levy; (ii) the Company, the REIT, the Operating
Partnership, any of their Subsidiaries or, at any time prior to the NHP
Combination Date, NHP shall admit the material allegations of a petition against
it in any Insolvency Proceeding, or an order for relief (or similar order under
non-U.S. law) is ordered in any Insolvency Proceeding; or (iii) the Company, the
REIT, the Operating Partnership, any of their Subsidiaries or any Management
Entity or, at any time prior to the NHP Combination Date, NHP shall acquiesce in
the appointment of a receiver, trustee, custodian, conservator, liquidator,
mortgagee in
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possession (or agent therefor), or other similar Person for itself or a
substantial portion of its Property or business; or
(h) MONETARY JUDGMENTS. One or more final (non-interlocutory)
judgments, orders or decrees shall be entered against the Company, involving in
the aggregate a liability (not fully covered by insurance) as to any single or
related series of transactions, incidents or conditions, of $500,000 or more,
and the same shall remain unvacated and unstayed pending appeal for a period of
thirty (30) days after the entry thereof; or
(i) NON-MONETARY JUDGMENTS. Any non-monetary judgment, order or
decree shall be rendered against the Company, that has or would reasonably be
expected to have a Material Adverse Effect, and there shall be any period of ten
(10) consecutive days during which a stay of enforcement of such judgment or
order, by reason of a pending appeal or otherwise, shall not be in effect; or
(j) REIT GUARANTY DOCUMENTS. The occurrence of any Guarantor Event
of Default.
8.02 REMEDIES.
If any Event of Default occurs, the Agent shall, at the request
of, or may, with the consent of, the Requisite Lenders:
(a) TERMINATION OF COMMITMENT. Declare the Commitment of each
Lender to make Loans to be terminated, whereupon such Commitments shall
forthwith be terminated;
(b) ACCELERATION. Declare (i) the unpaid principal amount of all
outstanding Loans and all interest accrued and unpaid thereon, and (ii) all
other amounts owing or payable hereunder or under any other Loan Document to be
immediately due and payable, without presentment, demand, protest or other
notice of any kind, all of which are hereby expressly waived;
(c) OTHER REMEDIES. Exercise on behalf of itself and the Lenders
all rights and remedies available to it and the Lenders under the Loan Documents
or applicable law; PROVIDED, however, that upon the occurrence of any event
specified in Section 8.01(f) or 8.01(g) (in the case of clause (i) of Section
8.01(g) upon the expiration of the sixty (60)-day period mentioned therein), the
Commitment of each Lender to make Loans shall automatically terminate, and the
unpaid principal amount of all outstanding Loans and interest accrued and unpaid
thereon, and all other amounts owing or payable hereunder as aforesaid shall
automatically become due and payable without further act of any Agent or Lender.
8.03 RIGHTS NOT EXCLUSIVE. The rights provided for in this
Agreement and the other Loan Documents are cumulative and are not exclusive of
any other rights, powers, privileges or remedies provided by law or in equity,
or under any other instrument, document or agreement now existing or hereafter
arising.
8.04 CERTAIN REQUIREMENTS IN ORDER TO PURSUE THE GUARANTY. Each
Lender intends that this Agreement creates a loan facility between such Lender
and the Company, and is not intended to be a loan to the REIT, the Operating
Partnership or any other Subsidiary thereof. Each Lender is relying on the
Company for repayment of the Obligations owing to such Lender, and neither the
Agent nor any Lender shall pursue the Guaranty, which is intended to guaranty
the Company's Obligations in the event the Company fails to perform under this
Agreement, unless the Agent has provided the Company 10 Business Days to perform
its Obligations hereunder, pursuant to and to the extent required by Section
2.01 of the Guaranty.
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ARTICLE IX
THE AGENT
9.01 APPOINTMENT AND AUTHORIZATION. Each Lender hereby irrevocably
appoints, designates and authorizes the Agent to take such action on its behalf
under the provisions of this Agreement and each other Loan Document and to
exercise such powers and perform such duties as are expressly delegated to it by
the terms of this Agreement or any other Loan Document, together with such
powers as are reasonably incidental thereto. Notwithstanding any provision to
the contrary contained elsewhere in this Agreement or in any other Loan
Document, Agent shall not have any duties or responsibilities except those
expressly set forth herein, nor shall Agent have or be deemed to have any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist on the part of Agent.
9.02 DELEGATION OF DUTIES. The Agent may execute any of its duties
under this Agreement or any other Loan Document by or through agents, employees
or attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects with
reasonable care.
9.03 LIABILITY OF AGENT. The Agent, its respective Affiliates, or
their respective officers, directors, employees, agents, or attorneys-in-fact
(all of the foregoing being collectively referred to as the "Agent-Related
Persons") shall not (a) be liable for any action taken or omitted to be taken by
any of them under or in connection with this Agreement or any other Loan
Document (except for its own gross negligence or willful misconduct), or (b) be
responsible in any manner to any of the Lenders for any recital, statement,
representation or warranty made by the Company, the Operating Partnership, the
REIT, any Subsidiary, any Common Stockholder or any Affiliate of any such
Person, or any officer thereof, contained in this Agreement or in any other Loan
Document, or in any certificate, report, statement or other document referred to
or provided for in, or received by the Agent under or in connection with, this
Agreement or any other Loan Document, or for the value of any Collateral or the
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement, any other Loan Document, or for any failure of the Company, the REIT,
the Operating Partnership, or any other party to any Loan Document to perform
its obligations hereunder or thereunder. No Agent-Related Person shall be under
any obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the Properties, books or
records of the Company, the REIT, the Operating Partnership, any Subsidiary, any
Common Stockholder or Affiliates thereof.
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9.04 RELIANCE BY AGENT.
(a) GENERALLY. The Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, telecopy, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to the
Company), independent accountants and other experts selected by the Agent. The
Agent shall be fully justified in failing or refusing to take any action under
this Agreement or any other Loan Document unless it shall first receive such
advice or concurrence of the Requisite Lenders as it deems appropriate and, if
it so requests, it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Agent shall in all cases
be fully protected in acting, or in refraining from acting, under this Agreement
or any other Loan Document in accordance with a request or consent of the
Requisite Lenders, and such request and any action taken or failure to act
pursuant thereto shall be binding upon all of the Lenders.
(b) CONDITIONS PRECEDENT. For purposes of determining compliance
with the conditions specified in Sections 4.01 and 4.02 (as to the initial
borrowing hereunder), each Lender that has executed this Agreement shall be
deemed to have consented to, approved or accepted or to be satisfied with each
document or other matter required thereunder to be consented to or approved by
or acceptable or satisfactory to such Lender, unless an officer of the Agent
responsible for the transactions contemplated by the Loan Documents shall have
received notice from such Lender prior to the initial borrowing specifying its
objection thereto and either such objection shall not have been withdrawn by
notice to the Agent to that effect or such Lender shall not have made available
to the Agent the Lender's ratable portion of such borrowing.
9.05 NOTICE OF DEFAULT. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default, except
with respect to defaults in the payment of principal, interest and fees required
to be paid to the Agent for the account of the Lenders, unless the Agent shall
have received written notice from a Lender or the Company referring to this
Agreement, describing such Default or Event of Default and stating that such
notice is a "notice of default." In the event that the Agent receives such a
notice, the Agent shall give notice thereof to the Lenders. The Agent shall
take such action with respect to such Default or Event of Default as shall be
requested by the Requisite Lenders in accordance with Article VIII; PROVIDED,
HOWEVER, that unless and until the Agent shall have received any such request,
it may (but shall not be obligated to) take such action, or refrain from taking
such action, with respect to such Default or Event of Default as it shall deem
advisable or in the best interest of the Lenders.
9.06 CREDIT DECISION. Each Lender expressly acknowledges that none
of the Agent-Related Persons has made any representation or warranty to such
Lender and that no act by the Agent hereinafter taken, including any review of
the affairs of the Company, the REIT, the Operating Partnership, any Subsidiary,
or any Common Stockholder shall be deemed to constitute any representation or
warranty by the Agent to any Lender. Each
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Lender represents to the Agent that such Lender has, independently and without
reliance upon the Agent and based on such documents and information as such
Lender has deemed appropriate, made its own appraisal of and investigation into
the business, prospects, operations, Properties, financial and other condition
and creditworthiness of the Company, the REIT, the Operating Partnership,
Subsidiary, or Common Stockholder and all applicable lender regulatory laws
relating to the transactions contemplated thereby (including, without
limitation, applicable margin regulations), and made its own decision to enter
into this Agreement and extend credit to the Company hereunder. Each Lender
also represents that it will, independently and without reliance upon the Agent
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement and the other Loan Documents,
and to make such investigations as it deems necessary to inform itself as to the
business, prospects, operations, Properties, financial and other condition and
creditworthiness of the Company, the REIT, the Operating Partnership, the
Subsidiaries and Common Stockholders. Except for notices, reports and other
documents expressly herein required to be furnished to the Lenders by the Agent,
Agent shall have no duty or responsibility to provide any Lender with any credit
or other information concerning the business, prospects, operations, Properties,
financial and other condition or creditworthiness of the Company, the REIT, the
Operating Partnership, the Subsidiaries and Common Stockholders which may come
into the possession of any of the Agent-Related Persons.
9.07 INDEMNIFICATION. The Lenders shall indemnify upon demand the
Agent-Related Persons (to the extent not reimbursed by or on behalf of the
Company and without limiting the obligation of the Company to do so) ratably
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses and disbursements of any
kind whatsoever which may at any time (including at any time following the
repayment of the Loans) be imposed on, incurred by or asserted against any such
Person in any way relating to or arising out of this Agreement or any document
contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by any such Person
under or in connection with any of the foregoing; PROVIDED, HOWEVER, that no
Lender shall be liable for the payment to the Agent-Related Persons of any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting solely from such
Person's gross negligence or willful misconduct. Without limitation of the
foregoing, each Lender shall reimburse the Agent upon demand (to the extent the
Agent is not reimbursed upon demand by the Company, unless the Agent is legally
restricted from making such demand upon the Company, in which case demand need
not be made upon the Company) for its ratable share of any costs or
out-of-pocket expenses (including Attorney Costs) incurred by the Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document, or any document
contemplated by or referred to herein to the extent that the Agent is not
reimbursed for such expenses by or on behalf of the Company. Without limiting
the generality of the foregoing, if the IRS or any authority of the United
States or other jurisdiction asserts a claim that the Agent did not properly
withhold tax from amounts paid to or for the account of any Lender (because the
appropriate form was not delivered or was not properly executed, or because such
Lender failed to notify the Agent of a change in
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circumstances which rendered the exemption from, or reduction of, withholding
tax ineffective, or for any other reason), such Lender shall indemnify the Agent
fully for all amounts paid, directly or indirectly, by the Agent as tax or
otherwise, including penalties and interest, and including any taxes imposed by
any jurisdiction on the amounts payable to the Agent under this Section 9.07,
together with all costs, expenses and attorneys' fees (including allocated costs
for in-house legal services). The obligation of the Lenders in this Section
shall survive the payment of all Obligations.
9.08 AGENT IN INDIVIDUAL CAPACITY. BofA (and any other Lender that
may hereafter serve as Agent) and each of their respective Affiliates may make
loans to, issue letters of credit for the account of, accept deposits from,
acquire equity interests in and generally engage in any kind of banking, trust,
financial advisory or other business with, the Company, the REIT, the Operating
Partnership, and the Subsidiaries and Affiliates as though BofA (or any other
such Lender) were not the agent hereunder and without notice to the Lenders.
With respect to its Loans, BofA (and any other Lender that may hereafter serve
as Agent), shall have the same rights and powers under this Agreement as any
other Lender and may exercise the same as though each of them were not an agent,
and the terms "Lender" and "Lenders" shall include BofA (and any other Lender
that may hereafter serve as Agent), in its individual capacity.
9.09 SUCCESSOR AGENTS. The Agent may resign as Agent upon 30 days'
notice to the Lenders. If an Agent shall resign under this Agreement, the
Requisite Lenders shall appoint from among the Lenders a successor Agent for the
Lenders, which successor Agent shall, if no Default or Event of Default exists
hereunder, be subject to the approval of the Company. If no successor Agent is
appointed prior to the effective date of the resignation of the retiring Agent,
the retiring Agent shall appoint, after consulting with the Lenders and the
Company, a successor Agent. Upon the acceptance of its appointment as successor
Agent hereunder, such successor Agent shall succeed to all the rights, powers
and duties of the retiring Agent, and the term "Agent" shall mean such successor
Agent, and the retiring Agent's rights, powers and duties as Agent shall be
terminated. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Article IX and Sections 10.04 and 10.05 shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was an
Agent under this Agreement.
9.10 COLLATERAL MATTERS.
(a) PERFECTION. The Agent is authorized on behalf of all the
Lenders, without the necessity of any notice to or further consent from the
Lenders, from time to time to take any action with respect to any Collateral or
the Collateral Documents which may be necessary to perfect and maintain
perfected the security interest in and Liens upon the Collateral granted
pursuant to the Collateral Documents.
(b) RELEASE. Upon request by the Agent at any time, the Lenders
will confirm in writing the Agent's authority to release particular types or
items of Collateral pursuant to Section 2.13(e) or any other provision of the
Loan Documents. The Agent shall be completely protected in taking any action
directed by all the Lenders in response to such
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request and shall incur no liability to the Company or any Lender for failing to
take any action as to which all of the Lenders do not concur.
(c) NO OTHER COLLATERAL. Each Lender agrees with and in favor of
each other (which agreement shall not be for the benefit of the Company, the
REIT, any Subsidiaries, any Common Stockholders or any Affiliates) that the
Company's obligation to such Lender under this Agreement and the other Loan
Documents is not and shall not be secured by any real property collateral now or
hereafter acquired by such Lender other than the Collateral hereunder.
ARTICLE X
MISCELLANEOUS
10.01 AMENDMENTS AND WAIVERS.
(a) GENERALLY. No amendment or waiver of any provision of this
Agreement or any other Loan Document, and no consent with respect to any
departure therefrom, shall be effective unless the same shall be in writing and
signed by the Requisite Lenders, and then such amendment, waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.
(b) MATTERS REQUIRING UNANIMOUS CONSENT. Notwithstanding the terms
of Section 10.01(a), no amendment or waiver of any provision of this Agreement
or any other Loan Document, no agreement to forebear from acting upon any
departure by the Company therefrom, and no consent with respect to any departure
by the Company therefrom, shall be effective to do any of the following, unless
the same is in writing and signed by all the Lenders:
(i) increase the Commitment of any Lender;
(ii) postpone or delay any date fixed for any payment of principal,
interest, fees or other amounts due hereunder or under any Loan Document whether
by acceleration or otherwise;
(iii) reduce the principal of, or the rate of interest specified
herein on, any Loan, or any fees or other amounts payable hereunder or under any
Loan Document;
(iv) change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Loans required for the Lenders or any of them to
take any action hereunder;
(v) amend Section 2.15 (Sharing of Payments, Etc.), Section 6.10
(Use of Proceeds), Section 8.02 (Remedies), Section 10.15 (Governing Law and
Jurisdiction) or this Section 10.01;
(vi) release any portion of the Collateral; or
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(vii) release any guarantor from liability under the REIT Guaranty
Documents.
(c) MATTERS REQUIRING AGENTS' CONSENT. Notwithstanding the terms
of Section 10.01(a), no amendment or waiver of any provision of this Agreement
or any other Loan Document, and no consent with respect to any departure by the
Company therefrom, shall be effective to affect the rights or duties of the
Agent under this Agreement or any other Loan Document, unless the same is in
writing and signed by the Agent.
10.02 NOTICES.
(a) DELIVERY. All notices, requests and other communications
provided for hereunder shall be in writing (including, unless the context
expressly otherwise provides, telegraphic, telex, facsimile transmission or
cable communication) and mailed, telegraphed, telexed or delivered, (i) if to
the Company, to its address specified on the signature pages hereof, (ii) if to
any Lender, to its Domestic Lending Office, and (iii) if to Agent, to its
address specified on the signature pages hereof; or, as to the Company or the
Agent, to such other address as shall be designated by such party in a written
notice to the other parties, and as to each other party, at such other address
as shall be designated by such party in a written notice to the Company and the
Agent.
(b) RECEIPT. All such notices and communications shall, when
transmitted by overnight delivery, telegraphed, telecopied by facsimile, telexed
or cabled, be effective when delivered for overnight delivery or to the
telegraph company, transmitted by telecopier, confirmed by telex answerback or
delivered to the cable company, respectively, or if delivered, upon delivery,
except that notices pursuant to Article II or VIII shall not be effective until
actually received by the Agent.
(c) RELIANCE. The Company acknowledges and agrees that any
agreement of the Agent and the Lenders under Article II to receive certain
notices by telephone and facsimile is solely for the convenience and at the
request of the Company. The Agent and the Lenders shall be entitled to rely on
the authority of any Person purporting to be a Person authorized by the Company
to give such notice, and the Agent and the Lenders shall not have any liability
to the Company or any other Person on account of any action taken or not taken
by the Agent and the Lenders in reliance upon such telephonic or facsimile
notice. The obligation of the Company to repay the Loans shall not be affected
in any way or to any extent by any failure by the Agent and the Lenders to
receive written confirmation of any telephonic or facsimile notice or the
receipt by the Agent and the Lenders of a confirmation which is at variance with
the terms understood by the Agent and the Lenders to be contained in the
telephonic or facsimile notice.
10.03 NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and no
delay in exercising, on the part of any Agent or Lender, any right, remedy,
power or privilege hereunder, shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege.
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10.04 COSTS AND EXPENSES. The Company shall, whether or not the
transactions contemplated hereby shall be consummated:
(a) FACILITY EXPENSES. Pay or reimburse the Agent and each Lender
on demand for all reasonable costs and expenses incurred by it in connection
with the development, preparation, delivery, and execution of, and any
amendment, supplement, waiver or modification to, this Agreement, any Loan
Document and any other documents prepared in connection herewith or therewith,
the consummation of the transactions contemplated hereby and thereby (including,
without limitation, recording costs and taxes, travel and due diligence expenses
incurred by representatives of the Agent, and the reasonable Attorney Costs
incurred by the Agent with respect thereto); and
(b) ENFORCEMENT EXPENSES. Pay or reimburse the Agent and Lenders
on demand for all reasonable costs and expenses incurred by them in connection
with the enforcement, attempted enforcement, or preservation of any rights or
remedies (including in connection with any "workout" or restructuring regarding
the Loans) under this Agreement, any other Loan Document, and any such other
documents, including reasonable Attorney Costs incurred by the Agent and Lender.
10.05 INDEMNITY. The Company shall indemnify and hold harmless the
Agent, each Lender and each of their respective officers, directors, employees,
counsel, agents and attorneys-in-fact (each, an "Indemnified Person") from and
against and pay them for any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, charges, expenses or disbursements
(including Attorney Costs) of any kind or nature whatsoever with respect to the
execution, delivery or enforcement of this Agreement and any other Loan
Documents, or the transactions contemplated hereby and thereby, and with respect
to any investigation, litigation or proceeding related to this Agreement or the
Loans or the use of the proceeds thereof, whether or not any Indemnified Person
is a party thereto (all the foregoing, collectively, the "Indemnified
Liabilities"); PROVIDED, that the Company shall have no obligation hereunder to
any Indemnified Person with respect to Indemnified Liabilities arising from the
gross negligence or willful misconduct of such Indemnified Person. The
agreements in this Section 10.05 shall survive payment of all other Obligations.
10.06 MARSHALLING; PAYMENTS SET ASIDE. Neither the Agent nor any
Lender shall be under any obligation to marshall any assets in favor of the
Company or any other Person or against or in payment of any or all of the
Obligations. To the extent that the Company makes a payment or payments to the
Agent or any Lender, or the Agent or any Lender enforces its Liens or exercises
its rights of setoff, and such payment or payments or the proceeds of such
enforcement or setoff or any part thereof are subsequently invalidated, declared
to be fraudulent or preferential, set aside or required to be repaid to a
trustee, receiver or any other party in connection with any Insolvency
Proceeding, or otherwise, then to the extent of such recovery the obligation or
part thereof originally intended to be satisfied shall be revived and continued
in full force and effect as if such payment had not been made or such
enforcement or setoff had not occurred.
10.07 SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and
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assigns, except that the Company may not assign or transfer any of its rights or
obligations under this Agreement without the prior written consent of the Agent
and each Lender, which may be withheld in their sole and absolute discretion.
10.08 ASSIGNMENTS, PARTICIPATIONS, ETC.
(a) ASSIGNMENTS. Subject to the further provisions of this Section
10.08(a), any Lender may, with the written consent of the Agent, which consent
shall not be unreasonably withheld, at any time assign and delegate to one or
more Eligible Assignees (provided that no written consent of the Agent shall be
required in connection with any assignment and delegation by a Lender to a
Lender Affiliate of such Lender) (each an "Assignee") all, or any ratable part
of all, of the Loans, the Commitments and the other rights and obligations of
such Lender hereunder, in a minimum amount of $5,000,000 and in additional
increments of $250,000; PROVIDED, HOWEVER, that the Company and the Agent may
continue to deal solely and directly with such Lender in connection with the
interest so assigned to an Assignee until (A) written notice of such assignment,
together with payment instructions, addresses and related information with
respect to the Assignee, shall have been given to the Company and the Agent by
such Lender and the Assignee; (B) such Lender and its Assignee shall have
delivered to the Company and the Agent an Assignment and Acceptance in the form
of EXHIBIT H ("Assignment and Acceptance") together with any Note or Notes
subject to such assignment; (C) such Lender shall have paid to the Agent, for
its own account, an assignment fee in the amount of $1500, if the Assignee is a
Lender (without giving effect to the Assignment), and $3000 in all other cases;
and (D) such Lender shall have delivered to the Agent such documents as may be
required by Section 3.01(f). Any such assignment requiring the approval of the
Agent shall also require the approval of the Company (such approval not to be
unreasonably withheld or delayed), provided that the Company's failure to
approve or disapprove such assignment within five days' after receiving written
notice thereof shall be deemed approval by the Company of such assignment, and
provided further, that no such approval from the Company shall be required
during the continuation of a Default or Event of Default.
(b) RIGHTS OF ASSIGNEE. From and after the date that the Agent
notifies the assignor Lender that the Agent has received an executed Assignment
and Acceptance and payment of the assignment fee specified in Section 10.08(a),
(i) the Assignee thereunder shall, subject to Section 10.08(a), be a party
hereto and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, shall have the rights
and obligations of a Lender under the Loan Documents, and (ii) the assignor
Lender shall, to the extent that rights and obligations hereunder have been
assigned by it pursuant to such Assignment and Acceptance, relinquish its rights
and be released from its obligations under the Loan Documents.
(c) REPLACEMENT NOTES. Within thirty (30) Business Days after its
receipt of notice by the Agent that the Agent has received an executed
Assignment and Acceptance and payment of the processing fee, the Company shall
execute and deliver to the Agent, new Notes evidencing such Assignee's assigned
Loans and Commitment and, if the assignor Lender has retained a portion of its
Loans and its Commitment, replacement Notes in the principal amount of the Loans
retained by the assignor Lender (such Notes to be in exchange
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for, but not in payment of, the Notes held by such Lender). Immediately upon
each Assignee's making its payment under the Assignment and Acceptance, this
Agreement shall be deemed to be amended to the extent, but only to the extent,
necessary to reflect the addition of the Assignee and the resulting adjustment
of the Commitments arising therefrom. The Commitment allocated to each Assignee
shall reduce such Commitment of the assigning Lender PRO TANTO.
(d) PARTICIPATIONS. Any Lender may at any time sell to one or more
commercial lenders (a "Participant") participating interests in any Loans,
Liability and Commitment of that Lender and the other interests of that Lender
(the "originating Lender") hereunder and under the other Loan Documents;
PROVIDED, HOWEVER, that (i) the originating Lender's obligations under this
Agreement shall remain unchanged, (ii) the originating Lender shall remain
solely responsible for the performance of such obligations, (iii) the Company
and the Agent shall continue to deal solely and directly with the originating
Lender in connection with the originating Lender's rights and obligations under
this Agreement and the other Loan Documents, (iv) no Lender shall transfer or
grant any participating interest under which the Participant shall have rights
to approve any amendment to, or any consent or waiver with respect to, this
Agreement or any other Loan Document, except to the extent such amendment,
consent or waiver would require unanimous consent as described in the FIRST
PROVISO to Section 10.01; and (v) the Company shall have approved the transfer
or grant of any participating interest in any Loans, and Commitment of the
originating Lender to a Participant that has not theretofore previously held a
participating interest therein (such approval not to be unreasonably withheld or
delayed), provided that the Company's failure to approve or disapprove in
writing such Participant within five days' after receiving written notice
thereof shall be deemed approval by the Company of such transfer or grant to
such Participant, and provided further, that no such approval from the Company
shall be required during the continuation of a Default or Event of Default.. In
the case of any such participation, the Participant shall not have any rights
under this Agreement, or any of the other Loan Documents, and all amounts
payable by the Company hereunder shall be determined as if such Lender had not
sold such participation; except that, if amounts outstanding under this
Agreement are due and unpaid, or shall have been declared or shall have become
due and payable upon the occurrence of an Event of Default, each Participant
shall be deemed to have the right of setoff in respect of its participating
interest in amounts owing under this Agreement to the same extent as if the
amount of its participating interest were owing directly to it as a Lender under
this Agreement.
(e) ASSIGNMENTS TO FEDERAL RESERVE BANK. Notwithstanding any other
provision contained in this Agreement or any other Loan Document to the
contrary, any Lender may assign all or any portion of the Loans or Notes held by
it to any Federal Reserve Bank or the United States Treasury as collateral
security pursuant to Regulation A of the Board of Governors of the Federal
Reserve System and any Operating Circular issued by such Federal Reserve Bank,
provided that any payment in respect of such assigned Loans or Notes made by the
Company to or for the account of the assigning and/or pledging Lender in
accordance with the terms of this Agreement shall satisfy the Company's
obligations hereunder in respect of such assigned Loans or Notes to the extent
of such payment. No such assignment shall release the assigning Lender from its
obligations hereunder.
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10.09 SETOFF. In addition to any rights and remedies of the Lenders
provided by law, if an Event of Default exists, each Lender is authorized at any
time and from time to time, without prior notice to the Company, any such notice
being waived by the Company to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held by, and other indebtedness at any time owing to, such
Lender to or for the credit or the account of the Company against any and all
obligations owing to such Lender, now or hereafter existing, irrespective of
whether the Agent or such Lender shall have made demand under this Agreement or
any Loan Document and whether such obligations may be contingent or unmatured.
Each Lender agrees to promptly notify the Company and the Agent after any such
setoff and application made by such Lender; PROVIDED, HOWEVER, that the failure
to give such notice shall not affect the validity of such setoff and
application. The rights of each Lender under this Section 10.09 are in addition
to the other rights and remedies (including other rights of setoff) that such
Lender may have. NOTWITHSTANDING THE FOREGOING, NO LENDER SHALL EXERCISE, OR
ATTEMPT TO EXERCISE, ANY RIGHT OF SETOFF, BANKER'S LIEN, OR THE LIKE, AGAINST
ANY DEPOSIT ACCOUNT OR PROPERTY OF THE COMPANY, HELD OR MAINTAINED BY ANY
LENDER, WITHOUT THE PRIOR WRITTEN CONSENT OF THE REQUISITE LENDERS.
10.10 NOTIFICATION OF ADDRESSES, LENDING OFFICES, ETC. Each Lender
shall notify the Agent in writing of any changes in the address to which notices
to such Lender should be directed, of addresses of its Offshore Lending Office,
of payment instructions in respect of all payments to be made to it hereunder
and of such other administrative information as the Agent shall reasonably
request.
10.11 COUNTERPARTS. This Agreement may be executed by one or more of
the parties to this Agreement in any number of separate counterparts, each of
which, when so executed, shall be deemed an original, and all of said
counterparts taken together shall be deemed to constitute but one and the same
instrument. A set of the copies of this Agreement signed by all the parties
shall be lodged with the Company and the Agent.
10.12 SEVERABILITY. The illegality or unenforceability of any
provision of this Agreement or any instrument or agreement required hereunder
shall not in any way affect or impair the legality or enforceability of the
remaining provisions of this Agreement or any instrument or agreement required
hereunder.
10.13 NO THIRD PARTIES BENEFITED. This Agreement is made and entered
into for the sole protection and legal benefit of the Company, the Agent and the
Lenders, and their permitted successors and assigns, and no other Person shall
be a direct or indirect legal beneficiary of, or have any direct or indirect
cause of action or claim in connection with, this Agreement or any of the other
Loan Documents. No Agent or Lender shall have any obligation to any Person not
a party to this Agreement or the other Loan Documents.
10.14 TIME. Time is of the essence of each term and provision of
this Agreement and each of the other Loan Documents.
10.15 GOVERNING LAW. THIS AGREEMENT AND THE NOTES AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE
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GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION
5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD
TO CONFLICTS OF LAWS PRINCIPLES.
10.16 WAIVER OF JURY TRIAL. THE COMPANY, THE AGENT, AND THE LENDERS
EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION,
PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST
ANY OTHER PARTY OR PARTIES, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT
CLAIMS, OR OTHERWISE. SUBJECT TO SECTION 10.17 BELOW, THE COMPANY, THE AGENT,
AND THE LENDERS EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED
BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES
FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY
OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING
WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF
THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF.
THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
10.17 ARBITRATION.
(a) MANDATORY ARBITRATION. Any controversy or claim between or
among the parties arising out of or relating to this Agreement, the Loan
Documents, and any claim based on or arising from an alleged tort, shall at the
request of any party be determined by arbitration. The arbitration shall be
conducted in New York, New York, in accordance with the United States
Arbitration Act (Title 9, U.S. Code), notwithstanding any choice of law
provision in this Agreement, and under the Commercial Rules of the American
Arbitration Association (the "AAA"). The arbitrator(s) shall give effect to
statutes of limitation in determining any claim. Any controversy concerning
whether an issue is arbitrable shall be determined by the arbitrator(s).
Judgment upon the arbitration award may be entered in any court having
jurisdiction. The institution and maintenance of an action for judicial relief
or pursuit of a provisional or ancillary remedy shall not constitute a waiver of
the right of any party, including the plaintiff, to submit the controversy or
claim to arbitration if any other party contests such action for judicial
relief.
(b) PROVISIONAL REMEDIES, SELF-HELP AND FORECLOSURE. No provision
of this Section 10.17 shall limit the right of any party to this Agreement to
exercise self-help remedies such as setoff, foreclosure against or sale of any
real or personal property collateral or security, or to obtain provisional or
ancillary remedies from a court of competent jurisdic-
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tion before, after, or during the pendency of any arbitration or other
proceeding. The exercise of a remedy does not waive the right of either party
to resort to arbitration.
10.18 NOTICE OF CLAIMS; CLAIMS BAR. THE COMPANY HEREBY AGREES THAT
IT SHALL GIVE PROMPT WRITTEN NOTICE TO THE AGENT OF ANY CLAIM OR CAUSE OF ACTION
IT BELIEVES IT HAS, OR MAY SEEK TO ASSERT OR ALLEGE AGAINST THE AGENT OR ANY
LENDER, WHETHER SUCH CLAIM IS BASED IN LAW OR EQUITY, ARISING UNDER OR RELATED
TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, OR TO THE LOANS (OR THE
COLLATERAL THEREFOR), OR ANY ACT OR OMISSION TO ACT BY THE AGENT OR ANY LENDER
WITH RESPECT HERETO OR THERETO, AND THAT IF THE COMPANY SHALL FAIL TO GIVE SUCH
PROMPT NOTICE TO THE AGENT WITH REGARD TO ANY SUCH CLAIM OR CAUSE OF ACTION, THE
COMPANY SHALL BE DEEMED TO HAVE WAIVED, AND SHALL BE FOREVER BARRED FROM
BRINGING OR ASSERTING, SUCH CLAIM OR CAUSE OF ACTION IN ANY ARBITRATION OR ANY
SUIT, ACTION OR PROCEEDING IN ANY COURT OR BEFORE ANY GOVERNMENTAL AGENCY.
10.19 ENTIRE AGREEMENT. This Agreement, together with the other Loan
Documents, embodies the entire agreement and understanding between the Company,
the Agent and the Lenders. Accordingly, this Agreement, together with the other
Loan Documents, supersedes all prior or contemporaneous agreements and
understandings of such Persons, verbal or written, relating to the subject
matter hereof and thereof, except for any prior arrangements made with respect
to the payment by the Company of (or any indemnification for) any fees, costs,
expenses, liabilities, damages or claims payable to or incurred (or to be
incurred) by or on behalf of the Agent or the Lenders.
10.20 INTERPRETATION. This Agreement, together with the other Loan
Documents, is the result of negotiations between and has been reviewed by
counsel to the Agent, the Lenders and the Company and other parties, and is the
product of all parties hereto. Accordingly, this Agreement and the other Loan
Documents shall not be construed against the Lenders or the Agent merely because
of the Agent's or Lender's involvement in the preparation of such documents and
agreements.
10.21 RELATIONSHIP. Nothing herein contained shall in any manner be
construed as creating any relationship between the Agent and the Lenders, on the
one hand, and the Company, on the other hand, other than as creditor and debtor.
The Company agrees to indemnify, protect, defend and hold the Agent and each
Lender harmless from and against any and all losses, liabilities, damages, and
costs and expenses (including, but not limited to, reasonable attorneys' fees
and disbursements, including reasonably allocated costs of in-house counsel)
resulting from any other construction of the parties' relationship.
10.22. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. ALL JUDICIAL
PROCEEDINGS BROUGHT AGAINST COMPANY ARISING OUT OF OR RELATING TO THIS AGREEMENT
MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE
STATE OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT COMPANY
ACCEPTS
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FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY,
THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF
FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED
THEREBY IN CONNECTION WITH THIS AGREEMENT. Company hereby agrees that service
of all process in any such proceeding in any such court may be made by
registered or certified mail, return receipt requested, to Company at its
address provided in Section 10.04, such service being hereby acknowledged by
Company to be sufficient for personal jurisdiction in any action against Company
in any such court and to be otherwise effective and binding service in every
respect. Nothing herein shall affect the right to serve process in any other
manner permitted by law or shall limit the right of the Agent or any Lender to
bring proceedings against Company in the courts of any other jurisdiction.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first written above.
COMPANY
AIMCO/NHP HOLDINGS, INC.,
a Delaware corporation
By:
Peter K. Kompaniez
Vice President
Notices to be sent to:
c/o AIMCO PROPERTIES, L.P.
1873 South Bellaire Street
17th Floor
Denver, Colorado 80222
Attention: Peter K. Kompaniez,
Vice Chairman
Facsimile: (303) 757-8735
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AGENT
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
as Agent
By:
Name:
Title:
Notices to be sent to:
Bank of America National Trust and Savings Association CRESG #1357
555 South Flower Street, 6th Floor
Los Angeles, CA 90071
Att'n: M. Harvey
Telephone: 213/228-4013
Facsimile: 213/228-5389
Payments to be made to:
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
333 S. Beaudry Ave.
Loan Accounting Dept #1503
Los Angeles, CA 90017
ABA #: 121 000 358
Credit Account #: 15031-00407
Attention: Maria Mora
Ref: AIMCO/NHP Holdings, Inc.
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<PAGE>
B OF A
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION,
as a Lender
By:
Name:
Title:
Notices to be sent to:
Bank of America National Trust and Savings Association CRESG #1357
555 South Flower Street, 6th Floor
Los Angeles, CA 90071
Att'n: M. Harvey
Telephone: 213/228-4013
Facsimile: 213/228-5389
Payments to be made to:
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
333 S. Beaudry Ave.
Loan Accounting Dept #1503
Los Angeles, CA 90017
ABA #: 121 000 358
Credit Account #: 15031-00407
Attention: Maria Mora
Ref: AIMCO/NHP Holdings, Inc.
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<PAGE>
SMITH BARNEY MORTGAGE CAPITAL GROUP, INC.,
a Delaware corporation,
as a Lender
By:
Name:
Title:
Notices to be sent to:
Smith Barney Mortgage Capital Group, Inc.
388 Greenwich Street, 33rd Floor
New York, New York 10013
Attention: Robert Deckey
Telephone: (212) 816-8240
Facsimile: (212) 816-7491
Payments to be made to:
Chase Manhattan Bank
ABA No.: 021-000-021
Ref.: AIMCO Funding
Attention: Joseph Martinelli
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SCHEDULES
Schedule 2.01 Commitments of the Lenders
EXHIBITS
EXHIBIT A Borrowing Notice
EXHIBIT B Note
EXHIBIT C Notice of Conversion/Continuation
EXHIBIT D Guaranty
EXHIBIT E Stock Pledge Agreement
Exhibit F Opinion Requirements
EXHIBIT G Compliance Certificate
EXHIBIT H Assignment and Acceptance
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Schedule 2.01
Commitments of the Lenders
- --------------------------------------------------------------------------------
Commitment
Bank of America National Trust and Savings Association $38,000,000
Smith Barney Mortgage Capital Group, Inc. $38,000,000
--------------------
Total Commitments $76,000,000
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EXHIBIT A
TO ACQUISITION SUB CREDIT AGREEMENT
BORROWING NOTICE
, 1997
Bank of America National Trust
and Savings Association, as Agent
CRESG #1357
555 South Flower Street, 6th Floor
Los Angeles, California 90071
Attn: Unit Manager
Re: Credit Agreement (Acquisition Sub Facility) dated as of May 5, 1997 (as the
same may be amended, modified or supplemented from time to time, the
"Agreement"), among AIMCO/NHP Holdings, Inc., a Delaware corporation (the
"Company"), the lenders from time to time party to the Agreement (the
"Lenders"), BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as one
of the Lenders, SMITH BARNEY MORTGAGE CAPITAL GROUP, INC., as one of the
Lenders, and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as
Agent (the "Agent") for the Lenders
Ladies and Gentlemen:
Reference is made to the Agreement. Capitalized terms used in this
Borrowing Notice without definition have the meanings specified in the
Agreement.
Pursuant to Section 2.03 of the Agreement, notice is hereby given that the
Company desires that the Lenders make the loan described in attached SCHEDULE 1
(the "Loan"). In connection therewith, the Company and the undersigned
Responsible Officers of the Company hereby certify that:
(1) REPRESENTATIONS AND WARRANTIES. All representations and
warranties of the Company contained in the Loan Documents, including those
contained in Article V of the Agreement, are true and correct as of the date
hereof and shall be true and correct in all material respects on the date of the
Loan, both before and after giving effect to the Loan;
(2) NO DEFAULT/EVENT OF DEFAULT. No Default or Event of Default
exists as of the date hereof or will result from the making of the Loan;
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(3) USE OF PROCEEDS. The proceeds of the Loan will be used only as
permitted under Sections 2.01(b), 6.10 and 7.12 of the Agreement;
(4) MAXIMUM DISBURSEMENT AMOUNT. The amount of the requested Loan
does not exceed the Maximum Disbursement Amount for the NHP Stock to be acquired
in part with the proceeds of the requested Loan; and
(5) NO MATERIAL ADVERSE EFFECT. No act, omission, change or event
which has a Material Adverse Effect has occurred since the Closing Date.
AIMCO/NHP Holdings, Inc.,
a Delaware corporation
By:
Name:
Its:
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SCHEDULE 1
to Borrowing Notice
REQUESTED LOAN
AMOUNT OF REQUESTED LOAN: $
(must be $1,000,000 a multiple of
$100,000 in excess thereof)
DESIGNATION OF INTEREST RATE:
(Portion of requested Loan to be funded as Base Rate Loan and/or LIBOR Loan):
(1) BASE RATE LOAN. The following Base Rate Loan:
Amount: $
Requested Borrowing Date:
(must be a Business Day at least two (2) Business Day after date of
notice)
(2) LIBOR LOAN. The following LIBOR Loan:
(there must not, after giving effect to the requested Loan, be more
than five (5) different LIBOR Loans in effect)
Amount: $
Requested Borrowing Date:
(must be a Business Day at least three (3) Business Days after date of
notice)
Interest Period:
(1,2,3, or 6 months)
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EXHIBIT B
TO ACQUISITION SUB CREDIT AGREEMENT
FORM OF PROMISSORY NOTE
May ___, 1997
$[3] [2]
FOR VALUE RECEIVED, AIMCO/NHP Holdings, Inc., a Delaware corporation (the
"Company"), promises to pay to the order of [4] ("Lender") the principal amount
of [5] ($ [3] ) or, if less, the aggregate amount of Loans (as
such term and all other capitalized terms used but not defined herein are
defined in the Credit Agreement referred to below) made by the Lender to the
Company pursuant to the Credit Agreement referred to below, outstanding on the
Maturity Date.
The Company also promises to make principal payments and interest on the
unpaid principal amount hereof from the date hereof until paid at the rates and
at the times which shall be determined in accordance with the provisions of the
Credit Agreement.
All payments of principal and interest in respect of this Note shall be
made in lawful money of the United States of America in same day funds at the
Payment Office. Until notified of the transfer of this Note, the Company shall
be entitled to deem the Lender or such person who has been so identified by the
transferor in writing to the Company as the holder of this Note, as the owner
and holder of this Note. The Lender and any subsequent holder of this Note
agrees that before disposing of this Note, or any part hereof, it will make a
notation hereon of all principal payments previously made hereunder of the date
to which interest hereon has been paid on the schedule attached hereto, if any;
PROVIDED, HOWEVER, that the failure to make notation of any payment made on this
Note shall not limit or otherwise affect the obligation of the Company hereunder
with respect to payments of principal or interest on this Note.
This Note is referred to in, and is entitled to the benefits of, the Credit
Agreement dated as of May 5, 1997 (the "CREDIT AGREEMENT") among the Company,
the lenders from time to time party thereto, and Bank of America National Trust
and Savings Association, as Agent (the "Agent"). The Credit Agreement, among
other things, (i) provides for the making of loans (the "LOANS") by the Lender
to the Company from time to time in an aggregate amount first above mentioned,
the indebtedness of the Company resulting from each such Loan being evidenced by
this Note, and (ii) contains provisions for acceleration of the maturity hereof
upon the happening of certain stated events and also for mandatory and optional
prepayments on account of principal hereof and certain principal payments prior
to the maturity hereof upon the terms and conditions therein specified.
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The terms of this Note are subject to amendment only in the manner provided
in the Credit Agreement.
No reference herein to the Credit Agreement and no provision of this Note
or the Credit Agreement shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of and interest on
this Note at the place, at the respective times, and in the currency herein
prescribed.
The Company promises to pay all costs and expenses, including reasonable
attorneys' fees, incurred in the collection and enforcement of this Note. The
Company hereby waives diligence, presentment, and protest, and except as
provided in the Credit Agreement, demand and notice of every kind and, to the
full extent permitted by law, the right to plead any statute of limitations as a
defense to any demand hereunder.
This Note shall be governed by, and construed in accordance with, the laws
of the state of New York without giving effect to its choice of law doctrine.
IN WITNESS WHEREOF, the Company has caused this Note to be executed and
delivered by its duly authorized officer, as of the date and place first above
written.
AIMCO/NHP Holdings, Inc.,
a Delaware corporation
By:
Name:
Its:
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EXHIBIT C
TO ACQUISITION SUB CREDIT AGREEMENT
NOTICE OF CONVERSION/CONTINUATION
__________________, 199___
Bank of America National Trust
and Savings Association, as Agent
CRESD #1357
555 South Flower Street, 6th Floor
Los Angeles, California 90071
Attn: Unit Manager
Re: Credit Agreement dated as of May 5, 1997(as the same may be amended,
modified or supplemented from time to time, the "Agreement"), by and among
AIMCO/NHP Holdings, Inc., a Delaware corporation (the "Company"), the
lenders from time to time party to the Agreement (the "Lenders"), BANK OF
AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as one of the Lenders,
SMITH BARNEY MORTGAGE CAPITAL GROUP, INC., as one of the Lenders, and BANK
OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Agent (the "Agent")
Ladies and Gentlemen:
Reference is made to the Agreement. Capitalized terms used in this
Notice of Conversion/Continuation without definition have the meanings specified
in the Agreement.
Pursuant to Section 2.04 of the Agreement, the Company hereby elects
to convert or continue the loans described in attached SCHEDULE 1 (the "Loans").
In connection therewith, the Company and the undersigned Responsible Officers of
the Company hereby certify that:
(1) REPRESENTATIONS AND WARRANTIES. All representations and
warranties of the Company contained in the Loan Documents, including those
contained in Article V of the Agreement, are true and correct as of the date
hereof and shall be true and correct in all material respects on the date of the
continuation/conversion of the Loan, both before and after giving effect to such
continuation/conversion;
(2) NO DEFAULT/EVENT OF DEFAULT. No Default or Event of Default
exists as of the date hereof or will result from the continuation/conversion of
the Loan; and
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(3) NO MATERIAL ADVERSE EFFECT. No act, omission, change or
event which has a Material Adverse Effect has occurred since the Closing Date.
AIMCO/NHP Holdings, Inc.,
a Delaware corporation
By:
Name:
Its:
By:
Name:
Its:
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SCHEDULE 1
to Notice of Conversion/Continuation
LOAN TO BE CONVERTED OR CONTINUED
A. All conversions and continuations must be of a Loan, or portion thereof, in
a principal amount of $1,000,000 or a multiple of $100,000 in excess
thereof.
B. Conversions/continuations to a LIBOR Loan under paragraphs (1) and (2)
below are not permitted if, after giving effect to thereto, (a) there would
be more than five (5) different LIBOR Loans in effect, or (b) the aggregate
outstanding principal amount of all LIBOR Loans would be reduced to be less
than $1,000,000.
(1) CONVERSION OF A BASE RATE LOAN INTO A LIBOR LOAN.
The following Base Rate Loan to a LIBOR Loan:
Amount: $
Requested Conversion Date:
(must be a Business Day at
least three
(3) Business Days after date
of notice)
Requested Interest Period:
(1, 2 or 3months)
(2) CONTINUATION OF A LIBOR LOAN INTO A SUBSEQUENT INTEREST PERIOD.
The following LIBOR Loan into a subsequent
Interest Period:
Amount: $
Last day of current Interest Period:
(must be a Business Day at
least three
(3) Business Days after date
of notice)
Requested Interest Period:
(1, 2 or 3 months)
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EXHIBIT D
PAYMENT GUARANTY
(ACQUISITION SUB FACILITY)
This Payment Guaranty ("Guaranty") is made as of May 5, 1997, by
APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland corporation (the
"REIT"), and AIMCO PROPERTIES, L.P., a Delaware limited partnership (the
"Operating Partnership") (each of the REIT and the Operating Partnership is
referred to herein individually and collectively as "Guarantor") in favor of
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION ("BofA"), as the agent
(in such capacity, the "Agent") for itself and the lenders ("Lenders") from time
to time party to the Acquisition Sub Credit Agreement (as hereinafter defined).
FACTUAL BACKGROUND
Guarantor is executing this Guaranty to induce the Lenders to make a
$76,000,000 loan facility available to AIMCO/NHP Holdings, Inc., a Delaware
corporation ("Acquisition Sub") in accordance with the Credit Agreement
(Acquisition Sub Facility) (the "Acquisition Sub Credit Agreement"), dated of
even date herewith, by and among Acquisition Sub, BofA, as Agent and as a
Lender, Smith Barney Mortgage Capital Group, Inc., as a Lender, and the other
Lenders from time to time party thereto. Capitalized terms used but not defined
herein shall have the meanings set forth in the Acquisition Sub Credit Agreement
or, if not defined therein, in the Operating Partnership Credit Agreement.
NOW THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, each Guarantor hereby agrees as
follows:
ARTICLE I
DEFINITIONS
1.01 DEFINED TERMS. As used herein, the following terms shall have
the meanings set forth below:
"AIMCO GROSS ASSET VALUE" means, as of any date, the total asset value
of the REIT, as determined in good faith by the Board of Directors of AIMCO in
accordance with Treasury Regulation Section 1.856-2(d)(3) and Code Section 856.
"BofA" means Bank of America National Trust and Savings Association,
other than in its capacity as the Agent under the Acquisition Sub Credit
Agreement.
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"COLLATERAL DOCUMENTS" means, collectively, (a) the Stock Pledge
Agreement and other similar agreements between any Guarantor or Common
Stockholder and the Lenders or the Agent for the benefit of the Lenders now or
hereafter delivered to the Lenders or the Agent pursuant to or in connection
with the transactions contemplated hereby, (b) all financing statements (or
comparable documents) now or hereafter filed in accordance with the UCC (or
comparable law) against any Guarantor or Common Stockholder as debtor in favor
of the Lenders or the Agent for the benefit of the Lenders as secured party, (c)
any other documents executed by any Guarantor or Common Stockholder at the
request of Agent and upon the recommendation of Agent's counsel or local counsel
in order to establish, perfect or protect any of the liens or security interests
granted in the Stock Pledge Agreement, and (d) any amendments, supplements,
modifications, renewals, replacements, consolidations, substitutions and
extensions of any of the foregoing.
"COMMON STOCKHOLDERS" means Terry Considine and Peter K. Kompaniez.
"CREDIT AGREEMENT EVENT OF DEFAULT" means an "Event of Default" as
defined in the Acquisition Sub Credit Agreement.
"EXCLUDED PROCEEDS" shall mean the sum of (i) all Net Issuance
Proceeds or Net Sale Proceeds received by the Operating Partnership or the REIT
prior to the Closing Date, (ii) all Net Issuance Proceeds to be received by the
REIT from those certain Stock offerings expected to be consummated by the REIT
on May 5, 1997, for 1,900,000 shares of Stock and on May 6, 1997, for 400,000
shares of Stock; and (iii) all loan proceeds disbursed under the Acquisition Sub
Credit Agreement, the Operating Partnership Credit Agreement or the Bridge Loan
Agreement.
"GUARANTOR DEFAULT" means any event or circumstance which, with the
giving of notice, the lapse of time, or both, would (if not cured or otherwise
remedied) constitute a Guarantor Event of Default.
"GUARANTOR EVENT OF DEFAULT" means any of the events or circumstances
specified in Section 8.01.
"GUARANTIED INDEBTEDNESS" means all Loans, and other Indebtedness,
advances, debts, liabilities, obligations, covenants and duties owed by the
Acquisition Sub to the Agent, any Lender, or any other Person required to be
indemnified under the Acquisition Sub Credit Agreement or any other Loan
Document, of any kind or nature, present or future, whether or not evidenced by
any note, guaranty or other instrument, whether or not for the payment of money,
whether arising by reason of an extension of credit, loan, guaranty,
indemnification or in any other manner, whether primary, secondary, direct or
indirect (including those acquired by assignment), absolute, fixed or
contingent, due or to become due, now existing or hereafter arising and however
acquired, and including without limitation, all obligations of the Acquisition
Sub to pay principal, interest, prepayment charges, breakage costs, late
charges,
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loan fees, and any other charges, fees and other sums, costs and expenses which
may due from time to time thereunder.
"NET SALE PROCEEDS" means, in respect of any Disposition of any
Property by the Operating Partnership, the REIT or any of their respective
Subsidiaries, the proceeds in cash or Cash Equivalents received by the Operating
Partnership, the REIT or any of their respective Subsidiaries upon or
substantially simultaneously with such Disposition, net of the direct costs of
such Disposition then payable by the recipient of such proceeds (excluding
amounts payable to the Operating Partnership, the REIT or any Affiliate of the
Operating Partnership or the REIT).
"OPERATING PARTNERSHIP CREDIT AGREEMENT" means that certain Amended
and Restated Credit Agreement (Secured Revolver-to-Term Facility) dated as of
May 5, 1997, by and among the Operating Partnership, BofA as the agent and a
lender and the other lenders named therein, as the same may be amended from time
to time. Notwithstanding the foregoing, for purposes of any incorporation
herein of any defined terms or any other provisions therein, such terms and
provisions shall be incorporated herein as such terms and provisions are set
forth in and in effect under said agreement on the date hereof, and as the same
may be amended from time to time with the consent of the Requisite Lenders
hereunder (or, if such provision would require the consent of a greater
percentage of the Lenders hereunder, then such greater percentage). Except as
otherwise provided herein, if any provision of the Operating Partnership Credit
Agreement is incorporated herein by reference, such provision shall be, subject
to the foregoing, as if fully set forth herein, but with all references therein
to the "Agent", any "Lender", the "Lenders" and the "Requisite Lenders" having
the meanings of those terms as set forth in this Guaranty.
"ORGANIZATIONAL CHART" means the organizational chart attached as
SCHEDULE 5.06 of the Operating Partnership Credit Agreement showing the REIT,
the Operating Partnership, all of their Subsidiaries and their interests in the
Acquisition Sub, the Management Entities and the Unconsolidated Partnerships, as
the same may be modified pursuant hereto.
"SBI" means Smith Barney Mortgage Capital Group, Inc.
1.02 OTHER DEFINITIONAL PROVISIONS.
(a) DEFINED TERMS. Unless otherwise specified herein or
therein, all terms defined in this Guaranty shall have the defined meanings when
used in any certificate or other document made or delivered pursuant hereto.
The meaning of defined terms shall be equally applicable to the singular and
plural forms of the defined terms. Terms (including uncapitalized terms) not
otherwise defined herein but defined in the UCC shall have the meanings set
forth therein.
(b) THE AGREEMENT. The words "hereof", "herein", "hereunder"
and words of similar import when used in this Guaranty shall refer to this
Guaranty as a whole and not to any particular provision of this Guaranty; and
section, schedule and exhibit references are to this Guaranty unless otherwise
specified.
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(c) CERTAIN COMMON TERMS.
(i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other writings,
however evidenced.
(ii) The term "including" is not limiting and means
"including without limitation."
(iii) The term "ratably" means, at any time that Loans may be
outstanding, in accordance with the amount of the outstanding Loans of the
respective Lenders; and, at any time that no Loans are outstanding, in
accordance with the outstanding Commitments of the respective Lenders.
(d) PERFORMANCE; TIME. Whenever any performance obligation
hereunder (other than a payment obligation) is stated to be due or required to
be satisfied on a day other than a Business Day, such performance shall be made
or satisfied on the next succeeding Business Day. In the computation of periods
of time from a specified date to a later specified date, the word "from" means
"from and including"; the words "to" and "until" each mean "to but excluding,"
and the word "through" means "to and including". If any provision of this
Guaranty refers to any action taken or to be taken by any Person, or which such
Person is prohibited from taking, such provision shall be interpreted to
encompass any and all means, direct or indirect, of taking, or not taking, such
action.
(e) CONTRACTS. Unless otherwise expressly provided herein,
references to agreements and other contractual instruments shall be deemed to
include all subsequent amendments and other modifications thereto, but only to
the extent such amendments and other modifications are not prohibited by the
terms of any Loan Document.
(f) LAWS. References to any statute or regulation are to be
construed as including all statutory and regulatory provisions consolidating,
amending or replacing the statute or regulation.
(g) CAPTIONS. The captions and headings of this Guaranty are for
convenience of reference only and shall not affect the construction of this
Guaranty.
(h) INDEPENDENCE OF PROVISIONS. The parties acknowledge that this
Guaranty and other Loan Documents may use several different limitations, tests
or measurements to regulate the same or similar matters, and that such
limitations, tests and measurements are cumulative and must each be performed,
except as expressly stated to the contrary in this Guaranty.
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1.03 ACCOUNTING PRINCIPLES.
(a) GAAP. Unless the context otherwise clearly requires, all
accounting terms not expressly defined herein shall be construed, and all
financial computations required under this Guaranty shall be made, in accordance
with GAAP, consistently applied.
(b) FISCAL YEAR; QUARTER. References herein to "fiscal year"
and "fiscal quarter" refer to such fiscal periods of the Operating Partnership.
ARTICLE II
GUARANTY PROVISIONS
2.01. GUARANTY OF LOAN.
(a) Guarantor absolutely, unconditionally and irrevocably
guaranties to Agent and the Lenders the full payment and performance of the
Guarantied Indebtedness and unconditionally agrees to pay to Agent and the
Lenders the full amount of the Guarantied Indebtedness in accordance with this
Guaranty. This is a guaranty of payment, not of collection.
(b) If Acquisition Sub (i) fails to pay the Guarantied
Indebtedness in full on the Scheduled Maturity Date thereof; (ii) fails to pay
the Guarantied Indebtedness in full within ten (10) Business Days after
acceleration of maturity thereof and demand for payment thereof by Agent to
Acquisition Sub, other than as described in clause (iii) below, or (iii) fails
to pay the Guarantied Indebtedness in full immediately upon acceleration of
maturity thereof as a result of any Credit Agreement Event of Default described
in Section 8.01(f) or 8.01(g) of the Acquisition Sub Credit Agreement (but only
in the case of the occurrence of any of the events described therein with
respect to the Acquisition Sub, the Operating Partnership or the REIT),
Guarantor shall, in lawful money of the United States, pay to Agent and the
Lenders, on demand, all sums due and owing on the Guarantied Indebtedness. If
the amount outstanding under the Guarantied Indebtedness is determined by a
court of competent jurisdiction or in any arbitration proceeding described in
Section 10.17 of the Acquisition Sub Credit Agreement, that determination shall
be conclusive and binding on Guarantor, regardless of whether Guarantor was a
party to the proceeding in which the determination was made or not.
2.02 REVIVAL AND REINSTATEMENT. If Agent or any Lender is required to
pay, return or restore to Acquisition Sub or any other person any amounts
previously paid on the Guarantied Indebtedness because of any Insolvency
Proceeding of Acquisition Sub or any other reason, the obligations of Guarantor
shall be reinstated and revived and the rights of Agent and such Lender shall
continue with regard to such amounts, all as though they had never been paid.
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2.03 ADDITIONAL AND INDEPENDENT OBLIGATIONS. Guarantor's obligations under
this Guaranty are in addition to its obligations under any future guaranties,
each of which shall remain in full force and effect until it is expressly
modified or released in a writing signed by Agent and consented to by the
Lenders. Guarantor's obligations under this Guaranty are independent of those
of Acquisition Sub on the Guarantied Indebtedness. Except as provided in
Section 2.01(b)(i), Agent or the Lenders may bring a separate action, or
commence a separate arbitration proceeding, against Guarantor without first
proceeding against Acquisition Sub, any other Guarantor or person or any
security that Agent or any Lender may hold, and without pursuing any other
remedy. None of Agent's or any Lender's rights under this Guaranty shall be
exhausted by any action by Agent or any Lender until the Guarantied Indebtedness
has been paid and performed in full in cash.
2.04 OBLIGATIONS IN RESPECT OF RESTRICTED CASH.
(a) If at any time (i) the REIT or the Operating Partnership shall
make any public or private issuance of Stock (or partnership units) for cash or
Cash Equivalents (other than for Excluded Proceeds) or (ii) incur Indebtedness
for borrowed money (other than for Excluded Proceeds) or (iii) the REIT, the
Operating Partnership or any Subsidiary (other than the Acquisition Sub) shall
make any Disposition of any Property for cash or Cash Equivalents (other than
for Excluded Proceeds), the REIT shall (A) notify the Agent of such issuance,
incurrence or Disposition (including the amount of the estimated Net Issuance
Proceeds or Net Sale Proceeds thereof) and (B) immediately upon the receipt by
the Operating Partnership or the REIT of such Net Issuance Proceeds or receipt
by the Operating Partnership, the REIT or such Subsidiary of such Net Sale
Proceeds, the REIT shall cause such Net Issuance Proceeds and Net Sale Proceeds,
to be contributed to the Operating Subsidiary, and the Operating Partnership
shall deposit, as collateral for the obligations of all Guarantors under this
Guarantor, such Net Issuance Proceeds and Net Sale Proceeds, whether received by
it directly or by contribution from the REIT, (together with all interest and
earnings thereon, "Restricted Cash"), into an interest bearing deposit account
(the "Restricted Cash Account") established with and pledged to the Agent for
the ratable benefit of the Lenders pursuant to documentation in form and
substance satisfactory to the Agent and the Requisite Lenders, until the balance
in the Restricted Cash Account shall equal the outstanding amount of the
Guarantied Indebtedness together with all interest accrued but unpaid thereon
and all interest reasonably projected by the Agent to accrue thereon through the
Maturity Date of the Guarantied Indebtedness, whereupon no further such deposits
shall be required to be so made.
(b) The Operating Partnership hereby grants a perfected first
priority security interest in favor of the Agent for the ratable benefit of the
Lenders in all Restricted Cash and in the Restricted Cash Account and all sums
at any time held, deposited or invested therein, together with any interest or
other earnings thereon, and all proceeds thereof, whether accounts, general
intangibles, chattel paper, deposit accounts, instruments, documents or
securities, together with all rights of a secured party with respect thereto
(even if no further documentation is requested by the Agent or the Requisite
Lenders or executed by the Operating Partnership with respect thereto). The
Operating Partnership shall
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execute such additional documents as the Agent or the Requisite Lenders in their
discretion may require and shall provide all other documents requested by the
Agent or the Requisite Lenders to evidence or perfect the Agent's first priority
security interest in such Restricted Cash Account and to grant to the Agent
dominion and control over the Restricted Cash Account. The Restricted Cash
Account shall be held in the name of the Operating Partnership as debtor, with
the Agent as secured party for the ratable benefit of the Lenders.
(c) All interest earned on the Restricted Cash Account shall be
retained in the Restricted Cash Account subject to the Operating Partnership's
withdrawal rights set forth herein. The Operating Partnership shall treat all
interest earned on the Restricted Cash Account as its income for federal and
state income tax purposes.
(d) Until the Guarantied Indebtedness shall have been paid in full,
no Restricted Cash shall be withdrawn from the Restricted Cash Account by the
Operating Partnership except for purposes of contributing capital to the
Acquisition Sub in amounts necessary to satisfy the prepayment obligations of
the Acquisition Sub under Section 2.06 of the Acquisition Sub Credit Agreement,
and provided that the amounts so contributed are actually used for such
purposes.
(e) Upon the occurrence and during the continuation of a Guarantor
Event of Default, and provided that Agent shall have given to the Acquisition
Sub, pursuant to and to the extent required by Section 2.01(b) of this Guaranty,
the 10 Business Days notice referred to therein, the Agent may (and, upon the
instruction of the Requisite Lenders, shall):
(i) without any advertisement or notice to or authorization from
the Operating Partnership or any other Person (all of which advertisements,
notices and/or authorizations are hereby expressly waived), withdraw, sell or
otherwise liquidate all Restricted Cash and apply the proceeds thereof to the
unpaid obligations of all Guarantors under this Guaranty in such order as the
Requisite Lenders may elect in their sole discretion, without liability for any
loss (including as a result of any sale or liquidation of any account including
such Restricted Cash before maturity) and the Operating Partnership and the REIT
hereby consents to any such withdrawal and application as a commercially
reasonable disposition of such Restricted Cash and agrees that such withdrawal
shall not result in satisfaction of the obligations of all Guarantors under this
Guaranty except to the extent the amounts are applied to such sums;
(ii) without any advertisement or notice to or authorization from
the REIT (all of which advertisements, notices and/or authorizations are hereby
expressly waived), notify any account debtor on any such Restricted Cash to make
payment directly to the Agent;
(iii) foreclose upon all or any portion of such Restricted Cash or
otherwise enforce the Agent's security interest in any manner permitted by law
or provided for in this Agreement;
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(iv) sell or otherwise dispose of all or any portion of such
Restricted Cash at one or more public or private sales, whether or not such
Restricted Cash is present at the place of sale, for cash or credit or future
delivery, on such terms and in such manner as the Requisite Lenders may
determine;
(v) recover from the Operating Partnership all costs and
expenses, including, without limitation, reasonable attorneys' fees, incurred or
paid by the Agent in exercising any right, power or remedy provided by this
section or by law; and
(vi) exercise any other right or remedy available to the Agent or
the Lenders under applicable law or in equity.
ARTICLE III
FURTHER PROVISIONS IN RESPECT OF THE GUARANTY
3.01 RIGHTS OF AGENT AND THE LENDERS. Guarantor authorizes Agent or
any Lender to perform any or all of the following acts at any time in its sole
discretion, all without notice to Guarantor and without affecting Guarantor's
obligations under this Guaranty:
(a) Agent or the Requisite Lenders may alter any terms of the
Guarantied Indebtedness or any part of it, including renewing, compromising,
extending or accelerating, or otherwise changing the time for payment of, or
increasing or decreasing the rate of interest on, the Guarantied Indebtedness or
any part of it.
(b) Agent or any Lender may take and hold security for the Guarantied
Indebtedness or this Guaranty, accept additional or substituted security for
either, and subordinate, exchange, enforce, waive, release, compromise, fail to
perfect and sell or otherwise dispose of any such security.
(c) Upon any Credit Agreement Event of Default or Guarantor Event of
Default, Agent or any Lender may direct the order and manner of any sale of all
or any part of any security now or later to be held for the Guarantied
Indebtedness or this Guaranty, respectively, and Agent or any Lender may also
bid at any such sale.
(d) Agent or any Lender may apply any payments or recoveries from
Acquisition Sub, Guarantor or any other source, and any proceeds of any
security, to Acquisition Sub's obligations under the Loan Documents in such
manner, order and priority as Agent or such Lender may elect, whether or not
those obligations are guarantied by this Guaranty or secured at the time of the
application.
(e) Agent or any Lender may substitute, add or release any one or
more Guarantors, other guarantors or endorsers.
(f) In addition to the Guarantied Indebtedness, Agent or any Lender
may extend other credit to Acquisition Sub or any other Guarantor, and may
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take and hold security for the credit so extended, all without affecting
Guarantor's liability under this Guaranty.
3.02 GUARANTY TO BE ABSOLUTE. Guarantor expressly agrees that
until the Guarantied Indebtedness is paid and performed in full and each and
every term, covenant and condition of this Guaranty is fully performed,
Guarantor shall not be released by or because of:
(a) Any act or event which might otherwise discharge, reduce,
limit or modify Guarantor's obligations under this Guaranty;
(b) Any waiver, extension, modification, forbearance, delay or
other act or omission of Agent or any Lender, or its failure to proceed
promptly or otherwise as against Acquisition Sub, Guarantor or any security;
(c) Any action, omission or circumstance which might increase the
likelihood that Guarantor may be called upon to perform under this Guaranty
or which might affect the rights or remedies of Guarantor as against
Acquisition Sub;
(d) Any dealings occurring at any time between Acquisition Sub
and Agent or any Lender, whether relating to the Guarantied Indebtedness or
otherwise; or
(e) Any action of Agent or any Lender described in Section 3.01
above.
Guarantor hereby acknowledges that absent this Section 3.02,
Guarantor might have a defense to the enforcement of this Guaranty as a
result of one or more of the foregoing acts, omissions, agreement, waivers or
matters. Guarantor hereby expressly waives and surrenders any defense to its
liability under this Guaranty based upon any of the foregoing acts,
omissions, agreements, waivers or matters. It is the purpose and intent of
this Guaranty that the obligations of Guarantor under it shall be absolute
and unconditional under any and all circumstances.
ARTICLE IV
WAIVERS AND SUBORDINATION BY GUARANTOR
4.01 GUARANTOR'S WAIVERS. Guarantor waives:
(a) All statutes of limitations as a defense to any action or
proceeding brought against Guarantor by Agent or any Lender, to the fullest
extent permitted by law;
(b) Except as expressly provided in Section 2.01(b)(i), any right
it may have to require Agent or any Lender to proceed against Acquisition
Sub,
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proceed against or exhaust any security held from Acquisition Sub, or pursue
any other remedy in Agent's or any Lender's power to pursue;
(c) Any defense based on any claim that Guarantor's obligations
exceed or are more burdensome than those of Acquisition Sub;
(d) Any defense based on: (i) any legal disability of Acquisition
Sub, (ii) any release, discharge, modification, impairment or limitation of
the liability of Acquisition Sub to Agent or any Lender from any cause,
whether consented to by Agent or any Lender or arising by operation of law or
from any Insolvency Proceeding and (iii) any rejection or disaffirmance of
the Guarantied Indebtedness, or any part of it, or any security held for it,
in any such Insolvency Proceeding;
(e) Any defense based on any action taken or omitted by Agent or
any Lender in any Insolvency Proceeding involving Acquisition Sub, including
any election to have Agent's or that Lender's claim allowed as being secured,
partially secured or unsecured, any extension of credit by Lender to
Acquisition Sub in any Insolvency Proceeding, and the taking and holding by
Agent or any Lender of any security for any such extension of credit;
(f) All presentments, demands for performance, notices of
nonperformance, protests, notices of protest, notices of dishonor, notices of
acceptance of this Guaranty and of the existence, creation, or incurring of
new or additional indebtedness, and demands and notices of every kind except
for any demand or notice by Agent or any Lender to Guarantor expressly
provided for in Section 2.01;
(g) Any defense based on or arising out of any defense that
Acquisition Sub may have to the payment or performance of the Guarantied
Indebtedness or any part of it; and
(h) Any defense based on or arising out of any action of Agent or
any Lender described in Article III above.
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4.02 WAIVERS OF SUBROGATION AND OTHER RIGHTS.
(a) During the existence of any Credit Agreement Event of
Default, Agent or any Lender, without prior notice to or consent of
Guarantor, may elect to: (i) foreclose either judicially or nonjudicially
against any security it may hold for the Guarantied Indebtedness, (ii) accept
a transfer of any such security in lieu of foreclosure, (iii) compromise or
adjust the Guarantied Indebtedness or any part of it or make any other
accommodation with Acquisition Sub or Guarantor, or (iv) exercise any other
remedy against Acquisition Sub or any security. No such action by Agent or
any Lender shall release or limit the liability of Guarantor, who shall
remain liable under this Guaranty after the action, even if the effect of the
action is to deprive Guarantor of any subrogation rights, rights of
indemnity, or other rights to collect reimbursement from Acquisition Sub for
any sums paid to Agent or any Lender, whether contractual or arising by
operation of law or otherwise. Guarantor expressly agrees that under no
circumstances shall it be deemed to have any right, title, interest or claim
in or to any property to be held by Agent or any Lender or any third party
after any foreclosure or transfer in lieu of foreclosure of any security for
the Guarantied Indebtedness.
(b) Regardless of whether Guarantor may have made any payments to
Lender, Guarantor hereby absolutely, irrevocably and unconditionally, now and
forever, waives, releases and covenants not to sue Acquisition Sub, any
shareholder thereof or any other Guarantor in respect of: (i) all rights of
restitution, subrogation, exoneration, indemnification and contribution, all
rights to collect reimbursement and all other rights, howsoever denominated,
to recover from Acquisition Sub, any shareholder thereof or any Guarantor any
sums paid to Agent or any Lender whether pursuant hereto or otherwise paid on
the Guarantied Indebtedness, and any other rights arising from the existence,
payment, performance or enforcement of Guarantor's obligations under this
Guaranty or any Collateral Document, (ii) all rights to enforce any remedy
that the Agent or any Lender may have against Acquisition Sub, (iii) all
rights to participate in any security now or later to be held by Agent or any
Lender for the Guarantied Indebtedness, and (iv) all rights to require
Acquisition Sub to perform the Guarantied Indebtedness; in each case whether
now existing or hereafter arising and whether contractual or arising in
equity, by statute, common law or otherwise by operation of law (including
the United States Bankruptcy Code or any successor or similar statute) or
otherwise. The foregoing waivers, releases and covenants are a material part
of the consideration to the Lenders for extending the credit under the
Acquisition Sub Credit Agreement to the Acquisition Sub and may be enforced
by and inure to the benefit of Agent, each Lender, Acquisition Sub, its
shareholders and each other Guarantor from time to time.
(c) Guarantor waives all rights and defenses arising out of an
election of remedies by the Agent or any Lender, even though that election of
remedies may affect Guarantor's rights of subrogation and reimbursement
against the Acquisition Sub by the operation of law or otherwise.
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4.03 INFORMATION REGARDING BORROWER. Before signing this
Guaranty, Guarantor investigated the financial condition and business
operations of Acquisition Sub and such other matters as Guarantor deemed
appropriate to assure itself of Acquisition Sub's ability to discharge its
obligations under the Loan Documents. Guarantor assumes full responsibility
for that due diligence, as well as for keeping informed of all matters which
may affect Acquisition Sub's ability to pay and perform its obligations to
the Agent and the Lenders. Neither Agent nor any Lender has any duty to
disclose to Guarantor any information which such party may have or receive
about Acquisition Sub's financial condition, business operations, or any
other circumstances bearing on its ability to perform.
4.04 SUBORDINATION. Any rights of Guarantor, whether now existing
or later arising, to receive payment on account of any indebtedness
(including interest) owed to it by Acquisition Sub or to receive any payment
from Acquisition Sub shall at all times be subordinate as to lien and time of
payment and in all other respects to the full and prior repayment of the
Guarantied Indebtedness. Guarantor shall not be entitled to enforce or
receive payment of any sums hereby subordinated until the Guarantied
Indebtedness has been paid and performed in full and any such sums received
in violation of this Guaranty shall be received by Guarantor in trust for the
Agent and the Lenders.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
Guarantor represents and warrants to the Agent and each Lender that:
5.01 EXISTENCE AND POWER. Guarantor:
(a) ORGANIZATION. Is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization;
(b) POWER AND AUTHORITY. Has the power and authority and all
governmental licenses, authorizations, consents and approvals to own its
Properties, to carry on its business and to execute, deliver, and perform its
obligations under, this Guaranty, the Collateral Documents to which it is a
party and the Organizational Documents of the Acquisition Sub to which it is
a party;
(c) DUE QUALIFICATION. Is duly qualified as a foreign
corporation, partnership, trust or other organization, and licensed and in
good standing under the laws of each jurisdiction where its ownership, lease
or operation of its Properties or the conduct of its business requires such
qualification; and
(d) COMPLIANCE WITH LEGAL REQUIREMENTS. Is in compliance with
all Requirements of Law applicable to it.
5.02 AUTHORIZATION; NO CONFLICT. The execution, delivery and
performance by Guarantor of this Guaranty, any Collateral Document and the
Organi-
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zational Documents of the Acquisition Sub to which such Person is party, have
been duly authorized by all necessary partnership, corporate or other
organizational action, and do not and will not:
(a) ORGANIZATIONAL DOCUMENTS. Contravene the terms of any of
such Person's Organizational Documents;
(b) CONTRACTUAL OBLIGATIONS. Conflict with, or result in any
breach or contravention of, or the creation of any Lien (other than pursuant
to the Collateral Documents) under, any document evidencing any Contractual
Obligation to which such Person is a party or any order, injunction, writ or
decree of any Governmental Authority to which such Person or its Properties
are subject; or
(c) REQUIREMENTS OF LAW. Violate any material Requirement of Law
applicable to it.
5.03 GOVERNMENTAL AUTHORIZATION. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority (except for recordings in connection with the Liens
granted to the Agent under the Collateral Documents) is necessary or required
in connection with the execution, delivery or performance by, or enforcement
against, Guarantor of this Guaranty, any of the Collateral Documents or the
Organizational Documents of the Acquisition Sub.
5.04 BINDING EFFECT. This Guaranty and each Collateral Document
to which Guarantor is a party constitute the legal, valid and binding
obligations of such Person, enforceable against such Person in accordance
with their respective terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, or similar laws affecting the enforcement
of creditors' rights generally or by equitable principles relating to
enforceability.
5.05 LITIGATION. Except as specifically disclosed in SCHEDULE
5.05 of the Operating Partnership Credit Agreement, there are no actions,
suits, proceedings, claims or disputes pending, or to the Knowledge of the
REIT, threatened or contemplated, at law, in equity, in arbitration or before
any Governmental Authority, against Guarantor, any Management Entity, any of
their Subsidiaries or any of their respective Properties, which (a) purport
to affect or pertain to this Guaranty, or any Collateral Document, or any of
the transactions contemplated hereby or thereby, or (b) if determined
adversely to any such Person, would reasonably be expected to have a Material
Adverse Effect. No injunction, writ, temporary restraining order or any other
order of any nature has been issued by any court or other Governmental
Authority purporting to enjoin or restrain the execution, delivery and
performance of this Guaranty or any Collateral Document, or directing that
the transactions provided for herein or therein not be consummated as herein
or therein provided.
5.06 SUBSIDIARIES; INTERESTS IN OTHER ENTITIES; CHANGES IN ORGANIZATIONAL
STRUCTURE. Except for the NHP Interests, neither the Operating Partnership, nor
the REIT, nor any of their respective Subsidiaries has any interest in any
corporation,
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partnership or other entity, except as disclosed in the Organizational Chart
and except for Subsidiaries or Unconsolidated Partnerships hereafter formed
or acquired in compliance with Section 7.07 and except for changes permitted
under Sections 7.06, 7.07 and 7.08 hereof.
5.07 FINANCIAL CONDITION. All financial statements delivered by
the REIT hereunder: (a) were prepared in accordance with GAAP consistently
applied throughout the period covered thereby, except as otherwise expressly
noted therein; and (b) are complete, accurate and fairly present the
financial condition of the REIT as of the dates thereof and results of
operations for the periods covered thereby.
5.08 REGULATED ENTITIES. No Guarantor is (a) an "investment
company" within the meaning of the Investment Operating Partnership Act of
1940; or (b) subject to regulation under the Public Utility Holding Operating
Partnership Act of 1935, the Federal Power Act, the Interstate Commerce Act,
any state public utilities code, or any other Federal or state statute or
regulation limiting its ability to incur Indebtedness. Each Guarantor has,
to the extent required under Regulation G of the Federal Reserve Board,
registered with such Board. The incurrence by any Guarantor of its
obligations hereunder does not violate Regulations G, U or X of said Board.
5.09 REIT AND TAX STATUS; STOCK EXCHANGE LISTING. The REIT
currently has REIT Status and has maintained REIT Status on a continuous
basis since its formation. The shares of common Stock of the REIT are listed
on the NYSE.
5.10 NO GUARANTOR DEFAULT. No Guarantor Default or Guarantor
Event of Default exists or would result from the incurring of any obligations
hereunder by the Guarantors. None of the Guarantors is in default under or
with respect to any Contractual Obligation in any respect which, individually
or together with all such other defaults, would reasonably be expected to
have a Material Adverse Effect.
5.11 [INTENTIONALLY DELETED].
5.12 FULL DISCLOSURE. None of the representations or warranties
made by the Guarantors herein or in the Collateral Documents as of the date
such representations and warranties are made or deemed made, and none of the
statements contained in each exhibit, report, statement or certificate
furnished by or on behalf of any such Person in connection with the
Collateral Documents, contains any untrue statement of a material fact or
omits any material fact required to be stated therein or necessary to make
the statements made therein, in light of the circumstances under which they
are made, not misleading. There is no fact, to the Knowledge of the REIT,
which materially and adversely affects the business, operations, properties,
assets or condition (financial or otherwise) of the Operating Partnership,
the REIT, the Management Entities, or any of the Subsidiaries which has not
been disclosed herein or in other documents, certificates and statements
furnished to the Agent and each Lender hereunder or pursuant hereto. The
copies of all documents delivered to the Agent and/or the Lenders from time
to time in connection with this Guaranty are and shall be
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true and complete copies of the originals thereof and have not been or shall
not be amended except as disclosed to the Agent and/or the Lenders, as
applicable.
5.13 REPRESENTATIONS IN THE ACQUISITION SUB CREDIT AGREEMENT. All
of the representations and warranties of the Acquisition Sub in the
Acquisition Sub Credit Agreement are true and correct.
ARTICLE VI
AFFIRMATIVE COVENANTS
As further consideration for this Guaranty, the REIT covenants and
agrees that, so long as the Guarantied Indebtedness shall remain unpaid or
unsatisfied, unless the Requisite Lenders waive compliance in writing:
6.01 FINANCIAL INFORMATION. The REIT shall deliver to the Agent
and to each Lender, in form and detail satisfactory to the Agent and the
Lenders;
(a) ANNUAL FINANCIAL STATEMENTS. As soon as available, but not
later than ninety (90) days after the end of each fiscal year, a copy of the
audited consolidated balance sheet of the REIT as of the end of such year and
the related consolidated statements of operations, stockholders' equity
(where applicable) and cash flows for such fiscal year, setting forth in each
case in comparative form the figures for the previous year, including the
REIT's SEC Form 10K for such period, and accompanied by the unqualified
opinion of a nationally-recognized independent public accounting firm stating
that such consolidated financial statements present fairly the financial
position for the periods indicated, in conformity with GAAP, and applied on a
basis consistent with prior years;
(b) QUARTERLY FINANCIAL STATEMENTS. As soon as available, but
not later than forty-five (45) days after the end of each of the first three
(3) fiscal quarters of each year, a copy of the unaudited consolidated
balance sheet of the REIT as of the end of such quarter and the related
consolidated statements of operations, stockholders' equity (where
applicable) and cash flows for the period commencing on the first day and
ending on the last day of such quarter, including the REIT's SEC Form 10Q for
such period, and accompanied by a certificate signed by at least two (2)
Responsible Officers stating that such financial statements are complete and
correct and present fairly the financial position for the periods indicated,
in conformity with GAAP for interim financial statements, and applied on a
basis consistent with prior quarters; and
(c) FINANCIAL STATEMENTS AND OTHER INFORMATION FOR NHP. Until
the NHP Combination Date, within five (5) days after the receipt thereof by the
Acquisition Sub, the REIT, the Operating Partnership or any Subsidiary thereof,
such periodic, quarterly, annual and special financial statements, reports,
proxy statements and other information as may be received by any such Person in
its capacity as a shareholder in NHP, and within five (5) days after the
delivery of any thereof by any such Person, copies of any reports, proxy
statements, tender or exchange offers or
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other information provided by such Person to NHP or to the shareholders
thereof to the SEC in respect of such Person's ownership of or intentions or
proposals with respect to NHP.
6.02 CERTIFICATES; OTHER INFORMATION. The REIT shall furnish to
the Agent with sufficient copies for each Lender:
(a) ACCOUNTING CERTIFICATES. Concurrently with the delivery of
the financial statements referred to in Section 6.01(a), a certificate of the
independent certified public accountants reporting on such financial
statements stating that, in making the examination necessary therefor, no
knowledge was obtained of any Guarantor Default or Guarantor Event of
Default, except as specified in such certificate;
(b) OFFICERS' CERTIFICATES. Concurrently with the delivery of
the financial statements referred to in Sections 6.01(a) and 6.01(b) above, a
compliance certificate, substantially in the form of EXHIBIT A, signed by at
least two (2) Responsible Officers (i) stating that, to the best of such
officers' knowledge, each of the REIT, the Operating Partnership and their
respective Subsidiaries, during such period, has observed or performed all of
its covenants and other agreements, and satisfied every condition contained
in this Guaranty and the other Collateral Documents to be observed, performed
or satisfied by it, and that such officers have no knowledge of any Guarantor
Default or Guarantor Event of Default except as specified in such
certificate; and (ii) showing in detail the calculations supporting such
statement for such period in respect of the covenants in Section 7.09 and
7.15;
(c) PERIODIC REPORTS AND FILINGS; PRESS RELEASES. Promptly
after the same are sent or released, copies of all reports, proxy statements and
financial statements which the REIT sends to its shareholders and copies of all
press releases made by the Operating Partnership and the REIT, promptly after
the same are filed, copies of all financial statements and regular, periodical
or special reports which the REIT may make to, or file with, the SEC or any
successor or similar Governmental Authority and promptly after the same are
received, copies of any reports prepared by analysts for or with respect to the
Operating Partnership or the REIT;
(d) ACCOUNTANTS' REPORTS. Promptly after the same are received,
copies of all reports which the independent certified public accountants of
the Operating Partnership or the REIT deliver to the Operating Partnership or
the REIT; and
(e) OTHER INFORMATION. Promptly, revisions to the Organizational
Chart and such additional financial and other information as the Agent may
from time to time reasonably request.
6.03 NOTICES. The REIT shall promptly (and in no event later than
ten (10) days after the REIT has reason to know of the same) notify the Agent
and each Lender of:
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(a) GUARANTOR DEFAULT; GUARANTOR EVENT OF DEFAULT. The
occurrence of any Guarantor Default or Guarantor Event of Default, and of the
occurrence or existence of any event or circumstance that is likely to become
a Guarantor Default or Guarantor Event of Default. Each notice under this
Section 6.03(a) shall describe with particularity the clause or provision of
this Guaranty or other Collateral Documents that have been breached or
violated;
(b) LITIGATION. The commencement of, or any material development
in, any litigation, arbitration or proceeding affecting the REIT, the
Operating Partnership, any Management Entity or any Subsidiary (i) in which
the amount of damages claimed is $2,000,000 or more, (ii) in which injunctive
or similar relief is sought and which, if adversely determined, would
reasonably be expected to have a Material Adverse Effect, (iii) in which the
relief sought is an injunction or other stay of the performance of any Loan
Document or (iv) required to be reported to the SEC pursuant to the Exchange
Act;
(c) ENVIRONMENTAL MATTERS. (i) Any and all material enforcement,
cleanup, removal or other governmental or regulatory actions instituted,
completed or threatened against the Operating Partnership, the REIT, any
Management Entity or any of their Subsidiaries or any of their Properties
pursuant to any Environmental Laws, (ii) all other material Environmental
Claims, and (iii) any environmental or similar condition on any real property
adjoining or in the vicinity of the Properties of the Operating Partnership,
the REIT, any Management Entity or any of their Subsidiaries that could
reasonably be anticipated to cause such Properties (or any portion thereof)
to be subject to any material restrictions on ownership, occupancy,
transferability or use under any Environmental Laws;
(d) ERISA. The occurrence of any of the following ERISA events
affecting the REIT or any member of its Controlled Group, together with a
copy of any notice with respect to such event that may be required to be
filed with any Governmental Authority and any notice delivered by a
Governmental Authority to the REIT or any member of its Controlled Group with
respect to such event:
(i) an ERISA Event where the aggregate liability is likely to
exceed $1,000,000;
(ii) the adoption of any new Plan that is subject to Title IV
of ERISA or Section 412 of the Code by any member of the Controlled Group;
(iii) the adoption of any amendment to a Plan that is subject
to Title IV of ERISA or Section 412 of the Code, if such amendment results in
a material increase in benefits or unfunded liabilities; or
(iv) the commencement of contributions by any member of the
Controlled Group to any Plan that is subject to Title IV of ERISA or Section
412 of the Code;
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(e) MATERIAL ADVERSE EFFECTS. The occurrence of any act,
omission, change or event which has a Material Adverse Effect subsequent to
the date of the most recent audited financial statements of the Operating
Partnership and the REIT delivered to the Agent pursuant to Section 6.01(a);
(f) MATERIAL TRANSACTIONS OR OCCURRENCES. The consummation of
any material Investment or Disposition, of any material issuance of Stock of
the REIT (other than upon the tender of any Units for redemption or upon the
conversion of any shares of the REIT's Class B Common Stock into shares of
the REIT's Class A Common Stock) or Units, of any incurrence of material
Indebtedness or of any other material transaction entered into, or the
commencement of any material Development Activity, by the Operating
Partnership, the REIT, any Management Entity or any of their Subsidiaries,
including, without limitation, any material occurrences or developments
(including, without limitation, the satisfaction of applicable conditions
precedent) in connection with the transactions contemplated by the NHP Merger
Agreement; and any change in any executive officer of the REIT.
(g) FAILURE TO QUALIFY AS A REIT. The failure of the REIT to
maintain REIT Status or of any Subsidiary of the REIT to maintain its status
as a qualified REIT subsidiary under the Code;
(h) ACCOUNTING CHANGES. Any material change in the Operating
Partnership's or the REIT's accounting policies or financial reporting
practices; and
(i) CROSS-DEFAULT. Any notice received by the Operating
Partnership, the REIT, any Management Entity or any of their Subsidiaries of
any default under any Indebtedness or Guaranty Obligation described in
Section 8.01(e). Each notice pursuant to this section shall be accompanied
by a written statement, signed by at least two (2) Responsible Officers,
setting forth details of the occurrence referred to therein and the
provisions of this Guaranty affected, and stating what action the Operating
Partnership or the REIT proposes to take with respect thereto; and
(j) CERTAIN TRANSACTIONS.
(i) On July 3, 1997, a notice setting forth the AIMCO Gross
Asset Value as of June 30, 1997; the amount of any increase in the AIMCO
Gross Asset Value , if any, during the period from March 31, 1997 to June 30,
1997 (other than any increase resulting from Excluded Proceeds); and the sum
of the Net Issuance Proceeds plus Net Sale Proceeds (other than Excluded
Proceeds) received during such period.
(ii) On October 3, 1997, a notice setting forth the AIMCO
Gross Asset Value as of September 30, 1997; the amount of any increase in
AIMCO Gross Asset Value, if any, from March 31, 1997 to September 30, 1997
(other than any increase resulting from Excluded Proceeds); and the sum of
the Net Issuance Proceeds plus Net Sale Proceeds (other than Excluded
Proceeds) received during such period.
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6.04 PRESERVATION OF EXISTENCE, ETC.; MAINTENANCE OF PROPERTY;
INSURANCE; PAYMENT OBLIGATIONS; COMPLIANCE WITH LAWS. The REIT and the
Operating Partnership shall perform all of the covenants and agreements set
forth in Sections 6.04, 6.05, 6.06, 6.07, 6.08 and 6.09 of the Operating
Partnership Credit Agreement, each of which is incorporated herein by this
reference.
6.05 MAINTENANCE OF REIT STATUS; STOCK EXCHANGE LISTING. The REIT
shall at all times maintain its REIT Status and maintain its common Stock
listed on the NYSE, the American Stock Exchange, or Nasdaq Stock Exchange.
The REIT shall cause each Wholly-Owned Subsidiary to comply with all
requirements applicable under the Code to REIT subsidiaries.
6.06 INSPECTION OF PROPERTY AND BOOKS AND RECORDS. The REIT shall
maintain, and shall cause the Operating Partnership, the Management Entities
and each of their Subsidiaries to maintain, proper books of record and
account, in which full, true and correct entries in conformity with GAAP
consistently applied shall be made of all financial transactions and matters
involving the Properties and business of the REIT, the Operating Partnership,
the Management Entities and each of their Subsidiaries. The REIT shall
permit, and shall cause the Operating Partnership, the Management Entities
and each of their Subsidiaries to permit, representatives of the Agent or any
Lender to visit and inspect any of their respective Properties, to examine
their respective corporate, financial and operating records, and make copies
thereof or abstracts therefrom, and to discuss their respective affairs,
finances and accounts with their respective directors, officers, and
independent public accountants, all at the expense of the REIT and at any
time during normal business hours and as often as may be reasonably desired,
upon no less than forty-eight (48) hours advance notice to the REIT;
PROVIDED, HOWEVER, when a Guarantor Event of Default exists, the Agent or any
Lender may visit and inspect at the expense of the REIT such Properties at
any time during business hours and without advance notice.
6.07 FURTHER ASSURANCES.
(a) FULL DISCLOSURE. The REIT will ensure that all other written
information, exhibits and reports furnished to any Agent or Lender by the
Operating Partnership, the REIT, any Management Entity or any of their
Subsidiaries do not contain any untrue statement of a material fact and do
not and will not omit to state any material fact or any fact necessary to
make the statements contained therein not misleading in light of the
circumstances in which made, and will promptly disclose to the Agent and the
Lenders and correct any defect or error that may be discovered therein or in
this Guaranty or any Collateral Document or in the execution, acknowledgment
or recordation thereof.
(b) FURTHER ACTS. Promptly upon request by the Agent or the
Requisite Lenders, the REIT shall (and shall cause the Operating Partnership,
each Management Entity and each of their Subsidiaries to) do, execute,
acknowledge, deliver, record, re-record, file, re-file, register and
re-register, any and all such further acts, deeds, conveyances, security
agreements, mortgages, deeds of trust, assignments,
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estoppel certificates, financing statements and continuations thereof,
termination statements, notices of assignment, transfers, certificates,
assurances and other instruments that the Agent or such Lenders, as the case
may be, may reasonably require from time to time in order (i) to carry out
more effectively the purposes of this Guaranty or any Collateral Document,
(ii) to subject to the Liens created by any of the Collateral Documents any
of the Collateral, (iii) to perfect and maintain the validity, effectiveness
and priority of any of the Collateral Documents and the Liens intended to be
created thereby, and (iv) to better assure, convey, grant, assign, transfer,
preserve, protect and confirm to the Agent and Lenders the rights granted or
onw or hereafter intended to be granted under any Loan Document, or any other
document executed in connection herewith or therewith.
6.08 COMMUNICATION WITH ACCOUNTANTS. If any Guarantor Event of
Default is continuing, the REIT authorizes the Agent and any Lender to
communicate directly with the REIT's and the Operating Partnership's
independent accountants and authorizes such accountants to disclose to such
Persons any and all financial statements and other information of any kind,
including the substance of any oral information or conversation that such
accountants may have with respect to the business, financial condition and
other affairs of the REIT and the Operating Partnership.
6.09 SOLVENCY. The REIT shall at all times be, and shall cause
the Operating Partnership to be, Solvent.
6.10 REFINANCING ACTIVITIES.
(a) In order to further assure to the Agent and the Lenders the
full repayment of the Guarantied Indebtedness, the REIT hereby agrees that,
in the event that the Guarantied Indebtedness shall not have been paid in
full on or prior to the date which is five (5) months after the Closing Date,
the REIT shall use best efforts promptly to raise capital (either through the
offering of stock (whether common or preferred, and whether publicly or in
private placements) or the sale or refinancing of Properties), in order to
cause the Guarantied Indebtedness to be repaid as soon as possible and in any
event prior to the maturity of the Guarantied Indebtedness.
(b) Without limiting the foregoing, in the event that the
Guarantied Indebtedness shall not have been paid in full on or prior to the
date which is five (5) months after the Closing Date, the REIT and the
Operating Partnership shall accept the terms and pricing presented to them by
SBI of a transaction to issue common Stock, preferred Stock and/or
Indebtedness of the REIT or the Operating Partnership in an amount which
would be sufficient to pay the Guarantied Indebtedness in full on or prior to
the Maturity Date, and shall cause such transaction to be consummated on or
prior to the Maturity Date.
ARTICLE VII
NEGATIVE COVENANTS
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As further consideration for this Guaranty, the REIT hereby
covenants and agrees that, so long as any of the Guarantied Indebtedness
shall remain unpaid or unsatisfied, unless the Requisite Lenders waive
compliance in writing:
7.01 LIENS. Neither the Operating Partnership, nor the REIT, nor
any Management Entity, nor any of their Subsidiaries shall, directly or
indirectly, make, create, incur, assume or suffer to exist any Lien upon or
with respect to any part of its Property, whether now owned or hereafter
acquired, other than Permitted Liens. Nothing contained in this Guaranty
shall restrict the granting of Liens by the Acquisition Sub unless such Liens
are prohibited under the Acquisition Sub Credit Agreement.
7.02 INDEBTEDNESS. Neither the Operating Partnership, nor the
REIT, nor any Management Entity, nor any of their Subsidiaries shall create,
incur, assume, suffer to exist, or otherwise become or remain directly or
indirectly liable with respect to, any Indebtedness except Permitted
Indebtedness. Nothing contained in this Section 7.02 shall be deemed to
excuse any lack of compliance by Operating Partnership, the REIT, or any
Subsidiary with the terms of Section 7.15 below.
7.03 CONTINGENT OBLIGATIONS. Neither the Operating Partnership,
nor the REIT, nor any of their Subsidiaries shall create, incur, assume or
suffer to exist any Contingent Obligations except as permitted under Section
7.03 of the Operating Partnership Credit Agreement, which is incorporated
herein by this reference.
7.04 LEASE OBLIGATIONS. Neither the Operating Partnership, nor
the REIT, nor any of their Subsidiaries shall create or suffer to exist any
obligations for the payment of rent for any Property under a lease or
agreement to lease that is not a Capital Lease, except as permitted under
Section 7.04 of the Operating Partnership Credit Agreement, which is
incorporated herein by this reference.
7.05 DISPOSITION OF PROPERTIES. Neither the Operating
Partnership, nor the REIT, nor any of their Subsidiaries shall, directly or
indirectly:
(a) make any Disposition of its interest in any Management
Entity, or enter into any agreement to do so; or
(b) make any Disposition of any other Property, or enter into any
agreement to do so, unless in the case of this clause (b) such Disposition
is at fair market value, and at the time of the Disposition no Guarantor
Event of Default exists.
Nothing contained in this Guaranty shall restrict Dispositions by
the Acquisition Sub unless such Dispositions are prohibited under the
Acquisition Sub Credit Agreement.
7.06 CONSOLIDATIONS AND MERGERS. Neither the Operating
Partnership, nor the REIT, nor any of their Subsidiaries shall merge,
consolidate with or into, or convey, transfer, lease or otherwise dispose of
(whether in one transaction or in a series of transactions) all or
substantially all of its Properties (whether now owned or hereafter acquired)
to or in favor of any Person; except as permitted under Section
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7.06 of the Operating Partnership Credit Agreement, which is incorporated
herein by this reference.
7.07 LIQUIDATIONS; MATERIAL ORGANIZATION CHANGES; NEW
SUBSIDIARIES. The REIT and the Operating Partnership shall perform all of
the covenants and agreements set forth in Section 7.07 of the Operating
Partnership Credit Agreement, which is incorporated herein by this reference.
7.08 INVESTMENTS. Neither the Operating Partnership, nor the
REIT, nor any Management Entity, nor any of their Subsidiaries shall directly
or indirectly own or acquire any assets or make any Investments (or incur any
Contractual Obligation or enter into any letter of intent to make any
Investments) other than:
(i) cash and Cash Equivalents;
(ii) multi-family apartment projects in fee simple or partnership
or joint venture interests therein;
(iii) ownership interests in Management Entities, provided in each
case the same are engaged in managing multi-family apartment projects;
(iv) prior to the NHP Combination Date, the ownership of Stock in
NHP by Acquisition Sub (it being understood that no Affiliate of AIMCO other
than the Acquisition Sub or, to the extent expressly permitted in the
Operating Partnership Credit Agreement, the Merger Sub, shall acquire any
Stock in NHP); and
(v) other assets not described elsewhere in this Section 7.08,
provided that the aggregate Carrying Value of such interests shall not at any
time exceed twenty-five percent (25%) of the Carrying Value of the total
assets owned by the Operating Partnership, the REIT, and their Subsidiaries.
7.09 RESTRICTED PAYMENTS AND DEMANDS.
(a) Neither the Operating Partnership nor the REIT shall declare
or make, or permit any of their respective Subsidiaries to declare or make, any
distribution of any Properties, including cash, rights, obligations, or
partnership interests or units, on account of any partnership interests, Units
or Stock, or purchase, redeem or otherwise acquire for value any of its
partnership interests, Units or Stock, now or hereafter outstanding to any
Person other than the Operating Partnership, the REIT or a Wholly-Owned
Subsidiary, (all of the foregoing, collectively, "distributions"), except
(a) for the exchange of common Stock of the REIT for Units; (b) that if no
Guarantor Default or Guarantor Event of Default exists under Section 8.01(a) or
under Section 8.01(c) as a result of a breach of Section 7.15, the REIT, the
Operating Partnership and all such Subsidiaries may make distributions during
any twelve (12) month period in an amount in the aggregate which does not exceed
the greater of 80%
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of Funds From Operations for such period or such amount as is necessary to
maintain REIT Status.
(b) Under no circumstances shall the REIT or the Operating
Partnership permit any payment to be made with respect to Intra-Company Debt
while any Guarantor Event of Default is continuing.
7.10 TRANSACTIONS WITH AFFILIATES. Neither the Operating
Partnership, nor the REIT, nor any Management Entity, nor any of their
Subsidiaries shall enter into any transaction with any Affiliate of the
Operating Partnership or of any such Person, except as permitted under
Section 7.10 of the Operating Partnership Credit Agreement, which is
incorporated herein by this reference.
7.11 SPECIAL COVENANTS RELATING TO THE REIT. The REIT shall
perform all of the covenants and agreements set forth in Section 7.11 of the
Operating Partnership Credit Agreement, which is incorporated herein by this
reference.
7.12 TAXATION OF THE OPERATING PARTNERSHIP. The Operating
Partnership shall at all times be taxed as a partnership under the Code and
not as an association taxable as a corporation.
7.13 ERISA. The REIT shall perform all of the covenants and
agreements set forth in Section 7.13 of the Operating Partnership Credit
Agreement, which is incorporated herein by this reference.
7.14 PREPAYMENTS. Neither the REIT nor the Operating Partnership
nor any Subsidiary shall, while the Guarantied Indebtedness is outstanding,
prepay any Indebtedness (other than the Guarantied Indebtedness and the
Indebtedness outstanding from time to time under the Operating Partnership
Credit Agreement and the Bridge Loan Agreement), unless the REIT shall have
theretofore deposited with the Agent Restricted Cash in the maximum amount
required under Section 2.04 of this Guaranty; provided, however, a prepayment
of Indebtedness shall be permitted in connection with the refinancing thereof
so long as the maximum principal amount of the loan so used to prepay any
such Indebtedness does not exceed the amount of such Indebtedness being
prepaid.
7.15 FINANCIAL COVENANTS.
(a) The REIT shall not permit the Net Worth of the REIT and its
Subsidiaries on a consolidated basis to be less at any time than $400,000,000
plus 75% of the Net Issuance Proceeds of all issuances of Stock or Units after
the Closing Date.
(b) The REIT shall not permit the ratio of Consolidated Total
Indebtedness to Gross Asset Value to exceed 0.60-to-1.00 at any time.
(c) The REIT shall not permit the Consolidated EBITDA-to-Interest
Ratio computed for any fiscal quarter or year to be less than 2.00-to-1.00.
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(d) The REIT shall not permit the Consolidated EBITDA-to-Fixed
Charges Ratio computed for any fiscal quarter or year to be less than
1.80-to-1.00.
7.16 ACCOUNTING CHANGES. Neither the Operating Partnership nor
the REIT shall make any significant change in accounting treatment or
reporting practices, except as required by GAAP, or change its fiscal year.
ARTICLE VIII
EVENTS OF DEFAULT
8.01 GUARANTOR EVENT OF DEFAULT. Any of the following shall
constitute a "Guarantor Event of Default":
(a) NON-PAYMENT. Any Guarantor or any Common Stockholder shall
fail to pay, when and as required to be paid herein or in the Collateral
Documents, any amount payable hereunder or thereunder; or
(b) REPRESENTATION OR WARRANTY. Any representation or warranty
by any Guarantor or any Common Stockholder made or deemed made herein, in any
Collateral Document, or in any certificate, document or financial or other
statement by such Guarantor or any Common Stockholder or any Responsible
Officer, furnished at any time under this Guaranty or in or under any Collateral
Document, shall prove to have been incorrect in any material respect on or as of
the date made or deemed made; or
(c) SPECIFIC GUARANTOR DEFAULTS. The REIT or the Operating
Partnership shall fail to perform or observe any term, covenant or agreement
binding upon it contained in Section 6.06, Section 6.10 and/or in Article
VII; provided that, in the case of a violation of the terms governing the
maximum amount of distributions during any twelve (12)-month period set forth
in Section 7.09(b), such failure shall not constitute a Guarantor Event of
Default if, by the end of the third month after such twelve (12)-month
period, such violation no longer exists, so long as no distributions were
made during such twelve (12)-month period in violation of the provisions of
Section 7.09(b) which prohibit distributions while certain Guarantor Defaults
or Guarantor Events of Default exist; or
(d) OTHER GUARANTOR DEFAULTS. Any Guarantor shall fail to
perform or observe any other term or covenant contained in this Guaranty or any
Collateral Document, and such default shall continue uncured for a period of 10
days after the earlier of (i) the date upon which a Responsible Officer knew or
received written notice of such failure or (ii) the date upon which written
notice thereof is given to the REIT by Agent or any Lender; or
(e) CROSS-DEFAULT. The Acquisition Sub shall fail, after any
applicable cure period:
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(i) to make any payment (and which uncured failure to pay is
continuing) in respect of any Indebtedness or Guaranty Obligation when due
which in the aggregate exceeds $500,000 (whether by scheduled maturity,
required prepayment, acceleration, demand, or otherwise), other than a
payment with respect to Intra-Company Debt where the obligee has not
commenced pursuing its remedies; or
(ii) to perform or observe any other condition or covenant,
or any other event shall occur or condition exist, under any agreement or
instrument relating to any such Indebtedness or Guaranty Obligation, if the
effect of such failure, event or condition is to cause, or to permit the
holder or holders of such Indebtedness or the beneficiary or beneficiaries of
such Indebtedness (or a trustee or agent on behalf of such holder or holders
or beneficiary or beneficiaries) to cause, such Indebtedness to be declared
to be due and payable prior to its stated maturity, or such Guaranty
Obligation to become payable or cash collateral in respect thereof to be
demanded; or
(f) BANKRUPTCY OR INSOLVENCY. The Operating Partnership, the
REIT, any of their Subsidiaries, any Management Entity, any Common
Stockholder or, at any time prior to the NHP Combination Date, NHP shall (i)
become insolvent, or generally fail to pay, or admit in writing its inability
to pay, its debts as they become due, subject to applicable grace periods, if
any, whether at stated maturity or otherwise; (ii) voluntarily cease to
conduct its business in the ordinary course; (iii) commence any Insolvency
Proceeding with respect to itself; or (iv) take any action to effectuate or
authorize any of the foregoing; or
(g) INVOLUNTARY PROCEEDINGS. (i) Any Insolvency Proceeding shall
be commenced or filed against the Operating Partnership, the REIT, any of
their Subsidiaries, any Management Entity, any Common Stockholder or, at any
time prior to the NHP Combination Date, NHP or any writ, judgment, warrant of
attachment, execution or similar process, shall be issued or levied against a
substantial part of such Person's Properties, and any such proceeding or
petition shall not be dismissed, or such writ, judgment, warrant of
attachment, execution or similar process shall not be released, vacated or
fully bonded within sixty (60) days after commencement, filing or levy; (ii)
the Operating Partnership, the REIT, any of their Subsidiaries, any
Management Entity, any Common Stockholder or, at any time prior to the NHP
Combination Date, NHP shall admit the material allegations of a petition
against it in any Insolvency Proceeding, or an order for relief (or similar
order under non-U.S. law) is ordered in any Insolvency Proceeding; or (iii)
the Operating Partnership, the REIT, any of their Subsidiaries or any
Management Entity, any Common Stockholder or, at any time prior to the NHP
Combination Date, NHP shall acquiesce in the appointment of a receiver,
trustee, custodian, conservator, liquidator, mortgagee in possession (or
agent therefor), or other similar Person for itself or a substantial portion
of its Property or business; or
(h) COLLATERAL DOCUMENTS. Any provision of any Collateral
Document shall for any reason (other than pursuant to the terms thereof) cease
to be valid and binding on or enforceable against the Person party thereto
(except to the
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extent that the same results solely from an act or omission of the Agent or
the Lenders), or such Person shall so state in writing or bring an action to
limit its obligations or liabilities thereunder.
ARTICLE IX
ARBITRATION, REFERENCE, INDEMNIFICATION, OTHER REMEDIES
9.01 REFERENCE AND ARBITRATION.
(a) MANDATORY ARBITRATION. Any controversy or claim between or
among the parties, including those arising out of or relating to this
Guaranty or the Loan Documents and any claim based on or arising from an
alleged tort, shall at the request of any party be determined by arbitration.
The arbitration shall be conducted in New York, New York, in accordance with
the United States Arbitration Act (Title 9, U.S. Code), notwithstanding any
choice of law provision in this Guaranty, and under the Commercial Rules of
the American Arbitration Association (the "AAA"). The arbitrator(s) shall
give effect to statutes of limitation in determining any claim. Any
controversy concerning whether an issue is arbitrable shall be determined by
the arbitrator(s). Judgment upon the arbitration award may be entered in any
court having jurisdiction. The institution and maintenance of an action for
judicial relief or pursuit of a provisional or ancillary remedy shall not
constitute a waiver of the right of any party, including the plaintiff, to
submit the controversy or claim to arbitration if any other party contests
such action for judicial relief.
(b) PROVISIONAL REMEDIES, SELF-HELP AND FORECLOSURE. No
provision of this Section 9.01 shall limit the right of any party to exercise
self-help remedies such as setoff, foreclosure against or sale of any real or
personal property collateral or security, or to obtain provisional or
ancillary remedies from a court of competent jurisdiction before, after, or
during the pendency of any arbitration.
9.02 INDEMNITY. Guarantor shall indemnify and hold harmless the
Agent, each Lender and each of their respective officers, directors,
employees, counsel, agents and attorneys-in-fact (each, an "Indemnified
Person") from and against and pay them for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
charges, expenses or disbursements (including Attorney Costs) of any kind or
nature whatsoever with respect to the execution, delivery and enforcement of
this Guaranty, or the transactions contemplated hereby and thereby, and with
respect to any investigation, litigation or proceeding related to this
Guaranty, whether or not any Indemnified Person is a party thereto (all the
foregoing, collectively, the "Indemnified Liabilities"); PROVIDED, that a
Guarantor shall have no obligation hereunder to any Indemnified Person with
respect to Indemnified Liabilities arising from the gross negligence or
willful misconduct of such Indemnified Person. The agreements in this
Section 9.02 shall survive payment of the Guarantied Indebtedness.
9.03 MARSHALLING; PAYMENTS SET ASIDE. Neither the Agent nor any
Lender shall be under any obligation to marshall any assets in favor of any
Guarantor or any other Person or against or in payment of any or all of the
obligations of such
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Guarantor under this Guaranty. To the extent that any Guarantor makes a
payment or payments to the Agent or any Lender, or the Agent or any Lender
enforces its Liens or exercises its rights of setoff, and such payment or
payments or the proceeds of such enforcement or setoff or any part thereof
are subsequently invalidated, declared to be fraudulent or preferential, set
aside or required to be repaid to a trustee, receiver or any other party in
connection with any Insolvency Proceeding, or otherwise, then to the extent
of such recovery the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such enforcement or setoff had not occurred.
9.04 SETOFF. In addition to any rights and remedies of the
Lenders provided by law, if a Guarantor Event of Default exists, then
irrespective of whether the Agent or such Lender shall have made demand under
this Guaranty and whether such obligations may be contingent or unmatured,
each Lender is authorized at any time and from time to time, without prior
notice to any Guarantor, any such notice being hereby waived to the fullest
extent permitted by law, to place a hold (in the full amount of the
Guarantied Indebtedness) against any and all deposits (general or special,
time or demand, provisional or final) at any time held by such Lender to or
for the credit or the account of such Guarantor and, provided that Guarantor
shall then be obligated to pay all sums due and owing on the Guarantied
Indebtedness in accordance with Section 2.01(b) hereof, to set off and apply
any and all such deposits and other indebtedness at any time owing to such
Lender to or for the credit or the account of such Guarantor against any and
all obligations owing to such Lender, now or hereafter existing. Each Lender
agrees to promptly notify the affected Guarantor and the Agent after any such
hold, setoff or application made by such Lender; PROVIDED, HOWEVER, that the
failure to give such notice shall not affect the validity of such setoff and
application. The rights of each Lender under this Section 10.09 are in
addition to the other rights and remedies (including other rights of setoff)
that such Lender may have. NOTWITHSTANDING THE FOREGOING, NO LENDER SHALL
EXERCISE, OR ATTEMPT TO EXERCISE, ANY RIGHT OF SETOFF, BANKER'S LIEN, OR THE
LIKE, AGAINST ANY DEPOSIT ACCOUNT OR PROPERTY OF ANY GUARANTOR HELD OR
MAINTAINED BY ANY LENDER, WITHOUT THE PRIOR WRITTEN CONSENT OF THE REQUISITE
LENDERS.
ARTICLE X
MISCELLANEOUS
10.01 NO WAIVER; CONSENTS; CUMULATIVE REMEDIES. Each waiver by
Agent or the Lenders must be in writing, and no waiver shall be construed as
a continuing waiver. No waiver shall be implied from Agent's or any Lender's
delay in exercising or failure to exercise any right or remedy against
Acquisition Sub, Guarantor or any security. Consent by Agent or the Lenders
to any act or omission by Acquisition Sub or Guarantor shall not be construed
as a consent to any other or subsequent act or omission, or as a waiver of
the requirement for Agent's or the Lenders' consent to be obtained in any
future or other instance. All remedies of
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Agent and each Lender against Acquisition Sub and Guarantor are cumulative.
As among the Agent and the Lenders only, nothing contained in this Guaranty
shall limit any of the approval rights of the Agent or the Lenders set forth
in the Loan Documents.
10.02 NO RELEASE. Guarantor shall not be released, in whole or in
part, from its obligations under this Guaranty except by a writing signed by
Agent and all the Lenders.
10.03 HEIRS, SUCCESSORS AND ASSIGNS; PARTICIPATIONS. The terms of
this Guaranty shall bind and benefit the heirs, legal representatives,
successors and assigns of Agent, the Lenders and Guarantor; provided,
however, that Guarantor may not assign this Guaranty, or assign or delegate
any of its rights or obligations under this Guaranty, without the prior
written consent of Agent in each instance. Without notice to or the consent
of Guarantor, Agent and any Lender may disclose any and all information in
its possession concerning Guarantor, this Guaranty and any security for this
Guaranty to any actual or prospective purchaser of any securities issued or
to be issued by Agent or such Lender, and to any actual or prospective
purchaser or assignee of any participation or other interest in the
Guarantied Indebtedness and this Guaranty.
10.04 NOTICES.
(a) DELIVERY. All notices, requests and other communications
provided for hereunder shall be in writing (including, unless the context
expressly otherwise provides, telegraphic, telex, facsimile transmission or
cable communication) and mailed, telegraphed, telexed or delivered to its
address specified on the signature pages hereof, or to such other address as
shall be designated by such party in a written notice to the other party.
(b) RECEIPT. All such notices and communications shall, when
transmitted by overnight delivery, telegraphed, telecopied by facsimile, telexed
or cabled, be effective when delivered for overnight delivery or to the
telegraph company, transmitted by telecopier, confirmed by telex answerback or
delivered to the cable company, respectively, or if delivered, upon delivery.
(c) RELIANCE. Agent and each Lender shall be entitled to rely on
the authority of any person purporting to be a person authorized by Guarantor
to give such notice, and neither Agent nor any Lender shall have any
liability to Guarantor or any other person on account of any action taken or
not taken by Agent or such Lender in reliance upon such telephonic or
facsimile notice. The obligation of Guarantor hereunder shall not be
affected in any way or to any extent by any failure by Lender to receive
written confirmation of any telephonic or facsimile notice or the receipt by
Agent or a Lender of a confirmation which is at variance with the terms
understood by Agent or such Lender to be contained in the telephonic or
facsimile notice.
10.05 RULES OF CONSTRUCTION. In this Guaranty, the word
"Acquisition Sub" includes both the named Acquisition Sub and any other
person who at any time
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assumes or otherwise becomes primarily liable for all or any part of the
obligations of the named Acquisition Sub on the Guarantied Indebtedness. The
word "person" includes any individual, company, trust or other legal entity
of any kind. If this Guaranty is executed by more than one person, the word
"Guarantor" includes all such persons. All headings appearing in this
Guaranty are for convenience only and shall be disregarded in construing this
Guaranty.
10.06 GOVERNING LAW. THIS GUARANTY AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
NEW YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF
LAWS PRINCIPLES.
10.07 COSTS AND EXPENSES. If any lawsuit or arbitration is
commenced which arises out of, or which relates to this Guaranty, the Loan
Documents or the Guarantied Indebtedness, the prevailing party shall be
entitled to recover from each other party such sums as the court or
arbitrator may adjudge to be reasonable attorneys' fees (including allocated
costs for services of in-house counsel) in the action or proceeding, in
addition to costs and expenses otherwise allowed by law. In all other
situations, including any Insolvency Proceeding, Guarantor agrees to pay all
of the Agent's and each Lender's costs and expenses, including attorneys'
fees (including allocated costs for services of the Agent's and each Lender's
in-house counsel) which may be incurred in any effort to collect or enforce
the Guarantied Indebtedness or any part of it or any term of this Guaranty.
Without limiting any rights of the Agent or Lenders under the Acquisition Sub
Credit Agreement or , all amounts of any kind due and payable under this
Guaranty (whether for principal, interest, and other costs under the
Guarantied Indebtedness, or for costs, fees, and expenses for which the
Guarantors are directly responsible hereunder, or otherwise) shall accrue
interest from the time the Agent or the Lenders make demand therefor
hereunder until paid in full in cash to such Agent or the Lenders at the Base
Rate, as defined in the Acquisition Sub Credit Agreement, plus three (3%)
percentage points, except to the extent that any such amounts are then
accruing interest under the Guarantied Indebtedness, in which case such Base
Rate plus 3% interest rate shall not be applied if the effect would be to
compound the interest to which such obligations are subject to under the
Guarantied Indebtedness.
10.08 CONSIDERATION. Guarantor acknowledges that it expects to
benefit from Lenders' extension of the loan facility under the Acquisition
Sub Credit Agreement to Acquisition Sub because of its relationship to
Acquisition Sub, because such loan facility is essential to Acquisition Sub's
acquisition of a portion of the outstanding Stock of NHP and because such
acquisition is part of Guarantor's overall plan to acquire or merge with NHP.
Guarantor is executing this Guaranty in consideration of these anticipated
benefits.
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10.09 INTEGRATION; MODIFICATIONS. This Guaranty (a) integrates
all the terms and conditions mentioned in or incidental to this Guaranty, (b)
supersedes all oral negotiations and prior writings with respect to its
subject matter, and (c) is intended by Guarantor, Agent and the and Lenders
as the final expression of the agreement with respect to the terms and
conditions set forth in this Guaranty and as the complete and exclusive
statement of the terms agreed to by Guarantor, Agent and the Lenders. No
representation, understanding, promise or condition shall be enforceable
against any party hereto unless it is contained in this Guaranty. This
Guaranty may not be modified except in a writing signed by both Agent (with
the consent of the Requisite Lenders) and Guarantor. No course of prior
dealing, usage of trade, parol or extrinsic evidence of any nature shall be
used to supplement, modify or vary any of the terms hereof. As between Agent
and the Lenders only, nothing contained in this Guaranty shall alter the
rights and obligations among Agent and the Lenders set forth in the Credit
Agreement.
10.10 MISCELLANEOUS. The illegality or unenforceability of one
or more provisions of this Guaranty shall not affect any other provision.
Time is of the essence in the performance of this Guaranty by Guarantor. The
obligations of each Guarantor under this Guaranty shall be joint and several.
10.11 COUNTERPARTS. This Guaranty may be executed by one or
more of the parties to this Guaranty in any number of separate counterparts,
each of which, when so executed, shall be deemed an original, and all of said
counterparts taken together shall be deemed to constitute but one and the
same instrument.
10.12 SEVERABILITY. The illegality or unenforceability of any
provision of this Guaranty or any instrument or agreement required hereunder
shall not in any way affect or impair the legality or enforceability of the
remaining provisions of this Guaranty or any instrument or agreement required
hereunder.
10.13 WAIVER OF JURY TRIAL. GUARANTOR, THE AGENT, AND THE
LENDERS EACH WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS GUARANTY OR
THE TRANSACTIONS CONTEMPLATED HEREBY, IN ANY ACTION, PROCEEDING OR OTHER
LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY
OR PARTIES, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR
OTHERWISE. SUBJECT TO SECTION 9.01 ABOVE, GUARANTOR, THE AGENT, AND THE
LENDERS EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A
COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES
FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY
OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING
WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY
OF THIS GUARANTY OR ANY PROVISION HEREOF. THIS WAIVER SHALL APPLY TO
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ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
GUARANTY.
10.14 CONSENT TO JURISDICTION AND SERVICE OF PROCESS. ALL
JUDICIAL PROCEEDINGS BROUGHT AGAINST GUARANTOR ARISING OUT OF OR RELATING TO
THIS AGREEMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE STATE OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS
AGREEMENT GUARANTOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES,
GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID
COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY AGREES
TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS
AGREEMENT. Guarantor hereby agrees that service of all process in any such
proceeding in any such court may be made by registered or certified mail,
return receipt requested, to Guarantor at its address provided in Section
10.04, such service being hereby acknowledged by Guarantor to be sufficient
for personal jurisdiction in any action against Guarantor in any such court
and to be otherwise effective and binding service in every respect. Nothing
herein shall affect the right to serve process in any other manner permitted
by law or shall limit the right of the Agent or any Lender to bring
proceedings against Guarantor in the courts of any other jurisdiction.
10.15 INTERPRETATION. This Guaranty is the result of
negotiations between and has been reviewed by counsel to the Agent, the
Lenders and the Guarantors, and is the product of all parties hereto.
Accordingly, this Guaranty shall not be construed against the Lenders or the
Agent merely because of the Agent's or Lender's involvement in the
preparation of such documents and agreements.
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IN WITNESS WHEREOF, the undersigned have executed this Guaranty on the date
hereinabove set forth.
Guarantors:
APARTMENT INVESTMENT AND
MANAGEMENT COMPANY,
a Maryland corporation
By:
---------------------------------
Peter K. Kompaniez, Vice Chairman
AIMCO PROPERTIES, L.P.,
a Delaware limited partnership
By: AIMCO-GP, Inc.,
a Delaware corporation
By:
----------------------------------
Peter K. Kompaniez, Vice President
Address Where Notices to
Guarantors are to be Sent:
1873 South Bellaire Street
17th Floor
Denver, Colorado 90071
Address Where Notices to Agent
are to be Sent:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
555 South Flower Street, 6th Floor
Los Angeles, California 90071
Att'n: Manager - Unit #1357
Addresses Where Notices to the Lenders are
to be Sent:
Per the Acquisition Sub Credit Agreement
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EXHIBIT E
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT ("Pledge Agreement") is made and dated as of this
5th day of May, 1997, by AIMCO Properties L.P., a Delaware limited
partnership ("AIMCO") and Terry Considine and Peter K. Kompaniez (each, a
"Common Stockholder," and collectively, the "Common Stockholders"; AIMCO and
the Common Stockholders are individually and collectively referred to herein
as "Pledgor") and Bank of America National Trust and Savings Association, a
national banking association ("BofA"), as Agent ("Secured Party") for BofA,
Smith Barney Mortgage Capital Group, Inc., a Delaware corporation and the
other lenders ("Lenders") from time to time party to the Acquisition Sub
Credit Agreement described below. Capitalized terms used but not defined
herein shall have the meanings set forth in the Guaranty described below or,
if not defined therein, in such Acquisition Sub Credit Agreement.
RECITALS
A. The Lenders have extended credit to or for the benefit of
AIMCO/NHP Holdings, Inc., a Delaware corporation ("Acquisition Sub"), on the
terms and subject to the conditions set forth in the Acquisition Sub Credit
Agreement, dated as of May 5, 1997 (as amended, modified, waived or replaced
from time to time, the "Acquisition Sub Credit Agreement") under which the
Lenders have committed to make available to the Acquisition Sub a credit
facility of up to $76,000,000. Secured Party is the agent for the Lenders.
B. AIMCO and Apartment Investment and Management Company, a
Maryland corporation (the "REIT") (individually, a "Guarantor" and
collectively, the "Guarantors") have guarantied the obligations of
Acquisition Sub pursuant to a Payment Guaranty, dated as of May 5, 1997 (the
"Guaranty"). Pledgor has agreed to pledge and to grant to Secured Party a
security interest in and lien upon the Collateral (as defined in Paragraph 2
below) as security for all Obligations (as defined in Paragraph 3 below), for
the ratable benefit of the Lenders.
C. Pledgor is the owner of Stock in Acquisition Sub, consisting of
the interests described on SCHEDULE 1 attached hereto.
NOW, THEREFORE, in consideration of the above Recitals and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Pledgor hereby agrees as follows:
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AGREEMENT
1. GRANT OF SECURITY INTEREST. Pledgor hereby pledges and
grants to Secured Party a security interest in the property described in
Paragraph 2 below (collectively and severally, the "Collateral") to secure
payment and performance of the Obligations.
2. COLLATERAL. The Collateral shall consist of the following,
whether now existing or hereafter arising:
(a) SECURITIES. All shares of capital stock or other
equity or beneficial interests in the Acquisition Sub held by Pledgor,
including, without limitation, the stock described on SCHEDULE 1 attached
hereto, all related securities, warrants, options or rights to receive any
capital stock or other equity or beneficial interests, and any interest of
Pledgor in the entries of on the books of any financial intermediary
pertaining thereto. All of the foregoing are collectively referred to herein
as the "Pledged Stock";
(b) CERTIFICATES. All certificates (including, without
limitation, any certificate representing a stock dividend or a distribution
in connection with any reclassification, increase or reduction of capital, or
issued in connection with any reorganization), options or rights, whether as
an addition to, in substitution of, as evidence of, or in exchange for, any
of the Pledged Stock;
(c) ADDITIONAL SHARES. All additional shares of, and all
securities convertible into and warrants, options and other rights to
purchase or otherwise acquire, stock of any issuer of the Pledged Stock from
time to time acquired by Pledgor in any manner (which shares shall be deemed
to be part of the Pledged Stock), the certificates or other instruments
representing such additional shares, securities, warrants, options or other
rights and any interest of Pledgor in the entries on the books of any
financial intermediary pertaining to such additional shares, and all
dividends, cash, warrants, rights, instruments and other property or proceeds
from time to time received, receivable or otherwise distributed in respect of
or in exchange for any or all of such additional shares, securities,
warrants, options or other rights;
(d) DISTRIBUTIONS, DIVIDENDS, ETC. All rights of Pledgor
as a shareholder or other holder of any equity or beneficial interest in the
Acquisition Sub, including, without limitation, all management and voting
rights, all rights to distributions, dividends, the payment of money or the
distribution of other property from the Acquisition Sub (including, without
limitation, all rights to receive profits or surplus of, or other
distributions or compensation by way of income, return of capital or any
liquidating or other distribution from the Acquisition Sub and whether such
distributions or payments are on account of Pledgor's interest as a
shareholder or other holder of any equity or beneficial interest in the
Acquisition Sub, as a creditor of the
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Acquisition Sub, or otherwise), and all rights to the assets of the
Acquisition Sub held by Pledgor or accruing to Pledgor under the
Organizational Documents for the Acquisition Sub or under applicable law.
All such rights are collectively referred to as the "Pledged Rights";
(e) BOOKS AND RECORDS. All present and future books and
records relating to the Collateral to the extent Pledgor has rights therein,
including, without limitation, books of account and ledgers of every kind and
nature, all electronically recorded data relating to the Collateral or the
business thereof, all receptacles and containers for such records, and all
files and correspondence relating thereto; and
(f) PROCEEDS. All proceeds of the foregoing Collateral.
For purposes of this Pledge Agreement, the term "proceeds" includes whatever
is receivable or received when Collateral or proceeds is sold, collected,
exchanged or otherwise disposed of, whether such disposition is voluntary or
involuntary, and includes, without limitation, all rights to payment,
including return premiums, with respect to any insurance relating thereto.
Nothing contained herein shall be deemed to render Secured Party or
any Lender responsible for any liabilities or obligations of Pledgor with
respect to the Pledged Stock or any other portion of the Collateral.
3. OBLIGATIONS. The obligations secured by this Pledge Agreement
shall consist of all obligations and liabilities, whether at stated maturity,
by required prepayment, declaration, acceleration, demand or otherwise
(including the payment of amounts that would become due but for the operation
of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C.
Section 362(a) or any successor provision), of all obligations and
liabilities of every nature of the Guarantors under the Guaranty, whether now
or hereafter existing, and all extensions or renewals thereof, whether for
principal, interest (including without limitation interest that, but for the
filing of a petition in bankruptcy with respect to any of the Guarantors,
would accrue on such obligations), fees, expenses, indemnities or otherwise,
whether voluntary or involuntary, direct or indirect, absolute or contingent,
liquidated or unliquidated, whether or not jointly owned with others, and
whether or not from time to time decreased or extinguished and later
increased, created or incurred, and all or any portion of such obligations or
liabilities that are paid, to the extent all or any part of such payment is
avoided or recovered directly or indirectly from Secured Party or any Lender
as a preference, fraudulent transfer or otherwise (all such obligations and
liabilities being the "Underlying Debt"), and all obligations of every nature
of Pledgor now or hereafter existing under this Pledge Agreement (all such
obligations of Pledgor, together with the Underlying Debt, being the
"Obligations").
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4. REPRESENTATIONS AND WARRANTIES. Pledgor hereby represents,
warrants and covenants with Secured Party that:
(a) OWNERSHIP OF COLLATERAL. Pledgor is the sole owner of
and has good title to the Collateral (or, in the case of after-acquired
Collateral, at the time Pledgor acquires rights in the Collateral, will be
the owner thereof) and is the record and beneficial owner of the Pledged
Stock included in the Collateral described on SCHEDULE 1.
(b) PERFECTION AND PRIORITY. The pledge of the Collateral
pursuant to this Agreement creates (together with (i) the delivery to Secured
Party of all stock certificates representing the Pledged Stock, and (ii)
filing of Uniform Commercial code financing statements with the Secretary of
State of Colorado (and, in the case of Peter Kompaniez, California) a valid
and perfected first priority security interest in the Collateral, securing
the payment of the Obligations. Except for the security interests in favor
of Secured Party hereunder, no Person has (or, in the case of after-acquired
Collateral, at the time Pledgor acquires rights therein, will have) any
right, title, claim or interest (by way of security interest or other lien or
charge) in, against or to the Collateral.
(c) ACCURACY OF INFORMATION. All information heretofore,
herein or hereafter supplied to Secured Party by or on behalf of Pledgor with
respect to the Collateral is or will be true and correct.
(d) DELIVERY OF DOCUMENTS, ETC. Pledgor has delivered to
Secured Party (i) true and correct copies of the Organizational Documents for
the Acquisition Sub, (ii) all instruments, documents, chattel paper and other
items of Collateral in which a security interest is or may be perfected by
possession, and (iii) any certificated Pledged Stock together with such
additional writings, including, without limitation, assignments and stock
powers, with respect thereto as Secured Party shall have requested.
(e) PLEDGED SHARES. The Pledged Stock has been validly
issued and is fully paid and nonassessable; and there are no outstanding
options, warrants or other agreements with respect thereto. The Pledged
Stock constitutes all of the issued and outstanding shares of capital stock
and the equity and beneficial interests in the Acquisition Sub.
(f) ORGANIZATIONAL DOCUMENTS. The terms of the
Organizational Documents for the Acquisition Sub have not been modified or
waived in any respect from such documents delivered to Secured Party pursuant
to Section 4(d)(i) above.
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(g) SET-OFF. Neither the Acquisition Sub nor any of the
other shareholders, partners, members or other holders of equity or
beneficial interests in the Acquisition Sub has any defense, set-off, claim
or counterclaim against Pledgor which can be asserted against Secured Party,
whether in any proceeding to enforce Secured Party's rights in the Collateral
or otherwise.
(h) NO DEFAULT. There is no default by Pledgor under the
Organizational Documents for the Acquisition Sub nor has any event occurred
which, with the passage of time or giving of notice, or both, would
constitute a default thereunder.
5. COVENANTS AND AGREEMENTS OF PLEDGOR. In addition to all
covenants and agreements of Pledgor set forth in any other agreement with
Secured Party, which are incorporated herein by this reference, Pledgor
hereby agrees:
(a) MAINTENANCE OF COLLATERAL. Pledgor agrees to do all
acts that may be necessary to maintain, preserve and protect the Collateral.
(b) USE OF COLLATERAL. Pledgor agrees not to use or
permit any Collateral to be used unlawfully or in violation of any provision
of the Guaranty, or any applicable statute, regulation or ordinance covering
the Collateral.
(c) TAXES. Pledgor agrees to pay all taxes, assessments,
charges, encumbrances and liens now or hereafter imposed upon or affecting
any Collateral prior to the time the same become delinquent, except for those
being contested in good faith by appropriate proceedings and for which the
Pledgor has provided adequate reserves.
(d) FINANCING STATEMENTS. Pledgor agrees to procure,
execute and deliver from time to time any endorsements, assignments,
financing statements and other writings reasonably deemed necessary or
appropriate by Secured Party to perfect, maintain and protect its security
interest hereunder and the priority thereof and to deliver promptly to
Secured Party all originals of Collateral or proceeds consisting of chattel
paper or instruments.
(e) ACTIONS. Pledgor agrees to appear in and defend any
action or proceeding which may affect its title to or Secured Party's
interest in the Collateral.
(f) USE OF PROCEEDS. Pledgor agrees, if the Lenders give
value to enable Pledgor to acquire rights in or the use of any Collateral, to
use such value for such purpose.
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(g) RECORDS. Pledgor agrees to keep separate, accurate
and complete records of the Collateral and to provide Secured Party with such
records and such other reports and information relating to the Collateral as
Secured Party may reasonably request from time to time.
(h) SALE OR ENCUMBRANCE. Except as permitted under
Section 7.07 of the Acquisition Sub Credit Agreement, Pledgor agrees not to
surrender or lose possession of (other than to Secured Party), sell,
encumber, or otherwise dispose of or transfer any Collateral or right or
interest therein and, notwithstanding any provision of the Organizational
Documents, to keep the Collateral free of all levies and security interests
or other Liens, charges, preferences or priorities, except those approved in
writing by Secured Party.
(i) PROCEEDS. Pledgor agrees to account fully for and
promptly deliver to Secured Party, in the form received, all proceeds of the
Collateral received, endorsed to Secured Party as appropriate, and until so
delivered all proceeds shall be held by Pledgor in trust for Secured Party,
separate from all other property of Pledgor and identified as the property of
Secured Party.
(j) LOCATION OF RECORDS. Pledgor agrees to keep the
records concerning the Collateral at the location set forth in Section 24
below and not to remove the records concerning the Collateral from such
location without the prior written consent of Secured Party.
(k) DISSOLUTION. Except as permitted under Section 7.07
of the Acquisition Sub Credit Agreement, Pledgor agrees not to permit or take
any action to dissolve or terminate the Acquisition Sub.
(l) COMPLIANCE WITH LAWS. To comply with all laws,
regulations and ordinances relating to the possession, operation, maintenance
and control of the Collateral.
(m) SAFEKEEPING. That such care as Secured Party gives to
the safekeeping of its own property of like kind shall constitute reasonable
care of such Collateral when in Secured Party's possession.
(n) PAYMENT OF SECURED PARTY'S COSTS AND EXPENSES. To
reimburse Secured Party upon demand for any reasonable costs and expenses,
including, without limitation, reasonable attorneys' fees, Secured Party may
incur while exercising any right, power or remedy provided by this Pledge
Agreement or by law, all of which costs and expenses are included in the
Obligations secured hereby.
(o) NOTICE OF CHANGES. To give Secured Party thirty (30)
days prior written notice of any change in Pledgor's residence or chief place
of
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business or legal name or trade name(s) or style(s) set forth in Section 24
of this Pledge Agreement.
(p) DIVIDENDS ON PLEDGED RIGHTS AND PLEDGED STOCK. To
account fully for and promptly deliver to Secured Party, as additional
Collateral hereunder, in the form received, any dividend or any other
distribution on account of its Pledged Rights and Pledged Stock, if any,
whether in cash, securities or property by way of stock-split, spin-off,
split-up or reclassification, combination of shares or the like, or in case
of any reorganization, consolidation or merger. Pledgor further agrees that
it will, upon obtaining any additional shares of stock or other securities of
the Acquisition Sub referred to in Section 1(c), promptly (and in any event
within five Business Days) deliver to Secured Party a Pledge Amendment, duly
executed by Pledgor, in substantially the form of EXHIBIT A annexed hereto (a
"Pledge Amendment"), in respect of the additional Pledged Stock to be pledged
pursuant to this Pledge Agreement. Pledgor hereby authorizes Secured Party
to attach each Pledge Amendment to this Pledge Agreement and agrees that all
Pledged Stock listed on any Pledge Amendment delivered to Secured Party shall
for all purposes hereunder be considered Collateral; PROVIDED that the
failure of Pledgor to execute a Pledge Amendment with respect to any
additional Pledged Stock pledged pursuant to this Pledge Agreement shall not
impair the security interest of Secured Party therein or otherwise adversely
affect the rights and remedies of Secured Party hereunder with respect
thereto.
(q) AMENDMENT OF ORGANIZATIONAL DOCUMENTS. Not to amend
or permit the amendment of the articles of incorporation, by-laws or other
Organizational Documents of the Acquisition Sub.
(r) COMPLIANCE WITH ACQUISITION SUB CREDIT AGREEMENT. To
cause the Acquisition Sub to comply with all the terms of the Acquisition Sub
Credit Agreement.
6. AUTHORIZED ACTION BY SECURED PARTY.
(a) Pledgor hereby agrees that from time to time, without
presentment, notice or demand, and without affecting or impairing in any way
the rights of Secured Party with respect to the Collateral, the obligations
of Pledgor hereunder or the Obligations, Secured Party may, but shall not be
obligated to and shall incur no liability to Pledgor or any third party for
failure to take any act which Pledgor is obligated by this Pledge Agreement
to do, during the existence of an Event of Default, exercise such rights and
powers as Pledgor might exercise with respect to the Collateral, and Pledgor
hereby irrevocably appoints Secured Party as its attorney-in-fact to, during
the existence of an Event of Default, exercise such rights and powers,
including without limitation: (i) collect by legal proceedings or otherwise
and endorse, receive and receipt for all dividends, interest, payments,
proceeds and other
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sums and property now or hereafter payable on or on account of the
Collateral; (ii) enter into any extension, reorganization, deposit, merger,
consolidation or other agreement pertaining to, or deposit, surrender,
accept, hold or apply other property in exchange for the Collateral; (iii)
insure, process and preserve the Collateral; (iv) transfer the Collateral to
its own or its nominee's name; (v) make any compromise or settlement, and
take any action it deems advisable, with respect to the Collateral; and (vi)
to notify any account pledgor on any Collateral to make payment directly to
Secured Party.
(b) So long as no Event of Default shall have occurred and be
continuing:
(i) Pledgor shall be entitled to exercise any and all
voting and other consensual rights pertaining to the Collateral or any part
thereof for any purpose not inconsistent with the terms of this Pledge
Agreement; PROVIDED, HOWEVER, that Pledgor shall give Secured Party at least
10 Business Days' prior written notice with respect to any shareholder vote
with respect to any act or undertaking which, if effected, would have a
Material Adverse Effect or would violate the Credit Agreement; and
(ii) Secured Party shall promptly execute and deliver (or
cause to be executed and delivered) to Pledgor all such proxies and other
instruments as Pledgor may from time to time reasonably request for the
purpose of enabling Pledgor to exercise the voting and other consensual
rights which it is entitled to exercise pursuant to paragraph (i) above.
(c) Upon the occurrence and during the continuation of an Event
of Default, and upon written notice from Secured Party to Pledgor, all rights
of Pledgor to exercise the voting and other consensual rights which it would
otherwise be entitled to exercise pursuant to Section 6(b)(i) shall cease,
and all such rights shall thereupon become vested in Secured Party who shall
thereupon have the sole right to exercise such voting and other consensual
rights;
(d) In order to permit Secured Party to exercise the voting and
other consensual rights which it may be entitled to exercise pursuant to
Section(6)(c)(i) and to receive all dividends and other distributions which
it is entitled to receive hereunder, (i) Pledgor shall promptly execute and
deliver (or cause to be executed and delivered) to Secured Party all such
proxies, dividend payment orders and other instruments as Secured Party may
from time to time reasonably request and (ii) without limiting the effect of
the immediately preceding clause (i), Pledgor hereby grants to Secured Party
an irrevocable proxy to vote the Pledged Stock and to exercise all other
rights, powers, privileges and remedies to which a holder of the Pledged
Stock would be entitled (including, without limitation, giving or withholding
written consents of shareholders,
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calling special meetings of shareholders and voting at such meetings), which
proxy shall be effective, automatically and without the necessity of any
action (including any transfer of any Pledged Stock on the record books of
the issuer thereof) by any other Person (including the issue of the Pledged
Stock or any officer or agent thereof), upon the occurrence and during the
continuance of an Event of Default and which proxy shall only terminate upon
the payment in full of the Obligations.
7. DEFAULT. The occurrence of any Guarantor Event of Default
shall constitute an Event of Default hereunder.
8. REMEDIES. Upon the occurrence and during the continuance of
any such Event of Default, provided that Guarantor shall then be obligated to
pay all sums then due and owing on the Guarantied Indebtedness in accordance
with Section 2.01(b) of the Guaranty, Secured Party may, at its option, and,
without notice to or demand on Pledgor and in addition to all rights and
remedies available to Secured Party under any other agreement do any one or
more of the following:
(a) GENERAL ENFORCEMENT. Foreclose or otherwise enforce
Secured Party's security interest in any manner permitted by law, or provided
for in this Pledge Agreement;
(b) SALE, ETC. Sell, lease or otherwise dispose of any
Collateral at one or more public or private sales at Secured Party's place of
business or any other place or places, including, without limitation, any
broker's board or securities exchange, whether or not such Collateral is
present at the place of sale, for cash or credit or future delivery, on such
terms and in such manner as Secured Party may determine;
(c) COSTS OF REMEDIES. Recover from Pledgor all costs
and expenses, including, without limitation, reasonable attorneys' fees,
incurred or paid by Secured Party in exercising any right, power or remedy
provided by this Pledge Agreement or by law with respect to the Collateral;
(d) ASSEMBLY OF COLLATERAL. Require Pledgor to assemble
the Collateral and make it available to Secured Party at a place to be
designated by Secured Party;
(e) TAKE POSSESSION OF COLLATERAL. Enter onto property
where Collateral is located and take possession thereof with or without
judicial process. Pledgor expressly waives any constitutional or other right
to a judicial hearing prior to the time Secured Party takes possession of the
Collateral upon default as provided herein;
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(f) VOTE OF PLEDGED STOCK. Vote or consent, and in
connection therewith Pledgor grants to Secured Party a proxy to vote or to
consent, with respect to Pledged Stock or Pledged Rights;
(g) MANNER OF SALE OF PLEDGED STOCK. Restrict the
prospective bidders or purchasers of Pledged Stock or Pledged Rights to
persons or entities who (i) will represent and agree that they are purchasing
for their own account, for investment, and not with a view to the
distribution or sale of any of the Pledged Stock or Pledged Rights; and (ii)
satisfy the offeree and purchaser requirements for a valid private placement
transaction under Section 4(2) of the Securities Act of 1933, as amended (the
"Act"), and under all applicable Securities and Exchange Commission releases,
rules and regulations. Pledgor agrees that disposition of any of the Pledged
Stock or Pledged Rights, if any, pursuant to any private sale made as
provided above may be at prices and on other terms less favorable than if the
Pledged Stock or Pledged Rights were sold at public sale, and that Secured
Party has no obligation to delay the sale of any Pledged Stock or Pledged
Rights for public sale under the Act. Pledgor agrees that a private sale or
sales made under the foregoing circumstances shall be deemed to have been
made in a commercially reasonable manner. In the event that Secured Party
elects to sell the Pledged Stock or Pledged Rights, or part of them, and
there is a public market for the Pledged Stock or Pledged Rights, in a public
sale, Pledgor shall, upon demand by Secured Party, use its best efforts to
register and qualify the Pledged Stock and/or Pledged Rights, under the Act
and all state Blue Sky or securities laws required by the proposed terms of
sale, and all expenses thereof shall be payable by Pledgor, including, but
not limited to, all costs of (i) registration or qualification of, under the
Act or any state Blue Sky or securities laws or pursuant to any applicable
rule or regulation issued pursuant thereto, any Pledged Stock or Pledged
Rights, and (ii) sale of such Pledged Shares, including, but not limited to,
brokers' or underwriters' commissions, fees or discounts, accounting and
legal fees, costs of printing and other expenses of transfer and sale. If
any consent, approval or authorization of any state, municipal or other
governmental department, agency or authority shall be necessary to effectuate
any sale or other disposition of Pledged Stock or Pledged Rights, or any part
thereof, Pledgor will execute such applications and other instruments as may
be required in connection with securing any such consent, approval or
authorization, and will otherwise use its best efforts to secure the same;
(h) MANNER OF SALE OF COLLATERAL OTHER THAN PLEDGED STOCK.
Pledgor shall be given five (5) business days' prior notice of the time and
place of any public sale or of the time after which any private sale or other
intended disposition of the Collateral other than Pledged Stock is to be
made, which notice Pledgor hereby agrees shall be deemed reasonable notice
thereof; and
(i) APPLICATION OF RECEIPTS. Secured Party shall apply
all sums received or collected from or on account of the Collateral,
including, without limitation, the proceeds of any sale thereof, to the
payment of the costs and expenses
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incurred in preserving and enforcing the rights of Secured Party in effecting
a sale of such Collateral (including, without limitation, reasonable
attorneys' fees and legal expenses, including fees and expenses of in-house
counsel) and to the payment of the Obligations in such order and manner as
Secured Party, in its sole discretion, elects.
9. DELIVERY TO AND RIGHTS OF PURCHASER. Upon any sale or other
disposition pursuant to this Pledge Agreement, Secured Party shall have the
right to deliver, assign and transfer to the purchaser thereof the Collateral
or portion thereof so sold or disposed of. Each purchaser at any such sale
or other disposition (including Secured Party) shall hold the Collateral free
from any claim or right of whatever kind, including any equity or right of
redemption of Pledgor, and Pledgor specifically waives (to the extent
permitted by law), upon any such sale or disposition pursuant to this Pledge
Agreement, all rights of redemption, stay or appraisal which it has or may
have under any rule of law or statute now existing or hereafter adopted.
10. COLLECTION OF COLLATERAL PAYMENTS.
(a) COLLECTION OF PAYMENTS. Pledgor shall, at its sole
cost and expense, take all reasonable and necessary action to obtain payment,
when due and payable, of all sums due or to become due with respect to any
Collateral ("Collateral Payments" or a "Collateral Payment"), including,
without limitation, the taking of such action with respect thereto as Secured
Party may request, or, in the absence of such request, as Pledgor may
reasonably deem advisable; provided, however, that Pledgor shall not, without
the prior written consent of Secured Party, grant or agree to any rebate,
refund, compromise or extension with respect to any Collateral Payment. Upon
the request of Secured Party, Pledgor will notify and direct any account
pledgor who is or might become obligated to make any Collateral Payment, to
make payment thereof to Secured Party (or to Pledgor in care of Secured
Party) at such address as Secured Party may designate. Pledgor will
reimburse Secured Party promptly upon demand for all out-of-pocket costs and
expenses, including reasonable attorneys' fees and litigation expenses,
incurred by Secured Party in seeking to collect its Collateral Payment.
(b) PAYMENTS IN TRUST. Upon the request of Secured Party,
Pledgor will, forthwith upon receipt, transmit and deliver to Secured Party,
in the form received, all cash, checks, drafts and other instruments for the
payment of money (properly endorsed where required so that such items may be
collected by Secured Party) which may be received by Pledgor at any time as
payment on account of any Collateral Payment and if such request shall be
made, until delivery to Secured Party, such items will be held in trust for
Secured Party and will not be commingled by Pledgor with any of its other
funds or property. Thereafter, Secured Party is hereby authorized and
empowered to endorse the name of Pledgor on any check, draft or other
instrument for the payment of money received by Secured Party on account of
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any Collateral Payment if Secured Party believes such endorsement is
necessary or desirable for purposes of collection.
(c) INDEMNIFICATION. Pledgor hereby indemnifies and saves
harmless Secured Party and its agents, officers and employees from and
against all liabilities and reasonable expenses on account of any adverse
claim asserted against Secured Party relating to any moneys received by
Secured Party on account of any of Pledgor's Collateral Payments and such
obligation of Pledgor shall continue in effect after and notwithstanding the
discharge of the Obligations and the release of the security interest granted
in Paragraph 1 above.
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11. STANDARD OF CARE. The powers conferred on Secured Party
hereunder are solely to protect its interest in the Collateral and shall not
impose any duty upon it to exercise any such powers. Except for the exercise
of reasonable care in the custody of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, Secured Party shall
have no duty as to any Collateral, it being understood that Secured Party
shall have no responsibility for (a) ascertaining or taking action with
respect to calls, conversions, exchanges, maturities, tenders or other
matters relating to any Collateral, whether or not Secured Party has or is
deemed to have knowledge of such matters, (b) taking any necessary steps
(other than steps taken in accordance with the standard of care set forth
above to maintain possession of the Collateral) to preserve rights against
any parties with respect to any Collateral, (c) taking any necessary steps to
collect or realize upon the Obligations or any guarantee therefor, or any
part thereof, or any of the Collateral, or (d) initiating any action to
protect the Collateral against the possibility of a decline in market value.
Secured Party shall be deemed to have exercised reasonable care in the
custody and preservation of Collateral in its possession if such Collateral
is accorded treatment substantially equal to that which Secured Party accords
its own property consisting of negotiable securities.
12. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS. This
Pledge Agreement shall create a continuing security interest in the
Collateral and shall (a) remain in full force and effect until the payment in
full of all Obligations and the cancellation or termination of the
Commitments, (b) be binding upon Pledgor, its successors and assigns, and (c)
inure, together with the rights and remedies of Secured Party hereunder, to
the benefit of Secured Party and its successors, transferees and assigns.
Without limiting the generality of the foregoing clause (c), but subject to
the provisions of Section 10.08 of the Credit Agreement, any Lender may
assign or otherwise transfer any Loans held by it to any other Person, and
such other Person shall thereupon become vested with all the benefits in
respect thereof granted to Lenders herein or otherwise. Upon the payment in
full of Obligations, the cancellation or termination of the Commitments, the
security interest granted hereby shall terminate and all rights to the
Collateral shall revert to Pledgor. Upon any such termination Secured Party
will, at Pledgor's expense, execute and deliver to Pledgor such documents as
Pledgor shall reasonably request to evidence such termination and Pledgor
shall be entitled to the return, upon its request and at its expense, against
receipt and without recourse to Secured Party, of such of the Collateral as
shall not have been sold or otherwise applied pursuant to the terms hereof.
13 SECURED PARTY AS AGENT.
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(a) Secured Party has been appointed to act as Secured Party
hereunder by Lenders, Secured Party shall be obligated, and shall have the
right hereunder, to make demands, to give notices, to exercise or refrain
from exercising any rights, and to take or refrain from taking any action
(including, without limitation, the release or substitution of Collateral),
solely in accordance with this Pledge Agreement and the Credit Pledge
Agreement.
(b) Secured Party shall at all times be the same Person that
is Agent under the Acquisition Sub Credit Agreement. Written notice of
resignation by Agent pursuant to Article IX of the Acquisition Sub Credit
Agreement shall also constitute notice of resignation as Secured Party under
this Pledge Agreement; removal of Agent pursuant to Article IX of the
Acquisition Sub Credit Agreement shall also constitute removal as Secured
Party under this Pledge Agreement; and appointment of a successor Agent
pursuant to Article IX of the Acquisition Sub Credit Agreement shall also
constitute appointment of a successor Secured Party under this Pledge
Agreement. Upon the acceptance of any appointment as Agent under Article IX
of the Acquisition Sub Credit Agreement by a successor Agent, that successor
Agent shall thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the retiring or removed Secured Party under
this Pledge Agreement, and the retiring or removed Secured Party under this
Pledge Agreement shall promptly (i) transfer to such successor Secured Party
all sums, securities and other items of Collateral held hereunder, together
with all records and other documents necessary or appropriate in connection
with the performance of the duties of the successor Secured Party under this
Pledge Agreement, and (ii) execute and deliver to such successor Secured
Party such amendments to financing statements, and take such other actions,
as may be necessary to appropriate in connection with the assignment to such
successor Secured Party of the security interests created hereunder,
whereupon such retiring or removed Secured Party shall be discharged from its
duties and obligations under this Pledge Agreement. After any retiring or
removed Agent's resignation or removal hereunder as Secured Party, the
provisions of this Pledge Agreement shall insure to its benefit as to any
actions taken or omitted to be taken by it under this Pledge Agreement while
it was Secured Party hereunder.
14. CUMULATIVE RIGHTS. The rights, powers and remedies of Secured
Party under this Pledge Agreement shall be in addition to all rights, powers
and remedies given to Secured Party by virtue of any statute or rule of law,
the Acquisition Sub Credit Agreement, the Loan Documents, the Guaranty or any
other agreement, all of which rights, powers and remedies shall be cumulative
and may be exercised successively or concurrently without impairing Secured
Party's security interest in the Collateral.
15. WAIVER. Any waiver, forbearance or failure or delay by Secured
Party in exercising any right, power or remedy shall not preclude the further
exercise thereof, and every right, power or remedy of Secured Party shall
continue in full force
14
<PAGE>
and effect until such right, power or remedy is specifically waived in a
writing executed by Secured Party. Pledgor waives any right to require
Secured Party to proceed against any person or to exhaust any Collateral or
to pursue any remedy in Secured Party's power, subject to the express
provision of Section 2.01(b) of the Guaranty.
16. SETOFF. Pledgor agrees that Secured Party may exercise its
rights of setoff with respect to the Obligations in the same manner as if the
Obligations were unsecured.
17. BINDING UPON SUCCESSORS. All rights of each party hereto shall
inure to the benefit of its successors and assigns, and all obligations of
each party hereto shall bind its successors and assigns.
18. ENTIRE AGREEMENT; SEVERABILITY; COUNTERPARTS. This Pledge
Agreement contains the entire pledge agreement between Secured Party and
Pledgor. If any of the provisions of this Pledge Agreement shall be held
invalid or unenforceable, this Pledge Agreement shall be construed as if not
containing those provisions and the rights and obligations of the parties
hereto shall be construed and enforced accordingly. This Agreement may be
executed in counterparts all of which together shall constitute but one
agreement.
19. CHOICE OF LAW. THIS PLEDGE AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
CALIFORNIA, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT TO THE
EXTENT THAT THE UNIFORM COMMERCIAL CODE PROVIDES THAT THE VALIDITY OR
PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN
RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF CALIFORNIA. Unless otherwise defined
herein or in the Credit Pledge Agreement, terms used in Articles 8 and 9 of
the Uniform Commercial Code in the State of California are used herein as
therein defined. Any disputes or claims relating to this Pledge Agreement
shall be resolved by arbitration in accordance with the terms and conditions
set forth in Section 10.17 of the Acquisition Sub Credit Agreement and
Section 9.01 of the Guaranty.
20. AMENDMENT. This Pledge Agreement may not be amended or
modified except by a writing signed by each of the parties hereto.
15
<PAGE>
21. NOTICES. Communications provided for herein shall be in
writing and shall be delivered, mailed, postage prepaid or communicated in
accordance with the Acquisition Sub Credit Agreement.
22. ADDRESS; TRADE NAMES; RECORDS. The REIT represents that its
chief place of business is 1873 South Bellaire Street, Suite 1700, Denver,
Colorado, that "AIMCO" constitutes the only trade name or style used by the
REIT; and that the REIT's records concerning the Collateral are kept at the
REIT's chief place of business listed above. Each Common Stockholder
represents that its place of business is as follows: c/o Apartment
Investment and Management Company, 1873 South Bellaire Street, Suite 1700,
Denver, Colorado, and that its records concerning the Collateral are kept at
1873 South Bellaire St., Suite 1700, Denver, Colorado.
23. CAPTIONS. All captions used in this Pledge Agreement are for
convenience only and shall not affect the construction of this Pledge
Agreement.
24. MODIFICATIONS. No modification or amendment of this Pledge
Agreement shall be effective unless in writing and signed by the parties
sought to be charged or bound hereby.
25. PLEDGOR'S THIRD PARTY WAIVERS.
(a) RIGHTS OF SECURED PARTY. Pledgor authorizes Secured
Party or any Lender to perform any or all of the following acts at any time
in its sole discretion, all without notice to Pledgor, without affecting
Pledgor's obligations under this Pledge Agreement or any other Loan Documents
and without affecting the Liens and encumbrances against the Collateral in
favor of Secured Party:
(i) Secured Party or any Lender may alter any terms
of the Obligations or any part thereof, including renewing,
compromising, extending or accelerating, or otherwise changing the time
for payment of, or increasing or decreasing the rate of interest on,
the Obligations or any part thereof.
(ii) Secured Party or any Lender may take and hold
security for the Obligations, accept additional or substituted security,
and subordinate, exchange, enforce, waive, release, compromise, fail to
perfect and sell or otherwise dispose of any such security.
(iii) Secured Party or any Lender may direct the
order and manner of any sale of all or any part of any security now or
later to be held for the Obligations, and Secured Party or any Lender
may also bid at any such sale.
16
<PAGE>
(iv) Secured Party or any Lender may apply any payments or
recoveries from Company, Pledgor, any Guaranty or any other source, and
any proceeds of any security, to the obligations under the Loan
Documents and the Obligations hereunder in such manner, order and
priority as Secured Party or such Lender may elect.
(v) Secured Party or any Lender may release any Guarantor
of its liability for the Obligations or any part thereof and the
Acquisition Sub of its liability under the Acquisition Sub Credit
Agreement or the Loan Documents or any part thereof.
(vi) Secured Party or any Lender may substitute, add or
release any one or more guarantors or endorsers.
(vii) In addition to the Obligations, Secured Party or any
Lender may extend other credit to the Acquisition Sub or any Guarantor,
and may take and hold security for the credit so extended, all without
affecting Pledgor's liability hereunder and without affecting the liens
and encumbrances against the Collateral hereunder.
(b) ABSOLUTE OBLIGATIONS. Pledgor expressly agrees that until all
Obligations are paid and performed in full and each and every term, covenant and
condition of this Pledge Agreement to which Pledgor is a party is fully
performed, Pledgor shall not be released of its obligations, waivers and
agreements set forth herein nor shall the validity, enforceability or priority
of the liens and encumbrances against the Collateral in favor of Secured Party
be affected in any manner by or because of:
(i) Any act or event which might otherwise discharge,
reduce, limit or modify Pledgor's obligations hereunder or the liens
and encumbrances against the Collateral in favor of Secured Party;
(ii) Any waiver, extension, modification, forbearance, delay
or other act or omission of Secured Party or any Lender or any failure
to proceed promptly or otherwise as against the Acquisition Sub, any
Guarantor, Pledgor or any other Person or any security;
(iii) Any action, omission or circumstance which might
increase the likelihood that Secured Party or any Lender might enforce
the rights granted under this Pledge Agreement or which might affect
the rights or remedies of Pledgor as against the Acquisition Sub or any
Guarantor; or
17
<PAGE>
(iv) Any dealings occurring at any time between the
Acquisition Sub or any Guarantor and Secured Party or any Lender,
whether relating to the Obligations or otherwise.
Pledgor hereby expressly waives and surrenders any defense to the
performance of the obligations under this Pledge Agreement or to the
enforcement of the liens and encumbrances against the Collateral in favor of
Secured Party based upon any of the foregoing acts, omissions, agreements,
waivers or matters described in this subsection. It is the purpose and
intent of this Pledge Agreement that the obligations of Pledgor under this
Pledge Agreement shall be absolute and unconditional under any and all
circumstances.
(c) PLEDGOR'S WAIVERS. Pledgor waives:
(i) All statutes of limitations as a defense to any action
or proceeding brought against Pledgor or the Collateral by Secured
Party or any Lender, to the fullest extent permitted by law;
(ii) Any right it may have to require Secured Party or any
Lender to proceed against the Acquisition Sub, any Guarantor or any
other Person, proceed against or exhaust any security held from the
Acquisition Sub, any Guarantor or any Person, or pursue any other
remedy in Secured Party's or such Lender's power to pursue;
(iii) Any defense based on any claim that Pledgor's
obligations exceed or are more burdensome than those of any Guarantor
or the Acquisition Sub;
(iv) Any defense: (A) based on any legal disability of the
Acquisiton Sub or any Guarantor, (B) based on any release, discharge,
modification, impairment or limitation of the liability of the
Acquisiton Sub or any Guarantor to Secured Party or any Lender from any
cause, whether consented to by Secured Party or arising by operation of
law, (C) arising out of or able to be asserted as a result of any case,
action or proceeding before any court or other Governmental Authority
relating to any Insolvency Proceeding or (D) arising from any rejection
or disaffirmance of the Obligations, or any part thereof, or any
security held therefor, in any such Insolvency Proceeding;
(v) Any defense based on any action taken or omitted by
Secured Party or any Lender in any Insolvency
18
<PAGE>
Proceeding involving the Acquisiton Sub or any Guarantor or any other
Pledgor, including any election to have Secured Party's or such
Lender's claim allowed as being secured, partially secured or
unsecured, any extension of credit by Secured Party or any Lender to
the Acquisiton Sub or any Guarantor in any Insolvency Proceeding, and
the taking and holding by Secured Party or such Lender of any security
for any such extension of credit;
(vi) All presentments, demands for performance, notices of
nonperformance, protests, notices of protest, notices of dishonor,
notices of intention to accelerate, notices of acceleration, notices of
acceptance of this Pledge Agreement and of the existence, creation, or
incurring of new or additional indebtedness, and demands and notices of
every kind; and
(vii) Any defense based on or arising out of any defense that
the Acquisiton Sub or any Guarantor or any of their affiliates may have
to the payment or performance of the Obligations.
(d) WAIVERS OF SUBROGATION AND OTHER RIGHTS.
(i) Upon any Event of Default, in its sole discretion,
without prior notice to or consent of Pledgor, Secured Party or any
Lender may elect to: (A) foreclose against any Collateral for the
Obligations, (B) accept a transfer of any such Collateral for the
Obligations in lieu of foreclosure, (C) compromise or adjust the
Obligations or any part thereof or make any other accommodation with
any Guarantor or any Person, or (D) exercise any other remedy against
any Guarantor or any Collateral for the Obligations. No such action by
Secured Party or any Lender shall release or limit Secured Party's or
the Lenders' rights hereunder, even if the effect of the action is to
deprive Pledgor of any subrogation rights, rights of indemnity, or
other rights to collect reimbursement from any Guarantor or any other
Person for any sums paid to Secured Party or such Lender, whether
contractual or arising by operation of law or otherwise. Pledgor
expressly agrees that under no circumstances shall it be deemed to have
any right, title, interest or claim in or to any property to be held by
Secured Party or any third party after any foreclosure or transfer in
lieu of foreclosure of any security for the Obligations.
(ii) Regardless of whether Pledgor may have made any
payments to Secured Party, Pledgor forever waives: (A) all rights of
subrogation, all rights of indemnity, and any other rights to collect
reimbursement from any Guarantor on account of the Collateral
19
<PAGE>
encumbered by this Pledge Agreement, whether contractual or arising by
operation of law (including the United States Bankruptcy Code or any
successor or similar statute) or otherwise; (B) all rights to enforce
any remedy that Secured Party or any Lender may have against any
Guarantor or any Person granting collateral for the Obligations; and
(C) all rights to participate in any Collateral now or later to be held
by Secured Party.
(iii) Regardless of whether Pledgor may have made any
payments to Lender, Pledgor hereby absolutely, irrevocably and
unconditionally, now and forever, waives, releases and covenants not to
sue Acquisition Sub or any shareholder thereof in respect of: (i) all
rights of restitution, subrogation, exoneration, indemnification and
contribution, all rights to collect reimbursement and all other rights,
howsoever denominated, to recover from Acquisition Sub, any shareholder
thereof any sums paid to Secured Party or any Lender whether pursuant
hereto or otherwise paid on the Underlying Debt, and any other rights
arising from the existence, payment, performance or enforcement of
Pledgor's obligations under this Pledge Agreement or any Collateral
Document, (ii) all rights to enforce any remedy that the Secured Party
or any Lender may have against Acquisition Sub, (iii) all rights to
participate in any security now or later to be held by Secured Party or
any Lender for the Underlying Indebtedness, and (iv) all rights to
require Acquisition Sub to perform the Underlying Indebtedness; in each
case whether now exiting existing or hereafter arising and whether
contractual or arising in equity, by statute, common law or otherwise
by operation of law (including the United States Bankruptcy Code or any
successor or similar statute) or otherwise. The foregoing waivers,
releases and covenants are a material part of the consideration to the
Lenders for extending the credit under the Acquisition Sub Credit
Agreement to the Acquisition Sub and may be enforced by and inure to
the benefit of Secured Party, each Lender, Acquisition Sub and its
shareholders from time to time.
(e) REVIVAL AND REINSTATEMENT. If Secured Party or any Lender
is required to pay, return or restore to the Acquisition Sub, any Guarantor
or any other Person any amounts previously paid under the Loan Documents
because of any Insolvency Proceeding affecting the Acquisition Sub or any
Guarantor or any other reason, the obligations of Pledgor shall be reinstated
and revived and the rights of Secured Party and such Lender shall continue
with regard to such amounts, all as though they had never been paid.
(f) ELECTION OF REMEDIES. Without limiting the foregoing,
Pledgor waives all rights and defenses arising out of an election of remedies
by the
20
<PAGE>
Secured Party or any Lender even though that election of remedies has
destroyed the Pledgor's rights of subrogation and reimbursement against the
Acquisition Sub, any Guarantor or any other Pledgor by operation of law or
otherwise.
(g) ADDITIONAL OBLIGATIONS. Pledgor's obligations under this
Pledge Agreement are in addition to Pledgor's obligations under any other
existing or future agreements, each of which shall remain in full force and
effect until it is expressly modified or released in a writing signed by
Secured Party with any required consent of the Lenders. Secured Party may
exercise its remedies hereunder, without first proceeding against the
Acquisition Sub, any Guarantor, any other Person or any collateral that
Secured Party may hold, and without pursuing any other remedy. Secured
Party's rights under this Pledge Agreement shall not be exhausted by any
action by Secured Party until all Obligations have been paid and performed in
full.
(h) CONSIDERATION. Pledgor acknowledges: that it expects to
benefit from the Lenders' extension of the credit under the Loan Documents to
the Acquisitioin Sub because of its relationship to the Acquisition Sub; that
it is receiving substantial benefits (which are reasonably equivalent
consideration for Pledgor's execution hereof) from the transaction of which
that extension of indebtedness forms a part; and that it is executing this
Pledge Agreement in consideration of those benefits.
(g) INTER-CREDITOR PROVISIONS. As among the Agent and the
Lenders only, nothing contained in this Pledge Agreement shall limit any of
the approval rights of the Agent or the Lenders set forth in the Loan
Documents.
26. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. ALL JUDICIAL
PROCEEDINGS BROUGHT AGAINST PLEDGOR ARISING OUT OF OR RELATING TO THIS PLEDGE
AGREEMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE STATES OF NEW YORK OR CALIFORNIA, AND BY EXECUTION AND
DELIVERY OF THIS PLEDGE AGREEMENT PLEDGOR ACCEPTS FOR ITSELF AND IN
CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE
NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF
FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT
RENDERED THEREBY IN CONNECTION WITH THIS PLEDGE AGREEMENT. Pledgor hereby
agrees that service of all process in any such proceeding in any such court
may be made by registered or certified mail, return receipt requested, to
Pledgor at its address provided in Section 24, such service being hereby
acknowledged by Pledgor to be sufficient for personal jurisdiction in any
action against Pledgor in any such court and to be otherwise effective and
binding service in every respect. Nothing herein shall affect the right to
serve process in any other manner permitted by law or shall limit the right
of Secured Party to bring proceedings against Pledgor in the courts of any
other jurisdiction.
21
<PAGE>
EXECUTED as of this 5th day of May, 1997.
PLEDGOR:
AIMCO Properties L.P.,
a Delaware limited partnership
By:
------------------------------------------
Peter K. Kompaniez
Vice President
--------------------------------------------
Peter K. Kompaniez
---------------------------------------
Terry Considine
22
<PAGE>
SCHEDULE 1
The following shares of capital stock in AIMCO/NHP Holdings, Inc.:
- --------------------------------------------------------------------------
Holder Description of Par Value Quantity
Shares
- --------------------------------------------------------------------------
AIMCO PROPERTIES, Series A Preferred $.01 95,000 shares
L.P., a Delaware Stock of AIMCO/NHP
limited partnership Holdings, Inc.
- --------------------------------------------------------------------------
Terry Considine Common Stock of $.01 4,000 shares
AIMCO/NHP
Holdings, Inc.
- --------------------------------------------------------------------------
Peter K. Kompaniez Common Stock of $.01 1,000 shares
AIMCO/NHP
Holdings, Inc.
- --------------------------------------------------------------------------
23
<PAGE>
EXHIBIT A
PLEDGE AMENDMENT
This Pledge Amendment, dated _____________, 19__, is delivered pursuant to
Section 5(p) of the Pledge Agreement referred to below. The undersigned hereby
agree(s) that this Pledge Amendment may be attached to the Pledge Agreement
dated May 5, 1997, between the undersigned and Bank of America National Trust
and Savings Association, a national banking association, as Agent, as Secured
Party (the "Pledge Agreement"), and that the Pledged Shares listed on this
Pledge Amendment shall be deemed to be part of the Pledged Stock and shall
become part of the Collateral and shall secure payment and performance of the
Obligations.
PLEDGOR:
By
-------------------------------------
- -------------------------------------------------------------------------------
Holder Description of Par Value Quantity
Shares
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
24
<PAGE>
Exhibit F
OPINION REQUIREMENTS
1
<PAGE>
LEGAL OPINION REQUIREMENTS
FOR THE
SYNDICATED CREDIT FACILITIES TO
AIMCO PROPERTIES, L.P. AND ITS AFFILIATES
IN CONNECTION WITH
THE ACQUISITION OF STOCK IN
NHP, INC.
OPINIONS REQUIRED UNDER CREDIT FACILITY #2 (ACQUISITION FINANCING TO THE
ACQUISITION SUBSIDIARY)
REQUIRED OPINIONS AS TO THE COMPANY COUNSEL TO OPINE
----------------------------------- ----------------
(AIMCO Properties, LP)
1. The Company is limited partnership duly organized Skadden, Arps
validly existing and in good standing under the laws of
the State of Delaware.
2. The Company has the requisite partnership power and " "
partnership authority (i) to own and operate its
properties and assets; (ii) to carry out its business as
such business is currently being conducted; (iii) to carry
out the terms and conditions applicable to it under the
Loan Documents and (iv) to acquire a preferred stock
interest in the Acquisition Subsidiary on the terms set
forth in the relevant preferred stock documents.
3. The execution, delivery and performance of the Loan " "
Documents by the Company and the acquisition of a
preferred stock interest in the Acquisition Subsidiary on
the terms set forth in the relevant preferred stock
documents have been duly authorized by all requisite
partnership action on the part of the Company and the
Loan Documents have been duly executed and delivered
by the Company.
4. The execution and delivery of the Loan Documents, " "
the consummation of the Loans and the acquisition of a
preferred stock interest in the Acquisition Subsidiary on
the terms set forth in the relevant preferred stock
documents by the Company will not conflict with or
result in a violation of any applicable law or rule
affecting the Company.
2
<PAGE>
5. No consent, approval, authorization, or other action by, " "
or filing with, any federal, state, or local governmental
authority is required in connection with the execution
and delivery by the Company of the Loan Documents,
the consummation of the Loans or the acquisition of a
preferred stock interest in the Acquisition Subsidiary on
the terms set forth in the relevant preferred stock
documents
6. The execution and delivery of the Loans Documents, " "
the consummation of the loan by the Company and the
acquisition of a preferred stock interest in the
Acquisition Subsidiary on the terms set forth in the
relevant preferred stock documents will not conflict
with or result in a violation of the Company's
Organization Documents.
7. The execution and delivery of the Loan Documents " "
and consummation of the loans by the Company will not
conflict with or result in a violation of any judgment,
order, or decree of any court or governmental agency to
which the Company is a party or by which it is bound.
(Based on an officer's certificate as to judgments,
orders and decrees.)
8. The execution and delivery of the Loan Documents, " "
the consummation of the Loans by the Company and the
acquisition of a preferred stock interest in the
Acquisition Subsidiary on the terms set forth in the
relevant preferred stock documents will not conflict with
or result in a violation of any material contract,
indenture, instrument, or other agreement to which the
Company is a party or by which it is bound. (Based on
an officer's certificate as to material contracts, etc.)
9. The Loan Documents constitute legal, valid, and " "
binding obligations of the Company, enforceable in
accordance with their terms.
3
<PAGE>
REQUIRED OPINIONS AS TO THE REIT COUNSEL TO OPINE
-------------------------------- ----------------
I. The REIT is a corporation duly organized, validly Maryland counsel to
existing, and in good standing under the laws of the the REIT
State of Maryland.
II. The REIT has the requisite corporate power and " "
corporate authority (i) to own and operate its properties
and assets; (ii) to carry out its business as such
business is currently being conducted; and (iii) to carry
out the terms and conditions applicable to it under the
Loan Documents.
III. The execution, delivery, and performance of the Loan " "
Documents by the REIT have been duly authorized by all
requisite corporate action on the part of the REIT and
the Loan Documents have been duly executed and delivered
by the REIT.
IV. The execution and delivery of the Loan Documents by Maryland counsel to
the REIT will not conflict with or result in a violation the REIT and Skadden,
of any applicable law or rule affecting the REIT. Arps
V. No consent, approval, authorization, or other action " "
by, or filing with, any federal, state, or local
governmental authority is required in connection with the
execution and delivery by the REIT of the Loan Documents.
VI. The execution and delivery of the Loan Documents by Maryland counsel to
the REIT will not conflict with or result in a violation the REIT
of the REIT's Organizational Documents.
VII. The execution and delivery of the Loan Documents by Maryland counsel to
the REIT will not conflict with or result in a violation the REIT and Skadden,
of any judgment, order, or decree of any court or Arps
governmental agency to which the REIT is a party or by
which it is bound. (Based on an officer's certificate as
to judgments, orders and decrees.)
VIII. The execution and delivery of the Loan Documents Skadden, Arps
by the REIT will not conflict with or result in a
violation of any contract, indenture, instrument, or
other agreement to which the REIT is a party or by which
it is bound. (Based on an officer's certificate as to
material contracts, etc.)
4
<PAGE>
IX. The Loan Documents constitute legal, valid, and " "
binding obligations of the REIT, enforceable in accordance
with their terms.
X. Commencing with the REIT's initial taxable year ended " "
December 31, 1994, the REIT was organized in conformity
with the requirements for qualification as a real estate
investment trust under the Code, and (i) the REIT's actual
method of operation since its formation and (ii) the REIT's
proposed method of operation, including the performance of
any of its obligations pursuant to the Loan Documents, will
enable it to meet the requirements for qualification and
taxation as a real estate investment trust under the Code.
5
<PAGE>
REQUIRED OPINIONS AS TO THE ACQUISITION
---------------------------------------
SUBSIDIARY COUNSEL TO OPINE
---------- ----------------
I. The Subsidiary is a corporation duly organized validly Skadden, Arps
existing and in good standing under the laws of the State
of Delaware.
II. The Subsidiary has the requisite partnership power and " "
partnership authority (i) to own and operate its properties
and assets; (ii) to carry out its business as such business
is currently being conducted; and (iii) to carry out the
terms and conditions applicable to it under the Loan
Documents.
III. The execution, delivery and performance of the Loan " "
Documents by the Subsidiary have been duly authorized by all
requisite partnership action on the part of the Subsidiary
and the Loan Documents have been duly executed and delivered
by the Subsidiary.
IV. The execution and delivery of the Loan Documents and " "
consummation of the Loans by the Subsidiary will not conflict
with or result in a violation of any applicable law or rule
affecting the Subsidiary.
V. No consent, approval, authorization, or other action by, " "
or filing with, any federal, state, or local governmental
authority is required in connection with the execution and
delivery by the Subsidiary of the Loan Documents and the
consummation of the Loans.
VI. The execution and delivery of the Loan Documents and " "
consummation of the Loan by the Subsidiary will not conflict
with or result in a violation of the Subsidiary's
Organizational Documents.
VII. The execution and delivery of the Loan Documents and " "
consummation of the Loans by the Subsidiary will not
conflict with or result in a violation of any judgment,
order, or decree of any court or governmental agency to
which the Subsidiary is a party or by which it is bound.
(Based on an officer's certificate as to judgments, orders
and decrees.)
6
<PAGE>
VIII. The execution and delivery of the Loan Documents, and " "
consummation of the Loan by the Subsidiary will not conflict
with or result in a violation of any material contract,
indenture, instrument, or other agreement to which the
Subsidiary is a party or by which it is bound. (Based on an
officer's certificate as to material contracts, etc.)
IX. The Loan Documents constitute legal, valid, and binding " "
obligations of the Subsidiary, enforceable in accordance with
their terms.
X. The extension, obtaining and arranging of credit pursuant " "
to the Loan Documents and the application of the proceeds
thereof as provided in the Credit Agreement do not violate
Regulation G, U or X of the Board of Governors of the Federal
Reserve System.
XI. The REIT and the Common Stockholders are the record owners " "
of the Pledged Stock. The Pledge Agreement creates a valid
security interest in the interest of the REIT and the Common
Stockholders in the Pledged Stock (as defined in the Pledge
Agreement), which security interest is perfected by possession
by Bank of America, as Agent, of the shares evidencing the
Pledged Stock.
7
<PAGE>
EXHIBIT G
TO ACQUISITION SUB CREDIT AGREEMENT
COMPLIANCE CERTIFICATE
____________, 1997
Bank of America National Trust and
Savings Association, as Agent
CRESG #1357
555 South Flower Street, 6th Floor
Los Angeles, California 90071
Attn: Unit Manager
Re: Credit Agreement, dated as of May 5, 1997 (as amended,
modified, supplemented, restated, or renewed from time to time, the
"Credit Agreement"), by and between AIMCO/NHP Holdings, Inc., a
Delaware corporation (the "Company"), the lenders from time to time
party to the Credit Agreement (the "Lenders"), BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION, a national banking
association, as one of the Lenders, SMITH BARNEY MORTGAGE CAPITAL
GROUP, INC., a Delaware corporation, as one of the Lenders and BANK OF
AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, a national banking
association, as Agent for the Lenders ("Agent")
Ladies and Gentlemen:
Reference is made to the Credit Agreement. Each initially capitalized term
not defined in this Compliance Certificate (including the schedules and other
attachments hereto, this "Certificate") shall have the meaning ascribed to such
term in the Credit Agreement.
The undersigned hereby certifies to Agent and each of the Lenders that, to
the best of the undersigned's knowledge after diligent inquiry with respect to
the fiscal quarter ending _____________, 199_ (the "Reporting Period"):
(1)REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company, the REIT, and their respective Subsidiaries contained
in the Loan Documents, including those contained in Article V of the Agreement,
are true and correct in all material respects as of the date hereof and were
true and correct at all times during the Reporting Periods;
1
<PAGE>
(2)COVENANTS. During the Reporting Period, the Company, the
REIT, and their respective Subsidiaries observed and performed all of their
respective covenants and other agreements under the Loan Documents, and
satisfied each of the conditions contained therein to be observed, performed or
satisfied by the Company, the REIT, and their respective Subsidiaries; and
(3)NO DEFAULT; EVENT OF DEFAULT. [Except as expressly set
forth in attached SCHEDULE 1,] no Default or Event of Default exists as of the
date hereof or existed at any time during the Reporting Period. [SCHEDULE 1
sets forth a true, correct and complete description of the nature and period of
existence of each Default or Event of Default that exists as of the date hereof
or existed at any time during the Reporting Periods and the actions that the
Company, the REIT, or their respective Subsidiaries have taken, are taking and
propose to take with respect thereto].
IN WITNESS WHEREOF, this Certificate is executed by the undersigned this
____ day of ____________, 19__.
AIMCO/NHP Holdings, Inc.,
a Delaware corporation
By:
-------------------------------------
Name:
-----------------------------------
Its:
------------------------------------
By:
-------------------------------------
Name:
-----------------------------------
Its:
------------------------------------
2
<PAGE>
SCHEDULE 1
to Compliance Certificate
DEFAULTS; EVENTS OF DEFAULT
____________, 199_
Condition(s) or event(s) constituting a Default or Event of Default:
_______________________
______________________________________________________________________________
___________
PERIOD OF EXISTENCE:
Remedial actions taken or proposed to be taken with respect to each such Default
or Event of
Default:_____________________________________________________________________
____
3
<PAGE>
EXHIBIT H
(to Acquisition Sub Credit Agreement)
ASSIGNMENT AND ACCEPTANCE AGREEMENT
_________________, 1997
This ASSIGNMENT AND ACCEPTANCE AGREEMENT ("Agreement") is entered
into by _______________________________________________________________, as
Assignor ("Assignor") and ___________________________________________________
as Assignee ("Assignee"). Capitalized terms used in this Agreement without
definition have the meanings specified in the Acquisition Sub Credit Agreement
described below.
RECITALS
A. Assignor is party to the Credit Agreement (Acquisition Sub
Facility) dated as of May 5, 1997 (as the same may be amended, modified or
supplemented from time to time, the "Acquisition Sub Credit Agreement"),
among AIMCO/NHP Holdings, Inc., a Delaware corporation (the "Company"), the
Lenders, including BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as
one of the Lenders, SMITH BARNEY MORTGAGE CAPITAL GROUP, INC., as one of the
Lenders, and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Agent
(the "Agent") for the Lenders;
B. Pursuant to the Acquisition Sub Credit Agreement, Assignor has
committed to make a loans ("the Loan") to the Company in the amount of
$__________ ("Assignor's Commitment") and the Lenders have committed to make
loans to the Company in an aggregate amount of $76,000,000 (the "Aggregate
Commitment" thereunder);
C. As of the date hereof, Assignor has made the Loan to the Company
under the Credit Agreement in the aggregate principal outstanding amount of
___________, and the Lenders have made loans to the Company under the
Acquisition Sub Credit Agreement in the aggregate principal outstanding
amount of _________;
D. Assignor wishes to assign to Assignee [part of] the rights and
obligations of Assignor under the Acquisition Sub Credit Agreement in respect of
Assignor's Commitment in an amount equal to $____________ (the "Assigned
1
<PAGE>
Amount") on the terms and subject to the conditions set forth herein and
Assignee wishes to accept assignment of such rights and to assume such
obligations from Assignor on such terms and subject to such conditions.
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, the parties hereto agree as follows:
1. ASSIGNMENT AND ACCEPTANCE.
(a) Subject to the terms and conditions of this Agreement,
upon the Effective Date (as hereinafter defined) (i) Assignor hereby sells,
transfers and assigns to Assignee, and (ii) Assignee hereby purchases,
assumes and undertakes from Assignor, without recourse and without
representation or warranty (except as provided in this Agreement),
_____________% (the "Assignee's Percentage Share") of (A) the Loan made by
Assignor and (B) all related rights, benefits, obligations, liabilities and
indemnities of Assignor under and in connection with the Acquisition Sub
Credit Agreement and the Loan Documents.
(b) With effect on and after the Effective Date (as defined in
Section 5), Assignee shall be a party to the Acquisition Sub Credit Agreement
and succeed to all of the rights and be obligated to perform all of the
obligations of a Lender under the Acquisition Sub Credit Agreement with a
Commitment equal to $__________. Assignee agrees that it will perform in
accordance with their terms all of the obligations which by the terms of the
Acquisition Sub Credit Agreement are required to be performed by it as a
Lender. It is the intent of the parties hereto that, as of the Effective
Date, the Commitment of Assignor shall be reduced by an amount equal to
$____________ , and Assignor shall relinquish its rights and be released from
its obligations under the Credit Agreement to the extent such obligations
have been assumed by Assignee.
(c) After giving effect to the assignment and assumption, on
the Effective Date, Assignee's Commitment will be $_____________.
2. PAYMENTS.
As consideration for the sale, assignment and transfer contemplated
in Section 1, Assignee shall pay to Assignor on the Effective Date in
immediately available funds an amount equal to $_____________,
_________representing Assignee's Percentage Share of the outstanding
principal amount of the Loan made by Assignor.
2
<PAGE>
3. REALLOCATION OF PAYMENTS.
Any interest, fees and other payments accrued to the Effective Date with
respect to the Assignor's Commitment and the outstanding amount of the Loan made
by Assignor shall be for the account of Assignor. Any interest, fees and other
payments accrued on and after the Effective Date with respect to the Assigned
Amount shall be for the account of Assignee. Each of Assignor and Assignee
agrees that it will (a) hold in trust for the other party, any interest, fees
and other amounts which it may receive to which the other party is entitled,
pursuant to the preceding sentences and (b) promptly upon receipt, pay to the
other party any such amounts which it may receive.
4. INDEPENDENT CREDIT DECISION.
Assignee (a) acknowledges that it has received a copy of the Acquisition
Sub Credit Agreement and the Schedules and Exhibits thereto, together with
copies of the most recent financial statements referred to in Section 6.01 of
each of the Acquisition Sub Credit Agreement, and such other documents and
information as it has deemed appropriate to make its own credit and legal
analysis and decision to enter into this Agreement; and (b) agrees that it will,
independently and without reliance upon Assignor, any Agent or any other Lender
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit and legal decisions in taking or not
taking action under the Acquisition Sub Credit Agreement.
5. EFFECTIVE DATE; NOTICES.
(a) As between Assignor and Assignee, the effective date for this
Agreement shall be ______________199__ (the "Effective Date"); PROVIDED
that the following conditions precedent have been satisfied on or before the
Effective Date:
(i) this Agreement shall be executed and delivered by Assignor
and Assignee;
(ii) Assignee shall pay to Assignor all amounts due to Assignor
under this Agreement;
(iii) to the extent required under Section 10.08(a) of each
of the Acquisition Sub Credit Agreement, the consent of the Agent and the
Company shall have been duly obtained (or, in the case of the Company, been
deemed obtained) and shall be in full force and effect as of the Effective Date;
(iv) Assignee shall have complied with Section 3.01(f) of each
of the Acquisition Sub Credit Agreement (if applicable); and
3
<PAGE>
(b) Promptly following the execution of this Agreement, Assignor
shall deliver to the Company and the Agent for acknowledgment by the Agent, a
Notice of Assignment in the form of attached SCHEDULE 1.
6. AGENT.
(a) Assignee hereby acknowledges such powers delegated to the Agent
pursuant to the terms of the Credit Agreement.
(b) Assignee shall assume no duties or obligations held by the Agent
under the Acquisition Sub Credit Agreement.
7. WITHHOLDING TAX.
Assignee agrees to comply with Section 3.01(f) of each of the
Acquisition Sub Credit Agreement (if applicable).
8. REPRESENTATIONS AND WARRANTIES.
(a) Assignor represents and warrants that (i) it is duly organized
and existing and it has the full power and authority to take, and has taken, all
action necessary to execute and deliver this Agreement and any other documents
required or permitted to be executed or delivered by it in connection with this
Agreement and to fulfill its obligations hereunder; (ii) no notices to, or
consents, authorizations or approvals of, any Person are required (other than
any already given or obtained) for its due execution, delivery and performance
of this Agreement, and apart from any agreements or undertakings or filings
required by the Acquisition Sub Credit Agreement, no further action by, or
notice to, or filing with, any Person is required of it for such execution,
delivery or performance; (iii) this Agreement has been duly executed and
delivered by it and constitutes the legal, valid and binding obligation of
Assignor, enforceable against Assignor in accordance with the terms hereof,
subject, as to enforcement, to bankruptcy, insolvency, moratorium,
reorganization and other laws of general application relating to or affecting
creditors' rights and to general equitable principles; and (iv) it is the legal
and beneficial owner of the interest being assigned by it hereunder and that
such interest is free and clear of any Lien or other adverse claim;
(b) Assignor makes no representation or warranty in connection with,
and assumes no responsibility with respect to:
(i) the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Acquisition Sub Credit Agreement or any
other Loan Document, or any other instrument or document furnished in
connection therewith;
4
<PAGE>
(ii) any statements, warranties or representations made in or in
connection with the Acquisition Sub Credit Agreement, any other Loan
Document, or any other instrument or document furnished in connection
therewith; or
(iii) the solvency, financial condition or financial statements of the
Company, or the performance or observance by the Company, of any of
its respective obligations under the Acquisition Sub Credit
Agreement, any other Loan Document, or any other instrument or
document furnished in connection therewith.
(c) Assignee represents and warrants that (i) it is duly organized
and existing and it has full power and authority to take, and has taken, all
action necessary to execute and deliver this Agreement and any other documents
required or permitted to be executed or delivered by it in connection with this
Agreement, and to fulfill its obligations hereunder; (ii) no notices to, or
consents, authorizations or approvals of, any Person are required (other than
any already given or obtained) for its due execution, delivery and performance
of this Agreement; and apart from any agreements or undertakings or filings
required by the Acquisition Sub Credit Agreement, no further action by, or
notice to, or filing with, any Person is required of it for such execution,
delivery or performance; (iii) this Agreement has been duly executed and
delivered by it and constitutes the legal, valid and binding obligation of
Assignee, enforceable against Assignee in accordance with the terms hereof,
subject, as to enforcement, to bankruptcy, insolvency, moratorium,
reorganization and other laws of general application relating to or affecting
creditors' rights and to general equitable principles; and (iv) it is an
Eligible Assignee.
9. FURTHER ASSURANCES.
Assignor and Assignee each hereby agrees to execute and deliver such other
instruments, and take such other action, as either party may reasonably request
in connection with the transactions contemplated by this Agreement, including
the delivery of any notices or other documents or instruments to the Company or
the Agent, which may be required in connection with the assignment and
assumption contemplated hereby.
10. MISCELLANEOUS.
(a) Any amendment or waiver of any provision of this Agreement shall
be in writing and signed by the parties hereto. No failure or delay by either
party hereto in exercising any right, power or privilege hereunder shall operate
as a waiver thereof and any waiver of any breach of the provisions of this
Agreement shall be without prejudice to any rights with respect to any other or
further breach thereof.
5
<PAGE>
(b) All payments made hereunder shall be made without any set-off or
counterclaim.
(c) Assignor and Assignee shall each pay its own costs and expenses
incurred in connection with the negotiation, preparation, execution and
performance of this Agreement.
(d) This Agreement may be executed in any number of counterparts and
all of such counterparts taken together shall be deemed to constitute one and
the same instrument.
(e) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, PROVIDED HOWEVER THAT THE AGENT AND THE
LENDERS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
6
<PAGE>
IN WITNESS WHEREOF, Assignor and Assignee have caused this Assignment and
Acceptance Agreement to be executed and delivered by their duly authorized
officers as of the date first above written.
______________________________________, Assignor
By:_______________________________________
Name _____________________________________
Title: ___________________________________
Address:
________________________________________, Assignee
By:_______________________________________
Name _____________________________________
Title: ___________________________________
Address:
7
<PAGE>
SCHEDULE 1
to Assignment and Acceptance
NOTICE OF ASSIGNMENT AND ACCEPTANCE
___________________, 199__
Bank of America National Trust and
Savings Association, as Agent
CRESG #1357
555 South Flower Street, 6th Floor
Los Angeles, California 90071
Attention: Unit Manager
AIMCO/NHP Holdings, Inc.,
a Delaware corporation
1873 South Bellaire Street, 17th Floor
Denver, Colorado 80222
Attention: Peter Kompaniez, Vice Chairman
Re: Credit Agreement, dated as of May 5, 1997
(Acquisition Sub Facility) (as the same may be amended,
modified or supplemented from time to time, the
"Acquisition Sub Credit Agreement"), as the same may be
amended, modified or supplemented from time to time, among
AIMCO/NHP Holdings, Inc., a Delaware corporation (the
"Company"), the lenders from time to time party to the
Credit Agreement (the "Lenders"), BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION, as one of the Lenders, and
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as
Agent (the "Agent") for the Lenders.
Ladies and Gentlemen:
Reference is made to the Acquisition Sub Credit Agreement. Capitalized
terms used in this Notice of Assignment and Acceptance without definition have
the meanings specified in the Acquisition Sub Credit Agreement.
8
<PAGE>
1. We hereby give notice to the Company and to the Agent of the
assignment by _____________________ ("Assignor") ______________________
("Assignee") of __________% of the right, title and interest of Assignor in and
to the Acquisition Sub Credit Agreement, including, without limitation, the
right, title and interest of Assignor in and to:
(A) Assignor's Commitment under and as such term is defined in the
Acquisition Sub Credit Agreement representing ___________% of the $__________
current Aggregate Commitment of all Lenders,
(B) Assignor's Commitment Percentage of the outstanding Loan made by
the Assignor under the Acquisition Sub Credit Agreement (representing an amount
equal to $____________ as of the Effective Date),
(C) all related rights, benefits, obligations, liabilities and
indemnities of Assignor under and in connection with the Acquisition Sub Credit
Agreement.
Before giving effect to the assignment and assumption, on the Effective
Date, Assignor's Commitment was $______________. After giving effect to the
assignment and assumption, on the Effective Date, Assignor's Commitment will be
$______________. After giving effect to the assignment and assumption, on the
Effective Date, Assignee's Commitment will be $_____________.
2. Assignee agrees that, upon receiving the consent of the Agent and the
Company to such assignment, Assignee will be bound by the terms of the
Acquisition Sub Credit Agreement as fully and to the same extent as if Assignee
were the Lender originally holding the interest so assigned to it under the
Acquisition Sub Credit Agreement.
3. The following administrative details apply to Assignee:
(A) Notice Address:
Assignee name:
Address:
Att'n:
Telephone:
Telecopier:
9
<PAGE>
(B) Payment Instructions:
ABA No.
Account No.
At:
Reference:
Att'n:
10
<PAGE>
IN WITNESS WHEREOF, Assignor and Assignee have caused this Notice of
Assignment and Acceptance to be executed by their respective duly authorized
officials, officers or agents as of the date first above mentioned.
Very truly yours,
[Assignor]
By:
---------------------------------
Title:
------------------------------
[Assignee]
By:
---------------------------------
Title:
------------------------------
ACKNOWLEDGED AND ASSIGNMENT
CONSENTED TO:
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Agent
By:
--------------------------
Title:
-----------------------
[Add Company's Signature Block if Company's Consent is required]
AIMCO/NHP Holdings, Inc.,
a Delaware corporation
By:
--------------------------
Title:
-----------------------
11
<PAGE>
EXHIBIT 3
AGREEMENT AND PLAN OF MERGER
dated as of April 21, 1997
by and among
APARTMENT INVESTMENT AND MANAGEMENT COMPANY,
AIMCO/NHP ACQUISITION CORP.
and
NHP INCORPORATED
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions.......................................................1
ARTICLE II
THE MERGER
SECTION 2.1 The Merger..................................................... 10
SECTION 2.2 Effective Time of the Merger................................... 11
SECTION 2.3 Closing........................................................ 11
SECTION 2.4 Effects of the Merger.......................................... 11
SECTION 2.5 Certificate of Incorporation and By-Laws....................... 11
SECTION 2.6 Directors...................................................... 11
SECTION 2.7 Officers....................................................... 12
ARTICLE III
CONVERSION OF SHARES
SECTION 3.1 Conversion of Capital Stock of
Merger Sub.................................................... 12
SECTION 3.2 Conversion of Capital Stock of NHP............................. 12
SECTION 3.3 NHP Common Stock Elections; Exchange of Certificates............ 14
SECTION 3.4 AIMCO Ownership Limit............................................16
SECTION 3.5 Dividends, Fractional Shares, Etc................................16
SECTION 3.6 NHP Stock Options................................................19
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF NHP
SECTION 4.1 Organization and Qualifications; Subsidiaries................... 21
SECTION 4.2 Certificate of Incorporation and Bylaws. ...................... 22
SECTION 4.3 Capitalization.................................................. 22
SECTION 4.4 Authority Relative to This Agreement............................ 23
SECTION 4.5 No Conflict; Required Filings and Consents;
Certain Contracts.............................................. 23
SECTION 4.6 Compliance...................................................... 24
SECTION 4.7 SEC Reports and Financial Statements............................ 24
SECTION 4.8 Absence of Certain Changes or Events............................ 25
i
<PAGE>
SECTION 4.9 Litigation...................................................... 26
SECTION 4.10 Registration Statements and Proxy
Statement/Prospectus........................................... 26
SECTION 4.11 Employee Benefit Plans......................................... 27
SECTION 4.12 Brokers........................................................ 28
SECTION 4.13 Taxes.......................................................... 28
SECTION 4.14 Opinion of Financial Advisor................................... 29
SECTION 4.15 Reliance....................................................... 29
SECTION 4.16 Management Arrangements.........................................29
SECTION 4.17 Disclosure .....................................................30
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF AIMCO
AND MERGER SUB
SECTION 5.1 Organization and Qualifications; Subsidiaries................... 30
SECTION 5.2 Charter and Bylaws.............................................. 30
SECTION 5.3 Capitalization.................................................. 31
SECTION 5.4 Authority Relative to This Agreement........................... 31
SECTION 5.5 No Conflict; Required Filings and Consents...................... 32
SECTION 5.6 Compliance...................................................... 33
SECTION 5.7 SEC Reports and Financial Statements............................ 33
SECTION 5.8 Absence of Certain Changes or Events............................ 34
SECTION 5.9 Litigation...................................................... 34
SECTION 5.10 Registration Statements and Proxy Statement/
Prospectus..................................................... 34
SECTION 5.11 Employee Benefit Plans..........................................35
SECTION 5.12 Brokers........................................................ 36
SECTION 5.13 Taxes.......................................................... 36
SECTION 5.14 REIT Status.................................................... 37
SECTION 5.15 Reliance .......................................................37
SECTION 5.16 Stock Purchase Agreement .......................................38
SECTION 5.17 Financial Capability ...........................................38
SECTION 5.18 Qualified Purchaser ............................................38
SECTION 5.19 Disclosure......................................................38
ARTICLE VI
COVENANTS
SECTION 6.1 Notification of Certain Matters................................. 38
SECTION 6.2 Further Action, Reasonable Efforts;
Consents and Approvals......................................... 39
ii
<PAGE>
SECTION 6.3 Conduct of Business of NHP Pending
the Closing.................................................... 39
SECTION 6.4 Conduct of Business of AIMCO Pending
the Closing.................................................... 41
SECTION 6.5 Access to Information........................................... 41
SECTION 6.6 No Solicitation................................................. 41
SECTION 6.7 Stockholder Meetings............................................ 43
SECTION 6.8 Registration Statements and Joint Proxy Statement/
Prospectus..................................................... 43
SECTION 6.9 Letters of Accountants.......................................... 45
SECTION 6.10 Accelerations.................................................. 45
SECTION 6.11 Public Announcements........................................... 45
SECTION 6.12 Blue Sky....................................................... 46
SECTION 6.13 NYSE Listing................................................... 46
SECTION 6.14 Affiliates..................................................... 46
SECTION 6.15 Indemnification with Respect to the Registration/
Statement...................................................... 46
SECTION 6.16 Spin-Off....................................................... 48
SECTION 6.17 Consent to Certain Transactions.................................48
SECTION 6.18 Directors' and Officers' Indemnification and
Insurance ......................................................49
SECTION 6.19 NHP Employees ..................................................50
SECTION 6.20 Directors.......................................................50
SECTION 6.21 Financing ......................................................51
SECTION 6.22 Separation Agreement ...........................................52
ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.1 Conditions to Each Party's Obligation to
Effect the Merger.............................................. 51
SECTION 7.2 Conditions to Obligations of NHP to
Effect the Merger.............................................. 52
SECTION 7.3 Conditions to Obligations of AIMCO and Merger
Sub to Effect the Merger....................................... 53
ARTICLE VIII
TERMINATION, WAIVER, AMENDMENT AND CLOSING
SECTION 8.1 Termination..................................................... 54
SECTION 8.2 Effect of Termination........................................... 56
SECTION 8.3 Amendment or Supplement......................................... 56
iii
<PAGE>
SECTION 8.4 Extension of Time, Waiver, Etc.................................. 57
SECTION 8.5 Termination Fee..................................................57
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Governing Law................................................... 58
SECTION 9.2 Entire Agreement................................................ 58
SECTION 9.3 Modification; Waiver............................................ 58
SECTION 9.4 Notices......................................................... 58
SECTION 9.5 Expenses........................................................ 60
SECTION 9.6 Assignment...................................................... 60
SECTION 9.7 Survival........................................................ 60
SECTION 9.8 Severability.................................................... 60
SECTION 9.9 Successors and Assigns; Third Parties........................... 61
SECTION 9.10 Counterparts................................................... 61
SECTION 9.11 Interpretation; References..................................... 61
SECTION 9.12 Jurisdiction .................................................. 61
SECTION 9.13 Exhibits and Schedules......................................... 62
SECTION 9.14 Attorneys' Fees................................................ 62
SECTION 9.15 Waiver of Jury Trial........................................... 62
SECTION 9.16 Further Assurances............................................. 62
SECTION 9.17 Negotiation of Agreement....................................... 62
iv
<PAGE>
DISCLOSURE SCHEDULE
Schedule 4.5 -- Conflicts
Schedule 4.6 -- Compliance
Schedule 4.8 -- Absence of Certain Changes or Events
Schedule 4.9 -- Litigation
Schedule 4.16 -- Management Arrangements
Schedule 6.3 -- Conduct of Business of NHP Pending the Closing
Schedule 6.18 -- Current Directors and Officers Liability Insurance Policies
EXHIBITS
Exhibit A -- Rule 145 Affiliate Agreement
Exhibit B -- Registration Rights Agreement
Exhibit C-1 -- Form of Legal Opinion of Skadden, Arps, Slate, Meagher & Flom
LLP, Counsel to AIMCO and Merger Sub
Exhibit C-2 -- Form of Legal Opinion of Piper & Marbury L.L.P., Maryland
Counsel to AIMCO
Exhibit D-1 -- Form of Legal Opinion of Wilmer, Cutler & Pickering, Counsel
to NHP
Exhibit D-2 -- Form of Legal Opinion of Arent Fox Kintner Plotkin & Kahn,
Special Counsel to NHP
v
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of April 21, 1997 (the
"AGREEMENT"), by and among APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a
Maryland corporation ("AIMCO"), AIMCO/NHP ACQUISITION CORP., a Delaware
corporation and a wholly owned subsidiary of AIMCO ("MERGER SUB"), and NHP
INCORPORATED, a Delaware corporation ("NHP").
WHEREAS, the Boards of Directors of AIMCO, Merger Sub and NHP have
determined that the merger of Merger Sub with and into NHP on the terms set
forth herein (the "MERGER"), with NHP surviving as a wholly owned subsidiary of
AIMCO, is advisable and in the best interests of their respective corporations
and stockholders and have approved this Agreement.
NOW, THEREFORE, in consideration of the mutual representations,
warranties and agreements contained herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto, intending to be legally bound hereby, agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS. The capitalized terms used in this Agreement
and not otherwise defined shall have the following meanings (unless the context
otherwise requires, such capitalized terms shall include the singular and plural
and the conjunctive and disjunctive forms of the terms defined):
"AIMCO COMMON STOCK" shall mean Class A Common Stock, par value $.01
per share, of AIMCO.
"AIMCO CONFIDENTIALITY AGREEMENT" shall mean the letter agreement,
dated January 15, 1997, from AIMCO to NHP.
"AIMCO MEETING" shall have the meaning set forth in SECTION 6.7.
<PAGE>
"AIMCO OPTION PLANS" shall have the meaning set forth in SECTION 5.3.
"AIMCO REGISTRATION STATEMENT" shall have the meaning set forth in
SECTION 6.8.
"AIMCO SEC REPORTS" shall have the meaning set forth in SECTION 5.7.
"AIMCO STOCK ISSUANCE" shall have the meaning set forth in SECTION
5.4.
"AIMCO STOCKHOLDER APPROVAL" shall have the meaning set forth in
SECTION 5.4.
"ACQUISITION PROPOSAL" shall have the meaning set forth in SECTION
6.6.
"BENEFIT PLAN" shall mean, with respect to any Person, any plan,
program, arrangement, practice or contract which provides benefits or
compensation to or on behalf of employees, former employees, consultants,
officers or directors of such Person or any of such Person's subsidiaries,
including, without limitation, any employee pension benefit plan (whether or not
insured), as defined in Section 3(2) of ERISA, any employee welfare benefit
plan (whether or not insured), as defined in Section 3(1) of ERISA, any stock
bonus, stock ownership, stock option, stock purchase, stock appreciation right,
phantom stock, or other stock plan (whether qualified or non-qualified), and any
pension, welfare, termination, employment, severance, retirement, bonus,
deferred compensation, incentive compensation, insurance (whether life, accident
and health, or other and whether key man, group, workers compensation, or
other), profit sharing, disability, thrift, day care, legal services, leave of
absence, layoff, or supplemental or excess benefit plan, and any other benefit
contract, arrangement, or procedure having the effect of a plan, whether formal,
informal, written or oral, that is (or was at any time) sponsored maintained or
contributed to by such Person or by any trade or business (whether or not
incorporated) which, together with such Person, would be deemed a "single
employer" within the meaning of Section 4001 of ERISA, within the last six
years.
"BLUE SKY LAWS" shall have the meaning set forth in SECTION 4.5.
2
<PAGE>
"BUSINESS DAY" shall mean any day other than a Saturday, a Sunday or a
day on which banking institutions in New York City are not required to be open.
"CAPRICORN" shall mean Capricorn Investors, L.P., a Delaware limited
partnership.
"CERTIFICATE OF MERGER" shall have the meaning set forth in SECTION
2.2.
"CERTIFICATES" shall have the meaning set forth in SECTION 3.2.
"CLAIM" shall have the meaning set forth in SECTION 6.18.
"CLASS B COMMON STOCK" shall have the meaning set forth in SECTION
5.3.
"CLOSING" shall have the meaning set forth in SECTION 2.3.
"CLOSING DATE" shall have the meaning set forth in SECTION 2.3.
"COBRA" shall have the meaning set forth in SECTION 4.11.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"CONSENTS" shall have the meaning set forth in SECTION 6.2.
"CONTRACT" shall mean, with respect to any Person, any note, bond,
indenture, lease, license, permit, franchise, deed of trust, mortgage, loan
agreement or other document, instrument, obligation or agreement, oral or
written, to which such Person or any of its subsidiaries is a party or by which
any of them or their assets or properties is bound or affected.
"DEMETER" shall mean Demeter Holdings Corporation, a Massachusetts
corporation.
"DGCL" means the General Corporation Law of the State of Delaware.
"DISSENTING SHARES" shall have the meaning set forth in SECTION 3.2.
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"DLJ" shall have the meaning set forth in SECTION 4.12.
"EFFECTIVE TIME" shall have the meaning set forth in SECTION 2.2.
"ELECTION DEADLINE" shall have the meaning set forth in SECTION 3.3.
"ELECTION FORM" shall have the meaning set forth in SECTION 3.3.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended (including without limitation any successor act), and the rules
and regulations promulgated thereunder.
"EXCESS SHARES" shall have the meaning set forth in SECTION 3.4.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"EXCHANGE AGENT" shall have the meaning set forth in SECTION 3.3.
"EXCHANGE RATIO" shall have the meaning set forth in SECTION 3.2.
"FAIRNESS OPINION" shall have the meaning set forth in SECTION 4.14.
"GAAP" shall mean generally accepted accounting principles,
consistently applied throughout the specified period and in the immediately
prior comparable period.
"GOVERNMENTAL AUTHORITY" shall mean any government or any agency,
bureau, board, commission, court, judicial or quasi-judicial body, department,
authority, official, political subdivision, tribunal or other instrumentality of
any government, whether Federal, state or local, domestic or foreign.
"IRS" shall mean the United States Internal Revenue Service or any
successor agency.
"INDEMNIFIED OFFICERS/DIRECTORS" shall have the meaning set forth in
SECTION 6.18.
"INDEMNIFIED PARTY" shall have the meaning set forth in SECTION 6.15.
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"INDEMNIFYING PARTY" shall have the meaning set forth in SECTION 6.15.
"INDEPENDENT COMMITTEE" shall mean NHP's committee of independent
directors, comprised of Messrs. Bodman, Creighton and Cutler, established by
resolutions adopted by the NHP Board of Directors as of February 24, 1997.
"LAW" shall mean any law, statute, rule, regulation, ordinance, decree
or order of any Governmental Authority.
"LETTER AGREEMENT" shall mean that certain letter agreement, dated
February 13, 1997, among AIMCO, Demeter, Phemus and Capricorn.
"LIEN" shall mean any mortgage, pledge, assessment, security interest,
lease, sublease, lien, adverse claim, levy, charge, option, right of others or
restriction (whether on voting, sale, transfer, disposition or otherwise) or
other encumbrance of any kind, whether imposed by agreement, understanding, law
or equity, or any conditional sale contract, title retention contract or other
contract to give or to refrain from giving any of the foregoing.
"LOSSES" shall have the meaning set forth in SECTION 6.18.
"MATERIAL ADVERSE EFFECT" shall mean, with respect to any Person, a
material adverse effect on (i) the validity or enforceability of this Agreement,
(ii) the ability of such Person to perform its obligations under this Agreement
or (iii) the business, assets, condition or results of operations of such Person
and its subsidiaries, taken as a whole.
"MATERIAL SUBSIDIARY" shall mean, with respect to any Person, a
subsidiary of such Person that (i) constitutes a "significant subsidiary" of
such Person, within the meaning of Rule 1-02 of Regulation S-X of the SEC, (ii)
has a direct or indirect ownership interest in any other subsidiary of such
Person that is a Material Subsidiary of such Person, or (iii) is otherwise
material to the business or operations of such Person and its subsidiaries,
taken as a whole.
"MATURITY TIME" shall have the meaning set forth in the Rights
Agreement.
"MAXIMUM PREMIUM" shall have the meaning set forth in SECTION 6.18.
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"MERGER CONSIDERATION" shall mean the Stock Consideration or the Mixed
Consideration.
"MERGER FILING" shall have the meaning set forth in SECTION 2.2.
"MIXED CONSIDERATION" shall have the meaning set forth in SECTION 3.2.
3.2.
"MIXED ELECTION" shall have the meaning set forth in SECTION 3.2.
"MORTGAGE SUBSIDIARY" shall mean NHP Financial Services, Ltd., a
Delaware corporation.
"MORTGAGE SUB STOCK" shall mean common stock, par value $.01 per
share, of the Mortgage Subsidiary.
"MS REGISTRATION STATEMENT" shall have the meaning set forth in
SECTION 6.8.
"NHP COMMON STOCK" shall mean the common stock, par value, $.01 per
share, of NHP.
"NHP CONFIDENTIALITY AGREEMENT" shall mean the letter agreement, dated
January 15, 1997, from NHP to AIMCO.
"NHP MEETING" shall have the meaning set forth in SECTION 6.7.
"NHP OPTION PLANS" shall have the meaning set forth in SECTION 4.3.
"NHP SEC REPORTS" shall have the meaning set forth in SECTION 4.7.
"NHP STOCK OPTIONS" shall have the meaning set forth in SECTION 4.3.
"NHP STOCKHOLDER APPROVAL" shall have the meaning set forth in SECTION
SECTION 6.7.
"NHP'S FREE CASH FLOW" shall mean, for any period, the amount of NHP's
earnings before interest, taxes, depreciation and amortization for such period,
less (i) the amount of cash payments made or obligated to be made in respect of
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taxes and interest during such period, and (ii) $500,000 for each month (or
ratable portion thereof) included in such period.
"NHP'S TRANSACTION COSTS" shall mean, for any period, all of NHP's
termination, severance and transaction costs arising during such period in
respect of the Spin-Off and the Merger.
"NYSE" means the New York Stock Exchange, Inc.
"NOTICES" shall have the meaning set forth in SECTION 9.4.
"OPTION" shall mean, with respect to any Person, any option, warrant,
call, right, subscription, convertible or exchangeable security or other right,
agreement, arrangement or commitment of any kind or character to which such
Person or any of its subsidiaries is a party relating to the issued or unissued
capital stock of such Person or any of its subsidiaries, or obligating such
Person or any of its subsidiaries to issue, transfer, grant or sell any shares
of capital stock of, or other equity interest in, or securities convertible into
or exchangeable for any capital stock or other equity interest in, such Person
or any of its subsidiaries.
"ORGANIZATIONAL DOCUMENTS" shall mean (i) with respect to a
corporation, its certificate or articles of incorporation and bylaws, (ii) with
respect to any limited liability company, its certificate of formation, articles
of organization, regulations, operating agreement and limited liability company
agreement, as applicable, (iii) with respect to any limited partnership, its
certificate of limited partnership and limited partnership agreement, (iv) with
respect to any general partnership, its partnership agreement, and (v) all other
similar organizational documents.
"OUTSIDE DATE" shall have the meaning set forth in SECTION 7.1.
"PERSON" shall mean any natural person, corporation, general
partnership, limited partnership, limited liability company, limited liability
partnership, proprietorship, trust, union, association, court, tribunal, agency,
government, department, commission, self-regulatory organization, arbitrator,
board, bureau, instrumentality or other entity, enterprise, authority or
business organization.
"PHEMUS" shall mean Phemus Corporation, a Massachusetts corporation.
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"PREFERRED STOCK" shall have the meaning set forth in SECTION 5.3.
"PROXY STATEMENT/PROSPECTUS" shall have the meaning set forth in
SECTION 6.8.
"REGISTRATION RIGHTS AGREEMENT" shall have the meaning set forth in
SECTION 6.14.
"REAL ESTATE ACQUISITION AGREEMENT" shall mean the Real Estate
Acquisition Agreement to be entered into by and among AIMCO, AIMCO Properties,
L.P., Demeter, Phemus, Capricorn and/or certain related entities on terms
substantially in accordance with the Letter Agreement, provided that AIMCO and
its affiliates may acquire, directly or indirectly, all of the real property
interests identified in the Letter Agreement for consideration substantially
equivalent to the values attributed to such interests in the Letter Agreement.
"REIT STATUS" shall mean, with respect to any Person, (a) the
qualification of such Person as a real estate investment trust under Sections
856 through 860 of the Code, (b) the applicability to such Person and its
shareholders of the method of taxation provided for in Sections 857 ET SEQ. of
the Code, and (c) the qualification and taxation of such Person as a real
estate investment trust under analogous provisions of state and local law in
each state and jurisdiction in which such Person owns property, operates or
conducts business.
"REPRESENTATIVES" means, with respect to any Person, the officers,
directors, employees, auditors and other agents and representatives of such
Person.
"RIGHT" shall have the meaning set forth in the Rights Agreement.
"RIGHT OF FIRST REFUSAL AGREEMENT" shall mean the Right of First
Refusal Agreement, dated as of August 18, 1995, by and among NHP, NHP Partners,
Inc., The National Housing Partnership, Demeter Holdings Corporation, NHP
Partners Limited Partnership, NHP Partners Two Limited Partnership, NHP Partners
LLC, NHP Partners Two LLC, Capricorn Investors, L.P., and J. Roderick Heller,
III.
"RIGHTS AGREEMENT" shall mean the Rights Agreement, dated as of April
21, 1997, by and between NHP, the Mortgage Subsidiary and The First National
Bank of Boston, as Rights Agent.
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"RIGHTS CONSIDERATION" shall have the meaning set forth in SECTION
3.2.
"RULE 145 AFFILIATE AGREEMENT" shall have the meaning set forth in
SECTION 6.14.
"RULE 145 AFFILIATES" shall have the meaning set forth in SECTION
6.14.
"SEC" shall mean the Securities and Exchange Commission.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SENIOR PREFERRED STOCK" shall have the meaning set forth in SECTION
5.3.
"SPIN-OFF" shall mean the distribution of Rights and Mortgage Sub
Stock pursuant to the Rights Agreement.
"STOCK AND ASSET TRANSFER RESTRICTIONS AGREEMENT" shall mean the Stock
and Asset Transfer Restrictions Agreement, dated as of December 10, 1993, by and
among Oxford Holding Corporation, Oxford Management Company, Inc., Oxford
Retirement Services, Inc., Oxford Realty Services Corp., Oxford Development
Corporation, NHP-HG, Inc., NHP, Inc., NHP Property Management, Inc., Oxford
Asset Management Corporation and Leo E. Zickler.
"STOCK PURCHASE AGREEMENT" shall mean the Stock Purchase Agreement,
dated as of April 16, 1997, by and among AIMCO, Demeter, and Capricorn.
"SUBSIDIARY" shall mean, with respect to any Person, (i) any
corporation with respect to which such Person, directly or indirectly through
one or more subsidiaries, (a) owns more than 50% of the outstanding shares of
capital stock having generally the right to vote in the election of directors or
(b) has the power, under ordinary circumstances, to elect, or to direct the
election of, a majority of the board of directors of such corporation, (ii) any
partnership with respect to which (a) such Person or a subsidiary of such Person
is a general partner, (b) such Person and its subsidiaries together own more
than 50% of the interests therein, or (c) such Person and its subsidiaries have
the right to appoint or elect or direct the appointment or election of a
majority of the directors or other Person or body responsible for the governance
or management thereof, (iii) any limited liability company with
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respect to which (a) such Person or a subsidiary of such Person is the manager
or managing member, (b) such Person and its subsidiaries together own more than
50% of the interests therein, or (c) such Person and its subsidiaries have the
right to appoint or elect or direct the appointment or election of a majority of
the directors or other Person or body responsible for the governance or
management thereof, or (iv) any other entity in which such Person has, and/or
one or more of its subsidiaries have, directly or indirectly, (a) at least a 50%
ownership interest or (b) the power to appoint or elect or direct the
appointment or election of a majority of the directors or other Person or body
responsible for the governance or management thereof.
"SUIT" shall have the meaning set forth in SECTION 9.12.
"SURVIVING CORPORATION" shall have the meaning set forth in SECTION
2.1.
"TAX" or "TAXES" shall mean all Federal, state, local and foreign
taxes and other assessments and governmental charges of a similar nature
(whether imposed directly or through withholdings), including any interest,
penalties and additions to Tax applicable thereto.
"TAX RETURNS" shall mean all Federal, state, local and foreign
returns, declarations, statements, reports, schedules, forms and information
returns relating to Taxes, and all amendments thereto.
"TRANSACTIONS" means the transactions contemplated by this Agreement
in ARTICLE II.
"TRIGGERING EVENT" shall have the meaning set forth in SECTION 6.10.
"WARN ACT" shall have the meaning set forth in SECTION 6.19.
ARTICLE II
THE MERGER
SECTION 2.1 THE MERGER. Upon the terms and subject to the conditions
of this Agreement, at the Effective Time, in accordance with the DGCL, Merger
Sub shall be merged with and into NHP in accordance with this Agreement and the
separate existence of Merger Sub shall cease. NHP shall be the surviving
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corporation in the Merger (hereinafter sometimes referred to as the "SURVIVING
CORPORATION").
SECTION 2.2 EFFECTIVE TIME OF THE MERGER. Upon the terms and subject
to the conditions hereof, a certificate of merger (the "CERTIFICATE OF MERGER")
shall be duly prepared, executed and acknowledged by the Surviving Corporation
and thereafter delivered to the Secretary of State of the State of Delaware, for
filing on the Closing Date (as defined in SECTION 2.3). The Merger shall become
effective as of the date and at such time as the Certificate of Merger pursuant
to Section 251 of the DGCL and any other documents necessary to effect the
Merger in accordance with the DGCL are duly filed (the "MERGER FILING") with the
Secretary of State of the State of Delaware or at such subsequent date or time
as shall be agreed by AIMCO and NHP and specified in the Certificate of Merger
(the time the Merger becomes effective pursuant to the DGCL being referred to
herein as the "EFFECTIVE TIME").
SECTION 2.3 CLOSING. Subject to the satisfaction or waiver of all of
the conditions to closing contained in ARTICLE VII, the closing of the Merger
(the "CLOSING") will take place at 10:00 a.m., New York City time, on a date to
be specified by the parties, which shall be no later than the fifth Business Day
(as defined below) after the satisfaction or waiver of the conditions to Closing
contained in ARTICLE VII, at the offices of Skadden, Arps, Slate, Meagher & Flom
LLP, 919 Third Avenue, New York, New York 10022, unless another date, time or
place is agreed to in writing by the parties hereto. The date and time at which
the Closing occurs is referred to herein as the "CLOSING DATE."
SECTION 2.4 EFFECTS OF THE MERGER. The Merger shall have the effects
set forth in the DGCL. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time, all the properties, rights, privileges,
powers and franchises of NHP and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities and duties of NHP and Merger Sub shall
become the debts, liabilities and duties of the Surviving Corporation.
SECTION 2.5 CERTIFICATE OF INCORPORATION AND BY-LAWS. The
Certificate of Incorporation of Merger Sub in effect immediately prior to the
Effective Time shall be the Certificate of Incorporation of the Surviving
Corporation until amended in accordance with the terms thereof and with
applicable law. The By-Laws of Merger Sub in effect immediately prior to the
Effective Time shall be the By-Laws of the Surviving Corporation until amended
in accordance with the terms thereof and with applicable law.
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SECTION 2.6 DIRECTORS. The directors of Merger Sub immediately prior
to the Effective Time shall be the initial directors of the Surviving
Corporation, each to hold office from the Effective Time in accordance with the
Certificate of Incorporation and By-Laws of the Surviving Corporation and until
his or her successor is duly elected and qualified.
SECTION 2.7 OFFICERS. The officers of NHP immediately prior to the
Effective Time shall be the initial officers of the Surviving Corporation, each
to hold office from the Effective Time in accordance with the Certificate of
Incorporation and By-Laws of the Surviving Corporation and until his or her
successor is duly appointed and qualified.
ARTICLE III
CONVERSION OF SHARES
SECTION 3.1 CONVERSION OF CAPITAL STOCK OF MERGER SUB. At the
Effective Time, each issued and outstanding share of common stock, par value
$.01 per share, of Merger Sub shall be converted into and become one fully paid
and nonassessable share of common stock, par value $.01 per share, of the
Surviving Corporation.
SECTION 3.2 CONVERSION OF CAPITAL STOCK OF NHP.
(a) Except as otherwise provided in SECTION 3.4, and subject to
SECTIONS 3.2(C) and (D), at the Effective Time, each issued and outstanding
share of NHP Common Stock shall be converted into one of the following:
(i) for each such share of NHP Common Stock with respect to which an
election to receive a combination of AIMCO Common Stock and cash has been
effectively made and not revoked or lost, pursuant to SECTION 3.3 (the "MIXED
ELECTION"), the right to receive 0.37383 shares of AIMCO Common Stock and an
amount in cash equal to $10.00 (together, the "MIXED CONSIDERATION"); or
(ii) for each such share of NHP Common Stock (other than a share with
respect to which a Mixed Election was effectively made and not revoked or lost),
the right to receive 0.74766 (the "EXCHANGE RATIO") shares of AIMCO Common Stock
(the "STOCK CONSIDERATION").
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As a result of the Merger and without any action on the part of the
holders thereof, at the Effective Time, all shares of NHP Common Stock shall no
longer be outstanding and shall automatically be cancelled and retired and shall
cease to exist, and each holder of shares of NHP Common Stock shall thereafter
cease to have any rights with respect to such shares of NHP Common Stock, except
the right to receive, without interest, the Merger Consideration and cash for
fractional shares of AIMCO Common Stock in accordance with SECTION 3.5 upon the
surrender of a certificate that, immediately prior to the Effective Time,
represented an outstanding share or shares of NHP Common Stock and a related
Right or Rights (a "CERTIFICATE").
(b) At the Effective Time, each issued and outstanding Right
shall, in accordance with its terms, be converted into the right to receive
one-third of a share of Mortgage Sub Stock (the "RIGHTS CONSIDERATION"). As a
result of the Merger and without any action on the part of the holders thereof,
at the Effective Time, all Rights shall, in accordance with their terms, no
longer be outstanding and shall automatically be cancelled and retired and shall
cease to exist, and each holder of Rights shall thereafter cease to have any
rights with respect thereto, except the right to receive, without interest, the
Rights Consideration and cash for fractional Rights in accordance with SECTION
3.5 upon the surrender of a Certificate.
(c) Notwithstanding anything contained in this SECTION 3.2 to the
contrary, each share of NHP Common Stock issued and held in NHP's treasury
immediately prior to the Effective Time, and each share of NHP Common Stock
owned by AIMCO or Merger Sub immediately prior to the Effective Time, shall, by
virtue of the Merger, cease to be outstanding and shall be cancelled and retired
and shall cease to exist without payment of any consideration therefor.
(d) Notwithstanding anything in this SECTION 3.2 to the contrary,
shares of NHP Common Stock which are issued and outstanding immediately prior to
the Effective Time and which are held by a Person who has not voted such shares
in favor of the Merger and who has properly exercised his rights of appraisal
for such shares in the manner provided by the DGCL (the "DISSENTING SHARES")
shall not be converted into or be exchangeable for the right to receive the
Merger Consideration, unless and until such holder shall have failed to perfect
or shall have effectively withdrawn or lost his right to appraisal and payment,
as the case may be. If such holder shall have so failed to perfect or shall
have effectively withdrawn or lost such right, his shares shall thereupon be
deemed to have been converted into and to have become exchangeable for, at the
Effective Time, the right to receive the Merger Consideration, without any
interest thereon. NHP shall give
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AIMCO prompt notice of any Dissenting Shares (and shall also give AIMCO prompt
notice of any withdrawals of such demands for appraisal rights) and AIMCO shall
have the right to direct all negotiations and proceedings with respect to any
such demands. NHP shall not, except with the prior written consent of AIMCO,
voluntarily make any payment with respect to, or settle or offer to settle, any
such demand for appraisal rights.
SECTION 3.3 NHP COMMON STOCK ELECTIONS; EXCHANGE OF CERTIFICATES.
(a)Each Person who, at the Effective Time, is a record holder of
shares of NHP Common Stock (other than holders of shares of NHP Common Stock to
be cancelled as set forth in SECTION 3.2(C) or Dissenting Shares) shall have the
right to submit an Election Form specifying the number of shares of NHP Common
Stock that such Person desires to have converted into the right to receive AIMCO
Common Stock and cash pursuant to the Mixed Election, and the number of shares
of NHP Common Stock that such person desires to have converted into the right to
receive solely AIMCO Common Stock (a "STOCK ELECTION").
(b) Promptly after the Effective Time, AIMCO shall deposit (or
cause to be deposited) with a bank or trust company to be designated by AIMCO
and reasonably acceptable to NHP (the "EXCHANGE AGENT"), for the benefit of the
holders of shares of NHP Common Stock and Rights, for exchange in accordance
with this ARTICLE III, (i) cash in an amount sufficient to pay the aggregate
cash portion of the Merger Consideration, (ii) certificates representing the
aggregate number of shares of AIMCO Common Stock that may be issued in respect
of shares of NHP Common Stock in the Merger, and (iii) certificates representing
the aggregate number of shares of Mortgage Sub Stock that may be delivered in
respect of Rights in the Merger. AIMCO Common Stock into which NHP Common Stock
shall be converted pursuant to the Merger shall be deemed to have been issued at
the Effective Time. Promptly after the Effective Time, AIMCO shall cause the
Mortgage Subsidiary to deposit with the Exchange Agent, for the benefit of the
holders of Rights, cash in an amount sufficient to pay the aggregate amount of
cash payable in lieu of fractional shares of Mortgage Sub Stock pursuant to
SECTION 3.5.
(c) As soon as reasonably practicable after the Effective Time,
AIMCO shall cause the Exchange Agent to mail to each holder of record of NHP
Common Stock and Rights immediately prior to the Effective Time (excluding
Dissenting Shares) (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon
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delivery of the Certificates to the Exchange Agent and shall be in such form and
have such other customary provisions as AIMCO may reasonably specify), (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for the Merger Consideration and Rights Consideration with respect to the shares
of NHP Common Stock and Rights formerly represented thereby, and (iii) a form
(an "ELECTION FORM") pursuant to which a holder of shares of NHP Common Stock
may make a Mixed Election or a Stock Election. As of the Election Deadline, all
holders of NHP Common Stock immediately prior to the Effective Time that have
not submitted to the Exchange Agent, or have properly revoked, a properly
completed Election Form, shall be deemed to have made a Stock Election.
(d)A Mixed Election or a Stock Election (other than a deemed
Stock Election) with respect to any shares of NHP Common Stock shall be
effective only if the Exchange Agent shall have received no later than 5:00
p.m., New York City time (the "ELECTION DEADLINE"), on a date to be mutually
agreed upon by NHP and AIMCO (which date shall not be later than the twentieth
Business Day after the Effective Time), (i) an Election Form properly completed
and executed (with the signature or signatures thereof guaranteed to the extent
required by the Election Form) by the holder thereof, accompanied by (ii) either
(x) the Certificate or Certificates representing such shares of NHP Common
Stock, in such form and with such endorsements, stock powers and signature
guarantees as may be required by such Election Form, or (y) an appropriate
guarantee of delivery of such Certificate from a member of any registered
national securities exchange or of the National Association of Securities
Dealers, Inc. or a commercial bank or trust company in the United States, as may
be required by such Election Form. Any holder of NHP Common Stock immediately
prior to the Effective Time who has made an election by submitting an Election
Form to the Exchange Agent may, at any time prior to the Election Deadline,
change his election by submitting a revised Election Form, properly completed
and signed that is received by the Exchange Agent prior to the Election
Deadline. Any holder of NHP Common Stock immediately prior to the Effective Time
who has made an election by submitting an Election Form to the Exchange Agent
may revoke his election and withdraw his Certificates deposited with the
Exchange Agent by written notice to the Exchange Agent received before the close
of business on the day prior to the Election Deadline.
(e) Upon surrender of a Certificate for cancellation to the
Exchange Agent or to such other agent or agents as may be appointed by AIMCO,
together with the Letter of Transmittal, duly executed, and such other documents
as AIMCO or the Exchange Agent shall reasonably request, the holder of such
Certificate shall be entitled to receive promptly after the Election Deadline in
exchange
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therefor, (i) a certified or bank cashier's check in an amount equal to the
cash, if any, which such holder has the right to receive pursuant to the
provisions of this ARTICLE III (including any cash in lieu of fractional shares
of AIMCO Common Stock pursuant to SECTION 3.5), (ii) a certificate representing
the number of shares of AIMCO Common Stock which such holder has the right to
receive pursuant to the provisions of this ARTICLE III, and (iii) a certificate
representing the number of shares of Mortgage Sub Stock which such holder has
the right to receive pursuant to the provisions of this ARTICLE III (in each
case, less the amount of any required withholding taxes), and the Certificate so
surrendered shall forthwith be cancelled. Until surrendered as contemplated by
this SECTION 3.3(E), each Certificate shall be deemed at any time after the
Effective Time to represent only the right to receive the Merger Consideration
with respect to the shares of NHP Common Stock formerly represented thereby and
the Rights Consideration with respect to the Rights formerly represented
thereby.
(f) AIMCO shall have the right to make reasonable rules, not
inconsistent with the terms of this Agreement, governing the issuance and
delivery of certificates for shares of AIMCO Common Stock into which shares of
NHP Common Stock are converted in the Merger, the issuance and delivery of
certificates for shares of Mortgage Sub Stock into which Rights are converted in
the Merger, and the payment of cash for shares of NHP Common Stock converted
into the right to receive cash in the Merger.
SECTION 3.4 AIMCO OWNERSHIP LIMIT. Notwithstanding any other
provision of this Agreement to the contrary, AIMCO shall not be obligated to
issue shares of AIMCO Common Stock to any Person if such issuance would result
in a violation of the ownership limit (the "OWNERSHIP LIMIT") set forth in
AIMCO's Organizational Documents. In lieu of issuing any shares (the "EXCESS
SHARES") of AIMCO Common Stock that would result in any Person receiving a
number of shares of AIMCO Common Stock in excess of the Ownership Limit, AIMCO
shall pay to such Person cash in an amount equal to the number of such Excess
Shares multiplied by $26.75.
SECTION 3.5 DIVIDENDS, FRACTIONAL SHARES, ETC.
(a) Notwithstanding any other provisions of this Agreement, no
dividends or other distributions declared after the Effective Time on AIMCO
Common Stock or Mortgage Sub Stock shall be paid to the holder of any
unsurrendered Certificates until such Certificates are surrendered for exchange
as provided in this ARTICLE III. Subject to the effect of applicable laws,
following the
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surrender of any such Certificate, there shall be paid, without interest, to the
Person in whose name the certificates representing the shares of AIMCO Common
Stock into which the shares of NHP Common Stock formerly represented by such
Certificate were converted are registered, (i) at the time of such surrender,
the amount of all dividends and other distributions with a record date after the
Effective Time theretofore payable with respect to such whole shares of AIMCO
Common Stock and not paid, less the amount of any withholding taxes which may be
required thereon, and (ii) at the appropriate payment date, the amount of
dividends or other distributions with a record date after the Effective Time but
prior to surrender and a payment date subsequent to surrender payable with
respect to such whole shares of AIMCO Common Stock, less the amount of any
withholding taxes which may be required thereon. Subject to the effect of
applicable laws, following the surrender of any such Certificate, there shall be
paid, without interest, to the Person in whose name the certificates
representing the shares of Mortgage Sub Stock into which the Rights formerly
represented by such Certificate were converted are registered, (i) at the time
of such surrender, the amount of all dividends and other distributions with a
record date after the Effective Time theretofore payable with respect to such
whole shares of Mortgage Sub Stock and not paid, less the amount of any
withholding taxes which may be required thereon, and (ii) at the appropriate
payment date, the amount of dividends or other distributions with a record date
after the Effective Time but prior to surrender and a payment date subsequent to
surrender payable with respect to such whole shares of Mortgage Sub Stock, less
the amount of any withholding taxes which may be required thereon.
(b) No fractional shares of AIMCO Common Stock or Mortgage Sub
Stock shall be issued in the Merger. All fractional shares of AIMCO Common
Stock or Mortgage Sub Stock that a holder of shares of NHP Common Stock or
Rights would otherwise be entitled to receive as a result of the Merger (or in
accordance with the terms of the Rights) shall be aggregated and, if a
fractional share results from such aggregation, such holder shall be entitled to
receive, in lieu thereof, an amount in cash determined by multiplying (i) the
fraction of a share of AIMCO Common Stock or Mortgage Sub Stock to which such
holder would otherwise have been entitled by (ii) in the case of AIMCO Common
Stock, $26.75 and, in the case of Mortgage Sub Stock, $9.15. No interest will
be paid or will accrue on any cash paid or payable in lieu of any fractional
shares of AIMCO Common Stock or Mortgage Sub Stock.
(c) At and after the Effective Time, there shall be no further
registration of transfers of shares of NHP Common Stock or Rights. If, after
the Effective Time, Certificates are presented to the Surviving Corporation,
they shall
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be cancelled and exchanged for the consideration provided for, and in accordance
with the procedures set forth, in this ARTICLE III. Certificates surrendered
for exchange by any Person constituting an "affiliate" of NHP for purposes of
Rule 145(c) under the Securities Act shall not be exchanged until AIMCO has
received a written Rule 145 Affiliate Agreement from such Person as provided in
SECTION 6.14.
(d) If any portion of the Merger Consideration or Rights
Consideration is to be paid to a Person other than the registered holder of the
shares of NHP Common Stock and Rights represented by the Certificate or
Certificates surrendered in exchange therefor, it shall be a condition to such
payment that the Certificate or Certificates so surrendered shall be properly
endorsed or otherwise be in proper form for transfer and that the Person
requesting such payment shall pay to the Exchange Agent any transfer or other
taxes required as a result of such payment to a Person other than the registered
holder of such Certificates or establish to the satisfaction of the Exchange
Agent that such tax has been paid or is not payable and, with respect to the
Rights, such other conditions as may be set forth in the Rights Agreement.
(e) Any portion of the Merger Consideration, Rights Consideration
or cash payable in lieu of fractional shares made available to the Exchange
Agent pursuant to this ARTICLE III that remains unclaimed by the former holders
of shares of NHP Common Stock or Rights one year after the Effective Time shall
be delivered (i) in the case of the Merger Consideration, to AIMCO, and (ii) in
the case of the Rights Consideration and cash payable in lieu of fractional
shares of Mortgage Sub Stock, to the Mortgage Subsidiary. Any such holder who
has not theretofore exchanged his Certificates for the Merger Consideration and
Rights Consideration in accordance with this ARTICLE III shall thereafter look
only (i) to AIMCO for payment of the applicable Merger Consideration, cash in
lieu of fractional shares and unpaid dividends and distributions on the AIMCO
Common Stock deliverable in respect thereof, determined pursuant to this
Agreement, in each case, without interest, and (ii) to the Mortgage Subsidiary
for payment of the applicable Rights Consideration, cash in lieu of fractional
shares and unpaid dividends and distributions on the Mortgage Sub Stock
deliverable in respect thereof, determined pursuant to this Agreement and the
Rights Agreement, in each case, without interest. None of AIMCO, NHP or the
Surviving Corporation shall be liable to any former holder of shares of NHP
Common Stock for any amount paid to a public official pursuant to any applicable
abandoned property, escheat or similar laws. Any amounts remaining unclaimed by
holders of shares of NHP Common Stock three years after the Effective Time (or
such earlier date immediately prior to
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such time as such amounts would otherwise escheat to or become property of any
governmental entity) shall, to the extent permitted by applicable law, become
the property of AIMCO free and clear of any claims or interest of any person
previously entitled thereto.
(f) In the event that any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the Person
claiming such Certificate to be lost, stolen or destroyed and, if required by
AIMCO, the posting by such Person of a bond in such reasonable amount as AIMCO
may direct as indemnity against any claim that may be made against it with
respect to such Certificate, the Exchange Agent will issue in exchange for such
lost, stolen or destroyed Certificate the applicable Merger Consideration and
Rights Consideration, cash in lieu of fractional shares, and unpaid dividends
and distributions on shares of AIMCO Common Stock or Mortgage Sub Stock
deliverable in respect thereof pursuant to this Agreement.
(g) If at any time during the period between the date of this
Agreement and the Effective Time, any change in the outstanding shares of
capital stock of AIMCO or the Mortgage Subsidiary shall occur, including by
reason of any reclassification, recapitalization, stock split or combination,
exchange or readjustment of shares, or any stock dividend thereon with a record
date during such period, the number of shares of AIMCO Common Stock constituting
all or part of the Merger Consideration or the number of shares of Mortgage Sub
Stock constituting all or part of the Rights Consideration, as the case may be,
shall be appropriately adjusted, and, in the case of the Rights Consideration,
in accordance with the terms of the Rights.
SECTION 3.6 NHP STOCK OPTIONS.
(a) Prior to the Effective Time, subject to the prior written
approval of AIMCO, in connection with the Spin-Off, NHP may issue to the holders
of NHP Stock Options then outstanding Options to purchase shares of Mortgage Sub
Stock and, in connection therewith, may reduce the exercise price with respect
to the NHP Stock Options. At the Effective Time, each outstanding NHP Stock
Option granted prior to the date of this Agreement shall immediately become
fully vested and exercisable, if not fully vested and exercisable at such time,
and all NHP Stock Options shall be assumed by AIMCO and adjusted in accordance
with the terms thereof and this Agreement to be exercisable to purchase shares
of AIMCO Common Stock, as provided below. Following the Effective Time, each
NHP Stock Option shall continue to have, and shall be subject to, the same terms
and conditions set
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forth in the NHP Option Plan pursuant to which such NHP Stock Option was issued,
or any agreement pursuant to which such NHP Stock Option was subject immediately
prior to the Effective Time, except as set forth in this SECTION 3.6 and except
that (i) each such NHP Stock Option shall be exercisable for that number of
shares of AIMCO Common Stock equal to the product of (x) the aggregate number of
shares of NHP Common Stock for which such NHP Stock Option was exercisable and
(y) the Exchange Ratio, rounded, in the case of any NHP Stock Options other than
an "incentive stock option" (within the meaning of section 422 of the Code), up,
and, in the case of any incentive stock option, down, to the nearest whole
share, if necessary, and (ii) the exercise price per share of such NHP Stock
Option shall be equal to the aggregate exercise price of such NHP Stock Option
at the Effective Time divided by the number of shares of AIMCO Common Stock for
which such NHP Stock Option shall be exercisable as determined in accordance
with the preceding clause (i), rounded up to the next highest cent, if
necessary.
(b) As of the Effective Time, AIMCO will enter into an assumption
agreement with respect to each NHP Stock Option, which shall provide for AIMCO's
assumption of the obligations of NHP under the NHP Option Plan or other
agreement under which such NHP Stock Option was granted. Prior to the Effective
Time, NHP shall make such amendments, if any, to the NHP Option Plans as shall
be necessary to permit the assumption and adjustment referred to in this SECTION
3.6; provided, however, that such amendments shall be subject to approval by
AIMCO (which approval will not be unreasonably withheld).
(c) It is the intention of the parties that, to the extent that
any NHP Stock Option constituted an incentive stock option immediately prior to
the Effective Time, such option continue to qualify as an incentive stock option
to the maximum extent permitted by Section 422 of the Code, and that the
assumption of the NHP Stock Options provided by this SECTION 3.6 satisfy the
conditions of Section 424(a) of the Code. AIMCO shall comply with the terms of
the NHP Option Plans and ensure, to the extent required by, and subject to the
provisions of, such NHP Option Plans, that the NHP Stock Options that qualified
as incentive stock options prior to the Effective Time continue to qualify as
incentive stock options after the Effective Time. As soon as practicable after
the Effective Time, AIMCO shall deliver to the participants in the NHP Option
Plans notices setting forth the number of shares and exercise price for such
participant's options.
(d) At or prior to the Effective Time, AIMCO shall take all
corporate action necessary to reserve for issuance a sufficient number of shares
of AIMCO Common Stock for delivery upon exercise of NHP Stock Options under the
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NHP Option Plans assumed in accordance with SECTION 3.6(b). AIMCO shall prepare
and file, at its own expense, a registration statement on Form S-8 to become
effective as of the Effective Time with respect to the shares of AIMCO Common
Stock subject to NHP Stock Options and shall use commercially reasonable efforts
to maintain the effectiveness of such registration statement (and maintain the
current status of the prospectus or prospectuses contained therein) for so long
as such options remain outstanding. With respect to those individuals who
subsequent to the Merger will be subject to the reporting requirements under
Section 16(a) of the Exchange Act, where applicable, AIMCO shall administer the
NHP Option Plans assumed pursuant to SECTION 3.6(B) in a manner that complies
with Rule 16b-3 promulgated under the Exchange Act, to the extent the applicable
NHP Option Plan complied with such rule prior to the Merger.
(e) AIMCO shall provide that, for a period of 90 days after the
Effective Time, each holder of NHP Stock Options that are not "incentive stock
options" (within the meaning of Section 422 of the Code) may, in lieu of
exercising any such NHP Stock Options, elect to receive for each share of AIMCO
Common Stock subject to such option a cash amount equal to the excess of $26.75
over the per share exercise price of such NHP Stock Option (as determined after
giving effect to Section 3.6(a)(ii). For a period of 90 days after the
Effective Time, AIMCO will take all actions necessary to provide that each
holder of NHP Stock Options that are incentive stock options, at his or her
election, may exercise his or her NHP Stock Option and immediately sell the
shares of AIMCO Common Stock received upon such exercise, back to AIMCO for
$26.75 per share in cash, such that the net effect is that the option holder
receives an amount in cash equal to the excess of $26.75 over the per share
exercise price of NHP Stock Options (as determined after giving effect to
Section 3.6(a)(ii).
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF NHP
NHP hereby represents and warrants to AIMCO and Merger Sub that:
SECTION 4.1 ORGANIZATION AND QUALIFICATIONS; SUBSIDIARIES. NHP and
each Material Subsidiary of NHP is a corporation, partnership or other legal
entity duly organized, validly existing and in good standing under the laws of
the jurisdiction of its incorporation or organization and has the requisite
power and authority and all necessary governmental approvals to own, lease and
operate its
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properties and to carry on its business as it is now being conducted, except
where the failure to be so organized, existing or in good standing or to have
such power, authority and governmental approvals would not, individually or in
the aggregate, have a Material Adverse Effect on NHP. Each of NHP and its
Material Subsidiaries is duly qualified or licensed as a foreign corporation or
partnership to transact business, and is in good standing, in each jurisdiction
where the character of the properties owned, leased or operated by it or the
nature of its business makes such qualification or licensing necessary, except
for such failures to be so qualified or licensed and in good standing that would
not, individually or in the aggregate, have a Material Adverse Effect on NHP.
SECTION 4.2 CERTIFICATE OF INCORPORATION AND BYLAWS. Complete and
correct copies of the certificate of incorporation and bylaws of NHP, as amended
to date, have been delivered to AIMCO under cover of a letter dated April 4,
1997, from NHP's General Counsel. Such Organizational Documents are in full
force and effect and have not been amended or modified in any respect. NHP is
not in violation of any provision of its Organizational Documents. No Material
Subsidiary of NHP is in violation of any provision of its Organizational
Documents, except for such violations that would not, individually or in the
aggregate, have a Material Adverse Effect on NHP.
SECTION 4.3 CAPITALIZATION. The authorized capital stock of NHP
consists of 25,000,000 shares of NHP Common Stock. As of March 7, 1997, (a)
12,652,439 shares of NHP Common Stock were issued and outstanding, all of which
were validly issued, fully paid and nonassessable; and (b)(i) 1,270,750 shares
of NHP Common Stock were reserved for issuance upon the exercise of outstanding
stock options granted pursuant to the 1990 Stock Option Plan of NHP
Incorporated, the 1995 Incentive Stock Option Plan of NHP Incorporated, the
stock option agreement, dated as of May 1, 1996, between NHP and William R.
Sullivan, and the stock option agreement, dated as of August 18, 1995, between
NHP and J. Roderick Heller III (collectively, the "NHP OPTION PLANS"), and (ii)
398,250 shares of NHP Common Stock were reserved for issuance pursuant to
options available for grant under the NHP Option Plans. Except as set forth
above, as of March 7, 1997, no shares of capital stock or other voting
securities of NHP were issued, reserved for issuance or outstanding and, since
such date, no shares of capital stock or other voting securities or options in
respect thereof have been issued except upon the exercise of options (the "NHP
STOCK OPTIONS") issued under the NHP Option Plans outstanding on March 7, 1997.
Except for the NHP Stock Options, there are not now, and at the Closing there
will not be, any NHP Options. All shares of NHP Common Stock subject to
issuance as aforesaid, upon issuance on the terms and
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conditions specified in the instruments pursuant to which they are issuable,
will be duly authorized, validly issued, fully paid and nonassessable. There
are no outstanding contractual obligations of NHP or any of its subsidiaries to
repurchase, redeem or otherwise acquire any shares of NHP Common Stock or any
other shares of capital stock of NHP or any of its subsidiaries, or make any
material investment (in the form of a loan, capital contribution or otherwise)
in any subsidiary of NHP or any other Person, other than a wholly-owned
subsidiary of NHP. Each outstanding share of capital stock of each Material
Subsidiary of NHP is duly authorized, validly issued, fully paid and
nonassessable and each such share owned by NHP or any subsidiary of NHP is owned
free and clear of any Liens.
SECTION 4.4 AUTHORITY RELATIVE TO THIS AGREEMENT. NHP has all
necessary corporate power and authority to execute and deliver this Agreement,
to perform its obligations hereunder and, subject to the adoption of this
Agreement by the stockholders of NHP as contemplated herein, to consummate the
Transactions. The execution and delivery of this Agreement by NHP, the
performance by NHP of its obligations hereunder and the consummation by NHP of
the Transactions have been duly and validly authorized by all necessary
corporate action and approved by the affirmative vote of a majority of the
entire Board of Directors of NHP and no other corporate proceedings on the part
of NHP are necessary to authorize this Agreement or to consummate the
Transactions (other than the NHP Stockholder Approval and the Merger Filing).
This Agreement has been duly and validly executed and delivered by NHP and,
assuming the due authorization, execution and delivery thereof by AIMCO and
Merger Sub, constitutes the legal, valid and binding obligation of NHP,
enforceable against NHP in accordance with its terms, except as enforcement may
be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or other similar laws relating to creditors' rights generally and by
equitable principles to which the remedies of specific performance and
injunctive and similar forms of relief are subject.
SECTION 4.5 NO CONFLICT; REQUIRED FILINGS AND CONSENTS; CERTAIN
CONTRACTS.
(a) Except as set forth on SCHEDULE 4.5, the execution and
delivery of this Agreement by NHP does not, and the performance of its
obligations under this Agreement and the consummation of the Transactions by NHP
will not, (i) conflict with, result in a breach of, cause a dissolution or
require the consent or approval of any Person under, or violate any provision
of, the Organizational Documents of NHP, (ii) require any consent, approval,
authorization or permit of, or filing with or notification to, any Governmental
Authority, except for (A) applicable
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requirements of the Exchange Act, the Securities Act and state securities or
"blue sky" laws ("BLUE SKY LAWS"), and (B) the Merger Filing, (iii) subject to
the making of the filings and obtaining the approvals identified in clause (ii),
conflict with or violate any Law, judgment, order, writ, injunction or decree
applicable to NHP or by which any property or asset of NHP is bound or affected,
or (iv) conflict with or result in any breach of or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
result in the loss by NHP or modification in a manner adverse to NHP of any
right or benefit under, or give to others any right of termination, amendment,
acceleration, repurchase or repayment, increased payments or cancellation of, or
result in the creation of a Lien or other encumbrance on any NHP Common Stock or
any property or asset of NHP or any subsidiary of NHP pursuant to, any Contract
of NHP, except, in each case, such as would not prevent or delay in any material
respect consummation of the Merger, or otherwise, individually or in the
aggregate, prevent NHP from performing its obligations under this Agreement in
any material respect, and would not, individually or in the aggregate, have a
Material Adverse Effect on NHP.
(b) Except as set forth in the Contracts filed (or incorporated
by reference) as exhibits to NHP's Annual Report on Form 10-K for the year ended
December 31, 1996 or the other NHP SEC Reports filed thereafter, there are no
Contracts to which NHP or any subsidiary of NHP is a party or by which NHP or
any subsidiary of NHP or any asset of NHP or any subsidiary of NHP is bound,
which by its terms materially limits the ability of NHP or any subsidiary of NHP
or, after consummation of the Transactions, would by its terms materially limit
the ability of AIMCO or any of its affiliates, to engage in any business in any
area or for any period.
SECTION 4.6 COMPLIANCE. Except as set forth on SCHEDULE 4.6, neither
NHP nor any subsidiary of NHP is in conflict with, or in default or violation
of, (a) any Law applicable to such Person or by which any property or asset of
such Person is bound or affected, or (b) any Contract to which NHP or any
subsidiary of NHP is a party or by which such Person or any property or asset of
such Person is bound or affected, except for any such conflicts, defaults or
violations that would not, individually or in the aggregate, have a Material
Adverse Effect on NHP.
SECTION 4.7 SEC REPORTS AND FINANCIAL STATEMENTS. Each form, report,
schedule, registration statement and definitive proxy statement filed by NHP
with the SEC since August 14, 1995 and prior to the date hereof (as such
documents have been amended prior to the date hereof, the "NHP SEC REPORTS"), as
of their respective dates, complied in all material respects with the applicable
requirements
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of the Securities Act and the Exchange Act and the rules and regulations
thereunder. None of the NHP SEC Reports, as of their respective dates,
contained or contains any untrue statement of a material fact or omits to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, except for such statements, if any, as have been modified or
superseded by subsequent filings prior to the date hereof. NHP has made
available to AIMCO true, accurate and complete copies of all of the NHP SEC
Reports. The consolidated financial statements of NHP and its subsidiaries
included in such reports comply as to form in all material respects with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto, have been prepared in accordance with GAAP
(except as may be indicated in the notes thereto or, in the case of the
unaudited interim financial statements, as permitted by Form 10-Q of the SEC)
and fairly present (subject, in the case of the unaudited interim financial
statements, to normal, year-end audit adjustments) the consolidated financial
position of NHP and its subsidiaries as at the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended. Since December 31, 1996, neither NHP nor any of its subsidiaries has
incurred any liabilities or obligations (whether absolute, accrued, fixed,
contingent, liquidated, unliquidated or otherwise and whether due or to become
due) of any nature, except liabilities, obligations or contingencies (a) which
are reflected on the consolidated balance sheet of NHP and its subsidiaries as
at December 31, 1996 (including the notes thereto) or (b) which (i) were
incurred in the ordinary course of business after December 31, 1996 and
consistent with past practices, (ii) are disclosed in the NHP SEC Reports filed
after December 31, 1996, (iii) would not, individually or in the aggregate, have
a Material Adverse Effect on NHP, or (iv) were incurred by the Mortgage
Subsidiary or one of its wholly owned subsidiaries and with respect to which
neither NHP nor any of its other subsidiaries will have any liability or
obligation as of the Effective Time. Since August 14, 1995, NHP has timely
filed with the SEC all forms, reports and other documents required to be filed
prior to the date hereof, and no subsidiary of NHP has filed, or been required
to file, any form, report or other document with the SEC, in each case, pursuant
to the Securities Act, the Exchange Act or the rules and regulations thereunder.
Since December 31, 1996, there has been no change in any of the significant
accounting (including tax accounting) policies, practices or procedures of NHP
or any subsidiary of NHP.
SECTION 4.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as
contemplated by this Agreement or as disclosed in any NHP SEC Report or as set
forth on SCHEDULE 4.8, since December 31, 1996, (a) NHP and its subsidiaries
have conducted their respective businesses only in the ordinary course,
consistent with
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past practice, and have not taken any of the actions set forth in paragraphs (a)
through (j) of SECTION 6.3, and (b) there has not occurred or arisen any event
that, individually or in the aggregate, has had or, insofar as reasonably can be
foreseen, is likely in the future to have, a Material Adverse Effect on NHP
other than events or developments generally affecting the industry in which NHP
operates. The Rights Agreement is in full force and effect and has not been
amended, modified or terminated.
SECTION 4.9 LITIGATION. Except as disclosed in the NHP SEC Reports
or as set forth on SCHEDULE 4.9, there are no claims, suits, actions or
proceedings pending or, to NHP's knowledge, threatened or contemplated, nor are
there any investigations or reviews by any Governmental Authority pending or, to
NHP's knowledge, threatened or contemplated, against, relating to or affecting
NHP or any of its subsidiaries, which could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on NHP, or to
prohibit or materially restrict the consummation of the Transactions, nor is
there any judgment, decree, order, injunction, writ or rule of any Governmental
Authority or any arbitrator outstanding against NHP or any of its subsidiaries
having, or which, insofar as can be reasonably foreseen, in the future is likely
to have, a Material Adverse Effect on NHP. In addition, there have not been any
developments with respect to any of the claims, suits, actions, proceedings,
investigations or reviews disclosed in the NHP SEC Reports which, insofar as can
be reasonably foreseen, in the future are likely to have a Material Adverse
Effect on NHP.
SECTION 4.10 REGISTRATION STATEMENTS AND PROXY STATEMENT/PROSPECTUS.
The information supplied or to be supplied by NHP, any subsidiary of NHP or
their respective Representatives for inclusion in (a) the AIMCO Registration
Statement will not, either at the time the AIMCO Registration Statement is filed
with the SEC, at the time any amendment thereof or supplement thereto is filed
with the SEC, at the time it becomes effective under the Securities Act or at
the Effective Time, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading, (b) the MS Registration Statement will not,
either at the time the MS Registration Statement is filed with the SEC, at the
time any amendment thereof or supplement thereto is filed with the SEC, at the
time it becomes effective or at the Effective Time, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, and (c) the
Proxy Statement/Prospectus, including any amendments and supplements thereto,
will not, at the date
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mailed to NHP's stockholders, at the time of the NHP Meeting, at the date mailed
to AIMCO's stockholders or at the time of the AIMCO Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The Proxy
Statement/Prospectus, as to information supplied by NHP, any subsidiary of NHP
or their respective Representatives, will comply in all material respects with
all applicable provisions of the Securities Act and the Exchange Act and the
rules and regulations promulgated thereunder, and the MS Registration Statement
will comply in all material respects with the provisions of applicable Federal
securities laws, rules and regulations.
SECTION 4.11 EMPLOYEE BENEFIT PLANS. Each Benefit Plan of NHP has
been administered in compliance, in all material respects, with its terms, and
is in compliance in all material respects with applicable laws, rules and
regulations, (including, without limitation, provisions relating to funding,
filing, termination, reporting, disclosure and continuation coverage obligations
pursuant to Title V of the Consolidated Omnibus Budget Reconciliation Act of
1985, as amended ("COBRA")). No Benefit Plan of NHP has been the subject of a
"reportable event" (as defined in Section 4043 of ERISA) (other than a
reportable event for which the 30 day notice requirement has been waived) and
there have not been any non-exempt "prohibited transactions" (as described in
Section 4975 of the Code or in Part 4 of Subtitle B of Title I of ERISA) with
respect to any Benefit Plan of NHP. There are no proceedings, suits or material
claims (other than routine claims for benefits) pending or, to the knowledge of
NHP, threatened with respect to any Benefit Plan of NHP, the assets of any trust
thereunder, or the Benefit Plan sponsor or the Benefit Plan administrator with
respect to the design or operation of any Benefit Plan of NHP. Each Benefit
Plan of NHP which is intended to be "qualified" within the meaning of Section
401(a) of the Code is so qualified, and any trust created pursuant to any such
Benefit Plan of NHP is exempt from Federal income tax under Section 501(a) of
the Code and the IRS has issued each such Benefit Plan a favorable determination
letter which is currently applicable. NHP is not aware of any circumstance or
event which would jeopardize the tax-qualified status of any Benefit Plan of NHP
or the tax-exempt status of any related trust, or would cause the imposition of
any material liability, penalty or tax under ERISA or the Code with respect to
any Benefit Plan of NHP. No material liabilities to or on behalf of
participants (other than routine claims for benefits), the IRS, the United
States Department of Labor, the Pension Benefit Guaranty Corporation or to any
other Person or entity have been or are reasonably expected to be incurred as a
result of the termination of any Benefit Plan of NHP or otherwise that have not
been satisfied in full or properly accrued on NHP's balance sheet as at December
31, 1996, included in the NHP SEC Reports.
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Except as set forth on SCHEDULE 4.11, neither NHP nor any of its subsidiaries
maintains or is obligated to contribute to, or has ever maintained or been
obligated to contribute to, a "multi-employer plan" (as such term is defined by
Section 4001(a)(3) of ERISA) or a "multiple employer plan" (within the meaning
of Section 413(c) of the Code). Except as set forth in SCHEDULE 4.11 or in the
NHP SEC Reports or as otherwise required by applicable law, neither NHP nor any
of its subsidiaries maintains any retiree life and/or retiree health insurance
plans which provide for continuing benefits or coverage for any employee or any
beneficiary of an employee after such employee's termination of employment.
Except as set forth in SCHEDULE 4.11 or in the NHP SEC Reports, the consummation
of the transactions contemplated by this Agreement will not (a) entitle any
employee of NHP or its subsidiaries to severance pay, unemployment compensation
or any other payment, (b) accelerate the time of payment or vesting, or increase
the amount of compensation due to any such employee or (c) result in any
liability under Title IV of ERISA.
SECTION 4.12 BROKERS. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the Transactions based on any arrangement or agreement made by or on behalf
of NHP, except Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"). NHP
has heretofore furnished to AIMCO a complete and correct copy of all agreements
between NHP and DLJ pursuant to which such firm would be entitled to any payment
relating to the Transactions.
SECTION 4.13 TAXES.
(a) Each of NHP and its subsidiaries has timely filed (or has had
timely filed on its behalf) or will file or cause to be timely filed, all
material Tax Returns required by applicable law to be filed by it prior to or as
of the Effective Time. All such Tax Returns and amendments thereto are, or will
be before the Effective Time, true, complete and correct in all material
respects.
(b) Each of NHP and its subsidiaries has paid (or has had paid on
its behalf), or where payment is not yet due, has established (or has had
established on its behalf and for its sole benefit and recourse), or will
establish or cause to be established on or before the Effective Time, an
adequate accrual for the payment of, all material Taxes due with respect to any
period ending prior to or as of the Effective Time.
(c) No deficiency or adjustment for any material Taxes has been
proposed, asserted or assessed against NHP or any of its subsidiaries that has
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not been resolved or paid or for which an adequate accrual has not been
established in accordance with generally accepted accounting principles. There
are no Liens for material Taxes upon the assets of NHP or any of its
subsidiaries, except Liens for current Taxes not yet due.
(d) Neither NHP nor any of its subsidiaries has entered into any
Contract that would result in the disallowance of any tax deductions pursuant to
section 280G of the Code. No "consent" within the meaning of section 341(f) of
the Code has been filed with respect to NHP or any of its subsidiaries.
(e) All Tax sharing agreements, Tax indemnity agreements and
similar agreements to which NHP or any of its subsidiaries is a party are
disclosed in the NHP SEC Reports, except for a Tax sharing agreement reasonably
acceptable to AIMCO that may be entered into between NHP and the Mortgage
Subsidiary after the date hereof.
SECTION 4.14 OPINION OF FINANCIAL ADVISOR. The Independent Committee
has received the opinion of DLJ, dated April 21, 1997 (the "FAIRNESS OPINION"),
to the effect that, as of such date, the Merger Consideration and the Rights
Consideration are, in the aggregate, fair to the unaffiliated stockholders of
NHP, from a financial point of view, and a copy of the Fairness Opinion has been
delivered to AIMCO.
SECTION 4.15 RELIANCE. In entering into this Agreement, NHP has
relied solely on representations made in this Agreement, including the Schedules
hereto, and any certificates and documents required to be provided by AIMCO and
the Merger Sub pursuant to this Agreement. NHP has been represented by counsel
and has had unrestricted opportunity to examine and understand the business and
assets of AIMCO.
SECTION 4.16 MANAGEMENT ARRANGEMENTS. Except as set forth on
SCHEDULE 4.16, and assuming that AIMCO satisfies the test for a "Qualified
Purchaser" under the Stock and Asset Transfer Restrictions Agreement, and
satisfies the net worth and managed units requirements of Section 4 of the Stock
and Asset Transfer Restrictions Agreement, there is currently no fact or
circumstance known to NHP that is likely to result in the loss by NHP, or
modification in a manner adverse to NHP, of any right or benefit under, or give
any Person any right of termination, cancellation or nonrenewal of, any Contract
pursuant to which NHP provides property management services, except such as
would not, individually or in the aggregate, have a Material Adverse Effect on
NHP.
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SECTION 4.17 DISCLOSURE. No representation or warranty of NHP
contained in this Agreement and no statement contained in any certificate or
schedule furnished or to be furnished by or on behalf of NHP to AIMCO or any of
its Representatives pursuant hereto contains or will contain any untrue
statement of a material fact.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF AIMCO
AND MERGER SUB
AIMCO and Merger Sub hereby represent and warrant to NHP that:
SECTION 5.1 ORGANIZATION AND QUALIFICATIONS; SUBSIDIARIES. AIMCO,
Merger Sub and each Material Subsidiary of AIMCO is a corporation, partnership
or other legal entity duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation or organization and has
the requisite power and authority and all necessary governmental approvals to
own, lease and operate its properties and to carry on its business as it is now
being conducted, except where the failure to be so organized, existing or in
good standing or to have such power, authority and governmental approvals would
not, individually or in the aggregate, have a Material Adverse Effect on AIMCO.
Each of AIMCO, Merger Sub and AIMCO's Material Subsidiaries is duly qualified or
licensed as a foreign corporation, partnership or limited liability company to
transact business, and is in good standing, in each jurisdiction where the
character of the properties owned, leased or operated by it or the nature of its
business makes such qualification or licensing necessary, except for such
failures to be so qualified or licensed and in good standing that would not,
individually or in the aggregate, have a Material Adverse Effect on AIMCO.
SECTION 5.2 CHARTER AND BYLAWS. Complete and correct copies of the
charter and bylaws of AIMCO, as amended and supplemented to date, have been
filed (or incorporated by reference) as exhibits 3.1 and 3.2, respectively, to
AIMCO's Annual Report on Form 10-K for the year ended December 31, 1996. Such
Organizational Documents are in full force and effect and have not been amended
or modified in any respect. AIMCO is not in violation of any provision of its
Organizational Documents. No Material Subsidiary of AIMCO is in violation of
any provision of its Organizational Documents, except for such violations that
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would not, individually or in the aggregate, have a Material Adverse Effect on
AIMCO.
SECTION 5.3 CAPITALIZATION. The authorized capital stock of AIMCO
consists of (a) 150,000,000 shares of AIMCO Common Stock; (b) 425,000 shares of
Class B Common Stock, par value $.01 per share ("CLASS B COMMON STOCK"), of
AIMCO; (c) 9,034,000 shares of Preferred Stock, par value $.01 per share
("PREFERRED STOCK"), of AIMCO; and (d) 966,000 shares of Cumulative Convertible
Senior Preferred Stock, par value $.01 per share (the "SENIOR PREFERRED STOCK"),
of AIMCO. As of March 11, 1997, (i) 17,569,970 shares of AIMCO Common Stock
were issued and outstanding, all of which were validly issued, fully paid and
nonassessable; (ii) 325,000 shares of Class B Common Stock were issued and
outstanding, all of which were validly issued, fully paid and nonassessable;
(iii) no shares of Preferred Stock or Senior Preferred Stock were issued and
outstanding; and (iv)(A) 560,659 shares of AIMCO Common Stock were reserved for
issuance upon the exercise of outstanding stock options granted pursuant to The
1994 Stock Option Plan of Apartment Investment and Management Company and
Affiliates, the Apartment Investment and Management Company 1996 Stock Award and
Incentive Plan and the Apartment Investment and Management Company Non-Qualified
Employee Stock Option Plan (collectively, the "AIMCO OPTION PLANS"), (B) 174,792
shares of AIMCO Common Stock were reserved for issuance pursuant to options
available for grant under AIMCO Option Plans. Except as set forth above, as of
March 11, 1997, no shares of capital stock or other voting securities of AIMCO
were issued, reserved for issuance or outstanding. All shares of AIMCO Common
Stock subject to issuance as aforesaid, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are issuable,
will be duly authorized, validly issued, fully paid and nonassessable. There
are no outstanding contractual obligations of AIMCO or any of its subsidiaries
to repurchase, redeem or otherwise acquire any shares of AIMCO Common Stock or
any other shares of capital stock of AIMCO or any of its subsidiaries, or make
any material investment (in the form of a loan, capital contribution or
otherwise) in any subsidiary of AIMCO or any other Person, other than a
wholly-owned subsidiary of AIMCO. Each outstanding share of capital stock of
each Material Subsidiary of AIMCO is duly authorized, validly issued, fully paid
and nonassessable and each such share owned by AIMCO or any subsidiary of AIMCO
is owned free and clear of any Liens.
SECTION 5.4 AUTHORITY RELATIVE TO THIS AGREEMENT. Each of AIMCO and
Merger Sub has all necessary corporate power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to consummate
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the Transactions, subject to the approval of the issuance of shares of AIMCO
Common Stock pursuant to the Merger (the "AIMCO STOCK ISSUANCE") by a majority
of votes cast by the holders of AIMCO Common Stock (the "AIMCO STOCKHOLDER
APPROVAL"). The execution and delivery of this Agreement by AIMCO and Merger
Sub, the performance by AIMCO and Merger Sub of their respective obligations
hereunder and the consummation by AIMCO and Merger Sub of the Transactions have
been duly and validly authorized by all necessary corporate action and no other
corporate proceedings on the part of AIMCO or Merger Sub are necessary to
authorize this Agreement or to consummate the Transactions (other than the AIMCO
Stockholder Approval and the Merger Filing). This Agreement has been duly and
validly executed and delivered by AIMCO and Merger Sub and, assuming the due
authorization, execution and delivery thereof by NHP, constitutes the legal,
valid and binding obligation of AIMCO and Merger Sub, enforceable against AIMCO
and Merger Sub in accordance with its terms, except as enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or other similar laws relating to creditors' rights generally and by
equitable principles to which the remedies of specific performance and
injunctive and similar forms of relief are subject.
SECTION 5.5 NO CONFLICT; REQUIRED FILINGS AND CONSENTS. The
execution and delivery of this Agreement by AIMCO and Merger Sub do not, and the
performance of their respective obligations under this Agreement and the
consummation of the Transactions by AIMCO and Merger Sub will not, (a) conflict
with, result in a breach of, cause a dissolution or require the consent or
approval of any Person under, or violate any provision of, the Organizational
Documents of AIMCO or Merger Sub, (b) require any consent, approval,
authorization or permit of, or filing with or notification to, any Governmental
Authority, except for (i) applicable requirements, if any, of the Exchange Act,
the Securities Act or the Blue Sky Laws, and (ii) the Merger Filing, (c) subject
to the making of the filings and obtaining the approvals identified in clause
(b), conflict with or violate any Law, judgment, order, writ, injunction or
decree applicable to AIMCO or Merger Sub or by which any property or asset of
AIMCO or Merger Sub is bound or affected, or (d) conflict with or result in any
breach of or constitute a default (or an event which with notice or lapse of
time or both would become a default) under, result in the loss by AIMCO or
Merger Sub or modification in a manner adverse to AIMCO or Merger Sub of any
right or benefit under, or give to others any right of termination, amendment,
acceleration, repurchase or repayment, increased payments or cancellation of, or
result in the creation of a Lien or other encumbrance on any Shares or any
property or asset of AIMCO or Merger Sub or any subsidiary of AIMCO or Merger
Sub pursuant to, any Contract of AIMCO or Merger Sub, except, in each
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case, such as would not prevent or delay AIMCO or Merger Sub from performing its
obligations under this Agreement in any material respect, and would not,
individually or in the aggregate, have a Material Adverse Effect on AIMCO or
Merger Sub.
SECTION 5.6 COMPLIANCE. Neither AIMCO, Merger Sub nor any Material
Subsidiary of AIMCO is in conflict with, or in default or violation of, (a) any
Law applicable to such Person or by which any property or asset of such Person
is bound or affected, or (b) any Contract to which AIMCO or Merger Sub or any
subsidiary of AIMCO is a party or by which such Person or any property or asset
of such Person is bound or affected, except for any such conflicts, defaults or
violations that would not, individually or in the aggregate, have a Material
Adverse Effect on AIMCO.
SECTION 5.7 SEC REPORTS AND FINANCIAL STATEMENTS. Each form, report,
schedule, registration statement and definitive proxy statement filed by AIMCO
with the SEC since June 30, 1995, and prior to the date hereof (as such
documents have been amended prior to the date hereof, the "AIMCO SEC REPORTS"),
as of their respective dates, complied in all material respects with the
applicable requirements of the Securities Act and the Exchange Act and the rules
and regulations thereunder. None of the AIMCO SEC Reports, as of their
respective dates, contained or contains any untrue statement of a material fact
or omits to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, except for such statements, if any, as have been modified
or superseded by subsequent filings prior to the date hereof. The consolidated
financial statements of AIMCO and its subsidiaries included in such reports
comply as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto or, in the case of the
unaudited interim financial statements, as permitted by Form 10-Q of the SEC)
and fairly present (subject, in the case of the unaudited interim financial
statements, to normal, year-end audit adjustments) the consolidated financial
position of AIMCO and its subsidiaries as at the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended. Since December 31, 1996, neither AIMCO nor any of its subsidiaries has
incurred any liabilities or obligations (whether absolute, accrued, fixed,
contingent, liquidated, unliquidated or otherwise and whether due or to become
due) of any nature, except liabilities, obligations or contingencies (a) which
are reflected on the consolidated balance sheet of AIMCO
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and its subsidiaries as at December 31, 1996 (including the notes thereto) or
(b) which (i) were incurred in the ordinary course of business after December
31, 1996 and consistent with past practices, (ii) are disclosed in the AIMCO SEC
Reports filed after December 31, 1996, or (iii) would not, individually or in
the aggregate, have a Material Adverse Effect on AIMCO. Since August 14, 1995,
AIMCO has timely filed with the SEC all forms, reports and other documents
required to be filed prior to the date hereof, and no subsidiary of AIMCO has
filed, or been required to file, any form, report or other document with the
SEC, in each case, pursuant to the Securities Act, the Exchange Act or the rules
and regulations thereunder. Since December 31, 1996, there has been no change
in any of the significant accounting (including tax accounting) policies,
practices or procedures of AIMCO or any subsidiary of AIMCO.
SECTION 5.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as
contemplated by this Agreement or as disclosed in any AIMCO SEC Report, since
December 31, 1996, (a) AIMCO and its subsidiaries have conducted their
respective businesses only in the ordinary course, consistent with past
practice, and (b) there has not occurred or arisen any event that, individually
or in the aggregate, has had or, insofar as reasonably can be foreseen, is
likely in the future to have, a Material Adverse Effect on AIMCO other than
events or developments generally affecting the industry in which AIMCO operates.
SECTION 5.9 LITIGATION. Except as disclosed in the AIMCO SEC
Reports, there are no claims, suits, actions or proceedings pending or, to
AIMCO's knowledge, threatened or contemplated, nor are there any investigations
or reviews by any Governmental Authority pending or, to AIMCO's knowledge,
threatened or contemplated, against, relating to or affecting AIMCO or any of
its subsidiaries, which could reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect on AIMCO, or to prohibit or materially
restrict the consummation of the Transactions, nor is there any judgment,
decree, order, injunction, writ or rule of any Governmental Authority or any
arbitrator outstanding against AIMCO or any of its subsidiaries having, or
which, insofar as can be reasonably foreseen, in the future is likely to have, a
Material Adverse Effect on AIMCO. In addition, there have not been any
developments with respect to any of the claims, suits, actions, proceedings,
investigations or reviews disclosed in the AIMCO SEC Reports which, insofar as
can be reasonably foreseen, in the future are likely to have a Material Adverse
Effect on AIMCO.
SECTION 5.10 REGISTRATION STATEMENTS AND PROXY STATEMENT/PROSPECTUS.
The information supplied or to be supplied by AIMCO, any
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subsidiary of AIMCO or their respective Representatives for inclusion in (a) the
AIMCO Registration Statement will not, either at the time the AIMCO Registration
Statement is filed with the SEC, at the time any amendment thereof or supplement
thereto is filed with the SEC, at the time it becomes effective under the
Securities Act or at the Effective Time, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading, (b) the MS
Registration Statement will not, either at the time the MS Registration
Statement is filed with the SEC, at the time any amendment thereof or supplement
thereto is filed with the SEC, at the time it becomes effective or at the
Effective Time, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading, and (c) the Proxy Statement/Prospectus,
including any amendments and supplements thereto, will not, at the date mailed
to AIMCO's stockholders, at the time of the AIMCO Meeting or at the time of the
NHP Meeting, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The Proxy Statement/Prospectus, as to information supplied by
AIMCO, any subsidiary of AIMCO or their respective Representatives, will comply
as to form in all material respects with all applicable provisions of the
Securities Act and the Exchange Act and the rules and regulations promulgated
thereunder, and the AIMCO Registration Statement will comply in all material
respects with the provisions of the Securities Act and the rules and regulations
promulgated thereunder.
SECTION 5.11 EMPLOYEE BENEFIT PLANS. Each Benefit Plan of AIMCO has
been administered in compliance, in all material respects, with its terms, and
is in compliance in all material respects with applicable laws, rules and
regulations, (including, without limitation, provisions relating to funding,
filing, termination, reporting, disclosure and continuation coverage obligations
pursuant to Title V of COBRA. No Benefit Plan of AIMCO has been the subject of
a "reportable event" (as defined in Section 4043 of ERISA) (other than a
reportable event for which the 30 day notice requirement has been waived) and
there have not been any non-exempt "prohibited transactions" (as described in
Section 4975 of the Code or in Part 4 of Subtitle B of Title I of ERISA) with
respect to any Benefit Plan of AIMCO. There are no proceedings, suits or
material claims (other than routine claims for benefits) pending or, to the
knowledge of AIMCO, threatened with respect to any Benefit Plan of AIMCO, the
assets of any trust thereunder, or the Benefit Plan sponsor or the Benefit Plan
administrator with respect to the design or operation of any Benefit Plan of
AIMCO. Each Benefit Plan of AIMCO which is
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intended to be "qualified" within the meaning of Section 401(a) of the Code is
so qualified, and any trust created pursuant to any such Benefit Plan of AIMCO
is exempt from Federal income tax under Section 501(a) of the Code and the IRS
has issued each such Benefit Plan a favorable determination letter which is
currently applicable. AIMCO is not aware of any circumstance or event which
would jeopardize the tax-qualified status of any Benefit Plan of AIMCO or the
tax-exempt status of any related trust, or would cause the imposition of any
material liability, penalty or tax under ERISA or the Code with respect to any
Benefit Plan of AIMCO. No material liabilities to or on behalf of participants
(other than routine claims for benefits), the IRS, the United States Department
of Labor, the Pension Benefit Guaranty Corporation or to any other Person or
entity have been or are reasonably expected to be incurred as a result of the
termination of any Benefit Plan of AIMCO or otherwise that have not been
satisfied in full or properly accrued on AIMCO's balance sheet as at December
31, 1996, included in the AIMCO SEC Reports. Neither AIMCO nor any of its
subsidiaries maintains or is obligated to contribute to, or has ever maintained
or been obligated to contribute to, a "multi-employer plan" (as such term is
defined by Section 4001(a)(3) of ERISA) or a "multiple employer plan" (within
the meaning of Section 413(c) of the Code). Except as set forth in the AIMCO
SEC Reports or as otherwise required by applicable law, neither AIMCO nor any of
its subsidiaries maintains any retiree life and/or retiree health insurance
plans which provide for continuing benefits or coverage for any employee or any
beneficiary of an employee after such employee's termination of employment.
Except as disclosed in the AIMCO SEC Reports, the consummation of the
transactions contemplated by this Agreement will not (a) entitle any employee of
AIMCO or its subsidiaries to severance pay, unemployment compensation or any
other payment, (b) accelerate the time of payment or vesting, or increase the
amount of compensation due to any such employee or (c) result in any liability
under Title IV of ERISA.
SECTION 5.12 BROKERS. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the Transactions based on any arrangement or agreement made by or on behalf
of AIMCO.
SECTION 5.13 TAXES.
(a) AIMCO and each of its subsidiaries has timely filed (or has
had timely filed on its behalf) or will file or cause to be timely filed, all
material Tax Returns required by applicable law to be filed by it prior to or as
of the
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Effective Time. All such Tax Returns and amendments thereto are, or will be
before the Effective Time, true, complete and correct in all material respects.
(b) Each of AIMCO and its subsidiaries has paid (or has had paid
on its behalf), or where payment is not yet due, has established (or has had
established on its behalf and for its sole benefit and recourse), or will
establish or cause to be established on or before the Closing Date, an adequate
accrual for the payment of, all material Taxes due with respect to any period
ending prior to or as of the Closing Date.
(c) No deficiency or adjustment for any material Taxes has been
proposed, asserted or assessed against AIMCO or any of its subsidiaries that has
not been resolved or paid or for which an adequate accrual has not been
established in accordance with generally accepted accounting principles. There
are no Liens for material Taxes upon the assets of AIMCO or any of its
subsidiaries, except Liens for current Taxes not yet due.
(d) Neither AIMCO nor any of its subsidiaries has entered into
any Contract that would result in the disallowance of any tax deductions
pursuant to section 280G of the Code. No "consent" within the meaning of
section 341(f) of the Code has been filed with respect to AIMCO or any of its
subsidiaries.
(e) All Tax sharing agreements, Tax indemnity agreements and
similar agreements to which AIMCO or any of its subsidiaries is a party are
disclosed in the AIMCO SEC Reports.
SECTION 5.14 REIT STATUS. AIMCO has been organized and operated in
conformity with the requirements for qualification as a real estate investment
trust under the Code for its taxable years ended December 31, 1994, 1995 and
1996, AIMCO's present and proposed method of operation will enable it to
continue to meet the requirements for qualification as a real estate investment
trust under the Code, and the consummation of the transactions contemplated by
this Agreement, the Stock Purchase Agreement and the Real Estate Acquisition
Agreement will not adversely affect AIMCO's ability to continue to meet such
requirements.
SECTION 5.15 RELIANCE. In entering into this Agreement, AIMCO has
relied solely on representations made in this Agreement, including the Schedules
hereto, and any certificates and documents required to be provided by NHP
pursuant
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to this Agreement. AIMCO has been represented by counsel and has had
unrestricted opportunity to examine and understand the business and assets of
NHP.
SECTION 5.16 STOCK PURCHASE AGREEMENT. AIMCO has delivered to NHP a
true and correct copy of the Stock Purchase Agreement. The Stock Purchase
Agreement is a valid and binding obligation of AIMCO and, to AIMCO's knowledge,
Demeter, and Capricorn.
SECTION 5.17 FINANCIAL CAPABILITY. AIMCO will have on the Closing
Date and immediately prior to and at the Effective Time, funds and authorized
and unissued shares of AIMCO Common Stock sufficient to consummate the Merger
and the transactions contemplated hereby. To the extent that such funds are to
be provided by third party financing, AIMCO will provide NHP with complete and
correct copies of all documents relating to the provision of such financing.
SECTION 5.18 QUALIFIED PURCHASER. AIMCO is, and, after giving effect
to the Transactions and the transactions contemplated by the Stock Purchase
Agreement, will be, a "Qualified Purchaser," as such term is defined in the
Stock and Asset Transfer Restrictions Agreement.
SECTION 5.19 DISCLOSURE. No representation or warranty of AIMCO
contained in this Agreement and no statement contained in any certificate or
schedule furnished or to be furnished by or on behalf of AIMCO to NHP or any of
its Representatives pursuant hereto contains or will contain any untrue
statement of a material fact.
ARTICLE VI
COVENANTS
SECTION 6.1 NOTIFICATION OF CERTAIN MATTERS. Each of the parties
hereto shall give prompt notice to the other parties hereto of (a) the
occurrence or nonoccurrence of any event the occurrence or nonoccurrence of
which would be likely to cause (i) any representation or warranty contained in
this Agreement to be untrue or inaccurate in any material respect, or (ii) any
covenant, condition or agreement contained in this Agreement not to be complied
with or satisfied and (b) any failure of such party to comply with or satisfy
any covenant, condition or agreement to be complied with or satisfied by it
hereunder. The delivery of any
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notice pursuant to this SECTION 6.1 shall not limit or otherwise affect the
remedies available hereunder to the party receiving such notice.
SECTION 6.2 FURTHER ACTION, REASONABLE EFFORTS; CONSENTS AND
APPROVALS. Upon the terms and subject to the conditions hereof, each of the
parties hereto shall use commercially reasonable efforts to take, or cause to be
taken, all appropriate action, and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated hereby, including,
without limitation, using commercially reasonable efforts to obtain all
licenses, permits, consents, approvals, authorizations, certificates,
qualifications and orders of, and make all filings and required submissions
with, all Governmental Authorities, and all shareholders, lenders and partners
of, and parties to Contracts with, AIMCO, NHP or any other Person, in each case,
as are necessary or desirable for the consummation of the transactions
contemplated hereby (collectively "CONSENTS"). NHP shall, as soon as possible
prior to the Closing, deliver to AIMCO copies of all Consents obtained by NHP.
AIMCO shall, as soon as possible prior to the Closing, deliver to NHP copies of
all Consents obtained by AIMCO. In case at any time after the Closing Date any
further action is necessary or desirable to carry out the purposes of this
Agreement, AIMCO and NHP shall use commercially reasonable efforts to take all
such action. Prior to the Closing, each party shall use its best efforts not to
take any action, or enter into any transaction, that would cause any of its
representations or warranties contained in this Agreement to be untrue.
SECTION 6.3 CONDUCT OF BUSINESS OF NHP PENDING THE CLOSING. From the
date hereof through the Closing, except as expressly permitted or contemplated
by this Agreement or as set forth on SCHEDULE 6.3 hereto, unless AIMCO shall
otherwise agree in writing prior to the taking of any action prohibited by the
terms of this SECTION 6.3, NHP and its subsidiaries shall conduct their
operations and business in the ordinary and usual course of business and
consistent with past practice and use reasonable efforts to keep available the
services of its present officers and key employees and preserve the goodwill and
business relationships with all Persons having business relationships with it.
Without limiting the generality of the foregoing, and except as otherwise
expressly permitted by this Agreement, prior to the Closing, without the prior
written consent of AIMCO, neither NHP nor any of its subsidiaries shall: (a)
amend or modify its Organizational Documents or the Rights Agreement; (b) issue,
sell, pledge or dispose of, grant or otherwise create, or agree to issue, sell,
pledge or dispose of, grant or otherwise create any capital stock or other
equity securities, any debt or other securities convertible into or exchangeable
for any of its capital stock or other equity securities; (c) purchase,
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redeem or otherwise acquire or retire, or offer to purchase, redeem or otherwise
acquire or retire, any of its capital stock or other equity securities
(including any options with respect to any of its capital stock or other equity
securities and any securities convertible or exchangeable into any of its
capital stock or other equity securities) or any long-term debt; (d) declare,
set aside, make or pay any dividend or other distribution, payable in cash,
stock, property or otherwise, with respect to any of its capital stock or other
equity securities (except the Spin-Off and dividends declared and paid by a
subsidiary of NHP only to NHP or a wholly-owned subsidiary of NHP), or
subdivide, reclassify, recapitalize, split, combine or exchange any of its
capital stock or other equity securities; (e) incur or become contingently
liable with respect to any indebtedness or guarantee any such indebtedness or
issue any debt securities if, after giving effect thereto, the outstanding
indebtedness of NHP and its subsidiaries exceeds the sum of (i) the amount of
long-term indebtedness and the current portion of long-term indebtedness of NHP
and its subsidiaries at December 31, 1996, plus (ii) $5 million (excluding any
such indebtedness relating to the Mortgage Subsidiary and permitted by the
proviso at the end of this SECTION 6.3); (f) acquire or agree to acquire by
merging or consolidating with, or by purchasing a substantial equity interest in
or a substantial portion of the assets of, or by any other manner, any business
or any corporation, partnership, association or other business entity; (g)
mortgage or otherwise encumber or subject to any Lien, or sell, transfer or
otherwise dispose of, any assets or properties that are material, individually
or in the aggregate, to NHP and its subsidiaries, taken as a whole, other than
Liens incurred in the ordinary course of business consistent with past practice
or to secure indebtedness incurred in compliance with clause (e), and sales and
dispositions in the ordinary course of business consistent with past practice;
(h) except as may be required by applicable Law, or as contemplated by this
Agreement, (i) increase the compensation payable or to become payable to, or
enter into any employment agreement with, its executive officers or employees,
except with respect to non-executive officer employees in the ordinary course of
business consistent with past practice; (ii) grant any severance or termination
pay to any director, executive officer or employee of NHP or any subsidiary of
NHP, except with respect to non-executive officer employees in the ordinary
course of business or pursuant to existing NHP Benefit Plans; or (iii) enter
into any severance agreement with any director, executive officer or employee
except with respect to non-executive officer employees in the ordinary course of
business; or (iv) establish, adopt, enter into, terminate, withdraw from or
amend in any material respect or take action to accelerate any rights or
benefits under any collective bargaining agreement, any stock option plan, or
any employee benefit plan or policy; (i) take any action, other than reasonable
actions in the ordinary course of business and consistent with past practice,
with respect to accounting policies or
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procedures (including Tax accounting policies, procedures and elections relating
to Taxes that would apply to NHP, AIMCO or the Surviving Corporation after the
Merger), except as may be required by generally accepted accounting principles,
or settle any material Audit or, except as required by Law, amend in any
material respect any material Tax Return; or (j) authorize any of, or commit or
agree to take any of, the foregoing actions; provided, however, that the
Mortgage Subsidiary may acquire any assets, businesses or entities, and NHP may
incur indebtedness on behalf of the Mortgage Subsidiary, if, after giving effect
to the Spin-Off, NHP and its other subsidiaries would not have any liabilities
or obligations relating thereto.
SECTION 6.4 CONDUCT OF BUSINESS OF AIMCO PENDING THE CLOSING. From
the date hereof through the Closing, except as expressly permitted or
contemplated by this Agreement, unless NHP shall otherwise agree in writing
prior to the taking of any action prohibited by the terms of this SECTION 6.4,
AIMCO and its subsidiaries shall conduct their operations and business in the
ordinary and usual course of business and consistent with past practice and use
reasonable efforts to keep available the services of its present officers and
key employees and preserve the goodwill and business relationships with all
Persons having business relationships with it.
SECTION 6.5 ACCESS TO INFORMATION.
(a) From the date hereof to the Effective Time, each of AIMCO and
NHP shall (and shall cause their respective subsidiaries and Representatives to)
afford the Representatives of the other party reasonable access at all
reasonable times to its officers, employees, agents, properties, offices, plants
and other facilities, books, records and Tax Returns, and shall furnish such
Representatives with all financial, operating and other data and information as
may be reasonably requested.
(b) All information provided by AIMCO or NHP pursuant to this
Agreement shall be subject to the AIMCO Confidentiality Agreement or the NHP
Confidentiality Agreement, respectively.
SECTION 6.6 NO SOLICITATION.
(a) NHP shall not, nor shall it permit any of its subsidiaries,
or any of their Representatives (including, without limitation, any investment
banker, attorney or accountant retained by NHP or a subsidiary of NHP), directly
or indirectly, to, (i) initiate, solicit or encourage any inquiries or proposals
that
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constitute, or could reasonably be expected to lead to, a proposal or offer for
a merger, consolidation, business combination, sale of assets representing a
substantial portion of the assets of NHP and its subsidiaries, taken as a whole,
sale of shares of capital stock (other than to NHP or a subsidiary of NHP),
including, without limitation, by way of a tender offer or exchange offer by any
person (other than NHP or a subsidiary of NHP) for shares of capital stock of
NHP, other than the Transactions (any of the foregoing inquiries or proposals
being referred to in this Agreement as an "ACQUISITION PROPOSAL"), (ii) engage
in negotiations or discussions concerning, or provide to any person or entity
any non-public information or data relating to NHP or any subsidiary of NHP for
the purposes of, or otherwise cooperate with or assist or participate in,
facilitate or encourage, any inquiries or the making of any Acquisition
Proposal, (iii) agree to, approve or recommend any Acquisition Proposal, or (iv)
take any other action inconsistent with the obligations and commitments assumed
by NHP pursuant to this SECTION 6.6; provided, however, that nothing contained
in this Agreement shall prevent NHP or its Board of Directors from (A)
furnishing nonpublic information to, or entering into discussions or
negotiations with, any person or entity in connection with an unsolicited bona
fide written Acquisition Proposal to NHP or its stockholders, if and only to the
extent that (1) the Board of Directors of NHP, by action of a majority of the
entire Board of Directors of NHP, or by the Board of Directors with the approval
of its Independent Committee, determines in good faith (after consultation with
outside legal counsel) that such action is necessary for such Board of Directors
to comply with its fiduciary duties to stockholders under applicable law, and
(2) prior to furnishing such non-public information to, or entering into
discussions or negotiations with, such person or entity, the Board of Directors
of NHP receives from such person or entity an executed confidentiality agreement
with terms no less favorable to such party than those contained in the NHP
Confidentiality Agreement; or (B) complying with Rule 14e-2 promulgated under
the Exchange Act with regard to an Acquisition Proposal or making any other
public disclosure that, in the opinion of NHP's counsel, is required by
applicable law, rule or regulation; provided, that prior to making any such
other public disclosure NHP shall to the extent reasonably practicable inform
AIMCO that it intends to make such disclosure and consult with AIMCO regarding
the necessity for such disclosure. NHP will immediately cease and cause to be
terminated any existing activities, discussions or negotiations by NHP or its
Representatives with any parties conducted heretofore with respect to any of the
foregoing.
(b) NHP shall (i) promptly notify AIMCO in writing after receipt
by NHP (or its Representatives) of any Acquisition Proposal or any inquiries
indicating that any person is considering making or wishes to make an
Acquisition
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Proposal, (ii) promptly notify AIMCO in writing after receipt of any request for
nonpublic information relating to it or any of its subsidiaries or for access to
its or any of its subsidiaries' properties, books or records by any person that,
to NHP's knowledge, may be considering making, or has made, an Acquisition
Proposal and (iii) keep AIMCO advised of the status and principal financial
terms of any such Acquisition Proposal, indication or request.
SECTION 6.7 STOCKHOLDER MEETINGS.
(a) NHP shall take all action necessary, in accordance with the
DGCL and NHP's Organizational Documents, to call a meeting of its stockholders
(the "NHP MEETING") to be held as promptly as practicable for the purpose of
considering and voting upon this Agreement and the Merger. The vote required
for such approval shall be the affirmative vote of the holders of 66-2/3% of the
outstanding shares of NHP Common Stock that is not owned (within the meaning of
Section 203 of the DGCL) by AIMCO (the "NHP STOCKHOLDER APPROVAL"). The Board
of Directors of NHP shall recommend that the stockholders of NHP approve this
Agreement and the Merger; provided, that the Board of Directors of NHP, by
action of a majority of the entire Board of Directors of NHP, or by the Board of
Directors with the approval of its Independent Committee, may withdraw such
recommendation if such Board of Directors determines in good faith, after
receipt of an Acquisition Proposal and after consultation with outside legal
counsel, that the withdrawal of such recommendation is necessary for such Board
of Directors to comply with its fiduciary duties under applicable law. AIMCO
shall vote or cause to be voted all of the shares of NHP owned by it and its
Affiliates in favor of adoption of this Agreement.
(b) AIMCO shall take all action necessary, in accordance with the
Maryland General Corporation Law and AIMCO's Organizational Documents, to call a
meeting of its stockholders (the "AIMCO MEETING") to be held as promptly as
practicable for the purpose of seeking the AIMCO Stockholder Approval. The
Board of Directors of AIMCO shall recommend that the stockholders of AIMCO vote
in favor of the matters that are the subject of the AIMCO Stockholder Approval.
SECTION 6.8 REGISTRATION STATEMENTS AND JOINT PROXY
STATEMENT/PROSPECTUS.
(a) As promptly as practicable after the execution of this
Agreement, (i) AIMCO and NHP shall prepare and file with the SEC a joint proxy
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statement relating to the NHP Meeting and the AIMCO Meeting to be held in
connection with the Transactions (together with any amendments thereof or
supplements thereto, the "PROXY STATEMENT/PROSPECTUS"), (ii) AIMCO shall prepare
and file with the SEC a registration statement on Form S-4 (together with all
amendments thereto, the "AIMCO REGISTRATION STATEMENT"), in which the Proxy
Statement/Prospectus shall be included as a prospectus, in connection with the
registration under the Securities Act of the shares of AIMCO Common Stock to be
issued pursuant to the Merger, and (iii) NHP shall cause the Mortgage Subsidiary
to prepare and file with the SEC a registration statement on an appropriate form
(together with any amendments thereof or supplements thereto, the "MS
REGISTRATION STATEMENT"), in which the Proxy Statement/Prospectus shall be
included, in connection with the registration under applicable Federal
securities laws, rules and regulations of the shares of Mortgage Sub Stock to be
distributed pursuant to the Rights and the Rights Agreement. Each of AIMCO and
NHP (i) shall cause the Proxy Statement/Prospectus, the AIMCO Registration
Statement and the MS Registration Statement to comply as to form in all material
respects with the applicable provisions of the Securities Act, the Exchange Act
and the rules and regulations thereunder, (ii) shall use commercially reasonable
efforts to have or cause the AIMCO Registration Statement and the MS
Registration Statement to become effective as promptly as practicable, and (iii)
shall take any and all action required under any applicable Federal or state
securities laws in connection with the issuance of shares of AIMCO Common Stock
and Mortgage Sub Stock pursuant to the Merger. AIMCO and NHP shall furnish to
the other all information concerning AIMCO and NHP as the other may reasonably
request in connection with the preparation of the documents referred to herein.
As promptly as practicable after the AIMCO Registration Statement and the MS
Registration Statement shall have become effective, each of AIMCO and NHP shall
mail the Proxy Statement/Prospectus to its respective stockholders.
(b) The information supplied by each of AIMCO and NHP for
inclusion in the AIMCO Registration Statement and the MS Registration Statement
and the Proxy Statement/Prospectus shall not (i) at the time the AIMCO
Registration Statement is declared effective, (ii) at the time the MS
Registration Statement is declared effective, (iii) at the time the Proxy
Statement/Prospectus (or any amendment thereof or supplement thereto) is first
mailed to the stockholders of AIMCO or NHP, (iv) at the time of the NHP Meeting,
(v) at the time of the AIMCO Meeting, or (vi) at the Effective Time, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein not
misleading. If, at any time prior to the Effective Time, any event or
circumstance relating to NHP, any subsidiary of NHP, AIMCO, any subsidiary of
AIMCO, or their respective officers or direc-
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tors, should be discovered by such party which should be set forth in an
amendment or a supplement to the AIMCO Registration Statement, the MS
Registration Statement or the Proxy Statement/Prospectus, such party shall
promptly inform the other thereof and take appropriate action in respect
thereof.
SECTION 6.9 LETTERS OF ACCOUNTANTS. AIMCO and NHP shall use
commercially reasonable efforts to cause to be delivered to the other "comfort"
letters of Ernst & Young LLP, AIMCO's independent public accountants, and of
Arthur Andersen LLP, NHP's independent public accountants, respectively, in each
case, dated and delivered on the date on which the AIMCO Registration Statement
shall become effective, on the date on which the MS Registration Statement shall
become effective and as of the Effective Time, and addressed to the boards of
directors of AIMCO and NHP, in form and substance reasonably satisfactory to the
other 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 6.10 ACCELERATIONS. Except as contemplated by this
Agreement, NHP shall take or forbear from taking such action as may be
reasonably necessary and within its control to insure that the Transactions
shall not constitute a change in ownership or control (or other similar event
accelerating or triggering changes to benefits or the terms of any contract,
agreement or arrangement (other than any NHP Benefit Plan) material to NHP and
its subsidiaries, taken as a whole (a "TRIGGERING EVENT")), for purposes of any
such contract, agreement or arrangement under which any such change in ownership
or control (or other Triggering Event) may be avoided by action or inaction, as
the case may be, by NHP or any of its officers or directors.
SECTION 6.11 PUBLIC ANNOUNCEMENTS. At all times at or before the
Closing, neither NHP nor AIMCO shall issue or make, directly or indirectly, any
reports, statements or releases to the public with respect to this Agreement or
the transactions contemplated hereby without the prior written consent of the
other; provided, however, that NHP and AIMCO may, without the prior written
consent of the other, issue or make, directly or indirectly, any report,
statement or release required by Law, its fiduciary obligations or any listing
agreement or arrangement to which such Person is a party with a national
securities exchange if the other parties to this Agreement are so notified as
soon as possible in advance of such report, statement or release.
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SECTION 6.12 BLUE SKY. AIMCO shall use its best efforts to obtain
prior to the Effective Time all approvals or permits required to carry out the
transactions contemplated hereby under applicable Blue Sky Laws in connection
with the issuance of shares of AIMCO Common Stock in the Merger and as
contemplated by this Agreement; provided, however, that with respect to such
qualifications neither AIMCO nor NHP shall be required to register or qualify as
a foreign corporation or to take any action which would subject it to general
service of process or taxation in any jurisdiction where any such entity is not
now so subject.
SECTION 6.13 NYSE LISTING. AIMCO shall promptly prepare and submit
to the NYSE listing applications covering the shares of AIMCO Common Stock to be
issued in the Merger, and shall use its best efforts to cause such shares to be
approved for listing and trading on the NYSE prior to the Effective Time,
subject to official notice of issuance.
SECTION 6.14 AFFILIATES. Within 30 days after the date of this
Agreement, (a) NHP shall deliver to AIMCO a letter identifying all persons who
may be deemed to be affiliates of NHP under Rule 145 of the Securities Act as of
the record date for the NHP Meeting (the "RULE 145 AFFILIATES") and (b) NHP
shall advise the persons identified in such letter of the resale restrictions
imposed by applicable securities laws and shall use commercially reasonable
efforts to obtain from each person identified in such letter a written
agreement, substantially in the form of EXHIBIT A hereto (a "RULE 145 AFFILIATE
AGREEMENT"). Prior to the Effective Time, AIMCO shall execute and deliver a
Registration Rights Agreement in the form of EXHIBIT B hereto (the "REGISTRATION
RIGHTS AGREEMENT").
SECTION 6.15 INDEMNIFICATION WITH RESPECT TO THE REGISTRATION
STATEMENT.
(a) Each party hereto shall (i) indemnify (in such role, an
"INDEMNIFYING PARTY") and hold harmless each other party and their respective
directors, officers and controlling persons (an "INDEMNIFIED PARTY") against any
and all loss, liability, claim, damage and expense whatsoever to which an
Indemnified Party may become subject, under the Securities Act, the Exchange Act
or otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of any untrue statement or alleged untrue
statement of a material fact contained in the AIMCO Registration Statement, the
MS Registration Statement or the Proxy Statement/Prospectus, or any amendment or
supplement thereto, or any preliminary Proxy Statement/Prospectus, or the
omission or alleged omission therefrom of a material fact required to be stated
therein or necessary to make the
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statements therein not misleading; and (ii) will reimburse the Indemnified Party
for any legal or other expenses reasonably incurred by the Indemnified Party in
connection with investigating or defending any such loss, claim, damage,
liability or action as such expenses are incurred; provided, however, that (i)
NHP shall be liable under this SECTION 6.15 only for information relating to NHP
included or incorporated by reference in the AIMCO Registration Statement, the
MS Registration Statement or Proxy Statement/Prospectus, (ii) AIMCO and Merger
Sub shall be liable under this SECTION 6.15 only for information relating to
AIMCO and Merger Sub included or incorporated by reference in the AIMCO
Registration Statement, the MS Registration Statement or Proxy
Statement/Prospectus, and (iii) no Indemnifying Party will be liable in any such
case under this SECTION 6.15 to the extent that any such loss, claim, damage,
liability or action arises out of any untrue statement or alleged untrue
statement or omission or alleged omission made in any of such documents in
reliance upon and in conformity with written information furnished to the
Indemnifying Party by or on behalf of such Indemnified Party specifically for
use therein.
(b) Promptly after receipt by an Indemnified Party under this
SECTION 6.15 of notice of any claim or the commencement of any action, the
Indemnified Party shall, if a claim in respect thereof is to be made against the
Indemnifying Party under this SECTION 6.15, promptly notify the Indemnifying
Party in writing of the claim or the commencement of that action; PROVIDED,
HOWEVER, that the failure to notify or a delay in notifying the Indemnifying
Party shall not relieve it from any liability which it may have to an
Indemnified Party otherwise than under this SECTION 6.15 except to the extent
that such Indemnifying Party is prejudiced thereby. If any such claim or action
shall be brought against an Indemnified Party, and it shall notify the
Indemnifying Party thereof, the Indemnifying Party shall be entitled to
participate therein, and, to the extent that it wishes, jointly with any other
similarly notified Indemnifying Party, to assume the defense thereof with
counsel reasonably satisfactory to the Indemnified Party. After notice from the
Indemnifying Party to the Indemnified Party of its election to assume the
defense of such claim or action, the Indemnifying Party shall not be liable to
the Indemnified Party under this SECTION 6.15 for any legal or other expenses
subsequently incurred by the Indemnified Party in connection with the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Party unless (i) the employment thereof has been specifically
authorized by the Indemnifying Party in writing, (ii) such Indemnified Party
shall have been advised by such counsel that there may be one or more legal
defenses available to it which are different from or additional to those
available to the Indemnifying Party and in the reasonable judgment of such
counsel it is advisable for such Indemnified Party to employ
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separate counsel or (iii) the Indemnifying Party has failed to assume the
defense to such claim or action and employ counsel reasonably satisfactory to
the Indemnified Party, in which case, if such Indemnified Party notifies the
Indemnifying Party in writing that it elects to employ separate counsel at the
expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense of such claim or action on behalf of such
Indemnified Party; it being understood, however, that the Indemnifying Party
shall not, in connection with any one such claim or action or separate but
substantially similar or related claims or actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys at any
time for all such Indemnified Parties, which firm shall be designated in writing
by such Indemnified Parties. Each Indemnified Party, as a condition of the
indemnity agreements contained herein shall use its best efforts to cooperate
with the Indemnifying Party in the defense of any such claim or action. The
Indemnifying Party shall not be liable for any settlement of any such claim or
action effected without its written consent (which consent shall not be
unreasonably withheld), but if settled with its written consent or if there be a
final judgment in favor of the plaintiff in any such claim or action, the
Indemnifying Party agrees to indemnify and hold harmless any Indemnified Party
from and against any loss or liability by reason of such settlement or judgment.
SECTION 6.16 SPIN-OFF. Prior to the Closing Date, NHP shall
distribute to all NHP stockholders of record as of a date prior to the Closing
Date one Right for each share of NHP Stock held by each NHP stockholder as of
such date. Prior to the Effective Time, NHP shall contribute cash to the
Mortgage Subsidiary, forgive indebtedness of the Mortgage Subsidiary, or any
combination of the foregoing, in an aggregate amount equal to NHP's best
estimate (which shall be subject to the prior approval of AIMCO, which approval
shall not be unreasonably withheld) of the amount, if any, by which (x) NHP's
Free Cash Flow for the period from February 1, 1997 until the earlier of the
Effective Time or the Maturity Time, exceeds (y) NHP's Transaction Costs for
such period. NHP and AIMCO shall use commercially reasonable efforts to obtain
the consent of The First National Bank of Boston to the Spin-Off.
SECTION 6.17 CONSENT TO CERTAIN TRANSACTIONS. NHP hereby consents to
a Change of Control Transaction (as defined in Section 1.3 of the Right of First
Refusal Agreement) involving AIMCO or any of its subsidiaries or affiliates
pursuant to the Real Estate Acquisition Agreement, provided that (a) the Real
Estate Acquisition Agreement is entered into on or prior to May 31, 1997, (b)
such
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agreement is delivered to NHP, and (c) such consent shall not become effective
until 5:00 p.m., Eastern Time, on May 3, 1997.
SECTION 6.18 DIRECTORS' AND OFFICERS' INDEMNIFICATION AND INSURANCE.
(a) From and after the Effective Time, the Surviving Corporation
shall, and AIMCO shall cause the Surviving Corporation to, indemnify, defend and
hold harmless the present and former officers and directors of NHP (the
"INDEMNIFIED OFFICERS/DIRECTORS") against all losses, expenses (including
attorneys fees), claims, damages, liabilities or amounts ("LOSSES") that are
paid in settlement (provided that such settlement has been approved by AIMCO,
such approval not to be unreasonably withheld) of, or otherwise in connection
with, any claim, action, suit, proceeding or investigation (a "CLAIM"), based in
whole or in part on the fact that such person is or was a director or officer of
NHP and arising out of actions or omissions occurring at or prior to the
Effective Time (including, without limitation, the Transactions), in each case,
to the full extent permitted under the DGCL and NHP's certificate of
incorporation and bylaws (to the extent permitted by applicable law) as in
effect on the date of this Agreement. The Surviving Corporation shall pay any
expenses in advance of the final disposition of any such Claim to each of the
Indemnified Officers/Directors to the fullest extent permitted under the DGCL
upon receipt from any of the Indemnified Officers/Directors to whom expenses are
advanced of any undertaking to repay such advances required under the DGCL. The
Surviving Corporation shall cooperate in the defense of any such matter.
(b) The Surviving Corporation shall, and AIMCO shall cause the
Surviving Corporation to, keep in effect provisions in its certificate of
incorporation and bylaws providing for exculpation of director liability and its
indemnification of the Indemnified Officers/Directors to the fullest extent
permitted under the DGCL, which provisions shall not be amended except as
required by applicable law or except to make changes permitted by law that would
enlarge the right of indemnification of the Indemnified Officers/Directors.
(c) For a period of three years after the Effective Time, the
Surviving Corporation shall, and AIMCO shall cause the Surviving Corporation to,
maintain in effect the current policies of directors' and officers' liability
insurance maintained by NHP covering persons who are currently covered by NHP's
officers' and directors' liability insurance policies with respect to actions or
omissions occurring at or prior to the Effective Time, a true and correct
summary of which is set forth on SCHEDULE 6.18, to the extent that such policies
are available; provided,
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that policies of at least the same coverage containing terms and conditions
which are no less advantageous to the insureds may be substituted therefor.
(d) From and after the Effective Time, AIMCO agrees to indemnify,
defend and hold harmless the Indemnified Officers/Directors against all Losses
that are paid in settlement (provided that such settlement has been approved by
AIMCO, such approval not to be unreasonably withheld) of, or otherwise in
connection with, a Claim based in whole or in part on the fact that such Person
is or was a director or officer of NHP and arising out of actions or omissions
occurring at or prior to the Effective Time (including, without limitation, the
Transactions), in each case to the fullest extent permitted by applicable Law
and whether or not the Surviving Corporation is permitted by applicable Law to
provide any indemnity with respect to such Losses. AIMCO shall pay any expenses
in advance of the final disposition of any such Claim to each of the Indemnified
Officers/Directors to the fullest extent permitted by applicable Law. AIMCO
shall cooperate in the defense of any such matter.
(e) The provisions of this SECTION 6.18 shall survive the
consummation of the Merger and expressly are intended to benefit each of the
Indemnified Officers/Directors.
SECTION 6.19 NHP EMPLOYEES.
(a) In the event that any employee of the Surviving Corporation
or one of its subsidiaries is at any time after the Effective Time transferred
to AIMCO or any affiliate of AIMCO or becomes a participant in an employee
benefit plan, program or arrangement maintained by or contributed by AIMCO or
any affiliate of AIMCO, AIMCO shall cause such plan, program or arrangement to
treat the prior service of such employee with NHP and its subsidiaries, to the
extent prior service is generally recognized under the comparable plan, program
or arrangement of NHP, as service rendered to AIMCO or such affiliates for
purposes of eligibility, vesting or entitlement to early retirement benefits,
vacation time or severance benefits under such plans.
(b) At the request and direction of AIMCO, NHP shall give any
notices required by the U.S. Worker Adjustment and Retraining Notification Act
of 1988, as amended ("WARN ACT"), or any similar state law or regulation.
SECTION 6.20 DIRECTORS. In the event of any vacancy in the Board of
Directors of NHP arising after the date of this Agreement and after the Initial
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Closing (as defined in the Stock Purchase Agreement), NHP shall cause an
individual designated by AIMCO to fill such vacancy, and if such vacancy
resulted from the death, removal or resignation of any director who served as a
member of any committee of NHP's Board of Directors (other than the Independent
Committee) or any board of directors of a subsidiary of NHP, then NHP shall
cause AIMCO's designee to be appointed to such committee or board of directors,
as the case may be. AIMCO shall not, until the earlier of the Effective Time or
the termination of this Agreement, take any action to remove from office as a
director of NHP any member of the Independent Committee, or increase the number
of NHP directors from that in effect as of the date hereof.
SECTION 6.21 FINANCING. AIMCO agrees that it will obtain all
financing necessary to consummate the Merger and the transactions contemplated
hereby in accordance with the terms and conditions specified in this Agreement.
SECTION 6.22 SEPARATION AGREEMENT. Prior to the Effective Time, NHP
shall, and shall cause the Mortgage Subsidiary to, enter into a separation
agreement providing for the Mortgage Subsidiary to assume all liabilities of NHP
relating to the business and operations of the Mortgage Subsidiary and to
indemnify NHP for, and hold NHP harmless from, such liabilities and all
expenses, costs and losses related thereto, all on terms reasonably acceptable
to AIMCO.
ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligations of each party to this Agreement to effect
the Merger shall be subject to the following conditions:
(a) All consents, approvals and action of any Governmental
Authority (including, without limitation, the U.S. Department of Housing and
Urban Development) required to permit the consummation of the Transactions shall
have been obtained or made, free of any condition that would have a Material
Adverse Effect on either AIMCO or NHP.
(b) No action shall have been taken, and no statute, rule,
regulation, executive order, judgment, decree, or injunction (other than a
temporary restraining order) shall have been enacted, entered, promulgated or
enforced (and
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not repealed, superseded, lifted or otherwise made inapplicable), by any court
of competent jurisdiction or Governmental Authority which restrains, enjoins or
otherwise prohibits the consummation of the transactions contemplated by this
Agreement (each party agreeing to use its commercially reasonable efforts to
avoid the effect of any such statute, rule, regulation or order or to have any
such order, judgment, decree or injunction lifted).
(c) Each of the AIMCO Registration Statement and the MS
Registration Statement shall have become effective in accordance with the
provisions of all applicable Federal Securities laws, rules and regulations, and
no stop order suspending such effectiveness shall have been issued and remain in
effect. AIMCO, NHP and/or the Mortgage Subsidiary shall have received all state
securities or "blue sky" permits and other authorizations necessary to issue and
distribute the AIMCO Common Stock, and distribute Mortgage Sub Stock, pursuant
to this Agreement.
(d) The shares of AIMCO Common Stock shall have been approved for
listing on the NYSE, subject only to official notice of issuance.
(e) Any applicable waiting period under the HSR Act shall have
expired or been terminated.
(f) The Effective Time shall have occurred on or prior to
December 1, 1997 (the "OUTSIDE DATE").
(g) AIMCO shall have received the AIMCO Stockholder Approval.
(h) NHP shall have received the NHP Stockholder Approval.
(i) The record date for the distribution of the Rights to NHP
stockholders shall have occurred.
(j) The Real Estate Acquisition Agreement shall have been entered
into and neither the Stock Purchase Agreement nor the Real Estate Acquisition
Agreement shall have been terminated.
SECTION 7.2 CONDITIONS TO OBLIGATIONS OF NHP TO EFFECT THE MERGER.
The obligations of NHP to effect the Merger are subject to the satisfaction of
the following conditions, unless waived by NHP:
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(a) The representations and warranties of AIMCO and Merger Sub
contained herein that are qualified as to materiality shall be true and
accurate, and those not so qualified shall be true and accurate in all material
respects, in each case, at and as of the Effective Time with the same force and
effect as though made at and as of the Effective Time (except to the extent a
representation or warranty speaks specifically as of an earlier date or except
as contemplated by this Agreement); provided, that any representation and
warranty that is true and accurate as of the date hereof (or such earlier date
as set forth above) shall be deemed to be true and accurate at and as of the
Effective Time except to the extent that AIMCO or any of its subsidiaries shall
have taken any voluntary action completely within the control of such person
that has been the principal cause of such representation or warranty not being
true and accurate; and provided, further, that the representations and
warranties set forth in SECTION 5.9 and clause (ii) of SECTION 5.8 shall be true
and accurate only as of the date hereof.
(b) AIMCO and Merger Sub shall have performed, in all material
respects, all obligations and complied, in all material respects, with all
covenants required by this Agreement to be performed or complied with by them
prior to the Effective Time.
(c) AIMCO shall have delivered to NHP a certificate, dated the
Effective Time and signed by its Chairman of the Board and Chief Executive
Officer or President, evidencing compliance with SECTIONS 7.2(a) and (b).
(d) NHP shall have received an opinion of Skadden, Arps, Slate,
Meagher & Flom LLP, counsel to AIMCO and Merger Sub, and an opinion of Piper &
Marbury L.L.P., Maryland counsel to AIMCO, in each case, in form and substance
reasonably satisfactory to NHP, addressing the matters set forth in EXHIBIT C-1
and EXHIBIT C-2, respectively.
(e) DLJ shall not have withdrawn the Fairness Opinion.
(f) The Stock Purchase Agreement shall not have been amended so
as to increase the consideration payable to Demeter and Capricorn thereunder.
SECTION 7.3 CONDITIONS TO OBLIGATIONS OF AIMCO AND MERGER SUB TO
EFFECT THE MERGER. The obligations of AIMCO and Merger Sub to effect the Merger
are subject to the satisfaction of the following conditions, unless waived by
AIMCO and Merger Sub:
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(a) The representations and warranties of NHP contained herein
that are qualified as to materiality shall be true and accurate, and those not
so qualified shall be true and accurate in all material respects, in each case
at and as of the Effective Time with the same force and effect as though made at
and as of the Effective Time (except to the extent a representation or warranty
speaks specifically as of an earlier date or except as contemplated by this
Agreement); provided, that any representation and warranty that is true and
accurate as of the date hereof (or such earlier date as set forth above) shall
be deemed to be true and accurate at and as of the Effective Time except to the
extent that NHP and its subsidiaries shall have taken any voluntary action
completely within the control of such person, that has been the principal cause
of such representation or warranty not being true and accurate; and provided,
further, that the representations and warranties set forth in SECTION 4.9 and
clause (ii) of SECTION 4.8 shall be true and accurate only as of the date
hereof.
(b) NHP shall have performed, in all material respects, all
obligations and complied, in all material respects, with all covenants required
by this Agreement to be performed or complied with by it prior to the Effective
Time.
(c) NHP shall have delivered to AIMCO a certificate, dated the
Effective Time and signed by its Chairman of the Board and Chief Executive
Officer or President, evidencing compliance with SECTIONS 7.3(a) and (b).
(d) AIMCO shall have received from each Rule 145 Affiliate of NHP
an executed copy of a Rule 145 Affiliate Agreement from each Rule 145 Affiliate
as contemplated by SECTION 6.14.
(e) AIMCO and Merger Sub shall have received an opinion of
Wilmer, Cutler & Pickering, counsel to NHP, and an opinion of Arent Fox Kintner
Plotkin & Kahn, in each case, in form and substance reasonably satisfactory to
AIMCO and Merger Sub, addressing the matters set forth in EXHIBIT D-1 and
EXHIBIT D-2, respectively.
ARTICLE VIII
TERMINATION, WAIVER, AMENDMENT AND CLOSING
SECTION 8.1 TERMINATION. This Agreement may be terminated and
abandoned at any time prior to the Effective Time, whether before or after
approval
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of this Agreement, the Merger and the other Transactions by the respective
stockholders of NHP and AIMCO:
(a) by the mutual written consent of NHP and AIMCO;
(b) by NHP or AIMCO, if (i) the Effective Time shall not have
occurred on or before the Outside Date, (ii) any Governmental Authority, the
consent of which is a condition to the obligations of NHP and AIMCO to
consummate the Transactions, shall have determined not to grant its consent and
all appeals of such determination shall have been taken and have been
unsuccessful or (iii) any court of competent jurisdiction shall have issued an
order, judgment or decree (other than a temporary restraining order)
restraining, enjoining or otherwise prohibiting the Merger and such order,
judgment or decree shall have become final and nonappealable; provided, however,
that the right to terminate this Agreement pursuant to clause (i) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement has been the cause of, or resulted in, the failure of the Effective
Time to occur on or before such date;
(c) by NHP, if there has been a material breach by AIMCO of any
representation, warranty, covenant or agreement set forth in this Agreement,
which breach has not been cured within ten Business Days following receipt by
AIMCO of notice of such breach from NHP; provided, however, that the right to
terminate this Agreement pursuant to this SECTION 8.1(c) shall not be available
to NHP if NHP, at such time, is in material breach of any representation,
warranty, covenant or agreement set forth in this Agreement;
(d) by AIMCO, if there has been a material breach by NHP of any
representation, warranty, covenant or agreement set forth in this Agreement,
which breach has not been cured within ten Business Days following receipt by
NHP of notice of such breach from AIMCO; provided, however, that the right to
terminate this Agreement pursuant to this SECTION 8.1(d) shall not be available
to AIMCO if AIMCO, at such time, is in material breach of any representation,
warranty, covenant or agreement set forth in this Agreement;
(e) by AIMCO or NHP if, at the NHP Meeting (including any
adjournment or postponement thereof) called pursuant to SECTION 6.7 hereof, the
NHP Stockholder Approval shall not have been obtained;
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(f) by AIMCO or NHP if, at the AIMCO Meeting (including any
adjournment or postponement thereof) called pursuant to SECTION 6.7 hereof, the
AIMCO Stockholder Approval shall not have been obtained;
(g) by NHP if (i) NHP receives an alternative Acquisition
Proposal, (ii) NHP is not then in breach of SECTION 6.6 or in breach of any
other representation, warranty, covenant or agreement that would give rise to a
failure of a condition set forth in SECTION 7.3(a) or 7.3(b), (iii) NHP shall
have made the payment required by SECTION 8.5, (iv) at least three Business Days
prior to such termination, NHP shall have provided to AIMCO written notice (A)
as to the material terms of any such Acquisition Proposal and (B) that the Board
of Directors of NHP, in the exercise of its good faith judgment as to fiduciary
duties to stockholders under applicable law, after consultation with outside
legal counsel, has determined, by action of a majority of the entire Board of
Directors of NHP, or by the Board of Directors with the approval of its
Independent Committee, that such termination is necessary in order for such
Board of Directors to comply with such duties, and (iv) on the date of such
termination, the Board of Directors of NHP determines, by action of a majority
of the entire Board of Directors of NHP, or by the Board of Directors with the
approval of its Independent Committee, that such termination continues to be
necessary in order for such Board of Directors to comply with its fiduciary
duties to stockholders under applicable law (which determination shall be made
in light of any revised proposal made by AIMCO) and NHP concurrently enters into
a definitive agreement providing for the implementation of such Acquisition
Proposal; and
(h) by AIMCO or NHP if (i) the Real Estate Acquisition Agreement
has not been entered into by May 31, 1997, or (ii) either the Stock Purchase
Agreement or the Real Estate Acquisition Agreement is terminated in accordance
with its terms.
SECTION 8.2 EFFECT OF TERMINATION. In the event of termination of
this Agreement by NHP or AIMCO as provided in SECTION 8.1 hereof, this Agreement
shall forthwith become void (except SECTIONS 6.5(b), 6.15, 8.2, 8.5, 9.1, 9.2,
9.5, 9.6, 9.7, 9.8, 9.9, 9.10, 9.14 or 9.15) and there shall be no liability on
the part of NHP, AIMCO, Merger Sub or their respective officers or directors,
except for any breach of a party's obligations under SECTIONS 6.5(b), 6.15, 8.2,
8.5, 9.1, 9.2, 9.5, 9.6, 9.7, 9.8, 9.9, 9.10, 9.14 and 9.15. Notwithstanding
the foregoing,no party hereto shall be relieved from liability for any willful,
material breach of this Agreement.
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SECTION 8.3 AMENDMENT OR SUPPLEMENT. At any time before or after
approval of this Agreement by the stockholders of NHP or AIMCO and prior to the
Effective Time, this Agreement may be amended or supplemented in writing by NHP,
Merger Sub and AIMCO with respect to any of the terms contained in this
Agreement, except that following approval by the stockholders of NHP or AIMCO
there shall be no amendment or supplement which by law requires further approval
by such stockholders without such further approval by the stockholders of NHP or
AIMCO, as the case may be.
SECTION 8.4 EXTENSION OF TIME, WAIVER, ETC. At any time prior to the
Effective Time:
(a) AIMCO may extend the time for the performance of any of the
obligations or acts of NHP, and NHP may extend the time for the performance of
any of the obligations or acts of AIMCO or Merger Sub;
(b) AIMCO may waive any inaccuracies in the representations and
warranties of NHP contained herein or in any document delivered pursuant hereto,
and NHP may waive any inaccuracies in the representations and warranties of
AIMCO contained herein or in any document delivered pursuant hereto; or
(c) AIMCO may waive compliance with any of the agreements of NHP
contained herein, and NHP may waive compliance with any of the agreements of
AIMCO or Merger Sub contained herein; provided, however, that no failure or
delay by NHP or AIMCO in exercising any right hereunder shall operate as a
waiver thereof nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right hereunder.
SECTION 8.5 TERMINATION FEE. If this Agreement is to be terminated
pursuant to SECTION 8.1(e) or 8.1(g), and if NHP is not entitled to terminate
this Agreement by reason of SECTION 8.1(b), 8.1(c) or 8.1(f), then, in addition
to any other rights or remedies that may be available to AIMCO, NHP shall
promptly (and in any event within two days of receipt by NHP of written notice
from AIMCO) pay to AIMCO (by wire transfer of immediately available funds to an
account designated by AIMCO) a termination fee of $4.0 million; provided,
however, that NHP shall not be obligated to pay such fee to AIMCO if this
Agreement is terminated pursuant to SECTION 8.1(e) unless (i) (A) at the time of
the NHP Meeting, NHP has received an alternative Acquisition Proposal, and (B)
prior to the termination of this Agreement, the Board of Directors of NHP shall
have withdrawn, or modified in a manner adverse to AIMCO, its approval or
recommen-
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dation of the Merger, and (ii) within two years after the termination of this
Agreement, NHP enters into a definitive agreement providing for an alternative
Acquisition Proposal or an alternative Acquisition Proposal is consummated with
any Person; and, provided, further, that if such termination fee becomes payable
as a result of a termination pursuant to SECTION 8.1(e), then such termination
fee shall be paid promptly following the earlier of the execution of such
definitive agreement providing for an alternative Acquisition Proposal and the
consummation of an alternative Acquisition Proposal, as the case may be. If
this Agreement is terminated pursuant to SECTION 8.1(e) and (i) prior to the
termination of this Agreement, the Board of Directors of NHP shall have
withdrawn, or modified in a manner adverse to AIMCO, its approval or
recommendation of the Merger, and (ii) NHP is not at that time obligated to pay
the termination fee pursuant to the first proviso of the preceding sentence,
then NHP shall pay to AIMCO, on demand, an amount equal to the documented
out-of-pocket expenses incurred by AIMCO in connection with this Agreement and
the Merger, provided, that the maximum amount of such expenses that NHP is
required to reimburse shall not exceed $4.0 million (which expense reimbursement
shall be credited against any termination fee that subsequently becomes payable
pursuant to clause (ii) of the preceding sentence).
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 GOVERNING LAW. This Agreement and the legal relations
among the parties hereto shall be governed by and construed and enforced in
accordance with the laws of the State of Delaware, without regard to its
principles of conflicts of law.
SECTION 9.2 ENTIRE AGREEMENT. This Agreement, including the exhibits
and schedules attached hereto, constitutes the entire agreement among the
parties pertaining to the subject matter hereof and supersedes all prior
agreements, understandings, letters of intent, negotiations and discussions,
whether oral or written, of the parties, and there are no warranties,
representations or other agreements, express or implied, made to any party by
any other party in connection with the subject matter hereof except as
specifically set forth herein or in the documents delivered pursuant hereto or
in connection herewith.
SECTION 9.3 MODIFICATION; WAIVER. No supplement, modification,
extension, waiver or termination of this Agreement shall be binding unless
executed
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in writing by the party to be bound thereby. No waiver of any provision of this
Agreement shall be deemed or shall constitute a waiver of any other provision
hereof (whether or not similar), nor shall such waiver constitute a continuing
waiver unless otherwise expressly provided.
SECTION 8.4 NOTICES. All notices, consents, requests, reports,
demands or other communications hereunder (collectively, "NOTICES") shall be in
writing and may be given personally, by registered mail, fax or by Federal
Express (or other reputable overnight delivery service):
if to AIMCO or Merger Sub, to it at:
1873 South Bellaire Street, 17th Floor
Denver, Colorado 80222-4348
Attention: Mr. Terry Considine
Telephone: (303) 757-8600
Fax: (303) 753-9538
and
28200 Highway 189, Building F-240
P.O. Box 1060
Lake Arrowhead, California 92352
Attention: Mr. Peter K. Kompaniez
Telephone: (909) 336-4821
Fax: (909) 336-4826
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue, Suite 3400
Los Angeles, California 90071
Attention: Rod A. Guerra, Esq.
Telephone: (213) 687-5000
Fax: (213) 687-5600
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if to NHP, to it at:
8065 Leesburg Pike, Suite 400
Vienna, Virginia 22182
Attention: Mr. J. Roderick Heller III and
Joel Bonder, Esq.
Telephone: (703) 394-2470
Fax: (703) 394-2970
with a copy to:
Wilmer, Cutler & Pickering
2445 M Street, N.W.
Washington, D.C. 20037
Attention: Richard W. Cass, Esq.
Telephone: (202) 663-6503
Fax: (202) 663-6363
or to such other address or such other person as the addressee party shall have
last designated by notice to the other party. All Notices shall be deemed to
have been given (i) when delivered personally, (ii) three days after being sent
by registered mail, (iii) upon transmission by fax and receipt of confirmation
of such transmission by the sender's fax machine, or (iv) one day after being
sent by Federal Express (or other reputable overnight delivery service).
SECTION 9.5 EXPENSES. Whether or not the transactions contemplated
by this Agreement shall be consummated, all fees and expenses incurred by any
party hereto in connection with this Agreement shall be borne by such party,
except that the expenses incurred in connection with printing the Proxy
Statement/Prospectus shall be paid in equal shares by NHP and AIMCO.
SECTION 9.6 ASSIGNMENT. No party hereto shall have the right, power
or authority to assign or pledge this Agreement or any portion of this
Agreement, or to delegate any duties or obligations arising under this
Agreement, voluntarily, involuntarily, or by operation of law, without the prior
written consent of the other parties hereto.
SECTION 9.7 SURVIVAL. None of the representations and warranties in
this Agreement or in any document or instrument delivered pursuant to this
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Agreement shall survive the Merger or the termination of this Agreement pursuant
to ARTICLE VIII.
SECTION 9.8 SEVERABILITY. Any provision or part of this Agreement
which is invalid or unenforceable in any situation in any jurisdiction shall, as
to such situation and such jurisdiction, be ineffective only to the extent of
such invalidity and shall not affect the enforceability of the remaining
provisions hereof or the validity or enforceability of any such provision in any
other situation or in any other jurisdiction.
SECTION 9.9 SUCCESSORS AND ASSIGNS; THIRD PARTIES. Subject to and
without waiver of the provisions of SECTION 9.6, all of the rights, duties,
benefits, liabilities and obligations of the parties shall inure to the benefit
of, and be binding upon, their respective successors, assigns, heirs and legal
representatives. Except as specifically set forth in SECTION 3.2, 3.3, 3.6,
6.15, 6.18 and 6.19, nothing herein expressed or implied is intended or shall be
construed to confer upon or give to any person or entity, other than the parties
hereto and their successors or permitted assigns, any rights or remedies under
or by reason of this Agreement.
SECTION 9.10 COUNTERPARTS. This Agreement may be executed in as many
counterparts as may be deemed necessary and convenient, and by the different
parties hereto on separate counterparts each of which, when so executed, shall
be deemed an original, but all such counterparts shall constitute one and the
same instrument.
SECTION 9.11 INTERPRETATION; REFERENCES. Any use of masculine,
feminine or neuter pronouns herein shall not be limiting, but shall be construed
as referring to persons of any gender, as the context may require. Any use of
the singular or plural form herein shall not be limiting, but shall be construed
as referring to either the plural or singular, as the context may require.
References to a "Schedule" or an "Exhibit" are, unless otherwise specified, to a
Schedule or an Exhibit attached to this Agreement, and references to an
"Article" or a "Section" are, unless otherwise specified, to an Article or a
Section of this Agreement. The Article and Section headings of this Agreement
are for convenience of reference only and shall not be deemed to modify,
explain, restrict, alter or affect the meaning or interpretation of any
provision hereof.
SECTION 9.12 JURISDICTION. The parties hereto hereby agree that any
disputes arising out of, in connection with or with respect to this Agreement,
the subject matter hereof, the performance or non-performance of any obligation
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hereunder, or any of the transactions contemplated hereby shall be adjudicated
in a state or federal court of competent civil jurisdiction sitting in the State
of Delaware and nowhere else. Each of the parties hereto hereby irrevocably
submits to the jurisdiction of any such court of the purposes of any suit, civil
action or other proceeding arising out of, in connection with or with respect to
this Agreement, the subject matter hereof, the performance of non-performance of
any obligation hereunder, or any of the transactions contemplated hereby (each,
a "SUIT"). To the extent permitted by Law, each of the parties hereto hereby
waives and agrees not to assert by way of motion, as a defense or otherwise in
any such Suit, any claim that it is not subject to the jurisdiction of the above
courts, that such Suit is brought in an inconvenient forum, that the venue of
such Suit is improper or that it is entitled to a trial by jury.
SECTION 9.13 EXHIBITS AND SCHEDULES. All exhibits and schedules
attached hereto are hereby incorporated by reference as though set out in full
herein.
SECTION 9.14 ATTORNEYS' FEES. In the event that any party hereto
brings an action or proceeding against the other party to enforce or interpret
any of the covenants, conditions, agreements or provisions of this Agreement,
the prevailing party in such action or proceeding shall be entitled to recover
all costs and expenses of such action or proceeding, including, without
limitation, reasonable attorneys' fees, charges, disbursements and the fees and
costs of expert witnesses.
SECTION 9.15 WAIVER OF JURY TRIAL. Each party to this Agreement
further waives its respective right to a jury trial of any claim or cause of
action arising out of this Agreement or any dealings between any of the parties
hereto relating to the subject matter of this Agreement. The scope of this
waiver is intended to be all-encompassing of any and all disputes that may be
filed in any court and that relate to the subject matter of this Agreement,
including, without limitation, contract claims, tort claims and all other common
law and statutory claims. This waiver is irrevocable, meaning that it may not
be modified either orally or in writing, and this waiver shall apply to any
subsequent amendments, supplements or other modifications to this Agreement or
to any other document or agreement relating to the Transactions.
SECTION 9.16 FURTHER ASSURANCES. Each of the parties shall, without
further consideration, use reasonable efforts to execute and deliver such
additional documents and take such other action as the other parties, or any of
them, may reasonably request to carry out the intent of this Agreement and the
Transactions.
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SECTION 9.17 NEGOTIATION OF AGREEMENT. Each of the parties
acknowledges that it has been represented by independent counsel of its choice
throughout all negotiations that have preceded the execution of this Agreement
and that it has executed the same with consent and upon the advice of said
independent counsel. Each party and its counsel cooperated in the drafting and
preparation of this Agreement and the documents referred to herein, and any and
all drafts relating thereto shall be deemed the work product of the parties and
may not be construed against any party by reason of its preparation.
Accordingly, any rule of law or any legal decision that would require
interpretation of any ambiguities in this Agreement against the party that
drafted it is of no application and is hereby expressly waived. The provisions
of this Agreement shall be interpreted in a reasonable manner to effect the
intentions of the parties and this Agreement.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the date first above written.
NHP INCORPORATED
By /s/ J. Roderick Heller, III
---------------------------------------
Name: J. Roderick Heller, III
Title: Chairman, President and
Chief Executive Officer
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
By /s/ Peter Kompaniez
---------------------------------------
Name: Peter Kompaniez
Title: Vice Chairman
AIMCO/NHP ACQUISITION CORP.
By /s/ Peter Kompaniez
---------------------------------------
Name: Peter Kompaniez
Title: Vice President
<PAGE>
EXHIBITS TO
AGREEMENT AND PLAN OF MERGER
dated as of
April 21, 1997
by and among
APARTMENT INVESTMENT AND MANAGEMENT COMPANY,
AIMCO/NHP ACQUISITION CORP.
and
NHP INCORPORATED
<PAGE>
INDEX
EXHIBIT A Form of Affiliate Letter..................................... A-1
EXHIBIT B Registration Rights Agreement ............................... B-1
EXHIBIT C-1 Form of Legal Opinion of Skadden, Arps,
Slate, Meagher & Flom LLP, Counsel to
AIMCO and Merger Sub.........................................C1-1
EXHIBIT C-2 Form of Legal Opinion of Piper & Marbury
L.L.P., Maryland Counsel to AIMCO............................C2-1
EXHIBIT D-1 Form of Legal Opinion of Wilmer, Cutler
& Pickering, Counsel to NHP..................................D1-1
EXHIBIT D-2 Form of Legal Opinion of Arent Fox Kintner
Plotkin & Kahn, Special Counsel to NHP.......................D2-1
<PAGE>
EXHIBIT A
FORM OF AFFILIATE LETTER
Apartment Investment and Management Company
1873 South Bellaire Street, 17th Floor
Denver, Colorado 80222-4348
Ladies and Gentlemen:
I have been advised that, as of the date of this letter agreement, I
may be deemed to be an "affiliate" of NHP Incorporated, a Delaware corporation
("NHP"), as such term is defined for purposes of paragraphs (c) and (d) of Rule
145 of the rules and regulations (the "Rules and Regulations") of the Securities
and Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Act").
Pursuant to the terms of the Agreement and Plan of Merger, dated as of
April 21, 1997 (the "Merger Agreement"), by and among Apartment Investment and
Management Company, a Maryland corporation ("AIMCO"), NHP and AIMCO/NHP
Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of AIMCO
("Merger Sub"), Merger Sub will be merged with and into NHP (the "Merger").
Pursuant to the Merger, all of the shares of Common Stock, par value $0.01 per
share, of NHP owned by the undersigned will be converted into the right to
receive shares of Class A Common Stock, par value $0.01 per share, of AIMCO (the
"AIMCO Common Stock"), or a combination of cash and shares of AIMCO Common
Stock.
I represent, warrant and covenant to AIMCO that, with respect to all
shares of AIMCO Common Stock received as a result of the Merger:
1. I shall not make any sale, transfer or other disposition of the
shares of AIMCO Common Stock in violation of the Act or the Rules and
Regulations.
2. I have carefully read this letter and the Merger Agreement and
have had an opportunity to discuss the requirements of such documents and any
other applicable limitations upon my ability to sell, transfer or otherwise
dispose of shares of AIMCO Common Stock with my counsel or counsel for NHP.
3. I have been advised that the issuance of shares of AIMCO Common
Stock to me pursuant to the Merger has been registered with the Commission under
the Act. However, I have also been advised that, since at the time the Merger
was submitted for a vote of the stockholders of NHP, I may be deemed to have
been an affiliate of NHP and the distribution by me of the AIMCO Common Stock
has not been registered under the Act, I may not sell, transfer or otherwise
dispose of shares of AIMCO
A-1
<PAGE>
Common Stock issued to me in the Merger unless (i) such sale, transfer or other
disposition has been registered under the Act or is made in conformity with Rule
145 under the Act, or (ii) in the opinion of counsel reasonably acceptable to
AIMCO, or pursuant to a "no action" letter obtained by the undersigned from the
staff of the Commission, such sale, transfer or other disposition is otherwise
exempt from registration under the Act.
4. I understand that, except as provided in the Registration Rights
Agreement to be entered into by AIMCO and the undersigned as contemplated by the
Merger Agreement, AIMCO is under no obligation to register under the Act the
sale, transfer or other disposition of shares of AIMCO Common Stock by me or on
my behalf or to take any other action necessary in order to make compliance with
an exemption from such registration available.
5. I understand that AIMCO will give stop transfer instructions to
AIMCO's transfer agents with respect to the AIMCO Common Stock and that the
certificates for the shares of AIMCO Common Stock issued to me, or any
substitutions therefor, will bear a legend substantially to the following
effect:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 UNDER THE SECURITIES ACT OF 1933
APPLIES. THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY ONLY BE
TRANSFERRED IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT, DATED
____________, BETWEEN THE REGISTERED HOLDER HEREOF AND _____________, A
COPY OF WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES OF _______."
6. I also understand that unless the transfer by me of my shares of
AIMCO Common Stock has been registered under the Act or is a sale made in
conformity with the provisions of Rule 145, AIMCO reserves the right to place a
legend substantially to the following effect on the certificates issued to any
transferee:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND WERE ACQUIRED FROM A
PERSON WHO RECEIVED SUCH SECURITIES IN A TRANSACTION TO WHICH RULE 145
UNDER THE SECURITIES ACT OF 1933 APPLIES. THE SECURITIES HAVE NOT
BEEN ACQUIRED BY THE HOLDER WITH A VIEW TO, OR FOR RESALE IN
CONNECTION WITH, ANY DISTRIBUTION THEREOF WITHIN THE MEANING OF THE
SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR
IN ACCORDANCE WITH AN EXEMPTION
A-2
<PAGE>
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933."
It is understood and agreed that the legends set forth in paragraphs 5
and 6 above shall be removed by delivery of substitute certificates without such
legend if such legend is not required for purposes of the Act. It is understood
and agreed that such legends and the stop orders referred to above will be
removed if (i) one year shall have elapsed from the date the undersigned
acquired the Securities received in the Merger and the provisions of Rule
145(d)(2) are then available to the undersigned, (ii) two years shall have
elapsed from the date the undersigned acquired the shares of AIMCO Common Stock
received in the Merger and the provisions of Rule 145(d)(3) are then available
to the undersigned, or (iii) AIMCO has received either an opinion of counsel,
which opinion and counsel shall be reasonably satisfactory to AIMCO, or a "no
action" letter obtained by the undersigned from the staff of the Commission, to
the effect that the restrictions imposed by Rule 145 under the Act no longer
apply to the undersigned.
Execution of this letter should not be considered an admission on my
part that I am an "affiliate" of NHP as described in the first paragraph of this
letter.
AIMCO agrees that, for a period of at least two years after the
effective date of Merger, it will make publicly available the information
required by, and in the manner specified by, Rule 144(c) under the Act.
Sincerely,
______________________
Name:
Accepted this ____ day of ____________________, 1997:
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
By:________________________________________
Name:
Title:
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EXHIBIT B
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and
entered into as of ______________, 1997, by and among Apartment Investment
and Management Company, a Maryland corporation ("AIMCO"), and the persons
named on the signature pages hereto (each, an "INVESTOR" and, collectively,
the "INVESTORS").
WHEREAS, the Investors own shares of common stock, par value $.01 per
share (the "NHP SHARES"), of NHP Incorporated, a Delaware corporation ("NHP");
WHEREAS, in connection with the Agreement and Plan of Merger, dated as
of April 21, 1997 (the "MERGER AGREEMENT"), by and among AIMCO, NHP, and
AIMCO/NHP Acquisition Corp., a Delaware corporation and a wholly owned
subsidiary of AIMCO ("MERGER SUB"), Merger Sub will be merged with and into NHP
and the NHP Shares will be converted into shares of AIMCO Common Stock (as
defined below) and/or cash; and
WHEREAS, in order to induce the Investors to execute and deliver to
AIMCO the letters contemplated by Section 6.14 of the Merger Agreement, AIMCO
has agreed to provide the registration rights set forth in this Agreement.
NOW THEREFORE, in consideration of the mutual covenants and agreements
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, intending to be
legally bound hereby, agree as follows:
SECTION 7. DEFINITIONS.
As used in this Agreement, the following terms shall have the
following meanings:
"ADVICE" shall have the meaning set forth in SECTION 4.
"AFFILIATE" means, with respect to any specified person, any other
person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified person. For the purposes of this
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definition, "control" when used with respect to any specified person means the
power to direct the management and policies of such person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "CONTROLLING" and "CONTROLLED" have meanings
correlative to the foregoing.
"AIMCO" shall have the meaning set forth in the introductory clauses
hereof.
"AIMCO COMMON STOCK" means the Class A Common Stock, par value $0.01
per share, of AIMCO issued pursuant to the Merger Agreement, or any other
shares of Capital Stock or other securities into which such shares of AIMCO
Common Stock shall be reclassified or changed, including, without limitation, by
reason of a merger, consolidation, exchange, reorganization or recapitalization.
If the AIMCO Common Stock has been so reclassified or changed, or if AIMCO pays
a dividend or makes a distribution on the AIMCO Common Stock in shares of
Capital Stock or other securities, or subdivides (or combines) its outstanding
shares of AIMCO Common Stock into a greater (or smaller) number of shares of
AIMCO Common Stock, a share of AIMCO Common Stock shall be deemed to be such
number of shares of Capital Stock and amount of other securities to which a
holder of a share of AIMCO Common Stock outstanding immediately prior to such
change, reclassification, exchange, dividend, distribution, subdivision or
combination would be entitled.
"BUSINESS DAY" means any day that is not a Saturday, a Sunday or a
legal holiday on which banking institutions in the State of New York are not
required to be open.
"CAPITAL STOCK" means, with respect to any person, any and all shares,
interests, participations or other equivalents (however designated) of corporate
stock issued by such person, including each class of common stock and preferred
stock of such person.
"DELAY PERIOD" shall have the meaning set forth in SECTION 2(D).
"DEMAND NOTICE" shall have the meaning set forth in SECTION 2(B).
"DEMAND REGISTRATION" shall have the meaning set forth in SECTION
2(c).
"EFFECTIVENESS PERIOD" shall have the meaning set forth in SECTION
2(d).
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"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the SEC promulgated thereunder.
"HOLD-BACK PERIOD" shall have the meaning set forth in SECTION 3.
"HOLDER" means a person who owns Registrable Securities and is either
(i) an Investor, (ii) a person that has agreed to be bound by the terms of this
Agreement as if such person were an Investor and is (A) a person to whom an
Investor has transferred Registrable Securities in a transaction not involving a
public offering (e.g. pursuant to Rule "4(1-1/2)" or any similar private
transfer exemption), (B) upon the death of any Investor, the executor of the
estate of such Investor or such Investor's heirs, devisees, legatees or assigns
or (iii) upon the disability of any Investor, any guardian or conservator of
such Investor.
"INITIAL SHELF REGISTRATION" shall have the meaning set forth in
SECTION 2(a).
"INTERRUPTION PERIOD" shall have the meaning set forth in SECTION 4.
"INVESTOR(S)" shall have the meaning set forth in the introductory
clauses hereof.
"MERGER AGREEMENT" shall have the meaning set forth in the
introductory clauses hereof.
"MERGER SUB" shall have the meaning set forth in the introductory
clauses hereof.
"NHP" shall have the meaning set forth in the introductory clauses
hereof.
"NHP SHARES" shall have the meaning set forth in the introductory
clauses hereof.
"PERSON" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"PROSPECTUS" means the prospectus included in any Registration
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A), as amended or supplemented
by any
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prospectus supplement, with respect to the terms of the offering of any portion
of the Registrable Securities covered by such Registration Statement and all
other amendments and supplements to such prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such prospectus.
"REGISTRABLE SECURITIES" means shares of AIMCO Common Stock of an
Investor unless (i) such securities have previously been disposed of by a Holder
pursuant to an effective Registration Statement under Section 5 of the
Securities Act, or (ii) at any time hereafter, such securities have become
freely transferable without restriction under the Securities Act.
"REGISTRATION" means registration under the Securities Act of the
offering of Registrable Securities pursuant to the Initial Shelf Registration or
a Demand Registration.
"REGISTRATION PERIOD" shall have the meaning set forth in SECTION
2(b).
"REGISTRATION STATEMENT" means any registration statement of AIMCO
under the Securities Act that covers any of the Registrable Securities pursuant
to the provisions of this Agreement, including the Prospectus included therein,
amendments and supplements to such registration statement, including pre- and
post-effective amendments, all exhibits, and all material incorporated by
reference or deemed to be incorporated by reference in such registration
statement.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
"SHELF REGISTRATION" means the registration under the Securities Act
of the offering of Registrable Securities on a delayed or continuous basis
pursuant to Rule 415 under the Securities Act (or any similar rule that may be
adopted by the SEC).
"SHELF REGISTRATION STATEMENT" means a Registration Statement intended
to effect a Shelf Registration.
"UNDERWRITTEN REGISTRATION OR UNDERWRITTEN OFFERING" means a
registration under the Securities Act in which securities of AIMCO are sold to
an underwriter for reoffering to the public.
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SECTION 8. INITIAL SHELF REGISTRATION; DEMAND REGISTRATION.
(a) As soon as practicable, but in any event within 90 days after
the date hereof, AIMCO shall prepare and file with the SEC a Shelf Registration
Statement on an appropriate form (the "INITIAL SHELF REGISTRATION"). AIMCO
shall include in the Initial Shelf Registration all Registrable Securities with
respect to which a Holder has, not later than the second day prior to the
effectiveness of such Shelf Registration Statement, given AIMCO written notice
of such Holder's intention to sell thereunder. AIMCO shall use its best efforts
to cause such Shelf Registration Statement to be declared effective by the SEC
as soon as possible. If AIMCO receives written notice from a Holder after the
date on which such Shelf Registration Statement has become effective that such
Holder desires to include additional Registrable Securities in such Shelf
Registration Statement, AIMCO shall use its best efforts to so include such
additional Registrable Securities as promptly as possible, including, if
required, filing an additional registration statement, either pursuant to Rule
462(b) under the Securities Act or otherwise, which registration statement shall
not be counted towards determining the number of Demand Registrations to which
the Holders are entitled pursuant to SECTION 2(b).
(b) The Holders shall have the right, during the period (the
"REGISTRATION PERIOD") commencing on the date hereof and ending on the third
anniversary hereof, by written notice (the "DEMAND NOTICE") given to AIMCO, to
request AIMCO to register under and in accordance with the provisions of the
Securities Act all or part of the Registrable Securities designated by such
Holders; PROVIDED, that the aggregate number of Registrable Securities requested
to be registered pursuant to any such Demand Notice and pursuant to all Demand
Notices received pursuant to the following sentence shall be at least 300,000
shares of AIMCO Common Stock. Upon receipt of any such Demand Notice, AIMCO
will promptly notify all other Holders of the receipt of such Demand Notice and
allow them the opportunity to include Registrable Securities held by them in the
proposed registration by submitting their own Demand Notice. The Holders as a
group shall be entitled to two Demand Registrations pursuant to this SECTION
2(b) unless any such Demand Registration did not become effective or was not
maintained effective for a period (whether or not continuous) of at least 90
days or such shorter period which shall terminate when all the Registrable
Securities covered by such Demand Registration have been disposed of pursuant
thereto, in which case the Holders, as a group, will be entitled, in each case
to one additional Demand Registration pursuant hereto.
(c) Within 20 days of the date on which AIMCO first receives a
Demand Notice pursuant to SECTION 2(B) hereof, AIMCO shall file with the SEC a
Registration Statement on the appropriate form for the registration and sale of
the total number of Registrable Securities specified in such Demand Notices in
accordance with the intended method or methods of distribution specified by the
Holders in such Demand Notices (a "DEMAND REGISTRATION"). AIMCO shall use its
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best efforts to cause such Registration Statement to be declared effective by
the SEC within 90 days of the date of AIMCO's earliest receipt of a Demand
Notice.
(d) AIMCO agrees to use commercially reasonable efforts to keep
any Registration Statement filed pursuant to this SECTION 2 continuously
effective and usable for the sale of Registrable Securities (i)(A) in the case
of a Shelf Registration, until one year from the date hereof or, if later, 90
days from the date on which the SEC declares such Registration Statement
effective, and (B) in the case of a Registration that is not a Shelf
Registration, until 90 days from the date on which the SEC declares such
Registration Statement effective, or (ii) until all the Registrable Securities
covered by such Registration Statement have been sold pursuant to such
Registration Statement, if earlier, in either case as such period may be
extended pursuant to this SECTION 2. Notwithstanding the foregoing, AIMCO shall
have the right to delay the filing of any Registration Statement otherwise
required to be prepared and filed by AIMCO pursuant to this SECTION 2, or to
suspend the use of any Registration Statement, for a period not in excess of 60
days (a "DELAY PERIOD") if any executive officer of AIMCO determines that in
such executive officer's reasonable judgment and good faith the registration and
distribution of the Registrable Securities covered or to be covered by such
Registration Statement would materially interfere with any pending financing,
acquisition or corporate reorganization or other material transaction involving
AIMCO or any of its subsidiaries or would require disclosure of any other
material corporate development that AIMCO is not otherwise required to disclose.
AIMCO will promptly give the Holders written notice of such determination and an
approximation of the period of the anticipated delay; PROVIDED, HOWEVER, that
the aggregate number of days included in all Delay Periods during any
consecutive 12 months shall not exceed the aggregate of (x) 150 days minus (y)
the number of days occurring during the Hold-Back Periods and Interruption
Periods during such consecutive 12 months. Each Holder agrees to cease all
disposition efforts under such Registration Statement with respect to
Registrable Securities held by such Holder immediately upon receipt of notice of
the beginning of any Delay Period. AIMCO shall provide written notice to the
Holders of the end of each Delay Period. AIMCO shall not be entitled to
initiate a Delay Period unless it shall (i) to the extent permitted by
agreements with other security holders of AIMCO, concurrently prohibit sales by
such other security holders under registration statements covering securities
held by such other security holders and (ii) have in place a policy that
prohibits sales of securities of AIMCO by senior executive officers during such
period. The time period for which AIMCO is required to maintain the
effectiveness of a Registration Statement referred to above shall be extended by
the aggregate number of days of all Delay Periods, Hold-Back Periods and
Interruption Periods affecting such Registration, and such period and any
extension thereof is hereinafter referred to as the "EFFECTIVENESS PERIOD."
(e) AIMCO shall not include any securities that are not
Registrable Securities in any Registration Statement filed pursuant to this
SECTION 2
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without the prior written consent of the Holders of a majority in number of the
Registrable Securities covered by such Registration Statement. AIMCO shall not
enter into any agreement granting any person (an "OTHER SECURITY HOLDER")
piggyback registration rights that would permit AIMCO securities of such Other
Security Holder (or such Other Security Holder's successors or assigns) to be
included on a Registration Statement filed pursuant to this SECTION 2 or
granting any Other Security Holder piggyback rights to include such Other
Security Holder's securities in any registration in which the Holders have the
right to include Registrable Securities on a priority basis more favorable to
such Other Security Holder than is provided to the Holders pursuant to SECTION
3(b). To AIMCO's knowledge, there are no agreements granting any person the
right to include securities in any registration pursuant to SECTION 2.
(f) Holders of a majority in number of the Registrable Securities
to be included in a Demand Registration pursuant to this SECTION 2 may, at any
time prior to the effective date of the Registration Statement in respect
thereof, revoke such request by providing a written notice to AIMCO to such
effect. The Holders of Registrable Securities who revoke such request shall
reimburse AIMCO for all of its out-of-pocket expenses incurred in the
preparation, filing and processing of the Registration Statement; PROVIDED,
HOWEVER, that, if such revocation was based on AIMCO's failure to comply in any
material respect with its obligations hereunder, such reimbursement shall not be
required.
SECTION 9. HOLD-BACK AGREEMENTS.
During any Effectiveness Period, each Holder having Registrable
Securities covered by the Registration Statement to which such Effectiveness
Period relates shall, if requested by the managing underwriter or underwriters
in an underwritten offering by AIMCO for the account of AIMCO, agree not to
effect any public sale or distribution of any securities of the same type
(including any underlying securities) as the securities being offered by AIMCO
(except as part of such underwritten offering or pursuant to Rule 144 or 145
under the Securities Act), during a period of up to 90 days, beginning on the
effective date of each such underwritten offering (each such period, a
"HOLD-BACK PERIOD").
SECTION 10. REGISTRATION PROCEDURES.
In connection with the registration obligations of AIMCO pursuant to
and in accordance with SECTION 2 hereof (and subject to AIMCO's rights under
SECTION 2), AIMCO will use commercially reasonable efforts to effect such
registration to permit the sale of such Registrable Securities in accordance
with the Holders' intended method or methods of disposition thereof, and
pursuant thereto AIMCO shall as expeditiously as possible:
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(a) prepare and file with the SEC a Registration Statement for
the sale of the Registrable Securities on any form for which AIMCO then
qualifies or which counsel for AIMCO shall deem appropriate in accordance
with such Holders' intended method or methods of distribution thereof and,
subject to SECTION 2(d), use commercially reasonable efforts to cause such
Registration Statement to become effective and remain effective as provided
herein;
(b) prepare and file with the SEC such amendments (including
post-effective amendments) to the Registration Statement, and such
supplements to the Prospectus, as may be required by the rules, regulations
or instructions applicable to the Securities Act during the applicable period
in accordance with the intended methods of disposition specified by the
Holders owning any Registrable Securities covered by such Registration
Statement, make generally available earnings statements satisfying the
provisions of Section 11(a) of the Securities Act (provided that AIMCO shall
be deemed to have complied with this clause if it has complied with Rule 158
under the Securities Act), and cause the Prospectus as so supplemented to be
filed pursuant to Rule 424 under the Securities Act;
(c) notify the Holders owning any Registrable Securities covered
by such Registration Statement promptly and (if requested) confirm such notice
in writing, (i) when a Prospectus or any Prospectus supplement or post-effective
amendment has been filed, and, with respect to a Registration Statement or any
post-effective amendment, when the same has become effective, (ii) of any
request by the SEC for amendments or supplements to a Registration Statement or
related Prospectus or for additional information regarding such Holders, (iii)
of the issuance by the SEC of any stop order suspending the effectiveness of a
Registration Statement or the initiation of any proceedings for that purpose,
(iv) of the receipt by AIMCO of any notification with respect to the suspension
of the qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose, and (v) of the happening of any event that requires
the making of any changes in such Registration Statement, Prospectus or
documents incorporated or deemed to be incorporated therein by reference so that
they will not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading;
(d) use commercially reasonable efforts to obtain the withdrawal
of any order suspending the effectiveness of a Registration Statement, or the
lifting of any suspension of the qualification or exemption from qualification
of any of the Registrable Securities for sale in any jurisdiction in the United
States;
(e) furnish to the Holders disposing of Registrable Securities
covered by such Registration Statement, counsel for such Holders and each
managing underwriter, if any, without charge, one conformed copy of the
Registration Statement, as declared effective by the SEC, and of each
post-effective amend-
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ment thereto, in each case, including financial statements and schedules and all
exhibits and reports incorporated or deemed to be incorporated therein by
reference; and deliver, without charge, such number of copies of the preliminary
prospectus, any amended preliminary prospectus, each final Prospectus and any
post-effective amendment or supplement thereto, as such Holder may reasonably
request in order to facilitate the disposition of the Registrable Securities
covered by the Registration Statement in conformity with the requirements of the
Securities Act;
(f) prior to any public offering of Registrable Securities, use
commercially reasonable efforts to register or qualify such Registrable
Securities for offer and sale under the securities or Blue Sky laws of such
jurisdictions in the United States as the Holders disposing of Registrable
Securities covered by the Registration Statement shall reasonably request in
writing; PROVIDED, HOWEVER, that AIMCO shall in no event be required to qualify
generally to do business as a foreign corporation or as a dealer in any
jurisdiction where it is not at the time so qualified or to execute or file a
general consent to service of process in any such jurisdiction where it has not
theretofore done so or to take any action that would subject it to general
service of process or taxation in any such jurisdiction where it is not then
subject;
(g) except during any Delay Period, upon the occurrence of any
event contemplated by SECTION 4(c)(v) above, promptly file a supplement or
post-effective amendment to the Registration Statement or related Prospectus or
any document incorporated or deemed to be incorporated therein by reference or
any other required document so that, as thereafter delivered to the purchasers
of the Registrable Securities being sold thereunder, such Prospectus will not
contain an untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading;
(h) use commercially reasonable efforts to cause all Registrable
Securities covered by the Registration Statement to be listed on each securities
exchange or automated interdealer quotation system, if any, on which similar
securities issued by AIMCO are then listed or quoted;
(i) on or before the effective date of the Registration
Statement, provide the transfer agent of AIMCO for the Registrable Securities
with printed certificates for the Registrable Securities in a form eligible for
deposit with The Depositary Trust Company;
(j) if such offering is an underwritten offering, make available
for inspection by any Holder disposing of Registrable Securities included in
such Registration Statement, any underwriter of such offering, and any attorney,
accountant or other agent retained by any such Holder or underwriter
(collectively, the "INSPECTORS"), all financial and other records and other
information, pertinent
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corporate documents and properties of any of AIMCO and its subsidiaries
(collectively, the "RECORDS"), as shall be reasonably necessary to enable them
to exercise their due diligence responsibility; PROVIDED, HOWEVER, that the
Records that AIMCO determines, in good faith, to be confidential shall not be
disclosed to any Inspector unless (i) such Inspector signs a confidentiality
agreement reasonably satisfactory to AIMCO (which shall permit the disclosure of
such Records in such Registration Statement or the related Prospectus if
necessary to avoid or correct a material misstatement in or material omission
from such Registration Statement or Prospectus), (ii) after consultation with
counsel for the applicable Inspectors, the Holders and AIMCO, the disclosure of
such Records is necessary to avoid or correct a misstatement or omission in such
Registration Statement or (iii) the release of such Records is ordered pursuant
to a subpoena or other order from a court of competent jurisdiction, PROVIDED
that each Holder shall, promptly after learning that disclosure of such Records
is sought in a court having jurisdiction, give notice to AIMCO and allow AIMCO,
at AIMCO's expense, to undertake appropriate action to prevent disclosure of
such Records; and
(k) if such offering is an underwritten offering, enter into such
agreements (including an underwriting agreement in form, scope and substance as
is customary in underwritten offerings) and take all such other appropriate and
reasonable actions requested by the Holders owning a majority of the Registrable
Securities being sold in connection therewith (including those reasonably
requested by the managing underwriters) in order to expedite or facilitate the
disposition of such Registrable Securities and, in such connection, (i) use its
commercially reasonable efforts to obtain opinions of counsel to AIMCO and
updates thereof (which counsel and opinions (in form, scope and substance) shall
be reasonably satisfactory to the managing underwriters and counsel to the
Holders disposing of Registrable Securities), addressed to each Holder selling
Registrable Securities covered by such Registration Statement and each of the
underwriters as to the matters customarily covered in opinions requested in
underwritten offerings and such other matters as may be reasonably requested by
such counsel and underwriters, (ii) use commercially reasonable efforts to
obtain "cold comfort" letters and updates thereof from the independent certified
public accountants of AIMCO (and, if necessary, any other independent certified
public accountants of any subsidiary of AIMCO or of any business acquired by
AIMCO for which financial statements and financial data are, or are required to
be, included in the Registration Statement), addressed to each Holder selling
Registrable Securities covered by the Registration Statement (unless such
accountants shall be prohibited from so addressing such letters by applicable
standards of the accounting profession) and each of the underwriters, such
letters to be in customary form and covering matters of the type customarily
covered in "cold comfort" letters in connection with underwritten offerings, and
(iii) if requested and if an underwriting agreement is entered into, provide
indemnification provisions and procedures substantially to the effect set forth
in SECTION 7 hereof with respect to all parties to be indemnified pursuant to
said Section. The above shall be done at each
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closing under such underwriting or similar agreement, or as and to the extent
required thereunder.
With respect to any Registration under SECTION 2 hereof, AIMCO
may require each Holder disposing of Registrable Securities covered by such
Registration to furnish such information regarding the Holder and such Holder's
intended disposition of Registrable Securities as AIMCO may from time to time
reasonably request in writing. If any such information with respect to the
Holder is not furnished within a reasonable period of time after receipt of such
request, AIMCO may exclude such Holder's Registrable Securities from such
Registration.
Upon receipt of any notice from AIMCO of the happening of any
event of the kind described in SECTION 4(c)(ii), 4(c)(iii), 4(c)(iv) or 4(c)(v)
hereof, each Holder shall (i) forthwith discontinue disposition of any
Registrable Securities covered by such Registration Statement or Prospectus
until receipt of the copies of the supplemented or amended Prospectus
contemplated by SECTION 4(g) hereof, or until such Holder is advised in writing
(the "ADVICE") by AIMCO that the use of the applicable Prospectus may be
resumed, and has received copies of any amended or supplemented Prospectus or
any additional or supplemental filings which are incorporated, or deemed to be
incorporated, by reference in such Prospectus (such period during which
disposition is discontinued being an "INTERRUPTION PERIOD") and (ii) if
requested by AIMCO, deliver to AIMCO (at the expense of AIMCO) all copies then
in its possession, other than permanent file copies then in its possession, of
the Prospectus covering such Registrable Securities at the time of receipt of
such request. No Holder shall utilize any material other than the applicable
current preliminary prospectus or Prospectus in connection with the offering of
Registrable Securities pursuant to SECTION 2 hereunder.
SECTION 11. REGISTRATION EXPENSES.
Whether or not any Registration Statement is filed or becomes
effective, AIMCO shall pay all costs, fees and expenses incident to AIMCO's
performance of or compliance with this Agreement including, without limitation,
(i) all registration and filing fees, including NASD filing fees, (ii) fees and
expenses of compliance with securities or Blue Sky laws, including reasonable
fees and disbursements of counsel in connection therewith, (iii) printing
expenses (including, without limitation, expenses of printing certificates for
Registrable Securities and of printing prospectuses (including preliminary
prospectuses) if the printing of prospectuses is requested by the Holders or the
managing underwriter, if any), (iv) messenger, telephone and delivery expenses,
(v) fees and disbursements of counsel for AIMCO, (vi) fees and disbursements of
all independent certified public accountants of AIMCO (including, without
limitation, expenses of any "cold comfort" letters required in connection with
this Agreement) and all other persons retained by AIMCO in connection with the
Registration Statement, (vii) fees and disbursements (not in excess of $25,000
per Registration) of one counsel, other than AIMCO's
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counsel, selected to represent all such Holders by Holders owning a majority in
number of the Registrable Securities being registered, (viii) fees and expenses
customarily reimbursed or paid by issuers or selling securityholders on behalf
of underwriters in underwritten offerings (other than any marketing or
distribution expenses) and (ix) all other costs, fees and expenses incident to
AIMCO's performance or compliance with this Agreement. Notwithstanding the
foregoing, the fees and expenses of any persons (other than fees and
disbursements not in excess of $25,000 per Registration of the counsel selected
by Holders owning a majority in number of the Registrable Securities being
registered) retained by a Holder, and any discounts, commissions or brokers'
fees or fees of similar securities industry professionals and any transfer taxes
relating to the disposition of the Registrable Securities by a Holder, will be
payable by such Holder, and AIMCO will have no obligation to pay any such
amounts.
SECTION 12. UNDERWRITING REQUIREMENTS.
(a) Subject to SECTION 6(b) hereof, any Holder shall have the
right, by written notice, to specify that it intends to dispose of Registrable
Securities covered by a Registration Statement pursuant to an underwritten
offering.
(b) In the case of any underwritten offering pursuant to a Shelf
Registration Statement, the Holders selling securities in such underwritten
offering shall select the institution or institutions that shall manage or lead
the offering or placement, subject to the reasonable satisfaction of AIMCO. In
the case of a Demand Registration in which an underwritten offering is
specified, the Holders selling securities in such offering shall select the lead
manager of such offering or placement, subject to the reasonable satisfaction of
AIMCO, and AIMCO shall select the second manager of such offering or placement,
subject to the reasonable satisfaction of such Holders. Any selection or other
decision by Holders pursuant to this paragraph (b) shall be made by the Holders
of a majority in number of the Registrable Securities to be sold pursuant to the
applicable underwritten offering. No Holder shall be entitled to participate in
an underwritten offering unless and until such Holder has entered into an
underwriting or other agreement with such institution or institutions for such
offering in such form as AIMCO and such institution or institutions shall
determine.
SECTION 13. INDEMNIFICATION.
(a) INDEMNIFICATION BY AIMCO. AIMCO shall, without limitation as
to time, indemnify and hold harmless, to the full extent permitted by law, each
Holder whose Registrable Securities are covered by a Registration Statement or
Prospectus, the officers, directors and agents and employees of each of them,
each Person who controls each such Holder (within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act) and the officers,
directors, agents and employees of each such controlling person, to the fullest
extent
B-12
<PAGE>
lawful, from and against any and all losses, claims, damages, liabilities,
judgment, costs (including, without limitation, costs of preparation and
reasonable attorneys' fees) and expenses (collectively, "LOSSES"), as incurred,
arising out of or based upon any untrue or alleged untrue statement of a
material fact contained in such Registration Statement or Prospectus or in any
amendment or supplement thereto or in any preliminary prospectus, or arising out
of or based upon any omission or alleged omission of a material fact required to
be stated therein or necessary to make the statements therein not misleading,
except insofar as the same are based upon information furnished in writing to
AIMCO by or on behalf of such Holder expressly for use therein; PROVIDED,
HOWEVER, that AIMCO shall not be liable to any Holder to the extent that any
such Losses arise out of or are based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in any preliminary prospectus if
(i) having previously been furnished by or on behalf of AIMCO with copies of the
Prospectus, such Holder failed to send or deliver a copy of the Prospectus with
or prior to the delivery of written confirmation of the sale of Registrable
Securities by such Holder to the person asserting the claim from which such
Losses arise and (ii) the Prospectus would have corrected in all material
respects such untrue statement or alleged untrue statement or such omission or
alleged omission; and PROVIDED, FURTHER, that AIMCO shall not be liable in any
such case to the extent that any such Losses arise out of or are based upon an
untrue statement or alleged untrue statement or omission or alleged omission in
the Prospectus, if (x) such untrue statement or alleged untrue statement,
omission or alleged omission is corrected in all material respects in an
amendment or supplement to the Prospectus and (y) having previously been
furnished by or on behalf of AIMCO with copies of the Prospectus as so amended
or supplemented, such Holder failed to deliver such Prospectus as so amended or
supplemented, prior to or concurrently with the delivery of written confirmation
of the sale of Registrable Securities to the person asserting the claim from
which such Losses arise.
(b) INDEMNIFICATION BY HOLDER OF REGISTRABLE SECURITIES. In
connection with any Registration Statement in which a Holder is participating,
and as a condition to such participation, such Holder shall (i) furnish to AIMCO
in writing such information as AIMCO reasonably requests for use in connection
with any Registration Statement or Prospectus and (ii) be deemed to have agreed
to indemnify, to the full extent permitted by law, AIMCO, its directors,
officers, agents and employees, each Person who controls AIMCO (within the
meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act),
and the directors, officers, agents or employees of such controlling Persons,
from and against all Losses arising out of or based upon any untrue or alleged
untrue statement of a material fact contained in any Registration Statement or
Prospectus or any amendment or supplement thereto, or any preliminary
prospectus, or arising out of or based upon any omission or alleged omission of
a material fact required to be stated therein or necessary to make the
statements therein not misleading, to the extent, but only to the extent, that
such untrue or alleged untrue statement or omission or alleged omission is based
upon any information so furnished in writing
B-13
<PAGE>
by or on behalf of such Holder to AIMCO expressly for use in such Registration
Statement or Prospectus.
(c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. If any Person shall
be entitled to indemnity hereunder (an "indemnified party"), such indemnified
party shall give prompt notice to the party from which such indemnity is sought
(the "indemnifying party") of any claim or of the commencement of any proceeding
with respect to which such indemnified party seeks indemnification or
contribution pursuant hereto; PROVIDED, HOWEVER, that the delay or failure to so
notify the indemnifying party shall not relieve the indemnifying party from any
obligation or liability except to the extent that the indemnifying party has
been materially prejudiced by such delay or failure. The indemnifying party
shall have the right, exercisable by giving written notice to an indemnified
party promptly after the receipt of written notice from such indemnified party
of such claim or proceeding, to assume, at the indemnifying party's expense, the
defense of any such claim or proceeding, with counsel reasonably satisfactory to
such indemnified party; PROVIDED, HOWEVER, that an indemnified party shall have
the right to employ separate counsel in any such claim or proceeding and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such indemnified party unless: (l) the indemnifying
party agrees to pay such fees and expenses; (2) the indemnifying party fails
promptly to assume the defense of such claim or proceeding or fails to employ
counsel reasonably satisfactory to such indemnified party; or (3) the named
parties to any proceeding (including impleaded parties) include both such
indemnified party and the indemnifying party, and such indemnified party shall
have been advised by counsel that there may be one or more legal defenses
available to it which are different from or additional to those available to the
indemnifying party (in which case the indemnifying party shall not have the
right to assume the defense of such action on behalf of such indemnified party);
in which case the indemnified party shall have the right to employ counsel and
to assume the defense of such claim or proceeding; PROVIDED, HOWEVER, that
subject to clause (3) above, the indemnifying party shall not, in connection
with any one such claim or proceeding or separate but substantially similar or
related claims or proceedings in the same jurisdiction, arising out of the same
general allegations or circumstances, be liable for the fees and expenses of
more than one firm of attorneys (together with appropriate local counsel) at any
time for all of the indemnified parties, or for fees and expenses that are not
reasonable. Whether or not such defense is assumed by the indemnifying party,
such indemnified party will not be subject to any liability for any settlement
made without its consent. The indemnifying party shall not 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 party of a release, in form and substance reasonably satisfactory to
the indemnified party, from all liability in respect of such claim or litigation
for which such indemnified party would be entitled to indemnification hereunder.
B-14
<PAGE>
(d) CONTRIBUTION. If the indemnification provided for in this
SECTION 7 is unavailable to an indemnified party in respect of any Losses (other
than in accordance with its terms), then each applicable indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of such Losses, in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party, on the one hand, and such indemnified party, on the other hand, in
connection with the actions, statements or omissions that resulted in such
Losses as well as any other relevant equitable considerations. The relative
fault of such indemnifying party, on the one hand, and indemnified party, on the
other hand, shall be determined by reference to, among other things, whether any
action in question, including any untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact, has been
taken by, or relates to information supplied by, such indemnifying party or
indemnified party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent any such action, statement or
omission. The amount paid or payable by a party as a result of any Losses shall
be deemed to include any legal or other fees or expenses incurred by such party
in connection with any investigation or proceeding.
The parties hereto agree that it would not be just and equitable
if contribution pursuant to this SECTION 7(d) were determined by PRO RATA
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provision of this SECTION 7(d), an indemnifying party that
is a Holder shall not be required to contribute any amount which is in excess of
the amount by which the total proceeds received by such Holder from the sale of
Registrable Securities (net of all underwriting discounts and commissions)
exceeds the amount of any damages that such indemnifying party has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
SECTION 14. MISCELLANEOUS.
(a) NOTICES. All notices or communications hereunder shall be in
writing (including facsimile or similar writing), addressed as follows:
B-15
<PAGE>
To AIMCO:
Apartment Investment and Management Company
1873 South Bellaire Street, 17th Floor
Denver, CO 80222
Attention: Terry Considine
With a copy (which shall not constitute notice) to:
Skadden, Arps, Slate, Meagher & Flom, LLP
300 South Grand Avenue, Suite 3400
Los Angeles, California 90071
Attention: Rod A. Guerra
To the Holders at their respective addresses set forth on the
signature pages hereto.
Any such notice or communication shall be deemed given (i) when
made, if made by hand delivery, (ii) one business day after being deposited with
a next-day courier, postage prepaid, or (iii) three business days after being
sent certified or registered mail, return receipt requested, postage prepaid, in
each case addressed as above (or to such other address as such party may
designate in writing from time to time).
(b) SEPARABILITY. If any provision of this Agreement shall be
declared to be invalid or unenforceable, in whole or in part, such invalidity or
unenforceability shall not affect the remaining provisions hereof which shall
remain in full force and effect.
(c) ASSIGNMENT. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective heirs, devisees,
legatees, legal representatives, successors and assigns. Except as set forth
herein, neither AIMCO nor any Holder shall assign this Agreement or any rights
or obligations hereunder without the prior written consent of AIMCO and the
other Holders, with respect to an assignment by any Holder, or the Holders, with
respect to an assignment by AIMCO; PROVIDED, that no consent of AIMCO or the
other Holders shall be required for the assignment by any Holder of this
Agreement or any of the rights and obligations of such Holder hereunder to any
person described in clause (ii) of the definition of "Holder" to whom
Registrable Securities are transferred by such Holder.
(d) ENTIRE AGREEMENT. This Agreement represents the entire
agreement of the parties and shall supersede any and all previous contracts,
arrangements or understandings between the parties hereto with respect to the
subject matter hereof.
B-16
<PAGE>
(e) AMENDMENTS AND WAIVERS. Except as otherwise provided herein,
the provisions of this Agreement may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given, unless AIMCO has obtained the written consent of Holders of at least a
majority in number of the Registrable Securities then outstanding.
(f) PUBLICITY. The Holders and AIMCO agree that no public
release or announcement concerning the transactions contemplated hereby shall be
issued by either party without the prior consent of the other party, except to
the extent that the Holders or AIMCO is advised by counsel that such release or
announcement is necessary or advisable under applicable law or the rules or
regulations of any securities exchange, in which case the party required to make
the release or announcement shall to the extent practicable provide the other
party with an opportunity to review and comment on such release or announcement
in advance of its issuance.
(g) EXPENSES. Whether or not the transactions contemplated
hereby are consummated, except as otherwise provided herein, all costs and
expenses incurred in connection with the execution of this Agreement shall be
paid by the party incurring such costs or expenses, except as otherwise set
forth herein.
(h) INTERPRETATION. The headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
(i) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when two or more such counterparts have been signed by
each of the parties and delivered to the other party.
(j) GOVERNING LAW. This Agreement shall be construed,
interpreted, and governed in accordance with the laws of the State of Maryland,
without reference to rules relating to conflicts of law.
(k) CALCULATION OF TIME PERIODS. Except as otherwise indicated,
all periods of time referred to herein shall include all Saturdays, Sundays and
holidays; PROVIDED, that if the date to perform the act or give any notice with
respect to this Agreement shall fall on a day other than a Business Day, such
act or notice may be timely performed or given if performed or given on the next
succeeding Business Day.
B-17
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first written above.
AIMCO:
APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
By:
-------------------------------------
Name:
Title:
INVESTOR:
-------------------------------------
Name:
Address:
-----------------------------
-------------------------------------
-------------------------------------
-------------------------------------
B-18
<PAGE>
EXHIBIT C-1
FORM OF LEGAL OPINION OF
SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP,
COUNSEL TO AIMCO AND MERGER SUB
1. Merger Sub has been duly incorporated and each of Merger Sub and
AIMCO Properties, L.P. is validly existing and in good standing under the laws
of the State of Delaware.
2. Merger Sub has the corporate power and corporate authority to
enter into the Agreement and to consummate the transactions contemplated
thereby. The execution and delivery of the Agreement by Merger Sub and the
consummation of the transactions contemplated thereby have been duly authorized
by all requisite corporate action on the part of Merger Sub.
3. The Agreement has been executed and delivered by Merger Sub and
(assuming it has been duly authorized, executed and delivered by AIMCO and NHP)
is a valid and binding obligation of AIMCO and Merger Sub, enforceable against
AIMCO and Merger Sub in accordance with its terms, except (a) to the extent that
enforcement thereof may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) general principles of equity
(regardless of whether enforcement is considered in a proceeding at law or in
equity) and (b) that rights to indemnification thereunder may be limited by
Federal or state securities laws or the policies underlying such laws.
4. Neither the execution and delivery of the Agreement by AIMCO, nor
the consummation by AIMCO of the transactions contemplated thereby, will (a)
violate the Certificate of Incorporation or By-laws of Merger Sub, or (b) to the
best of our knowledge, without having made any independent investigation,
constitute a violation of or a default under any material contract, agreement or
instrument to which AIMCO, Merger Sub or any of their Material Subsidiaries is
subject and which has been specifically identified to us as material by AIMCO
and Merger Sub in connection with rendering such opinion. We express no
opinion, however, as to whether the execution, delivery or performance by AIMCO
or Merger Sub of the Agreement will constitute a violation of or a default under
any covenant, restriction or provision with respect to financial ratios or tests
or any aspect of the financial condition or results of operations of AIMCO or
Merger Sub.
5. Neither the execution or delivery by AIMCO or Merger Sub of the
Agreement nor the consummation by AIMCO or Merger Sub of the Merger in
accordance with the terms and provisions thereof will violate any Applicable Law
(as hereinafter defined). "Applicable Laws" shall mean those laws, rules and
regu-
C1-1
<PAGE>
lations of the State of California, the general corporate law of the State of
Delaware and of the United States of America which, in our experience, are
normally applicable to transactions of the type contemplated by the Agreement.
6. No Governmental Approval (as hereinafter defined), which has not
been obtained or taken and is not in full force and effect, is required to
authorize or is required in connection with the execution, delivery or
performance of the Agreement by AIMCO or Merger Sub, except that we express no
opinion with regard to the securities or Blue Sky laws of the various states.
"Governmental Approval" means any consent, approval, license, authorization or
validation of, or filing, recording or registration with, any Governmental
Authority pursuant to Applicable Laws.
7. The AIMCO Registration Statement has been declared effective
under the Securities Act and, to the best of our knowledge, no stop order
suspending the effectiveness of the AIMCO Registration Statement or preventing
the use of the Proxy Statement/Prospectus has been issued.
8. [Unless a similar opinion is included as an exhibit in the AIMCO
Registration Statement:] [Commencing with AIMCO's initial taxable year ended
December 31, 1994, AIMCO was organized in conformity with the requirements for
qualification as a real estate investment trust ("REIT") under the Code, and
AIMCO's proposed method of operation, and its actual method of operation since
its formation, will enable it to meet the requirements for qualification and
taxation as a REIT. The qualification and taxation as a REIT depends upon
AIMCO's ability to meet, through actual annual operating results, certain
requirements, including requirements relating to distribution levels and
diversity of stock ownership, and the various qualification tests imposed under
the Code, the results of which will not be reviewed by us. Accordingly, no
assurance can be given that the actual results of AIMCO's operation for any one
taxable year will satisfy such requirements.]
9. The Proxy Statement/Prospectus, as of the date it was mailed to
stockholders of AIMCO and as of the date hereof, and the AIMCO Registration
Statement, as of the date of its effectiveness and as of the date hereof,
appeared on its face to be appropriately responsive in all material respects to
the applicable requirements of the Securities Act and the Exchange Act and the
rules and regulations thereunder, except that, in each case, we express no
opinion or belief as to the financial statements, schedules and other financial
data included or incorporated, or deemed to be incorporated, by reference
therein or excluded therefrom or any information to the extent it was furnished
by or relates to NHP, and we do not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Proxy
Statement/Prospectus or the AIMCO Registration Statement.
C1-2
<PAGE>
In addition, we have participated in conferences with officers and
other representatives of AIMCO, representatives of the independent public
accountants of AIMCO, officers and other representatives of NHP, counsel for NHP
and representatives of the independent public accountants of NHP, at which the
contents of the Proxy Statement/Prospectus, the AIMCO Registration Statement and
related matters were discussed and, although we are not passing upon, and do not
assume any responsibility for, the accuracy, completeness or fairness of the
statements contained in the Proxy Statement/Prospectus or the AIMCO Registration
Statement and have made no independent check or verification thereof, on the
basis of the foregoing, no facts have come to our attention that have led us to
believe that, insofar as it relates to AIMCO, the Proxy Statement/Prospectus,
the AIMCO Registration Statement, in each case, as of its date and the date of
the NHP Meeting, contained or contains an untrue statement of a material fact or
omitted or omits to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, except that we express no opinion or
belief with respect to the financial statements, schedules and other financial
data included or incorporated, or deemed to be incorporated, by reference in the
Proxy Statement/Prospectus or the AIMCO Registration Statement or the
information included or incorporated, or deemed to be incorporated, by reference
in the Proxy Statement/Prospectus or the AIMCO Registration Statement to the
extent such information was furnished by or relates to NHP.
C1-3
<PAGE>
EXHIBIT C-2
FORM OF LEGAL OPINION OF
PIPER & MARBURY L.L.P.,
MARYLAND COUNSEL TO AIMCO
1. AIMCO has been duly incorporated and is validly existing and in
good standing under the laws of its jurisdiction of incorporation.
2. AIMCO has the corporate power and corporate authority to enter
into the Agreement and to consummate the transactions contemplated thereby. The
execution and delivery of the Agreement by AIMCO and the consummation of the
transactions contemplated thereby have been duly authorized by all requisite
corporate action on the part of AIMCO.
3. Assuming the Agreement has been executed and delivered by an
authorized officer of AIMCO, the Agreement has been executed and delivered by
AIMCO.
4. Neither the execution and delivery of the Agreement by AIMCO, nor
the consummation by AIMCO of the transactions contemplated thereby, will violate
the Charter or By-laws of AIMCO.
5. Neither the execution or delivery by AIMCO of the Agreement nor
the consummation by AIMCO of the Merger in accordance with the terms and
provisions thereof will violate any Applicable Law (as hereinafter defined).
"Applicable Laws" shall mean those laws, rules and regulations of the State of
Maryland which, in our experience, are normally applicable to transactions of
the type contemplated by the Agreement.
6. No Governmental Approval (as hereinafter defined), which has not
been obtained or taken and is not in full force and effect, is required to
authorize or is required in connection with the execution, delivery or
performance of the Agreement by AIMCO, except that we express no opinion with
regard to the securities or Blue Sky laws of the various states. "Governmental
Approval" means any consent, approval, license, authorization or validation of,
or filing, recording or registration with, any Maryland Governmental Authority
pursuant to Applicable Laws.
7. The AIMCO Common Stock to be issued in the Merger has been duly
authorized and, upon issuance in accordance with the Agreement, will be validly
issued, fully paid and nonassessable.
C2-1
<PAGE>
EXHIBIT D-1
FORM OF LEGAL OPINION OF
WILMER, CUTLER & PICKERING,
COUNSEL TO NHP
1. NHP and each subsidiary of NHP listed on Schedule A attached
hereto has been duly incorporated and is validly existing and in good standing
under the laws of its respective jurisdiction of incorporation.
2. NHP has the corporate power and corporate authority to enter into
the Agreement and to consummate the transactions contemplated thereby. The
execution and delivery of the Agreement by NHP and the consummation of the
transactions contemplated thereby have been duly authorized by all requisite
corporate action on the part of NHP.
3. The Agreement has been executed and delivered by NHP and
(assuming it has been duly authorized, executed and delivered by AIMCO and
Merger Sub) is a valid and binding obligation of NHP, enforceable against NHP in
accordance with its terms, except (a) to the extent that enforcement thereof may
be limited by (i) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights generally
and (ii) general principles of equity (regardless of whether enforcement is
considered in a proceeding at law or in equity) and (b) that rights to
indemnification thereunder may be limited by Federal or state securities laws or
the policies underlying such laws.
4. Neither the execution and delivery of the Agreement by NHP, nor
the consummation by NHP of the transactions contemplated thereby, will (a)
violate the Certificate of Incorporation or By-laws of NHP, or (b) to the best
of our knowledge, without having made any independent investigation, constitute
a violation of or a default under any material contract, agreement or instrument
to which NHP or any of its Material Subsidiaries is subject and which has been
specifically identified to us as material by NHP in connection with rendering
such opinion. We express no opinion, however, as to whether the execution,
delivery or performance by NHP of the Agreement will constitute a violation of
or a default under any covenant, restriction or provision with respect to
financial ratios or tests or any aspect of the financial condition or results of
operations of NHP.
5. Neither the execution or delivery by NHP of the Agreement nor the
consummation by NHP of the Merger in accordance with the terms and provisions
thereof will violate any Applicable Law (as hereinafter defined). "Applicable
Laws" shall mean those laws, rules and regulations of the District of Columbia,
the general corporate law of the State of Delaware and of the United States of
America
D1-1
<PAGE>
which, in our experience, are normally applicable to transactions of the type
contemplated by the Agreement.
6. No Governmental Approval (as hereinafter defined), which has not
been obtained or taken and is not in full force and effect, is required to
authorize or is required in connection with the execution, delivery or
performance of the Agreement by NHP, except that we express no opinion with
regard to the securities or Blue Sky laws of the various states. "Governmental
Approval" means any consent, approval, license, authorization or validation of,
or filing, recording or registration with, any Governmental Authority pursuant
to Applicable Laws.
7. The MS Registration Statement has been declared effective under the
Exchange Act and, to the best of our knowledge, no stop order suspending the
effectiveness of the MS Registration Statement or preventing the use of the
Proxy Statement/Prospectus has been issued.
8. Each of the Proxy Statement/Prospectus, as of the date it was
mailed to stockholders of NHP and as of the date hereof, and the MS Registration
Statement, as of the date of its effectiveness and as of the date hereof,
appeared on its face to be appropriately responsive in all material respects to
the applicable requirements of the Securities Act and the Exchange Act and the
rules and regulations thereunder, except that, in each case, we express no
opinion or belief as to the financial statements, schedules and other financial
data included or incorporated, or deemed to be incorporated, by reference
therein or excluded therefrom or any information to the extent it was furnished
by or relates to AIMCO or Merger Sub, and we do not assume any responsibility
for the accuracy, completeness or fairness of the statements contained in the
Proxy Statement/Prospectus or the MS Registration Statement.
In addition, we have participated in conferences with officers and
other representatives of NHP, representatives of the independent public
accountants of NHP, officers and other representatives of AIMCO, counsel for
AIMCO and representatives of the independent public accountants of AIMCO, at
which the contents of the Proxy Statement/Prospectus, the MS Registration
Statement and related matters were discussed and, although we are not passing
upon, and do not assume any responsibility for, the accuracy, completeness or
fairness of the statements contained in the Proxy Statement/Prospectus or the MS
Registration Statement and have made no independent check or verification
thereof, on the basis of the foregoing, no facts have come to our attention that
have led us to believe that, insofar as it relates to NHP, the Proxy
Statement/Prospectus or the MS Registration Statement, in each case, as of its
date and the date of the NHP Meeting, contained or contains an untrue statement
of a material fact or omitted or omits to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that we express
no opinion or belief with respect to the financial statements, sched-
D1-2
<PAGE>
ules and other financial data included or incorporated, or deemed to be
incorporated, by reference in the Proxy Statement/Prospectus or the MS
Registration Statement or the information included or incorporated, or deemed to
be incorporated, by reference in the Proxy Statement/Prospectus or the MS
Registration Statement to the extent such information was furnished by or
relates to AIMCO or Merger Sub.
D1-3
<PAGE>
SCHEDULE A
NHP Management Company
NHP-HG II, Inc.
D1-4
<PAGE>
EXHIBIT D-2
FORM OF LEGAL OPINION OF
ARENT FOX KINTNER PLOTKIN & KAHN,
SPECIAL COUNSEL TO NHP
1. Neither the execution and delivery of the Agreement by NHP, nor
the consummation by NHP of the Merger, will give to any member of the Oxford
Group (as defined in the Stock Purchase Agreement) any right to terminate, not
renew or amend any of the Oxford Management Contracts (as defined in the Stock
Purchase Agreement) without the consent of NHP or one of its wholly owned
subsidiaries.
2. Neither the execution and delivery of the Agreement by NHP, nor
the consummation by NHP of the Merger, will constitute a violation of or a
default under, any of the Oxford Management Contracts or any other Contract,
agreement or instrument to which (a) NHP or any of its subsidiaries is a party,
and (b) any member of the Oxford Group is party, including, without limitation,
the Stock and Asset Transfer Restrictions Agreement.
D2-1
<PAGE>
[The Schedules listed in the table of contents preceding
the Agreement and Plan of Merger, dated as of April 21, 1997, by and among
Apartment Investment and Management Company, AIMCO/NHP Acquisition Corp. and NHP
Incorporated, have been omitted. A copy of such Schedules will be
furnished supplementally to the Securities and Exchange Commission upon
request.]
<PAGE>
EXHIBIT 4
STOCK PURCHASE AGREEMENT
dated as of
April 16, 1997
by and among
APARTMENT INVESTMENT AND MANAGEMENT COMPANY
DEMETER HOLDINGS CORPORATION
and
CAPRICORN INVESTORS, L.P.
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
1.1 Definitions........................................................... 1
ARTICLE II
PURCHASE AND SALE
2.1 Purchase and Sale of Stock............................................ 9
2.2 Consideration........................................................ 10
2.3 Closings.............................................................. 10
2.4 Deliveries by the Sellers at the Initial Closing
and each Subsequent Closing........................................... 11
2.5 Deliveries by AIMCO at the Initial Closing
and each Subsequent Closing........................................... 12
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS
3.1 Organization and Qualifications; Subsidiaries......................... 13
3.2 Certificate of Incorporation and Bylaws............................... 13
3.3 Capitalization........................................................ 13
3.4 Ownership of Shares................................................... 13
3.5 Authority Relative to This Agreement.................................. 14
3.6 No Conflict; Required Filings and Consents............................ 14
3.7 Compliance............................................................ 14
3.8 SEC Reports and Financial Statements.................................. 15
3.9 Absence of Certain Changes or Events.................................. 15
3.10 Litigation............................................................ 16
3.11 Investment Representations............................................ 16
3.12 Brokers............................................................... 17
3.13 Management Arrangements............................................... 17
3.14 Disclosure............................................................ 17
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF AIMCO
4.1 Organization and Qualifications; Subsidiaries......................... 18
4.2 Charter and Bylaws.................................................... 18
4.3 Capitalization........................................................ 18
4.4 Authority Relative to This Agreement.................................. 18
i
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Page
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4.5 No Conflict; Required Filings and Consents............................ 19
4.6 Compliance............................................................ 19
4.7 SEC Reports and Financial Statements.................................. 19
4.8 Absence of Certain Changes or Events.................................. 20
4.9 Litigation............................................................ 20
4.10 Investment Representations............................................ 21
4.11 Brokers............................................................... 22
4.12 Disclosure............................................................ 22
ARTICLE V
COVENANTS
5.1 Notification of Certain Matters....................................... 22
5.2 Further Action, Reasonable Efforts; Consents and Approvals............ 22
5.3 Conduct of Business of NHP Pending the Closing........................ 23
5.4 Conduct of Business of AIMCO Pending the Closing...................... 23
5.5 No Solicitation....................................................... 23
5.6 Transfer Taxes........................................................ 24
5.7 Public Announcements.................................................. 24
5.8 Voting Arrangements................................................... 24
5.9 Assignment of Shareholder Rights...................................... 25
5.10 Merger Proposal....................................................... 26
5.11 Exchange Offer........................................................ 26
5.12 Spin-Off.............................................................. 28
5.13 Sellers' Put Right.................................................... 28
5.14 Resignations of Directors............................................. 29
5.15 Determination of Initial Shares....................................... 29
5.16 Trust Agreement....................................................... 29
ARTICLE VI
CONDITIONS TO CLOSING
6.1 Conditions to Each Party's Obligation to Effect Each Closing.......... 30
6.2 Conditions to Obligations of AIMCO to Effect the
Initial Closing and the Subsequent Closing............................ 30
6.3 Conditions to Obligations of the Sellers to Effect the Initial
Closing and the Subsequent Closing.................................... 31
ARTICLE VII
TERMINATION, WAIVER AND AMENDMENT
7.1 Termination........................................................... 32
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7.2 Effect of Termination................................................. 33
7.3 Amendment or Supplement............................................... 33
7.4 Extension of Time, Waiver, Etc........................................ 33
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification by the Sellers........................................ 34
8.2 Indemnification by AIMCO.............................................. 35
8.3 Procedures Relating to Indemnification................................ 35
8.4 Limitations on Indemnification........................................ 38
ARTICLE IX
MISCELLANEOUS PROVISIONS
9.1 Governing Law......................................................... 39
9.2 Entire Agreement...................................................... 39
9.3 Modification; Waiver.................................................. 39
9.4 Notices............................................................... 40
9.5 Expenses.............................................................. 41
9.6 Assignment............................................................ 41
9.7 Survival.............................................................. 42
9.8 Severability.......................................................... 42
9.9 Successors and Assigns; Third Parties................................. 42
9.10 Counterparts.......................................................... 42
9.11 Interpretation; References............................................ 42
9.12 Time of Essence....................................................... 42
9.13 Remedies.............................................................. 43
9.14 Exhibits.............................................................. 43
9.15 Attorneys' Fees....................................................... 43
9.16 Waiver of Jury Trial.................................................. 43
9.17 Further Assurances.................................................... 44
9.18 Negotiation of Agreement.............................................. 44
9.19 Several Liability..................................................... 44
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DISCLOSURE SCHEDULE
EXHIBITS
EXHIBIT A -- Escrow Agreement
EXHIBIT B -- Guaranty
EXHIBIT C -- Registration Rights Agreement
EXHIBIT D -- Rights Agreement
EXHIBIT E -- Trust Agreement
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of April 16, 1997 (the
"AGREEMENT"), by and among Apartment Investment and Management Company, a
Maryland corporation ("AIMCO" or the "BUYER"), Demeter Holdings Corporation, a
Massachusetts corporation ("DEMETER"), and Capricorn Investors, L.P., a Delaware
limited partnership ("CAPRICORN," and together with Demeter, the "SELLERS").
WHEREAS, Demeter owns 5,619,695 shares (the "DEMETER SHARES") of
common stock, par value $.01 per share ("NHP STOCK"), of NHP Incorporated, a
Delaware corporation (together with any successors, "NHP"); and
WHEREAS, Capricorn owns 1,310,427 shares (the "CAPRICORN SHARES" and,
together with the Demeter Shares, the "SHARES") of NHP Stock;
WHEREAS, the Sellers desire to sell their respective Shares to AIMCO
in exchange for shares of Class A Common Stock, par value $.01 per share ("AIMCO
Stock"), of AIMCO and/or cash, and AIMCO desires to purchase such shares of NHP
Stock in exchange for such consideration; and
WHEREAS, AIMCO and the Sellers have previously entered into a letter
agreement, dated February 13, 1997 (the "LETTER AGREEMENT"), which provides for
AIMCO to purchase the Shares from the Sellers, and for AIMCO and the Sellers to
negotiate a further agreement for such purchase.
NOW, THEREFORE, in consideration of the foregoing and the covenants of
the parties set forth herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, subject to the terms
and conditions set forth herein, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. The capitalized terms used in this Agreement and not
otherwise defined herein shall have the following meanings (unless the context
otherwise requires, such capitalized terms shall include the singular and plural
and the conjunctive and disjunctive forms of the terms defined):
"ACCREDITED INVESTOR" shall have the meaning ascribed thereto in
Regulation D of the Rules and Regulations promulgated under the Securities Act.
"ACQUISITION PROPOSAL" shall have the meaning ascribed thereto in
SECTION 5.8.
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"AFFILIATE" shall mean, with respect to any Person, any other Person
that directly, or indirectly through one or more intermediaries, Controls, is
Controlled by, or is under common Control with such Person.
"AIMCO GROSS ASSET VALUE" shall mean, as of any date, the total asset
value of AIMCO, as determined in good faith by the Board of Directors of AIMCO
in accordance with Treasury Regulation Section 1.856-2(d)(3) and Code Section
856.
"AIMCO SEC REPORTS" shall have the meaning ascribed thereto in SECTION
4.7.
"AIMCO STOCK" shall mean shares of Class A Common Stock, par value
$.01 per share, of AIMCO.
"BUSINESS DAY" shall mean a day other than Saturday, Sunday, or any
day on which the principal commercial banks located in California are authorized
or obligated to close under the laws of California.
"CAPRICORN SHARE PERCENTAGE" shall mean a fraction, the numerator of
which is the total number of Capricorn Shares and the denominator of which is
the total number of Shares.
"CODE" shall mean the Internal Revenue Code of 1986, as amended, and
the rules and regulations promulgated thereunder.
"COMMENCEMENT DATE" shall have the meaning ascribed thereto in SECTION
5.11.
"COMMERCIALLY REASONABLE EFFORTS" or "COMMERCIALLY REASONABLE STEPS,"
when used with respect to any party, shall mean the reasonable efforts of a
party without the requirement that such party incur any unanticipated (as of the
date hereof) material and extraordinary out-of-pocket expenses, including the
making of any capital contribution, or incur any other unanticipated (as of the
date hereof) material and extraordinary burden or commence or pursue litigation
in any action, suit or proceeding, whether administrative, civil or criminal.
"CONSENTS" shall have the meaning ascribed thereto in SECTION 5.2.
"CONTRACT" shall mean, with respect to any Person, any note, bond,
indenture, lease, license, permit, franchise, deed of trust, mortgage, loan
agreement or other document, instrument, obligation or agreement, oral or
written, to which such Person or any of its subsidiaries is a party or by which
any of them or their assets or properties is bound or affected.
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"CONTROL" (and its derivative terms "CONTROLLED," "CONTROLS," etc.)
shall mean the power and right to direct the management and policies of another
Person, whether by ownership of voting securities, the ability to elect a
majority of the board of directors or other managing board or committee,
management contract, or otherwise.
"DAMAGES" shall mean any and all costs, damages, liabilities, fines,
fees, penalties, interest obligations, assessments, deficiencies, losses
(including any unrealized loss in value of any securities), and expenses
(including, without limitation, punitive, treble, or other exemplary damages,
amounts paid in settlement, interest, court costs, costs of investigation,
reasonable fees and expenses of attorneys, accountants, actuaries, and other
experts, and other reasonable expenses of litigation or of any claim, default or
assessment).
"DEMETER SHARE PERCENTAGE" shall mean a fraction, the numerator of
which is the total number of Demeter Shares and the denominator of which is the
total number of Shares.
"DIRECT CLAIM" shall have the meaning ascribed thereto in SECTION 8.3.
"DISCLOSURE SCHEDULE" shall mean the Disclosure Schedule attached
hereto.
"ESCROW AGENT" shall mean the Person named as Escrow Agent in the
Escrow Agreement.
"ESCROW AGREEMENT" shall mean an Escrow Agreement, substantially in
the form of EXHIBIT A hereto, to be entered into by Capricorn (or any transferee
of Capricorn Shares pursuant to SECTION 5.8(c)), AIMCO and an Escrow Agent to be
named therein and reasonably acceptable to AIMCO and Capricorn.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"EXCHANGE OFFER" shall have the meaning ascribed thereto in SECTION
5.11.
"EXCHANGE OFFER CLOSING" shall mean AIMCO's acceptance for exchange of
shares of NHP Stock tendered pursuant to the Exchange Offer.
"GAAP" shall mean generally accepted accounting principles,
consistently applied throughout the specified period and in the immediately
prior comparable period.
"GOVERNMENTAL AUTHORITY" shall mean any government or any agency,
bureau, board, commission, court, department, authority, official, political
subdivision, tribunal or other instrumentality of any government, whether
Federal, state or local, domestic or foreign.
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"GUARANTY" shall mean the Guaranty, substantially in the form of
EXHIBIT B hereto, to be made by Phemus for the benefit of AIMCO and its
Representatives.
"HSR ACT" shall mean Section 7A of the Clayton Act (Title II of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976), as amended (including
without limitation any successor act), and the rules and regulations promulgated
thereunder.
"HUD" means the U.S. Department of Housing and Urban Development.
"HUD CLEARANCE" shall mean approval by HUD of the participation of a
"Principal" in a "Project," each as defined in 24 C.F.R. Section 200.215,
pursuant to HUD's Previous Participation Review and Clearance procedure set
forth in 24 C.F.R. subpart H.
"INDEMNIFIED PARTY" shall have the meaning ascribed thereto in SECTION
8.3.
"INITIAL CLOSING" shall mean the closing of the transactions
contemplated by this Agreement in SECTION 2.1(a).
"INITIAL CLOSING DATE" shall mean the date on which the Initial
Closing occurs.
"INITIAL SHARES" shall have the meaning set forth in SECTION 5.15.
"IRS" shall mean the United States Internal Revenue Service or any
successor agency.
"KNOWLEDGE" shall mean, when used with respect to any Person, such
Person's actual knowledge without any duty to make any inquiry or investigation.
"LAW" shall mean any law, statute, rule, regulation, ordinance, decree
or order of any Governmental Authority.
"LIEN" shall mean any mortgage, pledge, assessment, security interest,
lease, sublease, lien, adverse claim, levy, charge, option, rights of others or
restrictions (whether on voting, sale, transfer, disposition or otherwise) or
other encumbrance of any kind, whether imposed by agreement, understanding, law
or equity, or any conditional sale contract, title retention contract, or other
contract to give or to refrain from giving any of the foregoing.
"MATERIAL ADVERSE EFFECT" shall mean, with respect to any Person, a
material adverse effect on the validity or enforceability of this Agreement, on
the ability of such Person to perform its obligations under this Agreement, if
any, or on the business, assets, condition or results of operation of such
Person.
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"MATERIAL SUBSIDIARY" shall mean, with respect to any Person, a
subsidiary of such Person that (i) constitutes a "significant subsidiary" of
such Person, within the meaning of Rule 1-02 of Regulation S-X of the SEC, (ii)
has a direct or indirect ownership interest in any other subsidiary of such
Person that is a Material Subsidiary of such Person, or (iii) is otherwise
material to the business or operations of such Person and its subsidiaries,
taken as a whole.
"MATURITY TIME" shall have the meaning set forth in the Rights
Agreement.
"MERGER" shall mean the merger of NHP and AIMCO or a subsidiary of
AIMCO pursuant to the Merger Proposal.
"MERGER PROPOSAL" shall mean the transactions proposed by AIMCO
pursuant to that certain letter, dated February 19, 1997, from AIMCO to NHP.
"MORTGAGE SUB STOCK" shall mean common stock, par value $.01 per
share, of the Mortgage Subsidiary.
"MORTGAGE SUBSIDIARY" shall mean NHP Financial Services, Ltd., a
Delaware corporation.
"NHP SEC REPORTS" shall have the meaning ascribed thereto in Section
3.8.
"NHP'S FREE CASH FLOW" shall mean, for any period, the amount of NHP's
earnings before interest, taxes, depreciation and amortization for such period,
less (i) the amount of cash payments made or obligated to be made in respect of
taxes and interest during such period, and (ii) $500,000 for each month (or
ratable portion thereof) included in such period.
"NHP'S TRANSACTION COSTS" shall mean, for any period, all of NHP's
termination, severance and transaction costs arising during such period in
respect of the Spin-Off and the Merger.
"NOTICE OF DIRECT CLAIM" shall have the meaning ascribed thereto in
SECTION 8.3.
"NOTICE OF THIRD PARTY CLAIM" shall have the meaning ascribed thereto
in SECTION 8.3.
"NOTICES" shall have the meaning ascribed thereto in SECTION 9.4.
"OFFER DOCUMENTS" shall have the meaning ascribed thereto in SECTION
5.11.
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"OPTION" shall mean, with respect to any Person, any option, warrant,
call, right, subscription, convertible or exchangeable security or other right,
agreement, arrangement or commitment of any kind or character to which such
Person or any of its subsidiaries is a party relating to the issued or unissued
capital stock of such Person or any of its subsidiaries, or obligating such
Person or any of its subsidiaries to issue, transfer, grant or sell any shares
of capital stock of, or other equity interest in, or securities convertible into
or exchangeable for any capital stock or other equity interest in, such Person
or any of its subsidiaries.
"ORDER" shall mean any order, decree, injunction, judgment, edict,
ruling, assessment, pronouncement, determination, decision, opinion, sentence,
subpoena, writ or award issued, made, entered or rendered by any court,
administrative agency or other Governmental Authority or by any arbitrator.
"ORGANIZATIONAL DOCUMENTS" shall mean (i) with respect to a
corporation, its certificate or articles of incorporation and bylaws, (ii) with
respect to any limited liability company, its certificate of formation, articles
of organization, regulations, operating agreement and limited liability company
agreement, as applicable, (iii) with respect to any limited partnership, its
certificate of limited partnership and limited partnership agreement, (iv) with
respect to any general partnership, its partnership agreement, and (v) all other
similar organizational documents.
"OXFORD GROUP" shall mean Mr. Leo E. Zickler, Oxford Realty Financial
Group, Inc., Oxford Corporation, Oxford Construction Services, Inc., Oxford
Development Corporation, Oxford Development Enterprises, Inc., Oxford Equities
Corporation II, Oxford Equities Corporation III, Oxford Equities Corporation,
Oxford Engineering Services, Inc., Oxford Holding Corporation, Oxford Investment
Corporation, Oxford Investment II Corporation, Oxford Management Company, Inc.,
Oxford Mortgage & Investment Corporation, Oxford Properties Corporation, Oxford
Real Estate Holdings Corporation, Oxford Residential Properties I Limited
Partnership, Oxford Realty Services Corp., Oxford Retirement Services, Inc. and
Oxford Securities Corporation, and all Affiliates, associates and subsidiaries
of any of them.
"OXFORD MANAGEMENT CONTRACTS" shall mean any Contract in effect as of
the date hereof pursuant to which NHP or any of its subsidiaries provides
management services to or for any of the Oxford Properties.
"OXFORD PROPERTIES" shall mean any property directly or indirectly
owned, controlled or sponsored by any member of the Oxford Group.
"PERSON" shall mean any natural person, corporation, general
partnership, limited partnership, limited liability company, limited liability
partnership, proprietorship, trust, union, association, court, tribunal, agency,
government, department, commission, self-regulatory organization, arbitrator,
board, bureau, instrumentality or other entity, enterprise, authority or
business organization.
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"PHEMUS" shall mean Phemus Corporation, a Massachusetts corporation.
"PROXY" shall have the meaning ascribed thereto in SECTION 5.8.
"PUT SHARES" shall have the meaning ascribed thereto in SECTION 5.13.
"REAL ESTATE AGREEMENT" shall mean the Real Estate Acquisition
Agreement to be entered into by and among AIMCO, AIMCO Properties, L.P.,
Demeter, Phemus Corporation, Capricorn and/or certain related entities on terms
substantially in accordance with the Letter Agreement.
"REGISTRATION RIGHTS AGREEMENT" shall mean the Registration Rights
Agreement, substantially in the form of EXHIBIT C hereto, to be entered into by
AIMCO and the Sellers at the Closing.
"REIT STATUS" shall mean, with respect to any Person, (a) the
qualification of such Person as a real estate investment trust under Sections
856 through 860 of the Code, (b) the applicability to such Person and its
shareholders of the method of taxation provided for in Sections 857 ET SEQ. of
the Code, and (c) the qualification and taxation of such Person as a real estate
investment trust under analogous provisions of state and local law in each state
and jurisdiction in which such Person owns property, operates or conducts
business.
"REPRESENTATIVE" shall mean, with respect to any Person, any director,
officer, employee, agent, advisor, counsel, accountant, lender or other
representative of such Person or of any Affiliate of such Person or any
Representative of any of the foregoing.
"RIGHT" shall have the meaning set forth in the Rights Agreement.
"RIGHTS AGREEMENT" shall mean a Rights Agreement, substantially in the
form of EXHIBIT D hereto, to be entered into by NHP, the Mortgage Subsidiary and
the Rights Agent to be named therein.
"SEC" shall mean the Securities and Exchange Commission.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SELLERS' PUT CLOSING" shall have the meaning ascribed thereto in
SECTION 5.13.
"SELLERS' PUT RIGHT" shall have the meaning ascribed thereto in
SECTION 5.13.
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"SENIOR PREFERRED STOCK" shall have the meaning ascribed thereto in
SECTION 4.3.
"SHAREHOLDERS AGREEMENT" shall have the meaning ascribed thereto in
SECTION 5.9.
"SPIN-OFF" shall mean the distribution of Rights and Mortgage Sub
Stock pursuant to the Rights Agreement.
"STOCK AND ASSET TRANSFER RESTRICTIONS AGREEMENT" shall mean the Stock
and Asset Transfer Restrictions Agreement, dated as of December 10, 1993, by and
among Oxford Holding Corporation, Oxford Management Company, Inc., Oxford
Retirement Services, Inc., Oxford Realty Services Corp., Oxford Development
Corporation, NHP-HG, Inc., NHP, Inc., NHP Property Management, Inc., Oxford
Asset Management Corporation and Leo E. Zickler.
"SUBSEQUENT CLOSING" shall mean each closing of the transactions
contemplated by this Agreement in SECTION 2.1(b).
"SUBSEQUENT CLOSING DATE" shall mean the date on which a Subsequent
Closing occurs.
"SUBSIDIARY" shall mean, with respect to any Person, (i) any
corporation with respect to which such Person, directly or indirectly through
one or more subsidiaries, (a) owns more than 50% of the outstanding shares of
capital stock having generally the right to vote in the election of directors or
(b) has the power, under ordinary circumstances, to elect, or to direct the
election of, a majority of the board of directors of such corporation, (ii) any
partnership with respect to which (a) such Person or a subsidiary of such Person
is a general partner, (b) such Person and its subsidiaries together own more
than 50% of the interests therein, or (c) such Person and its subsidiaries have
the right to appoint or elect or direct the appointment or election of a
majority of the directors or other Person or body responsible for the governance
or management thereof, (iii) any limited liability company with respect to which
(a) such Person or a subsidiary of such Person is the manager or managing
member, or (b) such Person and its subsidiaries together own more than 50% of
the interests therein, or (c) such Person and its subsidiaries have the right to
appoint or elect or direct the appointment or election of a majority of the
directors or other Person or body responsible for the governance or management
thereof, or (iv) any other entity in which such Person has, and/or one or more
of its subsidiaries have, directly or indirectly, (a) at least a 50% ownership
interest or (b) the power to appoint or elect or direct the appointment or
election of a majority of the directors or other Person or body responsible for
the governance or management thereof.
"TAX" or "TAXES" shall mean all Federal, state, local and foreign
taxes and other assessments and governmental charges of a similar nature
(whether imposed
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directly or through withholdings), including any interest, penalties and
additions to Tax applicable thereto.
"THIRD PARTY CLAIM" shall have the meaning ascribed thereto in SECTION
8.3.
"TRANSACTIONS" means the transactions contemplated by this Agreement
in SECTION 2.1 and SECTION 2.2 hereof.
ARTICLE II
PURCHASE AND SALE
2.1 PURCHASE AND SALE OF STOCK.
(a) Upon the terms and subject to the conditions set forth
herein, at the Initial Closing: (i) Demeter shall sell, convey, assign,
transfer and deliver to AIMCO, and AIMCO shall accept, purchase and acquire
from Demeter, a number of Demeter Shares equal to the product of (x) the number
of Initial Shares, and (y) the Demeter Share Percentage; and (ii) Capricorn
shall sell, convey, assign, transfer and deliver to AIMCO, and AIMCO shall
accept, purchase and acquire from Capricorn, a number of Capricorn Shares equal
to the product of (x) the number of Initial Shares, and (y) the Capricorn Share
Percentage. Each of Demeter and Capricorn shall retain beneficial ownership of
all Rights relating to the Initial Shares that it sells at the Initial Closing,
and AIMCO shall hold such Rights in trust for the benefit of Demeter and
Capricorn.
(b) Upon the terms and subject to the conditions set forth
herein, at each Subsequent Closing: (i) Demeter shall sell, convey, assign,
transfer and deliver to AIMCO, and AIMCO shall accept, purchase and acquire from
Demeter, a number of Demeter Shares equal to product of (x) the total number of
Shares requested by AIMCO to be purchased at such Subsequent Closing pursuant to
a notice given pursuant to SECTION 2.3(b), and (y) the Demeter Share Percentage;
and (ii) Capricorn shall sell, convey, assign, transfer and deliver to AIMCO,
and AIMCO shall accept, purchase and acquire from Capricorn, a number of
Capricorn Shares equal to the product of (x) the total number of Shares
requested by AIMCO to be purchased at such Subsequent Closing pursuant to a
notice given pursuant to SECTION 2.3(b), and (y) the Capricorn Share Percentage;
provided, however, that if any Shares have not been purchased by AIMCO hereunder
prior to October 1, 1997, all such remaining Shares shall be purchased by AIMCO
at a Subsequent Closing held on such date. Each of Demeter and Capricorn shall
retain beneficial ownership of all Rights relating to Shares sold prior to the
Maturity Time. Without limiting AIMCO's ability to sell, assign, transfer or
dispose of Shares acquired by it hereunder, with respect to Rights relating to
Shares sold prior to the Maturity Time, AIMCO shall hold such Rights in trust
for the
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benefit of Demeter and Capricorn in accordance with the trust agreement referred
to in SECTION 5.16.
2.2 CONSIDERATION.
(a) In exchange for the sale, conveyance, assignment and
transfer of Demeter Shares: (i) at the Initial Closing and each Subsequent
Closing, AIMCO shall pay to Demeter cash in an amount equal to the product of
(x) the number of Demeter Shares being sold at such closing, and (y) $20;
provided, however, that if and to the extent that, after giving effect to such
closing, the aggregate amount of cash consideration that would have been paid to
Demeter hereunder at the Initial Closing and any Subsequent Closings exceeds
$59,473,017, in lieu of paying such excess cash amount, AIMCO may elect to
deliver to Demeter a number of shares of AIMCO Stock equal to (A) all or any
portion of such excess amount, divided by (B) $26.75; and (ii) as soon as
practicable after the Maturity Time has occurred, AIMCO shall exercise all
Rights with respect to the Demeter Shares theretofore acquired by it, and shall
deliver to Demeter all shares of Mortgage Sub Stock acquired by AIMCO upon the
exercise, conversion or maturity of such Rights or, if the Maturity Time has not
occurred prior to September 1, 1997, at the request of Demeter, AIMCO shall pay
to Demeter an additional cash amount equal to the product of (x) the number of
Demeter Shares theretofore acquired by it, and (y) $3.05.
(b) In exchange for the sale, conveyance, assignment and
transfer of Capricorn Shares: (i) at the Initial Closing and each Subsequent
Closing, AIMCO shall deliver (I) to Capricorn a number of shares of AIMCO Stock
equal to the product of (A) 80% of the number of Capricorn Shares being sold at
such closing, and (B) a fraction, the numerator of which is $20 and the
denominator of which is $26.75 and (II) to the Escrow Agent a number of shares
of AIMCO Stock equal to the product of (A) 20% of the number of Capricorn Shares
being sold at such closing, and (B) a fraction, the numerator of which is $20
and the denominator of which is $26.75; and (ii) as soon as practicable after
the Maturity Time has occurred, AIMCO shall exercise all Rights with respect to
the Capricorn Shares theretofore acquired by it, and shall deliver to Capricorn
all shares of Mortgage Sub Stock acquired by AIMCO upon the exercise, conversion
or maturity of such Rights or, if the Maturity Time has not occurred prior to
September 1, 1997, at the request of Capricorn, AIMCO shall pay to Capricorn an
additional cash amount equal to the product of (x) the number of Capricorn
Shares theretofore acquired by it, and (y) $3.05.
2.3 CLOSINGS.
(a) Upon the terms and subject to the satisfaction or waiver of
all the conditions to such closing set forth in this Agreement, the Initial
Closing and each Subsequent Closing shall take place at 10:00 a.m., Boston time,
on dates to be specified by the parties, which shall be (i) in the case of the
Initial Closing, no later than the fifth Business Day after the satisfaction or
waiver of the conditions to such closing set forth
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in this Agreement, and no earlier than five Business Days after the date of this
Agreement, and (ii) in the case of any Subsequent Closing, on the date specified
by AIMCO in the notice given pursuant to SECTION 2.3(b) or, if any of the Shares
have not yet been purchased by AIMCO hereunder, on October 1, 1997, in each
case, at the offices of Skadden, Arps, Slate, Meagher & Flom LLP, One Beacon
Street, Boston, Massachusetts 02108-3194, unless another date or place is agreed
to in writing by the parties hereto.
(b) AIMCO shall give the Sellers notice of its intention to
effect a Subsequent Closing within 10 days of the AIMCO Gross Asset Value
increasing by more than $100 million from the AIMCO Gross Asset Value as of the
Initial Closing Date or as of the most recent Subsequent Closing Date, whichever
is later. Such notice shall specify (i) the date of the proposed Subsequent
Closing, which shall not be more than ten Business Days after the date of such
notice, and (ii) the number of Shares to be purchased at such Subsequent
Closing, which shall not be less than the quotient obtained by dividing (x) the
sum of (I) 5% of such increase in AIMCO Gross Asset Value, and (II) any
additional financing that AIMCO is able to obtain in connection with such
Subsequent Closing, by (y) $20. Such notice shall be accompanied by a
certificate signed by the secretary or an assistant secretary of AIMCO,
certifying as to the AIMCO Board of Directors' determination of such AIMCO Gross
Asset Value.
2.4 DELIVERIES BY THE SELLERS AT THE INITIAL CLOSING AND EACH
SUBSEQUENT CLOSING. At the Initial Closing and at the Subsequent Closing, the
Sellers shall deliver, or cause to be delivered, to AIMCO the following:
(a) STOCK CERTIFICATES. Demeter shall deliver or cause to be
delivered a certificate or certificates representing all of the Demeter Shares
to be purchased at such closing, in accordance with SECTION 2.1, accompanied by
duly executed blank stock powers or endorsed in blank for transfer, as AIMCO
requests. Capricorn shall deliver or cause to be delivered a certificate or
certificates representing all of the Capricorn Shares to be purchased at such
closing, in accordance with SECTION 2.1, accompanied by duly executed blank
stock powers or endorsed in blank for transfer, as AIMCO requests.
(b) PROOF OF AUTHORITY. Each of the Sellers shall deliver to
AIMCO a certificate, dated the Closing Date and executed by its clerk or
assistant clerk, in the case of Demeter, or the secretary or any assistant
secretary of the general partner of its general partner, in the case of
Capricorn, certifying that (i) such Seller has duly and validly taken all
corporate or partnership action, as the case may be, necessary to authorize its
execution and delivery of this Agreement and its performance of its obligations
under this Agreement, (ii) the individual(s) executing or delivering any
instruments, documents or certificates on behalf of such Seller has the power or
authority to act for or bind such Seller, and (iii) the resolutions (true and
complete copies of which shall be attached to the certificate) of the Board of
Directors of such Seller, in the case of Demeter, or of the general partner of
the general partner of such Seller, in the case
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of Capricorn, with respect to this Agreement and the Transactions have been duly
and validly adopted and are in full force and effect.
(c) STOCK POWERS. Capricorn shall deliver or cause to be
delivered duly executed blank stock powers with respect to all shares of AIMCO
Stock delivered to the Escrow Agent pursuant to SECTION 2.2(b).
(d) OTHER. The Sellers shall deliver to AIMCO all other
documents, instruments and writings reasonably requested by AIMCO to be
delivered by the Sellers at or prior to the Closing Date pursuant to this
Agreement.
2.5 DELIVERIES BY AIMCO AT THE INITIAL CLOSING AND EACH SUBSEQUENT
CLOSING. At the Initial Closing and the Subsequent Closing, AIMCO shall
deliver, or cause to be delivered, to the Sellers the following:
(a) STOCK CERTIFICATES. AIMCO shall deliver (i) to Demeter a
certificate or certificates representing the number of shares of AIMCO Stock
specified in SECTION 2.2(a), if any, (ii) to Capricorn a certificate or
certificates representing the number of shares of AIMCO Stock specified in
SECTION 2.2(b)(i)(I), and (iii) to the Escrow Agent a certificate or
certificates representing the number of shares of AIMCO Stock specified in
Section 2.2(b)(i)(II), in each case, in such denominations and registered in
such names as Demeter, in the case of the foregoing clause (i), or Capricorn, in
the case of the foregoing clause (ii), shall specify in writing at least three
Business Days prior to the Closing.
(b) CASH CONSIDERATION. AIMCO shall (i) deliver to Demeter a
check or checks, payable in next-day funds to the order of such Persons as
Demeter shall specify in writing at least three Business Days prior to such
closing, or (ii) wire transfer funds to such account or accounts as Demeter
shall specify at least three Business Days prior to such closing, or (iii)
perform any combination of the foregoing, as Demeter may request at least three
Business Days prior to such closing, in an aggregate amount equal to the cash to
be paid by AIMCO to Demeter pursuant to SECTION 2.2(a).
(c) PROOF OF AUTHORITY. AIMCO shall deliver to the Sellers a
certificate, dated the Closing Date and executed by the secretary or any
assistant secretary of AIMCO certifying that (i) AIMCO has duly and validly
taken all corporate action necessary to authorize its execution and delivery of
this Agreement and its performance of its obligations under this Agreement, (ii)
the individual(s) executing or delivering any instruments, documents or
certificates on behalf of such Seller has the power or authority to act for or
bind AIMCO, and (iii) the resolutions (true and complete copies of which shall
be attached to the certificate) of the Board of Directors of AIMCO with respect
to this Agreement and the Transactions have been duly and validly adopted and
are in full force and effect.
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(d) OTHER. AIMCO shall deliver to the Sellers all other
documents, instruments and writings reasonably requested by the Sellers to be
delivered by AIMCO at or prior to the Closing Date pursuant to this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS
Subject to the Disclosure Schedule, each of the Sellers hereby
represents and warrants, severally and not jointly, to AIMCO as follows:
3.1 ORGANIZATION AND QUALIFICATIONS; SUBSIDIARIES. Such Seller and,
to such Seller's knowledge, NHP and each Material Subsidiary of NHP is a
corporation, partnership or other legal entity duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation or
organization and has the requisite power and authority and all necessary
governmental approvals to own, lease and operate its properties and to carry on
its business as it is now being conducted, except where the failure to be so
organized, existing or in good standing or to have such power, authority and
governmental approvals would not, individually or in the aggregate, have a
Material Adverse Effect on such Person.
3.2 CERTIFICATE OF INCORPORATION AND BYLAWS. To such Seller's
knowledge, complete and correct copies of the certificate of incorporation and
bylaws of NHP, as amended to date, have been delivered to AIMCO under cover of a
letter dated April 4, 1997, from NHP's General Counsel. To such Seller's
knowledge, such Organizational Documents are in full force and effect and have
not been amended or modified in any respect. To such Seller's knowledge, NHP is
not in violation of any provision of its Organizational Documents. To such
Seller's knowledge, no Material Subsidiary of NHP is in violation of any
provision of its Organizational Documents, except for such violations that would
not, individually or in the aggregate, have a Material Adverse Effect on NHP.
3.3 CAPITALIZATION. To such Seller's knowledge, the authorized
capital stock of NHP as of December 31, 1996, and the number of shares of NHP
Stock issued and outstanding or subject to issuance pursuant to NHP Options as
of December 31, 1996, is as set forth in the NHP SEC Reports.
3.4 OWNERSHIP OF SHARES.
(a) Such Seller is the record and beneficial owner of the
Demeter Shares (in the case of Demeter) or the Capricorn Shares (in the case of
Capricorn), free and clear of any and all Liens.
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(b) Except as set forth in the Shareholders Agreement, such
Seller has no right to require NHP to register such Seller's Shares under the
Securities Act, and no right to require any Person to purchase such Seller's
Shares, in each case, pursuant to any Contract.
3.5 AUTHORITY RELATIVE TO THIS AGREEMENT. Such Seller has all
necessary power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the Transactions. The execution and
delivery of this Agreement by such Seller, the performance by such Seller of its
obligations hereunder and the consummation by such Seller of the Transactions
have been duly and validly authorized by all necessary corporate or partnership
action and no other corporate or partnership proceedings on the part of such
Seller are necessary to authorize this Agreement or to consummate the
Transactions. This Agreement has been duly and validly executed and delivered
by such Seller and, assuming the due authorization, execution and delivery
thereof by AIMCO, constitutes the legal, valid and binding obligation of such
Seller, enforceable against such Seller in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or other similar laws relating to creditors'
rights generally and by equitable principles to which the remedies of specific
performance and injunctive and similar forms of relief are subject.
3.6 NO CONFLICT; REQUIRED FILINGS AND CONSENTS. The execution and
delivery of this Agreement by such Seller do not, and the performance of its
obligations under this Agreement and the consummation of the Transactions by
such Seller will not, (a) conflict with, result in a breach of, cause a
dissolution or require the consent or approval of any Person under, or violate
any provision of the Organizational Documents of such Seller or, to such
Seller's knowledge, NHP, (b) require any consent, approval, authorization or
permit of, or filing with or notification to, any Governmental Authority, except
for the notification requirements of the HSR Act and the HUD Clearance, (c)
subject to the making of the filings and obtaining the approvals identified in
clause (b), conflict with or violate any Law, judgment, order, writ, injunction
or decree applicable to such Seller or, to such Seller's knowledge, NHP or by
which any property or asset of such Seller or, to such Seller's knowledge, NHP
is bound or affected, or (d) to such Seller's knowledge, conflict with or result
in any breach of or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, result in the loss by NHP or
modification in a manner materially adverse to NHP of any material right or
benefit under, or give to others any right of termination, amendment,
acceleration, repurchase or repayment, increased payments or cancellation of, or
result in the creation of a Lien or other encumbrance on any Shares or any
property or asset of NHP or any subsidiary of NHP pursuant to, any Contract of
NHP, except, in the case of clauses (a), (b) and (c), such as would not prevent
or delay such Seller from performing its obligations under this Agreement in any
material respect, and would not, individually or in the aggregate, have a
Material Adverse Effect on such Seller or, to such Seller's knowledge, NHP.
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3.7 COMPLIANCE. Neither such Seller nor, to such Seller's knowledge,
NHP or any subsidiary of NHP is in conflict with, or in default or violation of,
(a) any Law applicable to such Person or by which any property or asset of such
Person is bound or affected, or (b) any Contract to which such Seller, NHP or
any subsidiary of NHP is a party or by which such Person or any property or
asset of such Person is bound or affected, except for any such conflicts,
defaults or violations that would not, individually or in the aggregate, have a
Material Adverse Effect on such Seller or NHP.
3.8 SEC REPORTS AND FINANCIAL STATEMENTS. To such Seller's knowledge,
each form, report, schedule, registration statement and definitive proxy
statement filed by NHP with the SEC since August 14, 1995 and prior to the date
hereof (as such documents have been amended prior to the date hereof, the "NHP
SEC REPORTS"), as of their respective dates, complied in all material respects
with the applicable requirements of the Securities Act and the Exchange Act and
the rules and regulations thereunder. To such Seller's knowledge, none of the
NHP SEC Reports, as of their respective dates, contained or contains any untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except for such
statements, if any, as have been modified or superseded by subsequent filings
prior to the date hereof. To such Seller's knowledge, the Sellers have made
available to AIMCO true, accurate and complete copies of all of the NHP SEC
Reports. The consolidated financial statements of NHP and its subsidiaries
included in such reports comply as to form in all material respects with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto, have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes thereto or, in the
case of the unaudited interim financial statements, as permitted by Form 10-Q of
the SEC) and fairly present (subject, in the case of the unaudited interim
financial statements, to normal, year-end audit adjustments) the consolidated
financial position of NHP and its subsidiaries as at the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended. To such Seller's knowledge, since December 31, 1996, neither NHP nor any
of its subsidiaries has incurred any liabilities or obligations (whether
absolute, accrued, fixed, contingent, liquidated, unliquidated or otherwise and
whether due or to become due) of any nature, except liabilities, obligations or
contingencies (a) which are reflected on the consolidated balance sheet of NHP
and its subsidiaries as at December 31, 1996 (including the notes thereto) or
(b) which (i) were incurred in the ordinary course of business after December
31, 1996 and consistent with past practices, (ii) are disclosed in the NHP SEC
Reports filed after December 31, 1996, or (iii) would not, individually or in
the aggregate, have a Material Adverse Effect on NHP. To such Seller's
knowledge, since August 14, 1995, NHP has timely filed with the SEC all forms,
reports and other documents required to be filed prior to the date hereof, and
no subsidiary of NHP has filed, or been required to file, any form, report or
other document with the SEC, in each case, pursuant to the Securities Act, the
Exchange Act or the rules and regulations thereunder. To such Seller's
knowledge, since December 31, 1996, there has been no change in any of the
significant accounting
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(including tax accounting) policies, practices or procedures of NHP or any
subsidiary of NHP.
3.9 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as contemplated by
this Agreement or as disclosed in any NHP SEC Report, to such Seller's
knowledge, since December 31, 1996, (a) NHP and its subsidiaries have conducted
their respective businesses only in the ordinary course, consistent with past
practice, and (b) there has not occurred or arisen any event that, individually
or in the aggregate, has had or, insofar as reasonably can be foreseen, is
likely in the future to have, a Material Adverse Effect on NHP other than events
or developments generally affecting the industry in which NHP operates.
3.10 LITIGATION. Except as disclosed in the NHP SEC Reports, to such
Seller's knowledge, there are no claims, suits, actions or proceedings pending,
threatened or contemplated, nor are there any investigations or reviews by any
Governmental Authority pending, threatened or contemplated, against, relating to
or affecting NHP or any of its subsidiaries, which could reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect on NHP, or
to prohibit or materially restrict the consummation of the Transactions, nor is
there any judgment, decree, order, injunction, writ or rule of any court,
judicial or quasi-judicial body, governmental department, commission, agency,
instrumentality or authority or any arbitrator outstanding against NHP or any of
its subsidiaries having, or which, insofar as can be reasonably foreseen, in the
future is likely to have, a Material Adverse Effect on NHP. In addition, to
such Seller's knowledge, there have not been any developments with respect to
any of the claims, suits, actions, proceedings, investigations or reviews
disclosed in the NHP SEC Reports which, insofar as can be reasonably foreseen,
in the future are likely to have a Material Adverse Effect on NHP.
3.11 INVESTMENT REPRESENTATIONS. Such Seller is an Accredited
Investor. Such Seller has reviewed the AIMCO SEC Reports. Such Seller has had
access to such additional financial and other information, and has been afforded
the opportunity to ask questions of representatives of AIMCO, and to receive
answers to those questions, as it has deemed necessary in connection with its
acquisition of shares of AIMCO Stock. Such Seller acknowledges that the shares
of AIMCO Stock that will be acquired by it pursuant to this Agreement are being
acquired in a transaction not involving any public offering within the meaning
of the Securities Act, and such shares of AIMCO Stock have not been, and may
never be, registered under the Securities Act. Such Seller agrees not to offer,
sell, transfer or otherwise dispose of any shares of AIMCO Stock received by it
pursuant to this Agreement in the absence of registration under the Securities
Act unless it delivers to AIMCO evidence reasonably satisfactory to AIMCO that
the proposed sale, transfer or other disposition may be effected without
registration under the Securities Act or an opinion of counsel, in form and
substance reasonably satisfactory to AIMCO, to such effect. Such Seller agrees
not to offer, sell, transfer or otherwise dispose of any shares of AIMCO Stock
received by it pursuant to this Agreement in violation of applicable state
securities and blue sky laws. Such Seller has such
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knowledge and experience in financial and business matters that it is capable of
evaluating the merits and risks of an acquisition of shares of AIMCO Stock and
is able to bear the economic risk of a loss of an investment in shares of AIMCO
Stock and is not acquiring any shares of AIMCO Stock with a view to the
distribution thereof or any present intention of offering or selling any thereof
in a transaction that would violate the Securities Act or the securities laws of
any state or any other applicable jurisdiction. Such Seller acknowledges that
the shares of AIMCO Stock received by it pursuant to this Agreement will be in
the form of physical certificates and that, unless and until such shares of
AIMCO Stock shall have been registered under the Securities Act, the
certificates will bear a legend to the following effect:
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE
OF SUCH REGISTRATION, UNLESS THE TRANSFEROR DELIVERS TO THE COMPANY AN OPINION
OF COUNSEL OR OTHER EVIDENCE REASONABLY SATISFACTORY TO THE COMPANY, IN FORM AND
SUBSTANCE SATISFACTORY TO THE COMPANY, TO THE EFFECT THAT THE PROPOSED SALE,
TRANSFER OR OTHER DISPOSITION MAY BE EFFECTED WITHOUT REGISTRATION UNDER THE
SECURITIES ACT. THESE SECURITIES MAY NOT BE TRANSFERRED IN VIOLATION OF ANY
APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS.
3.12 BROKERS. No broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the
Transactions based on any arrangement or agreement made by or on behalf of such
Seller, and such Seller agrees to indemnify and hold AIMCO and the other Seller
harmless against any damages incurred as a result of any such claims.
3.13 MANAGEMENT ARRANGEMENTS. Assuming that AIMCO meets the
definition of a "Qualified Purchaser" under the Stock and Asset Transfer
Restrictions Agreement, to the best of such Seller's knowledge, there is
currently no fact or circumstance that could reasonably be expected to result in
the loss by NHP, or modification in a manner adverse to NHP, of any right or
benefit under, or give any Person any right to cause any termination,
cancellation or non-renewal of any Oxford Management Contract, except such as
would not, individually or in the aggregate, have a Material Adverse Effect on
NHP.
3.14 DISCLOSURE. No representation or warranty of such Seller
contained in this Agreement and no statement contained in any certificate or
schedule furnished or to be furnished by or on behalf of such Seller to AIMCO or
any of its Representatives pursuant hereto contains or will contain any untrue
statement of a material fact.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF AIMCO
AIMCO hereby represents and warrants each of to the Sellers, as
follows:
4.1 ORGANIZATION AND QUALIFICATIONS; SUBSIDIARIES. AIMCO and each
Material Subsidiary of AIMCO is a corporation, partnership or other legal entity
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization and has the requisite power
and authority and all necessary governmental approvals to own, lease and operate
its properties and to carry on its business as it is now being conducted, except
where the failure to be so organized, existing or in good standing or to have
such power, authority and governmental approvals would not, individually or in
the aggregate, have a Material Adverse Effect on such Person.
4.2 CHARTER AND BYLAWS. Complete and correct copies of the Charter
and bylaws of AIMCO, as amended and supplemented to date, have been filed (or
incorporated by reference) as exhibits 3.1 and 3.2, respectively, to AIMCO's
Annual Report on Form 10-K for the year ended December 31, 1996. Such
Organizational Documents are in full force and effect and have not been amended
or modified in any respect. AIMCO is not in violation of any provision of its
Organizational Documents. No Material Subsidiary of AIMCO is in violation of
any provision of its Organizational Documents, except for such violations that
would not, individually or in the aggregate, have a Material Adverse Effect on
AIMCO.
4.3 CAPITALIZATION.
(a) The authorized capital stock of AIMCO consists of (i)
150,000,000 shares of AIMCO Stock; (ii) 425,000 shares of Class B Common Stock,
par value $.01 per share ("AIMCO CLASS B COMMON STOCK"), of AIMCO; (iii)
9,034,000 shares of Preferred Stock, par value $.01 per share ("AIMCO PREFERRED
STOCK"), of AIMCO; and (iv) 966,000 shares of Cumulative Convertible Senior
Preferred Stock, par value $.01 per share (the "SENIOR PREFERRED STOCK"), of
AIMCO. As of March 11, 1997, (i) 17,569,970 shares of AIMCO Stock were issued
and outstanding, all of which were validly issued, fully paid and nonassessable;
(ii) 325,000 shares of AIMCO Class B Stock were issued and outstanding, all of
which were validly issued, fully paid and nonassessable; and (iii) no shares of
AIMCO Preferred Stock or Senior Preferred Stock were issued and outstanding.
(b) Prior to the Initial Closing, AIMCO will have reserved
1,800,000 shares of AIMCO Stock for issuance pursuant to SECTION 2.2 and SECTION
2.5 of this Agreement. When issued in accordance with the terms of this
Agreement, such shares will be duly authorized, validly issued, fully paid and
nonassessable. Assuming that the Seller's representations in SECTION 3.11 are
true and correct, when issued in
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accordance with this Agreement, such shares will have been issued in compliance
with the Securities Act and all state securities and blue sky laws.
4.4 AUTHORITY RELATIVE TO THIS AGREEMENT. AIMCO has all necessary
power and authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the Transactions. The execution and
delivery of this Agreement by AIMCO, the performance by AIMCO of its obligations
hereunder and the consummation by AIMCO of the Transactions have been duly and
validly authorized by all necessary corporate action and no other corporate
proceedings on the part of AIMCO are necessary to authorize this Agreement or to
consummate the Transactions. This Agreement has been duly and validly executed
and delivered by AIMCO and, assuming the due authorization, execution and
delivery thereof by the Sellers, constitutes the legal, valid and binding
obligation of AIMCO, enforceable against AIMCO in accordance with its terms,
except as enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or other similar laws relating to creditors'
rights generally and by equitable principles to which the remedies of specific
performance and injunctive and similar forms of relief are subject.
4.5 NO CONFLICT; REQUIRED FILINGS AND CONSENTS. The execution and
delivery of this Agreement by AIMCO do not, and the performance of its
obligations under this Agreement and the consummation of the Transactions by
AIMCO will not, (a) conflict with, result in a breach of, cause a dissolution or
require the consent or approval of any Person under, or violate any provision of
the Organizational Documents of AIMCO, (b) require any consent, approval,
authorization or permit of, or filing with or notification to, any Governmental
Authority, except for the notification requirements of the HSR Act and the HUD
Clearance, (c) subject to the making of the filings and obtaining the approvals
identified in clause (b), conflict with or violate any Law, judgment, order,
writ, injunction or decree applicable to AIMCO or by which any property or asset
of AIMCO is bound or affected, or (d) conflict with or result in any breach of
or constitute a default (or an event which with notice or lapse of time or both
would become a default) under, result in the loss by AIMCO or modification in a
manner materially adverse to AIMCO of any material right or benefit under, or
give to others any right of termination, amendment, acceleration, repurchase or
repayment, increased payments or cancellation of, or result in the creation of a
Lien or other encumbrance on any property or asset of AIMCO or any subsidiary of
AIMCO pursuant to, any Contract of AIMCO, except, in the case of clauses (a),
(b) and (c), such as would not prevent or delay such Seller from performing its
obligations under this Agreement in any material respect, and would not,
individually or in the aggregate, have a Material Adverse Effect on AIMCO.
4.6 COMPLIANCE. Neither AIMCO nor any subsidiary of AIMCO is in
conflict with, or in default or violation of, (a) any Law applicable to such
Person or by which any property or asset of such Person is bound or affected, or
(b) any Contract to which AIMCO or any subsidiary of AIMCO is a party or by
which such Person or any property or asset of such Person is bound or affected,
except for any such conflicts, de-
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faults or violations that would not, individually or in the aggregate, have a
Material Adverse Effect on AIMCO.
4.7 SEC REPORTS AND FINANCIAL STATEMENTS. Each form, report,
schedule, registration statement and definitive proxy statement filed by AIMCO
with the SEC since August 14, 1995 and prior to the date hereof (as such
documents have been amended prior to the date hereof, the "AIMCO SEC REPORTS"),
as of their respective dates, complied in all material respects with the
applicable requirements of the Securities Act and the Exchange Act and the rules
and regulations thereunder. None of the AIMCO SEC Reports, as of their
respective dates, contained or contains any untrue statement of a material fact
or omits to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, except for such statements, if any, as have been
modified or superseded by subsequent filings prior to the date hereof. AIMCO
has made available to the Sellers true, accurate and complete copies of all of
the AIMCO SEC Reports. The consolidated financial statements of AIMCO and its
subsidiaries included in such reports comply as to form in all material respects
with applicable accounting requirements and with the published rules and
regulations of the SEC with respect thereto, have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes thereto
or, in the case of the unaudited interim financial statements, as permitted by
Form 10-Q of the SEC) and fairly present (subject, in the case of the unaudited
interim financial statements, to normal, year-end audit adjustments) the
consolidated financial position of AIMCO and its subsidiaries as at the dates
thereof and the consolidated results of their operations and cash flows for the
periods then ended. Since December 31, 1996, neither AIMCO nor any of its
subsidiaries has incurred any liabilities or obligations (whether absolute,
accrued, fixed, contingent, liquidated, unliquidated or otherwise and whether
due or to become due) of any nature, except liabilities, obligations or
contingencies (a) which are reflected on the consolidated balance sheet of AIMCO
and its subsidiaries as at December 31, 1996 (including the notes thereto) or
(b) which (i) were incurred in the ordinary course of business after December
31, 1996 and consistent with past practices, (ii) are disclosed in the AIMCO SEC
Reports filed after December 31, 1996, or (iii) would not, individually or in
the aggregate, have a Material Adverse Effect on AIMCO. Since August 14, 1995,
AIMCO has timely filed with the SEC all forms, reports and other documents
required to be filed prior to the date hereof, and no subsidiary of AIMCO has
filed, or been required to file, any form, report or other document with the
SEC, in each case, pursuant to the Securities Act, the Exchange Act or the rules
and regulations thereunder. Since December 31, 1996, there has been no change
in any of the significant accounting (including tax accounting) policies,
practices or procedures of AIMCO or any subsidiary of AIMCO.
4.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as contemplated by
this Agreement or as disclosed in any AIMCO SEC Report, since December 31, 1996,
(a) AIMCO and its subsidiaries have conducted their respective businesses only
in the ordinary course, consistent with past practice, and (b) there has not
occurred or arisen
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any event that, individually or in the aggregate, has had or, insofar as
reasonably can be foreseen, is likely in the future to have, a Material Adverse
Effect on AIMCO other than events or developments generally affecting the
industry in which AIMCO operates.
4.9 LITIGATION. Except as disclosed in the AIMCO SEC Reports, to
AIMCO's knowledge, there are no claims, suits, actions or proceedings pending,
threatened or contemplated, nor are there any investigations or reviews by any
Governmental Authority pending, threatened or contemplated, against, relating to
or affecting AIMCO or any of its subsidiaries, which could reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
AIMCO, or to prohibit or materially restrict the consummation of the
Transactions, nor is there any judgment, decree, order, injunction, writ or rule
of any court, judicial or quasi-judicial body, governmental department,
commission, agency, instrumentality or authority or any arbitrator outstanding
against AIMCO or any of its subsidiaries having, or which, insofar as can be
reasonably foreseen, in the future is likely to have, a Material Adverse Effect
on AIMCO. In addition, to AIMCO's knowledge, there have not been any
developments with respect to any of the claims, suits, actions, proceedings,
investigations or reviews disclosed in the AIMCO SEC Reports which, insofar as
can be reasonably foreseen, in the future are likely to have a Material Adverse
Effect on AIMCO.
4.10 INVESTMENT REPRESENTATIONS. AIMCO is an Accredited Investor.
AIMCO has reviewed the NHP SEC Reports. AIMCO has had access to such additional
financial and other information, and has been afforded the opportunity to ask
questions of representatives of NHP, and to receive answers to those questions,
as it has deemed necessary in connection with its acquisition of the Shares.
AIMCO acknowledges that the Shares are being acquired in a transaction not
involving any public offering within the meaning of the Securities Act, and the
Shares have not been, and may never be, registered under the Securities Act.
AIMCO agrees not to offer, sell, transfer or otherwise dispose of any of the
Shares in violation of the Securities Act or any applicable state securities or
blue sky laws. AIMCO has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of an
acquisition of the Shares and is able to bear the economic risk of a loss of an
investment in the Shares and is not acquiring the Shares with a view to the
distribution thereof or any present intention of offering or selling any thereof
in a transaction that would violate the Securities Act or the securities laws of
any state or any other applicable jurisdiction. AIMCO acknowledges that the
Shares will be in the form of physical certificates and that, unless and until
the Shares shall have been registered under the Securities Act, the certificates
may bear a legend to the following effect:
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE
OF SUCH REGISTRATION, UNLESS THE TRANSFEROR DELIVERS TO THE COMPANY AN OPINION
OF COUNSEL OR OTHER EVIDENCE REASONABLY SATISFACTO-
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RY TO THE COMPANY, IN FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY, TO THE
EFFECT THAT THE PROPOSED SALE, TRANSFER OR OTHER DISPOSITION MAY BE EFFECTED
WITHOUT REGISTRATION UNDER THE SECURITIES ACT. THESE SECURITIES MAY NOT BE
TRANSFERRED IN VIOLATION OF ANY APPLICABLE STATE SECURITIES OR "BLUE SKY" LAWS.
4.11 BROKERS. No broker, finder or investment banker is entitled to
any brokerage, finder's or other fee or commission in connection with the
Transactions based on any arrangement or agreement made by or on behalf of
AIMCO, and AIMCO agrees to indemnify and hold the Sellers harmless against any
damages incurred as a result of any such claims.
4.12 DISCLOSURE. No representation or warranty of AIMCO contained in
this Agreement and no statement contained in any certificate or schedule
furnished or to be furnished by or on behalf of AIMCO to any Seller or any of
its Representatives pursuant hereto contains or will contain any untrue
statement of a material fact.
ARTICLE V
COVENANTS
5.1 NOTIFICATION OF CERTAIN MATTERS. Each of the parties hereto shall
give prompt notice to the other parties hereto of (a) the occurrence or
nonoccurrence of any event the occurrence or nonoccurrence of which would be
likely to cause (i) any representation or warranty contained in this Agreement
to be untrue or inaccurate in any material respect, or (ii) any covenant,
condition or agreement contained in this Agreement not to be complied with or
satisfied and (b) any failure of such party to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder. Subject to SECTION 8.1, the delivery of any notice pursuant to this
Section shall not limit or otherwise affect the remedies available hereunder to
the party receiving such notice.
5.2 FURTHER ACTION, REASONABLE EFFORTS; CONSENTS AND APPROVALS. Upon
the terms and subject to the conditions hereof, each of the parties hereto shall
use commercially reasonable efforts to take, or cause to be taken, all
appropriate action, and to do, or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated hereby, including, without limitation,
using commercially reasonable efforts to obtain all licenses, permits, consents,
approvals, authorizations, certificates, qualifications and orders of, and make
all filings and required submissions with, all Governmental Authorities, and all
shareholders, lenders and partners of, and parties to contracts with, any of the
Sellers, AIMCO, NHP or any other Persons, in each case, as are necessary or
desirable for the consummation of the transactions contemplated hereby
(collectively "CONSENTS"). The Sellers shall, as soon as possible prior to the
Initial Closing, deliver
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to AIMCO copies of all Consents obtained by the Sellers. AIMCO shall, as soon
as possible prior to the Initial Closing, deliver to the Sellers copies of all
Consents obtained by AIMCO. In case at any time after the Initial Closing Date
any further action is necessary or desirable to carry out the purposes of this
Agreement, AIMCO and the Sellers shall use commercially reasonable efforts to
take all such action. Prior to the Initial Closing, each party shall use its
best efforts not to take any action, or enter into any transaction, that would
cause any of its representations or warranties contained in this Agreement to be
untrue. Until all of the Shares have been sold to AIMCO, each party shall use
its best efforts not to take any action, or enter into any transaction, that
would cause (a) in the case of each of the Sellers, any of its representations
or warranties in SECTION 3.4(a), 3.11 or 3.12 to be untrue, and (b) in the case
of AIMCO, any of its representations or warranties in SECTION 4.3(b), 4.10 or
4.11 to be untrue. Notwithstanding the foregoing, the Sellers shall not be
obligated to vote, grant or withhold their consent or take any other action in
their capacities as stockholders of NHP, except to the extent specifically
provided in SECTION 5.8(a).
5.3 CONDUCT OF BUSINESS OF NHP PENDING THE CLOSING. From the date
hereof through the Initial Closing, except for the Spin-Off or as expressly
permitted or contemplated by this Agreement, unless AIMCO shall otherwise agree
in writing prior to the taking of any action prohibited by the terms of this
Section, the Sellers shall use their best efforts to cause NHP and its
subsidiaries to conduct their operations and business in the ordinary and usual
course of business and consistent with past practice and use reasonable efforts
to keep available the services of its present officers and key employees and
preserve the goodwill and business relationships with all Persons having
business relationships with it. Notwithstanding the foregoing, the Sellers shall
not be obligated to vote, grant or withhold their consent or take any other
action in their capacities as stockholders of NHP, except to the extent
specifically provided in SECTION 5.8(a).
5.4 CONDUCT OF BUSINESS OF AIMCO PENDING THE CLOSING. From the date
hereof through the Initial Closing, except as expressly permitted or
contemplated by this Agreement, unless the Sellers shall otherwise agree in
writing prior to the taking of any action prohibited by the terms of this
Section, AIMCO shall and shall cause its subsidiaries to conduct their
operations and business in the ordinary and usual course of business and
consistent with past practice and use reasonable efforts to keep available the
services of its present officers and key employees and preserve the goodwill and
business relationships with all Persons having business relationships with it.
5.5 NO SOLICITATION. Except for the Spin-Off, the Sellers shall not,
and shall not permit any of their Representatives or any other Person acting for
or on behalf of any of them to, directly or indirectly, initiate, solicit,
encourage, entertain offers with respect to, negotiate with respect to, or in
any manner encourage, recommend or agree to, any inquiry, offer or proposal
relating to (a) the sale of NHP or any of its assets or equity securities, (b)
the merger, consolidation or other combination of NHP with any Person, or (c)
the liquidation, dissolution or reorganization of NHP, except as specif-
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ically contemplated by this Agreement. Without limiting the generality of the
foregoing, the Sellers shall not, and shall not permit any of their
Representatives or any other Person acting for or on behalf of any of them to,
furnish or cause to be furnished any information with respect to NHP or the
Shares to any Person other than AIMCO and its Representatives. If any of the
Sellers or any of their Representatives receives from any Person any offer,
proposal or informational request that may be subject to this SECTION 5.5, the
Sellers shall, as soon as possible, but in any event within three Business Days,
(w) advise AIMCO of such offer, proposal or informational request, (x) provide
AIMCO with a copy of any document or writing received by any of the Sellers or
their Representatives relating to such offer, proposal or informational request,
(y) advise such Person, by written notice, of the terms of this SECTION 5.5, and
(z) deliver a copy of such notice to AIMCO. Notwithstanding anything in this
Agreement to the contrary, nothing in this ARTICLE V shall be construed to
obligate any of the Seller's Representatives who serve as a director of NHP to
take any action or refrain from taking any action in his or her capacity as a
director of NHP.
5.6 TRANSFER TAXES. The Sellers shall be liable for, and shall
indemnify and hold AIMCO harmless against, any liability for any sales, gains,
transfer or similar Taxes resulting from the transfer to AIMCO of any Shares
pursuant to this Agreement.
5.7 PUBLIC ANNOUNCEMENTS. Until all of the Shares have been sold to
AIMCO, none of the Sellers or AIMCO shall issue or make, directly or indirectly,
any reports, statements or releases to the public with respect to this Agreement
or the transactions contemplated hereby without the prior written consent of
each of the others; provided, however, that each of the Sellers and AIMCO may,
without the prior written consent of the others, issue or make, directly or
indirectly, any report, statement or release required by Law, its fiduciary
obligations or any listing agreement or arrangement to which such Person is a
party with a national securities exchange if the other parties to this Agreement
are so notified as soon as possible in advance of such report, statement or
release.
5.8 VOTING ARRANGEMENTS.
(a) At every meeting of the stockholders of NHP, and at every
adjournment or postponement thereof, and on any matter to which the stockholders
of NHP are entitled to express consent or dissent in writing without a meeting,
with respect to all of the Shares, the Sellers shall: (i) vote in favor of (or
consent to) the Merger Proposal and any actions required in furtherance thereof;
(ii) vote against (or dissent from) any proposal or offer to acquire all or any
portion of NHP, its equity securities, its assets or its subsidiaries' assets,
whether by tender or exchange offer, merger, consolidation, business
combination, sale of assets, sale of additional interests or similar transaction
(each, an "ACQUISITION PROPOSAL"), which is not made by AIMCO or one of its
Affiliates; and (iii) vote against (or dissent from) any action or agreement
that is reasonably likely to impede, interfere with, delay or postpone the
Transactions, the
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Merger Proposal or the Exchange Offer, or to impair the value of such
transactions to AIMCO.
(b) Except as contemplated in this Agreement (including SECTION
5.8(c)), (i) each Seller will not, and will cause its Affiliates not to,
directly or indirectly, sell, transfer, pledge, encumber, assign or otherwise
dispose of, or enter into any contract, option or other arrangement or
understanding with respect to the sale, transfer, pledge, encumbrance,
assignment or other disposition of, the Shares to be sold hereunder by such
Seller, and (ii) each Seller will not, and will cause its Affiliates not to,
directly or indirectly, grant or agree to grant any proxies or authorities with
respect to, deposit or agree to deposit into a voting trust, or enter into or
agree to enter into a voting agreement with respect to, any of the Shares;
provided, however, that any transferee of Capricorn Shares pursuant to Section
5.8(c) may grant a proxy to Winokur Holdings, Inc. to vote such Capricorn Shares
in accordance with SECTION 5.8(a).
(c) Notwithstanding anything in this Agreement to the contrary,
upon at least five Business Days prior notice to AIMCO, (i) Capricorn may
transfer any or all of the Capricorn Shares (and may assign its rights and
benefits under this Agreement with respect to such Capricorn Shares) to any of
its constituent partners that agree, severally and not jointly, and pursuant to
a written agreement reasonably acceptable to AIMCO, to be bound by the
provisions of this Agreement applicable to Capricorn with respect to the
Capricorn Shares received by such transferee, and (ii) any such transferee may
further transfer any or all of the Capricorn Shares so transferred to it (and
assign its rights and benefits under this Agreement with respect to such
Capricorn Shares) to any charitable institution that agrees, severally and not
jointly and pursuant to a written agreement reasonably acceptable to AIMCO, to
be bound by the provisions of this Agreement applicable to Capricorn with
respect to the Capricorn Shares received by such transferee. Upon the
effectiveness of each such transfer of Capricorn Shares, (i) the obligations and
agreements of the transferor thereof under this Agreement with respect to the
Capricorn Shares so transferred shall terminate with respect to such Capricorn
Shares (and no other Shares), (ii) the transferee thereof shall be entitled to
the rights of Capricorn set forth in ARTICLE II and SECTION 5.13 of this
Agreement, and shall be obligated to perform the covenants and other obligations
and agreements of the transferor thereof under this Agreement, in each case,
with respect to such Capricorn Shares transferred to such transferee (and no
other Shares); PROVIDED that (x) notwithstanding any transfer of Capricorn
Shares, the representations and warranties of Capricorn set forth in ARTICLE III
shall remain in full force and effect (except that the representations and
warranties set forth in SECTION 3.4 shall be true and correct in all material
respects only as of the date of this Agreement) and the obligations and
agreements of Capricorn set forth in ARTICLE V, VIII and IX shall remain in full
force and effect (except that Capricorn shall at any time have obligations under
SECTION 5.3 only with respect to the Capricorn Shares then owned by it and shall
have obligations under SECTIONS 5.6 AND 5.9 only with respect to the Capricorn
Shares sold by it pursuant to this Agreement), (y) each such transferee of
Capricorn Shares shall be deemed to have made the representations and warranties
of Capricorn set forth in SECTION 3.4 only with respect
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to the Capricorn Shares transferred to such transferee and shall not be deemed
to have made any other representations or warranties, and (z) no such transferee
shall have, or be deemed to have, any obligation under SECTION 5.3.
5.9 ASSIGNMENT OF SHAREHOLDER RIGHTS. At or prior to the Initial
Closing, each Seller shall assign to AIMCO all of its rights under the Amended
and Restated Shareholders Agreement, dated as of August 15, 1995 (the
"SHAREHOLDERS AGREEMENT"), by and among NHP, the John B. Frick Revocable Trust
and the Sellers.
5.10 MERGER PROPOSAL. If the Board of Directors of NHP approves the
Merger Proposal, then AIMCO shall use commercially reasonable efforts to
promptly and diligently negotiate in good faith a definitive agreement with NHP
on the terms set forth in the Merger Proposal.
5.11 EXCHANGE OFFER.
(a) If the Board of Directors of NHP has not approved the Merger
Proposal prior to the first anniversary of the date of this Agreement (such
first anniversary being the "COMMENCEMENT DATE"), then AIMCO shall commence, not
later than the Commencement Date, an offer (the "EXCHANGE OFFER") to exchange
shares of AIMCO Stock for any and all of the then outstanding shares of NHP
Stock, with the number of shares of AIMCO Stock offered in exchange for each
share of NHP Stock equal to $20 divided by $26.75; provided, however, that AIMCO
shall not be obligated to issue any fractional shares of AIMCO Stock pursuant to
the Exchange Offer and, in lieu thereof, may make cash payments; provided,
further, that AIMCO shall not be obligated to commence the Exchange Offer if any
event or circumstance shall have occurred or arisen and be continuing that would
result in the failure to satisfy any of the conditions set forth in SECTION
5.11(c). AIMCO's obligation under this SECTION 5.11(a) shall include preparing
and filing with the SEC a registration statement for the purpose of registering
under the Securities Act the shares of AIMCO Stock to be issued in the Exchange
Offer and using its best efforts to seek the effectiveness of such registration
statement and maintain the effectiveness of such registration statement until
the consummation of the Exchange Offer.
(b) AIMCO shall conduct the Exchange Offer in accordance with
all applicable laws, including without limitation, Section 14 under the Exchange
Act, and the rules and regulations thereunder. AIMCO shall cause the
information included, or incorporated by reference, in the documents (the "OFFER
DOCUMENTS") pursuant to which the Exchange Offer is made (other than information
with respect to NHP) not to contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein not misleading at the time the Offer
Documents (or any amendment or supplement thereto) are first mailed to the
stockholders of NHP.
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(c) Notwithstanding any other provisions of the Exchange Offer,
AIMCO shall not be required to accept for exchange any shares of NHP Stock
tendered pursuant to the Exchange Offer, may postpone the exchange of shares
tendered, and may terminate or amend the Exchange Offer if at any time on or
after the date hereof and at or before the time of acceptance for exchange of
any such shares (whether or not any shares have theretofore been accepted for
exchange) pursuant to the Exchange Offer, any of the following shall occur:
(i) any change, event, occurrence or circumstance shall
have occurred, arisen or been threatened in the business, properties,
assets, liabilities, capitalization, financial condition, operations,
licenses or franchises, or results of operations of NHP, which change is
or is reasonably likely to have a Material Adverse Effect on NHP, or a
material change shall have occurred in the equity capitalization of NHP
that would be adverse to AIMCO, or AIMCO shall have become aware of any
facts relating to NHP or its operations which has or may have material
significance with respect to the value of NHP;
(ii) there shall be instituted or pending any action,
proceeding, application or counterclaim by any Governmental Authority, or
by any Person before any Governmental Authority (other than pursuant to
Section 203 of the DGCL), which (A) restrains, prohibits, materially
delays or makes illegal the making or consummation of the Exchange Offer,
(B) seeks to restrain, prohibit, materially delay or make illegal the
Exchange Offer, (C) imposes or seeks to impose any material limitation
on the ability of AIMCO or any Affiliate of AIMCO to conduct NHP's business
or own any assets of NHP, (D) imposes or seeks to impose material
limitations on the ability of AIMCO to acquire or hold or to exercise
full rights of ownership of the shares of NHP Stock including, but not
limited to, the right to vote the shares of NHP Stock purchased by it on
all matters properly presented to the stockholders of NHP, or (E) might
result in a limitation of the benefits expected to be derived by AIMCO as
a result of the transactions contemplated by the Exchange Offer or the
value of the shares of NHP Stock to AIMCO; provided, however, that AIMCO
shall use its best efforts to contest any such action, proceeding,
application or counterclaim, or to seek to have any such action,
proceeding, application or counterclaim vacated or lifted;
(iii) there shall be any action taken, or any Law or Order
shall be sought, proposed, enacted, promulgated, entered, enforced or
deemed applicable to the Exchange Offer, AIMCO or any Affiliate of AIMCO,
or any other action shall have been taken, proposed or threatened, by any
Governmental Authority that might reasonably be expected to, directly or
indirectly, result in any of the consequences
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referred to in clauses (A) through (E) of paragraph (ii) above (other than
pursuant to Section 203 of the DGCL);
(iv) a registration statement relating to the shares of
AIMCO Stock issuable pursuant to the Exchange Offer shall not be effective
under the Securities Act or there shall be pending or threatened a
proceeding for the issuance of an order suspending the effectiveness of
any such registration statement; or
(v) any of the conditions set forth in SECTION 6.1 shall
not have been satisfied.
5.12 SPIN-OFF. Prior to the Initial Closing Date, the Sellers shall
use commercially reasonable efforts to (a) cause NHP to enter into the Rights
Agreement and issue the Rights pursuant thereto, (b) prohibit NHP from amending
or terminating the Rights Agreement without the prior written approval of AIMCO,
and (c) cause NHP to obtain the consent of The First National Bank of Boston to
the Spin-Off. After the Initial Closing, (A) AIMCO and the Sellers shall use
commercially reasonable efforts to (i) cause NHP to cause the Maturity Time to
occur as soon as possible, and (ii) cause NHP to obtain the consent of The First
National Bank of Boston to the Spin-Off, and (B) AIMCO shall (i) not permit NHP
to redeem the Rights without the prior written consent of Demeter, and (ii) to
the extent within its control and subject to any fiduciary obligations it may
have, cause NHP to appoint persons designated by Demeter as directors of the
Mortgage Subsidiary. With respect to all Rights relating to Shares sold prior
to the Maturity Time, AIMCO shall not approve or consent to any amendment of the
Rights Agreement without the prior written consent of Demeter. Prior to the
Merger, the Sellers and AIMCO shall use commercially reasonable efforts to
contribute to the Mortgage Subsidiary the amount, if any, by which (x) NHP's
Free Cash Flow for the period from February 1, 1997 until the Maturity Time,
exceeds (y) NHP's Transaction Costs for such period and, if the Maturity Time
occurs after the Merger, AIMCO shall cause NHP to contribute such amount to the
Mortgage Subsidiary prior to the Maturity Time.
5.13 SELLERS' PUT RIGHT.
(a) The Sellers shall have the right (the "SELLERS' PUT RIGHT")
to require AIMCO to acquire a number of the Shares (with respect to each Seller,
such Seller's "PUT SHARES") in exchange for (i) in the case of Demeter, cash in
an amount equal to a number of shares of AIMCO Stock equal to the number of
Demeter's Put Shares, multiplied by $20, or (ii) in the case of Capricorn, a
number of shares of AIMCO Stock equal to the number of Capricorn's Put Shares,
multiplied by $20, and divided by $26.75. The aggregate number of Put Shares
may not exceed 10% of the total number of shares of NHP Stock outstanding at the
time the Sellers' Put Right is exercised.
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(b) The Seller's Put Right may be exercised only once (unless
the Sellers' Put Closing in respect of such exercise fails to occur as a result
of the failure to satisfy any of the conditions set forth in SECTION 6.1), and
shall be exercised by Demeter's delivery of a written notice to AIMCO specifying
(i) the number of Demeter Shares and the number of Capricorn Shares that are
requested to be acquired by AIMCO pursuant to the Sellers' Put Right, (ii) the
date and time (which shall be at least ten Business Days after such notice is
given) at which the closing (the "SELLERS' PUT CLOSING") of the purchase of the
Put Shares is to occur, and (iii) the names and denominations in which the
certificates representing shares of AIMCO Stock to be delivered at the Sellers'
Put Closing are to be issued.
(c) The Sellers' Put Closing shall take place at the principal
offices of AIMCO's counsel, Skadden, Arps, Slate, Meagher & Flom LLP, in Boston,
Massachusetts (or such other location as Demeter and AIMCO may agree on). At
the Sellers' Put Closing (i) AIMCO shall (x) deliver to the Sellers a
certificate or certificates representing the aggregate number of shares of AIMCO
Stock specified in SECTION 5.13(a), in such denominations and registered in such
names as Demeter shall have requested in its exercise notice to AIMCO, and (y)
wire transfer to an account specified by the Sellers at least five Business Days
prior to the Sellers' Put Closing, funds in an amount equal to the cash amount
specified in SECTION 5.13(a), and (ii) the Sellers shall deliver or cause to be
delivered a certificate or certificates representing the Put Shares, accompanied
by duly executed blank stock powers or endorsed in blank for transfer, as AIMCO
may request.
(d) AIMCO's obligation to consummate the Sellers' Put Closing
shall be subject to the conditions set forth in SECTION 6.1.
(e) In the event of any exercise of the Sellers' Put Right, the
number of Demeter Shares and Capricorn Shares to be purchased at the Initial
Closing shall be reduced by the number of each that have been sold pursuant to
the exercise of the Sellers' Put Right.
5.14 RESIGNATIONS OF DIRECTORS. Promptly after a majority of the
Shares has been sold hereunder, the Sellers shall cause all of their
Representatives who serve as a member of the board of directors of NHP or any of
its subsidiaries to resign from such boards of directors; provided, that AIMCO
has notified the Sellers that Representatives of AIMCO will be appointed to fill
any vacancies created thereby.
5.15 DETERMINATION OF INITIAL SHARES. Prior to the Initial Closing,
AIMCO shall use commercially reasonable efforts to obtain one or more
commitments from lenders to provide financing for the Transactions in an
aggregate amount equal to the cash necessary for AIMCO to complete the
Transactions. At least 5 Business Days prior to the Initial Closing, AIMCO
shall give written notice to the Sellers as to the number of Shares (the
"INITIAL SHARES") that it intends to purchase at the Initial Closing, which
shall be equal to the greater of (a) 2,500,000, and (b) the quotient obtained by
dividing
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(i) the sum of (x) 5% of the AIMCO Gross Asset Value as of a date not more than
five Business Days prior to the Initial Closing, giving pro forma effect to
AIMCO's acquisition of the Initial Shares, and (y) the maximum amount of
financing that AIMCO was able to obtain in connection therewith, by (ii) $20.
5.16 TRUST AGREEMENT. Prior to the Initial Closing, AIMCO and the
Sellers shall enter into a trust agreement, substantially in the form of EXHIBIT
E hereto.
ARTCILE VI
CONDITIONS TO CLOSING
6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT EACH CLOSING. The
respective obligations of each party to this Agreement to effect the Initial
Closing, the Subsequent Closing, the Exchange Offer Closing and the Sellers' Put
Closing (to the extent each is a party to such transactions) shall be subject to
the following conditions:
(a) GOVERNMENTAL APPROVALS. All consents, approvals and action
of Governmental Authorities required to permit the consummation of the
transactions contemplated to occur at such closing shall have been obtained or
made, free of any condition that would have a Material Adverse Effect on AIMCO
or NHP, and all required authorizations, consents, orders or approvals of, or
declarations or filings with, or expirations of waiting periods imposed by, any
Governmental Authority shall have been obtained or filed or shall have occurred.
(b) NO INJUNCTIONS. No action shall have been taken, and no
statute, rule, regulation, executive order, decree or injunction shall have been
enacted, entered, promulgated or enforced (and not repealed, superseded or
otherwise made inapplicable), by any court or Governmental Authority which
prohibits the consummation of the transactions contemplated to occur at such
closing.
(c) NO RESTRAINING ORDERS. No court of competent jurisdiction
shall have issued an order, judgment or decree (other than a temporary
restraining order) restraining, enjoining or otherwise prohibiting the
transactions contemplated to occur at such closing which has not been lifted
(each party agreeing to use its reasonable efforts to have any such injunction,
order or decree lifted).
6.2 CONDITIONS TO OBLIGATIONS OF AIMCO TO EFFECT THE INITIAL CLOSING
AND THE SUBSEQUENT CLOSING. The obligations of AIMCO to effect the Initial
Closing and the Subsequent Closing are subject to the satisfaction of the
following conditions, unless waived by AIMCO.
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Sellers contained herein that are qualified as to materiality
shall be true and correct, and those not so qualified shall be true and correct
in all material respects,
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at and as of the Initial Closing Date and, in the case of a Subsequent Closing,
the representations and warranties of the Sellers contained in SECTIONS 3.4(a),
3.11 and 3.12 shall be true and correct at and as of the Subsequent Closing
Date, with the same force and effect as though made on and as of such date,
except for any representation or warranty that specifically relates to an
earlier date, which shall be true and correct as of such earlier date.
(b) PERFORMANCE. The Sellers shall have performed, in all
material respects, all obligations and complied, in all material respects, with
all covenants required by this Agreement to be performed or complied with by
them prior to such closing.
(c) CERTIFICATES. Each of the Sellers shall have delivered to
AIMCO a certificate, dated the Initial Closing Date or the Subsequent Closing
Date, as the case may be, and signed by the president or chief executive officer
of such Seller, in the case of Demeter, or of the general partner of the general
partner of such Seller, in the case of Capricorn, certifying as to such Seller's
compliance with SECTION 6.2(a) and SECTION 6.2(b).
(d) REAL ESTATE AGREEMENT. The Real Estate Agreement shall have
been entered into and shall not have been terminated.
(e) GUARANTY. Phemus shall have duly executed and delivered to
AIMCO the Guaranty, and shall have delivered to AIMCO a certificate, executed by
its clerk or assistant clerk, certifying that (i) Phemus has duly and validly
taken all corporate action necessary to authorize its execution and delivery of
the Guaranty and its performance of its obligations under the Guaranty, (ii) the
individual(s) executing and delivering the Guaranty on behalf of Phemus has the
power or authority to act for or bind Phemus, and (iii) the resolutions (true
and complete copies of which shall be attached to the certificate) of the Board
of Directors of Phemus, with respect to the Guaranty, have been duly and validly
adopted and are in full force and effect.
(f) ESCROW AGREEMENT. Capricorn and all transferees of
Capricorn Shares pursuant to SECTION 5.8(c) shall have duly executed and
delivered to AIMCO an Escrow Agreement.
(g) OTHER. The Sellers shall have delivered to the Buyers such
other documents and instruments, signed and properly acknowledged by the
Sellers, if appropriate, as may be reasonably required by AIMCO or otherwise in
order to effectuate the provisions of this Agreement and such closing.
6.3 CONDITIONS TO OBLIGATIONS OF THE SELLERS TO EFFECT THE INITIAL
CLOSING AND THE SUBSEQUENT CLOSING. The obligations of the Sellers to effect
the Initial Closing and the Subsequent Closing are subject to the satisfaction
of the following conditions, unless waived by the Sellers:
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(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of AIMCO contained herein that are qualified as to materiality shall
be true and correct, and those not so qualified shall be true and correct in all
material respects, at and as of the Initial Closing Date, and, in the case of a
Subsequent Closing, the representations and warranties of AIMCO contained in
SECTIONS 4.3(b), 4.10 and 4.11 shall be true and correct at and as of the
Subsequent Closing Date, with the same force and effect as though made on and as
of such date, except for any representation or warranty that specifically
relates to an earlier date, which shall be true and correct as of such earlier
date.
(b) PERFORMANCE. AIMCO shall have performed, in all material
respects, all obligations and complied, in all material respects, with all
covenants required by this Agreement to be performed or complied with by it
prior to such closing.
(c) CERTIFICATES. AIMCO shall have delivered to each of the
Sellers a certificate dated the Initial Closing Date or the Subsequent Closing
Date, as the case may be, and signed by its president or vice chairman,
certifying as to AIMCO's compliance with SECTION 6.3(a) and SECTION 6.3(b).
(d) REGISTRATION RIGHTS AGREEMENT. AIMCO shall have executed
and delivered to each of the Sellers that is to receive shares of AIMCO Stock at
such closing, a Registration Rights Agreement relating to such shares of AIMCO
Stock.
(e) OTHER. AIMCO shall have delivered such other documents and
instruments, properly signed and acknowledged if appropriate, as reasonably may
be required in order to effectuate the provisions of this Agreement and such
closing.
ARTICLE VII
TERMINATION, WAIVER AND AMENDMENT
7.1 TERMINATION. This Agreement may be terminated and abandoned at
any time prior to the Initial Closing:
(a) by the mutual written consent of AIMCO and Demeter;
(b) by AIMCO or Demeter if (i) any Governmental Authority, the
consent of which is a condition to the obligations of AIMCO and any of the
Sellers to consummate the Initial Closing, shall have determined not to grant
its consent and all appeals of such determination shall have been taken and have
been unsuccessful, or (ii) any court of competent jurisdiction shall have issued
an order, judgment or decree (other than a temporary restraining order)
restraining, enjoining or otherwise prohibiting the
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Initial Closing, and such order, judgment or decree shall have become final and
nonappealable;
(c) by AIMCO if there has been a material breach by any of the
Sellers of any representation, warranty, covenant or agreement set forth in this
Agreement, which breach has not been cured within ten business days following
receipt by the breaching party of notice of such breach;
(d) by Demeter if there has been a material breach by AIMCO of
any representation, warranty, covenant or agreement set forth in this Agreement,
which breach has not been cured within ten business days following receipt by
the breaching party of notice of such breach; and
(e) by AIMCO or Demeter if the Initial Closing has not occurred
by May 31, 1997; provided, however, that (i) AIMCO shall not be entitled to
terminate this Agreement pursuant to this SECTION 7.1(e) if a knowing or willful
breach of this Agreement by AIMCO has prevented the Initial Closing from
occurring by such date, and (ii) Demeter shall not be entitled to terminate
this Agreement pursuant to this SECTION 7.1(e) if a knowing or willful breach of
this Agreement by any Seller has prevented the Initial Closing from occurring by
such date.
7.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement by AIMCO or either Seller as provided in SECTION 7.1, this Agreement
shall forthwith become void and there shall be no liability on the part of
AIMCO, the Sellers or their respective officers or directors; provided, however,
that if AIMCO terminates this Agreement with respect to only one of the Sellers,
or if only one of the Sellers terminates this Agreement, AIMCO and the other
Seller shall remain obligated under this Agreement; provided, further, that if
this Agreement is so terminated by a party because one or more of the conditions
to such party's obligations hereunder is not satisfied as a result of the other
party's willful failure to comply with its obligations under this Agreement, the
terminating party's right to pursue all legal remedies for breach of contract or
otherwise, including, without limitation, Damages relating thereto, shall
survive such termination unimpaired.
7.3 AMENDMENT OR SUPPLEMENT. This Agreement may be amended or
supplemented in writing by AIMCO and Demeter and, solely with respect to any
change to SECTION 2.1(a)(ii), 2.1(b)(ii) or 5.8(c), Capricorn.
7.4 EXTENSION OF TIME, WAIVER, ETC. At any time prior to the
Subsequent Closing:
(a) AIMCO may extend the time for the performance of any of the
obligations or acts of either of the Sellers and Demeter may extend the time for
the performance of any of the obligations or acts of AIMCO;
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(b) AIMCO may waive any inaccuracies in the representations and
warranties of either Seller contained herein or in any document delivered
pursuant hereto, and either Seller may do the same with respect to AIMCO for
such Seller; or
(c) AIMCO may waive compliance with any of the agreements or
conditions of either Seller contained herein, and either Seller may do the same
with respect to AIMCO for such Seller; provided, that no failure or delay by any
party in exercising any right hereunder shall operate as a waiver thereof nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right hereunder.
ARTICLE VII
INDEMNIFICATION
8.1 INDEMNIFICATION BY THE SELLERS. Subject to SECTION 9.7, from and
after the Initial Closing, each of the Sellers shall, severally and not jointly,
indemnify, reimburse, defend and hold harmless AIMCO and its Representatives
for, from and against all demands, claims, actions, causes of action and
Damages, asserted against, resulting to, imposed on or suffered or incurred by
AIMCO or its Representatives, directly or indirectly, in connection with any of
the following:
(a) any breach of, or inaccuracy in, any representation or
warranty of such Seller in this Agreement or any certificate, instrument or
other document delivered pursuant hereto or in connection herewith;
(b) any breach of any covenant of such Seller contained in this
Agreement;
(c) claims made by any member of the Oxford Group arising in
connection with the sale of the Shares hereunder other than claims arising (i)
as a result of AIMCO not meeting the definition of a "Qualified Purchaser" under
the Stock and Asset Transfer Restrictions Agreement, or (ii) as a result of
AIMCO failing to satisfy the net worth or managed units requirements of Section
4 of the Stock and Asset Transfer Restrictions Agreement (iii) as a result of a
"Termination for Financial Performance," as defined in any Oxford Management
Contract, based on the relevant property's financial performance after the
Initial Closing Date, (iv) as a result of a "For Cause Termination," as defined
in any Oxford Management Contract, based on an event or circumstance arising
after the Initial Closing Date, unless, and to the extent that, any such event
or circumstance arises as a result of any action or inaction by NHP, the Sellers
or any of their affiliates prior to the Initial Closing Date, (v) as a result of
any failure by AIMCO to satisfy any fiduciary obligations (whether express or
implied) under any Oxford Management Contract after the Initial Closing Date; or
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(d) the loss by NHP or any of its subsidiaries, or modification
in a manner adverse to NHP or any of its subsidiaries, of any right or benefit
under, or any termination, cancellation or non-renewal of, any Oxford Management
Contract, and such loss, modification, termination, cancellation or non-renewal
occurs on or before the first anniversary of the Initial Closing Date, unless
such loss, modification, termination, cancellation or non-renewal occurs (i) as
a result of AIMCO not meeting the definition of a "Qualified Purchaser" under
the Stock and Asset Transfer Restrictions Agreement, (ii) as a result of AIMCO
failing to satisfy the net worth or managed units requirements of Section 4 of
the Stock and Asset Transfer Restrictions Agreement, (iii) as a result of a
"Termination for Financial Performance," as defined in such Oxford Management
Contract, based on the relevant property's financial performance after the
Initial Closing Date, (iv) as a result of a "For Cause Termination," as defined
in such Oxford Management Contract, based on an event or circumstance arising
after the Initial Closing Date, unless, and to the extent that, any such event
or circumstance arises as a result of any action or inaction by NHP, the Sellers
or any of their affiliates prior to the Initial Closing Date, (v) as a result of
any failure by AIMCO to satisfy any fiduciary obligations (whether express or
implied) under any such Oxford Management Contract after the Initial Closing
Date, or (vi) at the request or with the consent of AIMCO.
8.2 INDEMNIFICATION BY AIMCO. Subject to SECTION 9.7, from and after
the Initial Closing, AIMCO shall indemnify, reimburse, defend, and hold harmless
the Sellers and their Representatives for, from, and against all demands,
claims, actions or causes of action, and Damages, asserted against, resulting
to, imposed on, or suffered or incurred by any of the Sellers or their
Representatives, directly or indirectly, in connection with any of the
following:
(a) any breach of, or inaccuracy in, any representation or
warranty of AIMCO contained in this Agreement or any certificate, instrument or
other document delivered pursuant hereto or in connection herewith; or
(b) any breach of covenant of AIMCO contained in this Agreement.
8.3 PROCEDURES RELATING TO INDEMNIFICATION.
(a) Each person to be indemnified pursuant to SECTION 8.1 or
SECTION 8.2 (an "INDEMNIFIED PARTY") agrees to give prompt notice (a "NOTICE OF
THIRD PARTY CLAIM") to the indemnifying party of the assertion of any claim, or
the commencement of any suit, action or proceeding, brought against or sought to
be collected from such indemnified party (each, a "THIRD PARTY CLAIM"), in
respect of which indemnity may be sought by such indemnified party under SECTION
8.1 or SECTION 8.2; provided that the omission so to promptly notify the
indemnifying party with respect to a Third Party Claim brought against or sought
to be collected from such indemnified party will not relieve the indemnifying
party from any liability which it may have to such indemnified party under
SECTION 8.1 or SECTION 8.2 except as otherwise provided in SECTION 8.4 or to
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the extent that such failure has materially prejudiced such indemnifying party
with respect to the defense of such Third Party Claim. If any indemnified party
shall seek indemnity under SECTION 8.1 or SECTION 8.2 with respect to a Third
Party Claim brought against or sought to be collected from such indemnified
party, the indemnifying party shall be entitled to participate therein and, to
the extent that it wishes, to assume and direct the defense and settlement
thereof with counsel satisfactory to such indemnified party; provided that if
any Third Party Claim brought against or sought to be collected from any
indemnified party includes a request for injunctive or other equitable relief
that, if granted, is reasonably likely to have a Material Adverse Effect or a
similar effect on such indemnified party, such indemnified party shall be
entitled to control and direct the defense and settlement thereof and in such
event the legal and other expenses subsequently incurred by such indemnified
party in connection with the defense thereof shall be paid by the indemnifying
party. After notice from the indemnifying party to an indemnified party of its
election to assume and direct the defense and settlement of a Third Party Claim
brought against or sought to be collected from such indemnified party which such
indemnifying party is entitled to assume and direct under the terms hereof, the
indemnifying party shall not be liable to such indemnified party under SECTION
8.1 or SECTION 8.2, as the case may be, for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided that such
indemnified party shall have the right to employ counsel to represent such party
if in the reasonable judgment of such party, it is advisable for such party to
be represented by separate counsel because the representation of both the
indemnified party and the indemnifying party in such matter could present such
counsel with a potential conflict of interest and in such event the fees and
expenses of such separate counsel shall be paid by the indemnifying party.
Notwithstanding the foregoing provisions of this SECTION 8.3(a), the
indemnifying party shall not (A) without the prior written consent of an
indemnified party, effect any settlement of any pending or threatened proceeding
in respect of which such indemnified party is, or with reasonable
foreseeability, could have been a party and indemnity could have been sought
hereunder by such indemnified party for a Third Party Claim brought against or
sought to be collected from such indemnified party, unless such settlement
includes an unconditional release of such indemnified party from all liability
arising out of such proceeding (provided that, whether or not such a release is
required to be obtained, the indemnifying party shall remain liable to such
indemnified party in accordance with SECTION 8.1 or SECTION 8.2 in the event
that a Third Party Claim is subsequently brought against or sought to be
collected from such indemnified party) or (B) be liable for any settlement of
any Third Party Claim brought against or sought to be collected from an
indemnified party effected without such indemnifying party's written consent
(which shall not be unreasonably withheld), but if settled with such
indemnifying party's written consent, or if there is a final judgment for the
plaintiff in any such Third Party Claim, such indemnifying party agrees (to the
extent stated above) to indemnify the indemnified party from and against any
loss, liability, claim, damage or expense by reason or such settlement or
judgment. The indemnification required by SECTION 8.1 or SECTION 8.2, as the
case may be, shall be made by periodic payments of the amount thereof during the
course of
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the investigation or defense, as and when bills are received or loss, liability,
claim, damage or expense is incurred.
(b) In the event any indemnified party should have a claim
(each, a "DIRECT CLAIM") against any indemnifying party under SECTION 8.1 or
SECTION 8.2 that does not involve a Third Party Claim being asserted against or
sought to be collected from such indemnified party, the indemnified party shall
deliver notice (a "NOTICE OF DIRECT CLAIM") of such claim with reasonable
promptness to the indemnifying party. The failure by any indemnified party so
to notify the indemnifying party shall not relieve the indemnifying party from
any liability which it may have to such indemnified party under SECTION 8.1 or
SECTION 8.2 except as otherwise provided in SECTION 8.4 or to the extent that
the indemnifying party demonstrates that it has been materially prejudiced by
such failure. If the indemnifying party does not notify the indemnified party,
within 30 calendar days following its receipt of a Notice of Direct Claim, that
the indemnifying party disputes its liability to the indemnified party under
SECTION 8.1 or SECTION 8.2, as the case may be, such claim specified by the
indemnified party in such Notice of Direct Claim will be conclusively deemed a
liability of the indemnifying party under SECTION 8.1 or SECTION 8.2, as the
case may be, and the indemnifying party shall pay the amount of such liability
to the indemnified party on demand, or, in the case of any notice in which the
amount of the claim (or any portion thereof) is estimated, on such later date
when the amount of such claim (or such portion thereof) becomes finally
determined.
(c) If the indemnifying party has timely disputed its liability
with respect to a Third Party Claim or a Direct Claim, the indemnifying party
and the indemnified party agree to proceed in good faith to negotiate a
resolution of such dispute and, if not resolved through negotiations, such
dispute will be resolved by arbitration held in Denver, Colorado in accordance
with the Commercial Arbitration Rules of the American Arbitration Association
(the "AAA") then in effect unless the parties mutually agree otherwise. Notice
of the demand for arbitration shall be filed in writing by the indemnified party
with the indemnifying party and with the AAA and shall be made within a
reasonable time after the dispute has arisen. Within 30 days after the date the
arbitration notice is filed with the AAA, the indemnified party and the
indemnifying party shall select one person to act as arbitrator. If the parties
are unable to agree upon an arbitrator within 10 days, the arbitrator shall be
selected by the AAA within 30 days thereafter. The arbitrator shall be
independent and impartial. The arbitrator shall promptly schedule all discovery
and the other steps to be taken in resolution of any controversy, dispute or
claim and otherwise assume sufficient initiative and control to effect the
sufficient and expeditious resolution of the dispute. The award rendered by the
arbitrator shall be final and judgment may be entered upon it in accordance with
applicable law in any court having jurisdiction thereof. Any liability that the
indemnifying party agrees to assume, or that is determined by the arbitrator to
be a liability of the indemnifying party under SECTION 8.1 or SECTION 8.2 will
be conclusively deemed a liability of the indemnifying party. Except by written
consent of the Person sought to be joined, no arbitration arising out of or
relating to this Agreement shall include, by consolidation, joinder or in any
other manner, any Person not a party to, or otherwise
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bound by, this Agreement. The provisions of this Agreement to arbitrate and any
other written agreement to arbitrate referred to herein shall be specifically
enforceable under the prevailing arbitration law. Each party hereto expressly
consents to, and waives any future objection to, such forum and arbitration
rules.
(d) If Demeter or Phemus is obligated to indemnify AIMCO or any
of its Representatives under this ARTICLE VIII, Demeter or Phemus, as the case
may be, will succeed to, and stand in place of NHP or AIMCO in respect of any,
similar claims or causes of action of NHP or AIMCO may have against third
parties in connection with any matter for which Demeter or Phemus is obligated
to indemnify AIMCO or any of its Representatives, but only to the extent that
Demeter or Phemus, as the case may be, has indemnified AIMCO or any of its
Representatives for such matter. In such event, AIMCO shall cooperate with
Demeter and Phemus in a reasonable manner, at the cost and expense of Demeter or
Phemus, as the case may be, in prosecuting any such subrogated right or claim,
including without limitation, signing claims or bringing actions in the name of
NHP or AIMCO.
(e) Each of AIMCO and its Representatives may give notice of a
claim under the Escrow Agreement in an amount equal to any amount for which it
may be entitled to indemnification under this ARTICLE VIII upon notice to
Capricorn specifying in reasonable detail the basis for such claim. Neither the
giving of any such notice, nor the failure to give any such notice, of a claim
under the Escrow Agreement will constitute an election of remedies or limit
AIMCO or any of its Representatives in any manner in the enforcement of any
other remedies that may be available to it.
8.4 LIMITATIONS ON INDEMNIFICATION.
(a) The obligations to indemnify and hold harmless a party
hereto, (i) pursuant to SECTION 8.1(a) and SECTION 8.2(a), shall terminate when
the applicable representation or warranty terminates pursuant to SECTION 9.7,
(ii) pursuant to SECTION 8.1(b) and SECTION 8.2(b), shall not terminate, and
(iii) pursuant to SECTION 8.1(c) and SECTION 8.1(d), shall terminate after the
first anniversary of the Initial Closing Date; provided, however, that, as to
clauses (i) and (iii) above, such obligation to indemnify and hold harmless
shall not terminate with respect to any item as to which the person to be
indemnified or the related party thereto shall have, before the expiration of
the applicable period, previously made a claim by delivering a notice (stating
in reasonable detail the basis of such claim) to the indemnifying party.
(b) The Sellers shall have no liability under SECTION 8.1, and
AIMCO shall have no liability under SECTION 8.2, unless and until the aggregate
Damages for which indemnification is sought under such Section exceed
$1,000,000, and then only for the amount by which such Damages exceed
$1,000,000; provided, however, that such limitation shall not apply to any
intentional breach or any of the matters referred to in SECTION 8.4(c).
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(c) In the event that the Sellers are obligated to indemnify
AIMCO or any of its Representatives pursuant to SECTION 8.1(a), (c) or (d) as a
result of a loss by NHP or any of its subsidiaries, or modification in a manner
adverse to NHP or any of its subsidiaries, of any right or benefit under, or any
termination, cancellation or non-renewal of, any Contract, in effect as of the
Initial Closing Date, pursuant to which NHP or any of its subsidiaries provides
property management services (including, without limitation, services provided
to or for the Oxford Properties), Damages shall be calculated by multiplying (i)
that portion of the aggregate annualized revenues lost by NHP and its
subsidiaries as a result of all such losses, modifications, terminations,
cancellations and non-renewals (reduced by the amount of any compensatory
payments received in respect thereof, other than payments by the Sellers and
Phemus under this Agreement or the Guaranty) that exceeds $3.0 million, by (ii)
3.6.
(d) In the event that AIMCO or its Representatives are entitled
to indemnification by any of the Sellers for any Damages under SECTION 8.1(c) or
(d) or for a breach of the representations set forth in ARTICLE III (other than
SECTIONS 3.4, 3.5, 3.11 and 3.12), if, and only to the extent that such breach
of representation relates to NHP and not to such Seller, the aggregate liability
of such Seller shall be limited to an amount equal to the product of (i) the
aggregate amount of such Damages, multiplied by (ii) 42.9% in the case of
Demeter, and 10.1% in the case of Capricorn.
(e) Each Seller's liability to AIMCO and its Representatives
under this ARTICLE VIII shall not exceed the aggregate consideration paid to
such Seller hereunder. AIMCO's liability to each Seller and its Representatives
under this ARTICLE VIII shall not exceed the aggregate consideration paid to
such Seller hereunder.
ARTICLE IX
MISCELLANEOUS PROVISIONS
9.1 GOVERNING LAW. This Agreement and the legal relations among the
parties hereto shall be governed by and construed and enforced in accordance
with the laws of the State of Delaware, without regard to its principles of
conflicts of law.
9.2 ENTIRE AGREEMENT. This Agreement, including the exhibits and
schedules attached hereto, constitutes the entire agreement among the parties
pertaining to the subject matter hereof and supersedes all prior agreements,
understandings, letters of intent, negotiations and discussions, whether oral or
written, of the parties, including that certain letter agreement, dated February
13, 1997, among AIMCO and the Sellers, and there are no warranties,
representations or other agreements, express or implied, made to any party by
any other party in connection with the subject matter hereof except as
specifically set forth herein or in the documents delivered pursuant hereto or
in connection herewith.
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9.3 MODIFICATION; WAIVER. No supplement, modification, waiver or
termination of this Agreement shall be binding unless executed in writing by the
party to be bound thereby. No waiver of any provision of this Agreement shall
be deemed or shall constitute a waiver of any other provision hereof (whether or
not similar), nor shall such waiver constitute a continuing waiver unless
otherwise expressly provided.
9.4 NOTICES. All notices, consents, requests, reports, demands or
other communications hereunder (collectively, "NOTICES") shall be in writing and
may be given personally, by registered mail, or by Federal Express (or other
reputable overnight delivery service):
if to AIMCO, to it at:
1873 South Bellaire Street, 17th Floor
Denver, Colorado 80222-4348
Attention: Mr. Terry Considine
Telephone: (303) 757-8600
and
28200 Highway 189, Building F-240
P.O. Box 1060
Lake Arrowhead, California 92352
Attention: Mr. Peter K. Kompaniez
Telephone: (909) 336-4821
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue, Suite 3400
Los Angeles, California 90071
Attention: Rod A. Guerra, Esq.
Telephone: (213) 687-5000
if to Demeter, to it at:
c/o Harvard Management Company, Inc.
600 Atlantic Avenue
Boston, Massachusetts 02210
Attention: Mr. Tim Palmer
Tami E. Nason, Esq.
Telephone: (617) 523-4400
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with a copy to:
Ropes & Gray
One International Place
Boston, Massachusetts 02210
Attention: Larry Jordan Rowe, Esq.
Telephone: (617) 951-7407
if to Capricorn, to it at:
30 East Elm Street
Greenwich, Connecticut 06830
Attention: Mr. Herbert S. Winokur, Jr.
Telephone: (203) 861-6600
with a copy to:
O'Melveny & Myers LLP
153 East 53rd Street
New York, New York 10022
Attention: Drake Tempest, Esq.
Telephone: (212) 326-2000
or to such other address or such other person as the addressee party shall have
last designated by notice to the other party. All Notices shall be deemed to
have been given (i) when delivered personally, (ii) three days after being sent
by registered mail, or (iii) one day after being sent by Federal Express (or
other reputable overnight delivery service).
9.5 EXPENSES. Whether or not the transactions contemplated by this
Agreement shall be consummated, all fees and expenses incurred by any party
hereto in connection with this Agreement shall be borne by such party.
Notwithstanding the preceding sentence, AIMCO shall pay one-half and the
Sellers, collectively, shall pay one-half of all HSR Act fees for filings made
in connection with the Transactions.
9.6 ASSIGNMENT.
(a) Except as specifically provided to the contrary in SECTION
5.8(c) and SECTION 9.6(b), no party hereto shall have the right, power, or
authority to assign or pledge this Agreement or any portion of this Agreement,
or to delegate any duties or obligations arising under this Agreement,
voluntarily, involuntarily, or by operation of law, without the prior written
consent of the other parties hereto.
(b) AIMCO may assign any or all of its rights and interest in
this Agreement to any corporation (i) with respect to which AIMCO owns, directly
or
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indirectly, a majority of the outstanding capital stock and (ii) that is
designated by AIMCO to purchase any or all of the Shares pursuant to this
Agreement. Notwithstanding any such assignment, AIMCO shall remain liable to
perform all obligations required to be performed by it hereunder. In the event
of any such assignment, all of the Sellers' representations and warranties shall
be deemed to be made to AIMCO and such designee, and all covenants and
agreements of the Sellers herein shall be deemed to be made for the benefit of
AIMCO and such designee.
9.7 SURVIVAL. All representations and warranties in this Agreement
(other than SECTIONS 3.4(a), 3.5, 4.3(b) and 4.4) shall survive only until the
first anniversary of the Initial Closing. The representations and warranties in
SECTIONS 3.4(a), 3.5, 4.3(b) and 4.4 shall survive the Initial Closing and any
Subsequent Closing indefinitely. All representations and warranties shall
survive notwithstanding any investigation conducted with respect thereto or any
knowledge acquired as to the accuracy or inaccuracy of any such representation
or warranty.
9.8 SEVERABILITY. Any provision or part of this Agreement which is
invalid or unenforceable in any situation in any jurisdiction shall, as to such
situation and such jurisdiction, be ineffective only to the extent of such
invalidity and shall not affect the enforceability of the remaining provisions
hereof or the validity or enforceability of any such provision in any other
situation or in any other jurisdiction.
9.9 SUCCESSORS AND ASSIGNS; THIRD PARTIES. Subject to and without
waiver of the provisions of SECTION 9.6, all of the rights, duties, benefits,
liabilities and obligations of the parties shall inure to the benefit of, and be
binding upon, their respective successors, assigns, heirs and legal
representatives. Except as specifically set forth or referred to herein,
nothing herein expressed or implied is intended or shall be construed to confer
upon or give to any person or entity, other than the parties hereto and their
successors or permitted assigns, any rights or remedies under or by reason of
this Agreement.
9.10 COUNTERPARTS. This Agreement may be executed in as many
counterparts as may be deemed necessary and convenient, and by the different
parties hereto on separate counterparts each of which, when so executed, shall
be deemed an original, but all such counterparts shall constitute one and the
same instrument.
9.11 INTERPRETATION; REFERENCES. Any use of masculine, feminine or
neuter pronouns herein shall not be limiting, but shall be construed as
referring to persons of any gender, as the context may require. Any use of the
singular or plural form herein shall not be limiting, but shall be construed as
referring to either the plural or singular, as the context may require.
References to a "Schedule" or an "Exhibit" are, unless otherwise specified, to a
Schedule or an Exhibit attached to this Agreement, and references to an
"Article," a "Section" or a "Subsection" are, unless otherwise specified, to an
Article, a Section or a Subsection of this Agreement. The Article and Section
headings of this Agreement are for convenience of reference only and shall not
be
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deemed to modify, explain, restrict, alter or affect the meaning or
interpretation of any provision hereof.
9.12 TIME OF ESSENCE. Time shall be of the essence with respect to
all matters contemplated by this Agreement.
9.1 REMEDIES.
(a) In the event of a breach by AIMCO or any of the Sellers of
its obligations under ARTICLE II or SECTION 5.5, 5.8 or 5.13 of this Agreement,
the non-breaching party, in addition to being entitled to exercise all rights
granted by law, including recovery of damages, will be entitled to specific
performance of its rights under this Agreement. AIMCO and the Sellers agree
that monetary damages would not be adequate compensation for any loss incurred
by reason of a breach by any of them of any of the provisions of ARTICLE II or
SECTION 5.5, 5.8 or 5.13 of this Agreement and hereby further agree that, in the
event of any action for specific performance in respect of such breach, they
shall waive the defense that a remedy at law would be adequate.
(b) The sole and exclusive liability of the Sellers to AIMCO,
and of AIMCO to the Sellers, for money Damages under or in connection with this
Agreement or the transactions contemplated hereby (including without limitation,
for any breach or inaccuracy of any representation or warranty or for any breach
of any covenant required to be performed hereunder) and the sole and exclusive
remedy of AIMCO and the Sellers with respect to any of the foregoing, shall be
as expressly set forth in ARTICLE VIII and the Sellers and AIMCO hereby waive,
release and agree not to assert any other remedy for money Damages; provided,
however, that the foregoing shall not limit AIMCO or the Sellers in any way from
exercising any rights or securing any remedies in connection with this Agreement
or the transactions contemplated hereby as a result of a fraudulent breach of
any representation, warranty or covenant hereunder.
9.14 EXHIBITS. All exhibits attached hereto are hereby incorporated
by reference as though set out in full herein.
9.15 ATTORNEYS' FEES. In the event that any party hereto brings an
action or proceeding against the other party to enforce or interpret any of the
covenants, conditions, agreements or provisions of this Agreement, the
prevailing party in such action or proceeding shall be entitled to recover all
costs and expenses of such action or proceeding, including, without limitation,
attorneys' fees, charges, disbursements and the fees and costs of expert
witnesses.
9.16 WAIVER OF JURY TRIAL. Consistent with SECTION 8.2, each party to
this Agreement further waives its respective right to a jury trial of any claim
or cause of action arising out of this Agreement or any dealings between any of
the parties hereto relating to the subject matter of this Agreement. The scope
of this waiver is intended to be all-encompassing of any and all disputes that
may be filed in any court and that
43
<PAGE>
relate to the subject matter of this Agreement, including, without limitation,
contract claims, tort claims and all other common law and statutory claims.
This waiver is irrevocable, meaning that it may not be modified either orally or
in writing, and this waiver shall apply to any subsequent amendments,
supplements or other modifications to this Agreement or to any other document or
agreement relating to the Transactions.
9.17 FURTHER ASSURANCES. Each of the parties shall, without further
consideration, use reasonable efforts to execute and deliver such additional
documents and take such other action as the other parties, or any of them, may
reasonably request to carry out the intent of this Agreement and the
Transactions.
9.18 NEGOTIATION OF AGREEMENT. Each of the parties acknowledges that
it has been represented by independent counsel of its choice throughout all
negotiations that have preceded the execution of this Agreement and that it has
executed the same with consent and upon the advice of said independent counsel.
Each party and its counsel cooperated in the drafting and preparation of this
Agreement and the documents referred to herein, and any and all drafts relating
thereto shall be deemed the work product of the parties and may not be construed
against any party by reason of its preparation. Accordingly, any rule of law or
any legal decision that would require interpretation of any ambiguities in this
Agreement against the party that drafted it is of no application and is hereby
expressly waived. The provisions of this Agreement shall be interpreted in a
reasonable manner to effect the intentions of the parties and this Agreement.
9.19 SEVERAL LIABILITY. The liability of Demeter and Capricorn under
this Agreement is several and not joint.
[SIGNATURE PAGES FOLLOW]
44
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
APARTMENT INVESTMENT
AND MANAGEMENT COMPANY
By: /s/ Peter Kompaniez
-----------------------------
Name: Peter Kompaniez
Title: Vice Chairman
DEMETER HOLDINGS CORPORATION
By: /s/ Michael R. Eisenson
-----------------------------
Name: Michael R. Eisenson
Title: Authorized Signatory
By: /s/ Tim R. Palmer
-----------------------------
Name: Tim R. Palmer
Title: Authorized Signatory
CAPRICORN INVESTORS, L.P.
By: Capricorn Holdings, G.P.,
its General Partner
By: Winokur Holdings Inc.,
its General Partner
By: /s/ Herbert S. Winokur, Jr.
-----------------------------
Name: Herbert S. Winokur, Jr.
Title: President
45
<PAGE>
EXHIBITS TO
STOCK PURCHASE AGREEMENT
dated as of
April 16, 1997
by and among
APARTMENT INVESTMENT AND MANAGEMENT COMPANY,
DEMETER HOLDINGS CORPORATION
and
CAPRICORN INVESTORS, L.P.
<PAGE>
INDEX
EXHIBIT A Escrow Agreement . . . . . . . . . . . . . . . . . . . . . . A-1
EXHIBIT B Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . B-1
EXHIBIT C Registration Rights Agreement . . . . . . . . . . . . . . . . C-1
EXHIBIT D Rights Agreement . . . . . . . . . . . . . . . . . . . . . . D-1
EXHIBIT E Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . E-1
<PAGE>
EXHIBIT A
ESCROW AGREEMENT
ESCROW AGREEMENT, dated as of ______ __, 1997 (the "AGREEMENT"), by
and among Apartment Investment and Management Company, a Maryland corporation
("AIMCO"), [Capricorn Investors, L.P., a Delaware limited partnership]
("CAPRICORN"), and ___________, a [national banking association] [bank
organized under the laws of ___________], as escrow agent (the "ESCROW AGENT").
WHEREAS, AIMCO has entered into a Stock Purchase Agreement, dated as
of April 16, 1997 (the "STOCK PURCHASE AGREEMENT"), with Demeter Holdings
Corporation, a Massachusetts corporation ("DEMETER"), and Capricorn Investors,
L.P., a Delaware limited partnership, which provides for AIMCO and Capricorn to
enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the covenants of
the parties set forth herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, subject to the terms
and conditions set forth herein, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. Capitalized terms used but not otherwise defined in
this Agreement shall have the respective meanings ascribed thereto in the Stock
Purchase Agreement.
1.2 "CLOSING PRICE" shall mean, with respect to any security on any
day, the closing sale price, regular way, on such day or, in case no such sale
takes place on such day, the average of the reported closing bid and asked
prices, regular way, in each case on the principal national securities exchange
or quotation system on which such security is quoted or listed or admitted to
trading, as the case may be, or, if not quoted or listed or admitted to trading
on any national securities exchange or quotation system, the average of the
closing bid and asked prices of such security on the over-the-counter market on
the day in question as reported by the National Quotation Bureau Incorporated,
or a similar generally accepted reporting service or, if not so reported, the
market value per unit of such security on the day in question, as determined,
using valuation techniques generally accepted in the securities industry, by any
New York Stock Exchange ("NYSE") member firm selected by Escrow Agent for that
purpose.
1.3 "DETERMINATION DATE" shall mean (i) when used with respect to any
dividend or other distribution, the date fixed for the determination of the
holders of the
A-1
<PAGE>
securities entitled to receive such dividend or distribution, or, if a
dividend or distribution is paid or made without fixing such a date, the date
of such dividend or distribution and (ii) when used with respect to any
subdivision, combination or reclassification of securities, the date upon
which such subdivision, combination or reclassification becomes effective.
1.4 "EX-DATE" shall mean (i) when used with respect to any dividend
or distribution, the first date on which the securities on which the dividend or
distribution is payable trade regular way on the relevant exchange or in the
relevant market without the right to receive such dividend or distribution, and
(ii) when used with respect to any subdivision, combination or reclassification
of securities, the first date on which the securities trade regular way on such
exchange or in such market to reflect such subdivision, combination or
reclassification becoming effective.
1.5 "MARKET PRICE" shall mean, with respect to any security on any
date (the "SPECIFIED DATE"), the average of the daily Closing Prices with
respect to such security for the ten consecutive Trading Days for such security
ending on the third Trading Day that immediately precedes the Specified Date,
appropriately adjusted to take into account any dividends or distributions
payable on such security, or any reclassification, subdivisions or combinations
of, or similar transactions involving, such security with respect to which (i)
the Ex-Date occurs after the first of such ten consecutive Trading Days and (ii)
the Determination Date occurs prior to the Specified Date.
1.6 "TRADING DAY" shall mean, with respect to any security, (i) if
the principal trading market for the applicable security is the NYSE or another
national securities exchange, a day on which the NYSE or such other national
securities exchange is open for business, (ii) if the principal trading market
for the applicable security is the Nasdaq Stock Market, a day on which a trade
may be made on the Nasdaq Stock Market, or (iii) if the applicable security is
not listed, admitted for trading or quoted as provided in clause (i) or (ii),
any day other than a Saturday or Sunday or a day on which banking institutions
in the State of New York are authorized or obligated by law or executive order
to close.
ARTICLE II
ESCROW
2.1 ESTABLISHMENT OF ESCROW.
(a) AIMCO may, from time to time, in accordance with the Stock
Purchase Agreement, deposit with Escrow Agent certificates representing shares
of AIMCO Stock issued in the name of Capricorn (the "ESCROW SHARES"). Capricorn
shall deliver to the Escrow Agent duly executed blank stock powers for each of
the Escrow Shares. Upon receipt of such shares, Escrow Agent shall give AIMCO
written acknowledgement thereof. The Escrow Shares, any shares of AIMCO Stock,
marketable
A-2
<PAGE>
securities or other assets deposited by Capricorn with Escrow Agent pursuant
to SECTION 2.4, the proceeds of any sales of such securities or other assets
and any dividends or earnings thereon, as reduced by any disbursements
pursuant to SECTION 2.3, or SECTION 2.4, amounts withdrawn under SECTION
3.1(J), or losses on investments, are collectively referred to herein as the
"ESCROW FUND."
(b) Escrow Agent hereby agrees to act as escrow agent and to
hold, safeguard and disburse the Escrow Fund pursuant to the terms and
conditions hereof.
2.2 INVESTMENT OF FUNDS. Assets in the Escrow Fund, other than
shares of AIMCO Stock and marketable securities, shall be invested from time to
time as directed by Capricorn, until disbursement of the entire Escrow Fund.
2.3 CLAIMS.
(a) From time to time on or before the earlier to occur of the
Merger or the first anniversary of the Initial Closing Date, AIMCO may give
written notice (a "NOTICE") to Capricorn and Escrow Agent specifying in
reasonable detail the nature and dollar amount of any claim (a "CLAIM") it may
have against Capricorn under ARTICLE VIII of the Stock Purchase Agreement; AIMCO
may make more than one claim with respect to any underlying state of facts. If
Capricorn gives notice to AIMCO and Escrow Agent disputing any Claim (a "COUNTER
NOTICE") within 30 days following receipt by Escrow Agent of the Notice
regarding such Claim, such Claim shall be resolved as provided in SECTION
2.3(B). If no Counter Notice is received by Escrow Agent within such 30-day
period, then the dollar amount of damages claimed by AIMCO as set forth in its
Notice shall be deemed established for purposes of this Agreement and the Stock
Purchase Agreement and, at the end of such 30-day period, Escrow Agent shall (i)
deliver to AIMCO one or more certificates representing, in the aggregate, a
number of Escrow Shares equal to (x) the dollar amount claimed in the Notice,
divided by (y) the Market Price of AIMCO Stock on the date of delivery of such
Escrow Shares to AIMCO, or (ii) pay to AIMCO the dollar amount claimed in the
Notice, in each case, from (and only to the extent of) the Escrow Fund. Escrow
Agent shall not inquire into or consider whether a Claim complies with the
requirements of the Stock Purchase Agreement.
(b) If a Counter Notice is given with respect to a Claim, Escrow
Agent shall make payment with respect thereto only in accordance with (i) joint
written instructions of AIMCO and Capricorn, or (ii) a final non-appealable
order of a court of competent jurisdiction. Any court order shall be
accompanied by a legal opinion by counsel for the presenting party satisfactory
to Escrow Agent to the effect that the order is final and non-appealable.
Escrow Agent shall act on such court order and legal opinion without further
question.
A-3
<PAGE>
2.4 SUBSTITUTION OF ESCROW FUNDS. Capricorn may, at any time and
from time to time, deposit with Escrow Agent shares of AIMCO Stock or other
marketable securities duly indorsed in blank, or cash or cash equivalents, in
substitution of all or any portion of the Escrow Fund, and Escrow Agent shall
promptly thereafter pay and distribute to Capricorn an amount of Escrow Shares
and/or other assets then included in the Escrow Fund, as requested by Capricorn,
equal in value to the shares of AIMCO Stock, marketable securities, cash or cash
equivalents deposited by Capricorn with Escrow Agent, with shares of AIMCO Stock
and marketable securities valued for such purpose at the Market Price of such
security on the date of delivery of such Escrow Shares.
2.5 TERMINATION OF ESCROW. On the earlier to occur of the Merger or
the first anniversary of the Initial Closing Date, Escrow Agent shall pay and
distribute to Capricorn the amount of securities and other assets then included
in the Escrow Fund, unless any Claims are then pending, in which case an amount
equal to the aggregate dollar amount of such Claims (as shown in the Notices of
such Claims) shall be retained by Escrow Agent in the Escrow Fund (and the
balance paid to Capricorn), until it receives joint written instructions of
AIMCO and Capricorn or a final non-appealable order of a court of competent
jurisdiction as contemplated by SECTION 2.3(b).
2.6 OWNERSHIP OF ESCROW FUND. AIMCO and Capricorn agree that,
subject to the other terms and provisions of this Agreement, including, without
limitation, SECTION 2.3, for all purposes, including Federal and other taxes
based on income, Capricorn will be treated as the owner of all of the Escrow
Fund, and that Capricorn will report all income, if any, that is earned on, or
derived from, the Escrow Fund as its income in the taxable year or years in
which such income is properly includible and pay any taxes attributable thereto.
ARTICLE III
ESCROW AGENT
3.1 DUTIES OF ESCROW AGENT.
(a) Escrow Agent shall not be under any duty to give the Escrow
Fund held by it hereunder any greater degree of care than it gives its own
similar property and shall not be required to invest any funds held hereunder
except as directed in this Agreement. Uninvested funds held hereunder shall not
earn or accrue interest.
(b) Escrow Agent shall not be liable, except for its own gross
negligence or willful misconduct and, except with respect to claims based upon
such gross negligence or willful misconduct that are successfully asserted
against Escrow Agent, the other parties hereto shall jointly and severally
indemnify and hold harmless Escrow Agent (and any successor Escrow Agent) from
and against any and all losses, liabilities, claims, actions, damages and
expenses, including reasonable attorneys' fees
A-4
<PAGE>
and disbursements, arising out of and in connection with this Agreement.
Without limiting the foregoing, Escrow Agent shall in no event be liable in
connection with its investment or reinvestment of any cash held by it
hereunder in good faith, in accordance with the terms hereof, including,
without limitation, any liability for any delays (not resulting from its
gross negligence or willful misconduct) in the investment or reinvestment of
the Escrow Fund, or any loss of interest incident to any such delays.
(c) Escrow Agent shall be entitled to rely upon any order,
judgment, certification, demand, notice, instrument or other writing delivered
to it hereunder without being required to determine the authenticity or the
correctness of any fact stated therein or the propriety or validity of the
service thereof. Escrow Agent may act in reliance upon any instrument or
signature believed by it to be genuine and may assume that the person purporting
to give receipt or advice or make any statement or execute any document in
connection with the provisions hereof has been duly authorized to do so. Escrow
Agent may conclusively presume that the undersigned representative of any party
hereto which is an entity other than a natural person has full power and
authority to instruct Escrow Agent on behalf of that party unless written notice
to the contrary is delivered to Escrow Agent.
(d) Escrow Agent may act pursuant to the advice of counsel with
respect to any matter relating to this Agreement and shall not be liable for any
action taken or omitted by it in good faith in accordance with such advice.
(e) Escrow Agent does not have any interest in the Escrow Fund
deposited hereunder but is serving as escrow holder only and having only
possession thereof. Any payments of income from this Escrow Fund shall be
subject to withholding regulations then in force with respect to United States
taxes. The parties hereto will provide Escrow Agent with appropriate Internal
Revenue Service Forms W-9 for tax identification number certification, or non-
resident alien certifications. This SECTION 3.1(e) and SECTION 3.1(b) shall
survive notwithstanding any termination of this Agreement or the resignation of
Escrow Agent.
(f) Escrow Agent makes no representation as to the validity,
value, genuineness or the collectability of any security or other document or
instrument held by or delivered to it.
(g) Escrow Agent shall not be called upon to advise any party as
to the wisdom in selling or retaining or taking or refraining from any action
with respect to any securities or other property deposited hereunder.
(h) Escrow Agent (and any successor Escrow Agent) may at any
time resign as such by delivering the Escrow Fund to any successor Escrow Agent
jointly designated by the other parties hereto in writing, or to any court of
competent jurisdiction, whereupon Escrow Agent shall be discharged of and from
any and all further obligations arising in connection with this Agreement. The
resignation of Escrow
A-5
<PAGE>
Agent will take effect on the earlier of (i) the appointment of a successor
(including a court of competent jurisdiction) or (ii) the day which is 30
days after the date of delivery of its written notice of resignation to the
other parties hereto. If, at that time, Escrow Agent has not received a
designation of a successor Escrow Agent, Escrow Agent's sole responsibility
after that time shall be to retain and safeguard the Escrow Fund until
receipt of a designation of successor Escrow Agent or a joint written
disposition instruction by the other parties hereto or a final non-appealable
order of a court of competent jurisdiction.
(i) In the event of any disagreement between the other parties
hereto resulting in adverse claims or demands being made in connection with the
Escrow Fund or in the event that Escrow Agent is in doubt as to what action it
should take hereunder, Escrow Agent shall be entitled to retain the Escrow Fund
until Escrow Agent shall have received (i) a final non-appealable order of a
court of competent jurisdiction directing delivery of the Escrow Fund or (ii) a
written agreement executed by the other parties hereto directing delivery of the
Escrow Fund, in which event Escrow Agent shall disburse the Escrow Fund in
accordance with such order or agreement. Any court order shall be accompanied
by a legal opinion by counsel for the presenting party satisfactory to Escrow
Agent to the effect that the order is final and non-appealable. Escrow Agent
shall act on such court order and legal opinion without further question.
(j) AIMCO and Capricorn shall pay Escrow Agent compensation (as
payment in full) for the services to be rendered by Escrow Agent hereunder in
the amount of $_________ at the time of execution of this Agreement and
$_____________ annually thereafter and agree to reimburse Escrow Agent for all
reasonable expenses, disbursements and advances incurred or made by Escrow Agent
in performance of its duties hereunder (including reasonable fees, expenses and
disbursements of its counsel). Any such compensation and reimbursement to which
Escrow Agent is entitled shall be borne 50% by AIMCO, and 50% by Capricorn.
(k) No printed or other matter in any language (including,
without limitation, prospectuses, notices, reports and promotional material)
that mentions Escrow Agent's name or the rights, powers, or duties of Escrow
Agent shall be issued by the other parties hereto or on such parties' behalf
unless Escrow Agent shall first have given its specific written consent thereto.
(l) The other parties hereto authorize Escrow Agent, for any
securities held hereunder, to use the services of any United States central
securities depository it reasonably deems appropriate, including, without
limitation, the Depositary Trust Company and the Federal Reserve Book Entry
System.
3.2 LIMITED RESPONSIBILITY. This Agreement expressly sets forth
all the duties of Escrow Agent with respect to any and all matters pertinent
hereto. No implied duties or obligations shall be read into this Agreement
against Escrow Agent. Escrow
A-6
<PAGE>
Agent shall not be bound by the provisions of any agreement among the other
parties hereto except this Agreement.
ARTICLE IV
MISCELLANEOUS PROVISIONS
4.1 GOVERNING LAW. This Agreement and the legal relations among the
parties hereto shall be governed by and construed and enforced in accordance
with the laws of the State of Delaware, without regard to its principles of
conflicts of law.
4.2 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement among the parties pertaining to the subject matter hereof and
supersedes all prior agreements, understandings, letters of intent, negotiations
and discussions, whether oral or written, of the parties, and there are no
warranties, representations or other agreements, express or implied, made to any
party by any other party in connection with the subject matter hereof except as
specifically set forth herein or in the documents delivered pursuant hereto or
in connection herewith.
4.3 MODIFICATION; WAIVER. No supplement, modification, waiver or
termination of this Agreement shall be binding unless executed in writing by the
party to be bound thereby. No waiver of any provision of this Agreement shall
be deemed or shall constitute a waiver of any other provision hereof (whether or
not similar), nor shall such waiver constitute a continuing waiver unless
otherwise expressly provided.
4.4 NOTICES. All notices, consents, requests, reports, demands or
other communications hereunder (collectively, "NOTICES") shall be in writing and
may be given personally, by registered mail, or by Federal Express (or other
reputable overnight delivery service):
if to AIMCO, to it at:
1873 South Bellaire Street, 17th Floor
Denver, Colorado 80222-4348
Attention: Mr. Terry Considine
Telephone: (303) 757-8600
and
28200 Highway 189, Building F-240
P.O. Box 1060
Lake Arrowhead, California 92352
Attention: Mr. Peter K. Kompaniez
Telephone: (909) 336-4821
A-7
<PAGE>
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue, Suite 3400
Los Angeles, California 90071
Attention: Rod A. Guerra, Esq.
Telephone: (213) 687-5000
if to Capricorn, to it at:
c/o Capricorn Investors, L.P.
30 East Elm Street
Greenwich, Connecticut 06830
Attention: Mr. Herbert S. Winokur, Jr.
Telephone: (203) 861-6600
with a copy to:
O'Melveny & Myers, LLP
153 East 53rd Street
New York, New York 10022
Attention: Drake Tempest, Esq.
Telephone: (212) 326-2000
if to Escrow Agent, to it at:
___________________
___________________
Attention: ___________________
Telephone: ___________________
with a copy to:
___________________
___________________
Attention: __________________
Telephone: ___________________
or to such other address or such other person as the addressee party shall have
last designated by notice to the other party. All Notices shall be deemed to
have been given (i) when delivered personally, (ii) three days after being sent
by registered mail, or (iii) one day after being sent by Federal Express (or
other reputable overnight delivery service).
A-8
<PAGE>
4.5 EXPENSES. Except as set forth in SECTION 4.12, all fees and
expenses incurred by AIMCO, Capricorn or Phemus in connection with this
Agreement shall be borne by such party.
4.6 ASSIGNMENT.
(a) Except as specifically provided to the contrary in SECTION
3.1(h) or SECTION 4.6(b), no party hereto shall have the right, power, or
authority to assign or pledge this Agreement or any portion of this Agreement,
or to delegate any duties or obligations arising under this Agreement,
voluntarily, involuntarily, or by operation of law, without the prior written
consent of the other parties hereto.
(b) AIMCO may assign any or all of its rights and interest in
this Agreement to any corporation (i) with respect to which AIMCO owns, directly
or indirectly, a majority of the outstanding capital stock, and (ii) that is
designated by AIMCO to purchase any or all of the Shares pursuant to the Stock
Purchase Agreement. Notwithstanding any such assignment, AIMCO shall remain
liable to perform all obligations required to be performed by it hereunder.
4.7 SEVERABILITY. Any provision or part of this Agreement which is
invalid or unenforceable in any situation in any jurisdiction shall, as to such
situation and such jurisdiction, be ineffective only to the extent of such
invalidity and shall not affect the enforceability of the remaining provisions
hereof or the validity or enforceability of any such provision in any other
situation or in any other jurisdiction.
4.8 SUCCESSORS AND ASSIGNS; THIRD PARTIES. Subject to and without
waiver of the provisions of SECTION 4.6, all of the rights, duties, benefits,
liabilities and obligations of the parties shall inure to the benefit of, and be
binding upon, their respective successors, assigns, heirs and legal
representatives. Except as specifically set forth or referred to herein,
nothing herein expressed or implied is intended or shall be construed to confer
upon or give to any person or entity, other than the parties hereto and their
successors or permitted assigns, any rights or remedies under or by reason of
this Agreement.
4.9 COUNTERPARTS. This Agreement may be executed in as many
counterparts as may be deemed necessary and convenient, and by the different
parties hereto on separate counterparts each of which, when so executed, shall
be deemed an original, but all such counterparts shall constitute one and the
same instrument.
4.10 INTERPRETATION; REFERENCES. Any use of masculine, feminine or
neuter pronouns herein shall not be limiting, but shall be construed as
referring to persons of any gender, as the context may require. Any use of the
singular or plural form herein shall not be limiting, but shall be construed as
referring to either the plural or singular, as the context may require.
References to an "Article" or a "Section" are, unless otherwise specified, to an
Article or a Section of this Agreement. The Article and
A-9
<PAGE>
Section headings of this Agreement are for convenience of reference only and
shall not be deemed to modify, explain, restrict, alter or affect the meaning
or interpretation of any provision hereof.
4.11 TIME OF ESSENCE. Time shall be of the essence with respect to
all matters contemplated by this Agreement.
4.12 ATTORNEYS' FEES. In the event that AIMCO or Capricorn brings an
action or proceeding against the other to enforce or interpret any of the
covenants, conditions, agreements or provisions of this Agreement, the
prevailing party in such action or proceeding shall be entitled to recover all
costs and expenses of such action or proceeding, including, without limitation,
attorneys' fees, charges, disbursements and the fees and costs of expert
witnesses.
4.13 JURISDICTION; SERVICE OF PROCESS. Any action or proceeding
seeking to enforce any provision of, or based on any right arising out of, this
Agreement may be brought against any of the parties in the courts of the State
of California, County of Los Angeles, the State of New York, County of New York,
or, if it has or can acquire jurisdiction, in the United States District Court
for the Central District of California or the United States District Court for
the Southern District of New York, and each of the parties consents to the
jurisdiction of such courts (and of the appropriate appellate courts) in any
such action or proceeding and waives any objection to venue laid therein.
Process in any action or proceeding referred to in the preceding sentence may be
served on any party anywhere in the world.
4.14 WAIVER OF JURY TRIAL. Each party to this Agreement further
waives its respective right to a jury trial of any claim or cause of action
arising out of this Agreement or any dealings between any of the parties hereto
relating to the subject matter of this Agreement. The scope of this waiver is
intended to be all-encompassing of any and all disputes that may be filed in any
court and that relate to the subject matter of this Agreement, including,
without limitation, contract claims, tort claims and all other common law and
statutory claims. This waiver is irrevocable, meaning that it may not be
modified either orally or in writing, and this waiver shall apply to any
subsequent amendments, supplements or other modifications to this Agreement or
to any other document or agreement relating hereto.
4.15 NEGOTIATION OF AGREEMENT. Each of the parties acknowledges that
it has been represented by independent counsel of its choice throughout all
negotiations that have preceded the execution of this Agreement and that it has
executed the same with consent and upon the advice of said independent counsel.
Each party and its counsel cooperated in the drafting and preparation of this
Agreement and the documents referred to herein, and any and all drafts relating
thereto shall be deemed the work product of the parties and may not be construed
against any party by reason of its preparation. Accordingly, any rule of law or
any legal decision that would require interpretation of any ambiguities in this
Agreement against the party that drafted it is of
A-10
<PAGE>
no application and is hereby expressly waived. The provisions of this
Agreement shall be interpreted in a reasonable manner to effect the
intentions of the parties and this Agreement.
4.16 REMEDIES. In the event of a breach by any party of this
Agreement, a non-breaching party, in addition to being entitled to exercise all
rights granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement. The parties hereby
agree that monetary damages would not be adequate compensation for any loss
incurred by reason of a breach by any of them of any of the provisions of this
Agreement and hereby further agree that, in the event of any action for specific
performance in respect of such breach, they shall waive the defense that a
remedy at law would be adequate.
[SIGNATURE PAGES FOLLOW]
A-11
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
APARTMENT INVESTMENT
AND MANAGEMENT COMPANY
By:______________________________
Name:
Its:
[CAPRICORN INVESTORS, L.P.]
By:______________________________
Name:
Its:
[ESCROW AGENT]
By:______________________________
Name:
Its:
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<PAGE>
EXHIBIT B
GUARANTY
GUARANTY, dated as of ______ __, 1997 (the "GUARANTY"), by Phemus
Corporation, a Massachusetts corporation ("PHEMUS"), for the benefit of
Apartment Investment and Management Company, a Maryland corporation ("AIV"),
and its Representatives (collectively, "AIMCO").
WHEREAS, AIV has entered into a Stock Purchase Agreement, dated as
of April 16, 1997 (the "STOCK PURCHASE AGREEMENT"), with Demeter Holdings
Corporation, a Massachusetts corporation, and Capricorn Investors, L.P., a
Delaware limited partnership, which provides for Phemus to execute and
deliver this Guaranty.
NOW, THEREFORE, in consideration of the foregoing and the covenants
of the parties set forth herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
subject to the terms and conditions set forth herein, the parties hereby
agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. Capitalized terms used but not otherwise defined
in this Agreement shall have the respective meanings ascribed thereto in the
Stock Purchase Agreement.
ARTICLE II
PAYMENT GUARANTY
2.1 GUARANTY OF PAYMENT. In consideration of good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
Phemus hereby guaranties, as primary obligor and not as surety, the due and
punctual payment in full of all obligations of Demeter under the Stock
Purchase Agreement. This is a guaranty of payment and not of collection.
2.2 GUARANTY ABSOLUTE. Subject to SECTION 2.6, the obligations of
Phemus under the Guaranty shall be absolute, irrevocable and unconditional
under any and all circumstances, in accordance with its terms, and shall
remain in full force and effect without regard to, and shall not be released,
suspended, terminated, discharged or otherwise affected by, any act, event or
circumstance that might discharge, reduce, limit or modify Phemus's
obligations under the Guaranty or constitute a legal or equitable discharge
or defense of a guarantor.
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2.3 WAIVERS. Phemus hereby expressly waives: (a) any right it
may have to require AIMCO to proceed against Demeter, proceed against or
exhaust any security held from Demeter or pursue any other remedy in AIMCO's
power to pursue; (b) promptness, diligence, notice of acceptance and any
other notice with respect to its obligations hereunder; and (c) all
presentments, demands for payment or performance, notices of nonperformance,
protests, notices of protest, notices of dishonor, notices of acceptance of
this Guaranty, and demands and notices of every kind other than as required
by the Stock Purchase Agreement. Phemus acknowledges that it will receive
direct and indirect benefits from this Guaranty and that the waivers set
forth herein are knowingly made in contemplation of such benefits.
2.4 REINSTATEMENT OF OBLIGATIONS. If AIMCO is required by court
or otherwise to pay, return or restore to Demeter or Phemus or any other
person any amounts previously paid pursuant to the Stock Purchase Agreement,
the obligations of Phemus under this Guaranty, to the extent theretofore
discharged, shall be reinstated and revived and the rights of AIMCO shall
continue with regard to such amounts as though they had never been paid.
2.5 DISPUTED AMOUNTS. If Phemus contests any claim by AIMCO
hereunder, Phemus shall nonetheless pay to AIMCO the non-disputed portion of
such Claim not paid by the Sellers to the extent required by this Guaranty.
AIMCO may not enforce this Guaranty against Phemus with respect to the
disputed amount of such claim unless and until a final, non-appealable order,
award or judgment of a court of competent jurisdiction has been made with
respect to such contested claim which requires Demeter or Phemus to pay any
of such contested claim to or for the benefit of AIMCO, in which event Phemus
shall, unless the same is paid by Demeter when due, pay upon demand all
amounts owed thereunder (including without limitation, all damages, awarded
interest, legal costs, and attorneys' fees) to the extent required by this
Guaranty.
2.6 LIMITATION ON OBLIGATIONS. Nothing contained herein, express or
implied, is intended to, or shall be deemed to, obligate Phemus to pay any
amount if and to the extent that Demeter would not have been obligated to pay
such amount under the Stock Purchase Agreement or otherwise, by reason of any
defense, claim, cause of action, counterclaim, right or set-off or similar
right.
2.7 LIMITATION ON SUBROGATION. Notwithstanding any payment or
payments made by Phemus by reason of this Guaranty, Phemus shall not be
subrogated to any rights of AIMCO against Demeter until all obligations of
Demeter to AIMCO under the Stock Purchase Agreement shall have been paid in
full.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS
Phemus hereby represents and warrants to AIMCO as follows:
3.1 ORGANIZATION AND QUALIFICATIONS. Phemus is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts. Phemus was incorporated in 1987.
3.2 AUTHORITY RELATIVE TO THIS AGREEMENT. Phemus has all
necessary power and authority to execute and deliver this Guaranty and to
perform its obligations hereunder. The execution and delivery of this
Guaranty by Phemus and the performance by Phemus of its obligations hereunder
have been duly and validly authorized by all necessary corporate action and
no other corporate proceedings on the part of such Seller are necessary to
authorize this Guaranty. This Guaranty has been duly and validly executed and
delivered by Phemus and constitutes the legal, valid and binding obligation
of Phemus, enforceable against Phemus in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or other similar laws relating to creditors'
rights generally and by equitable principles to which the remedies of
specific performance and injunctive and similar forms of relief are subject.
3.3 NO CONFLICT; REQUIRED FILINGS AND CONSENTS. The execution and
delivery of Guaranty by Phemus do not, and the performance of its obligations
under this Guaranty will not, (a) conflict with, result in a breach of, cause
a dissolution or require the consent or approval of any Person under, or
violate any provision of the Organizational Documents of Phemus, (b) require
any consent, approval, authorization or permit of, or filing with or
notification to, any Governmental Authority, (c) conflict with or violate any
Law, judgment, order, writ, injunction or decree applicable to Phemus or by
which any property or asset of Phemus is bound or affected, or (d) conflict
with or result in any breach of or constitute a default (or an event which
with notice or lapse of time or both would become a default) under, result in
the loss by Phemus or modification in a manner materially adverse to Phemus
of any material right or benefit under, or give to others any right of
termination, amendment, acceleration, repurchase or repayment, increased
payments or cancellation of, or result in the creation of a Lien or other
encumbrance on any property or asset of Phemus pursuant to, any Contract of
Phemus except, in the case of clauses (a), (b) and (c), such as would not
prevent or delay Phemus from performing its obligations under this Guaranty
in any material respect, and would not, individually or in the aggregate,
have a Material Adverse Effect on Phemus.
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3.4 HARVARD AFFILIATION. Each of Phemus and Demeter is solely
controlled by the President and the Fellows of Harvard College.
3.5 NET WORTH. Phemus has a net worth in excess of $500,000,000.
ARTICLE IV
COVENANTS OF PHEMUS
4.1 CORPORATE EXISTENCE. Except for a transaction that satisfies
the requirements of SECTION 4.2, Phemus shall do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence in accordance with its organizational documents.
4.2 LIMITATION ON SALE OF ASSETS, LIQUIDATION, ETC. Phemus shall
not, in a single transaction or through a series of related transactions, (a)
consolidate with or merge with or into any other Person, or transfer (by
lease, assignment, sale or otherwise) all or substantially all of its
properties and assets as an entirety or substantially as an entirety to
another Person or group of affiliated Persons or (b) adopt a plan (a "PLAN OF
LIQUIDATION") that provides for, contemplates or the effectuation of which is
preceded or accompanied by (regardless of whether substantially
contemporaneously, in phases or otherwise) (i) the sale, lease, conveyance or
other disposition of all or substantially all of the assets of Phemus
otherwise than as an entirety or substantially as an entirety and (ii) the
distribution of all or substantially all of the proceeds of such sale, lease,
conveyance or other disposition and all or substantially all of the remaining
assets of such Person to holders of capital stock of Phemus unless, in the
case of clause (a) or (b):
(x) either Phemus shall be the continuing Person, or the Person (if
other than Phemus) formed by such consolidation or into which Phemus is
merged or to which all or substantially all of the properties and assets of
Phemus are transferred as an entirety or substantially as an entirety (or, in
the case of a Plan of Liquidation, any Person to which assets are
transferred) (Phemus or such other Person being hereinafter referred to as
the "SURVIVING PERSON") shall be a corporation organized and validly existing
under the laws of the United States, any State thereof or the District of
Columbia, and shall expressly assume all of the obligations of Phemus under
this Guaranty; and
(y) immediately after and giving effect to such transaction and
the assumption contemplated by clause (x) above, the Surviving Person shall
have a net worth equal to or greater than the net worth of Phemus immediately
preceding the transaction.
4.3 LIQUIDITY. Phemus covenants and agrees that it will, at such
time, if any, as its obligations under the Guaranty become due, have liquid
assets at least equal to its obligations hereunder.
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ARTICLE V
MISCELLANEOUS PROVISIONS
5.1 GOVERNING LAW. This Guaranty and the legal relations among
the parties hereto shall be governed by and construed and enforced in
accordance with the laws of the State of Delaware, without regard to its
principles of conflicts of law.
5.2 MODIFICATION; WAIVER. No supplement, modification, waiver or
termination of this Guaranty shall be binding unless executed in writing by
Phemus. No waiver of any provision of this Guaranty shall be deemed or shall
constitute a waiver of any other provision hereof (whether or not similar),
nor shall such waiver constitute a continuing waiver unless otherwise
expressly provided.
5.3 NOTICES. All notices, consents, requests, reports, demands or
other communications hereunder (collectively, "NOTICES") shall be in writing
and may be given personally, by registered mail, or by Federal Express (or
other reputable overnight delivery service):
if to AIMCO, to it at:
1873 South Bellaire Street, 17th Floor
Denver, Colorado 80222-4348
Attention: Mr. Terry Considine
Telephone: (303) 757-8600
and
28200 Highway 189, Building F-240
P.O. Box 1060
Lake Arrowhead, California 92352
Attention: Mr. Peter K. Kompaniez
Telephone: (909) 336-4821
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue, Suite 3400
Los Angeles, California 90071
Attention: Rod A. Guerra, Esq.
Telephone: (213) 687-5000
if to Phemus, to it at:
c/o Harvard Management Company, Inc.
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600 Atlantic Avenue
Boston, Massachusetts 02210
Attention: Mr. Tim Palmer
Tami E. Nason, Esq.
Telephone: (617) 523-4400
with a copy to:
Ropes & Gray
One International Place
Boston, Massachusetts 02210
Attention: Larry Jordan Rowe, Esq.
Telephone: (617) 951-7407
or to such other address or such other person as the addressee party shall
have last designated by notice to the other party. All Notices shall be
deemed to have been given (i) when delivered personally, (ii) three days
after being sent by registered mail, or (iii) one day after being sent by
Federal Express (or other reputable overnight delivery service).
5.4 EXPENSES. Except as set forth in SECTION 5.10, all fees and
expenses incurred by Phemus in connection with this Guaranty shall be borne by
Phemus.
5.5 ASSIGNMENT.
(a) Phemus shall not delegate any duties or obligations
arising under this Guaranty, voluntarily, involuntarily, or by operation of
law, without the prior written consent of AIMCO.
(b) AIMCO may assign any or all of its rights and interest in
this Guaranty to any corporation (i) with respect to which AIMCO owns,
directly or indirectly, a majority of the outstanding capital stock, and (ii)
that is designated by AIMCO to purchase any or all of the Shares pursuant to
the Stock Purchase Agreement. Notwithstanding any such assignment, AIMCO
shall remain liable to perform all obligations required to be performed by it
hereunder.
5.6 SEVERABILITY. Any provision or part of this Guaranty which is
invalid or unenforceable in any situation in any jurisdiction shall, as to
such situation and such jurisdiction, be ineffective only to the extent of
such invalidity and shall not affect the enforceability of the remaining
provisions hereof or the validity or enforceability of any such provision in
any other situation or in any other jurisdiction.
5.7 SUCCESSORS AND ASSIGNS; THIRD PARTIES. Subject to and without
waiver of the provisions of SECTION 5.5, all of the rights and benefits of
AIMCO shall inure to the benefit of AIMCO's successors and assigns. Except
as specifically set forth or
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referred to herein, nothing herein expressed or implied is intended or shall
be construed to confer upon or give to any person or entity, other than AIMCO
and its successors and permitted assigns, any rights or remedies under or by
reason of this Guaranty.
5.8 INTERPRETATION; REFERENCES. Any use of masculine, feminine or
neuter pronouns herein shall not be limiting, but shall be construed as
referring to persons of any gender, as the context may require. Any use of
the singular or plural form herein shall not be limiting, but shall be
construed as referring to either the plural or singular, as the context may
require. References to an "Article" or a "Section" are, unless otherwise
specified, to an Article or a Section of this Guaranty. The Article and
Section headings of this Guaranty are for convenience of reference only and
shall not be deemed to modify, explain, restrict, alter or affect the meaning
or interpretation of any provision hereof.
5.9 TIME OF ESSENCE. Time shall be of the essence with respect to
all matters contemplated by this Guaranty.
5.10 ATTORNEYS' FEES. In the event that AIMCO brings an action or
proceeding against Phemus to enforce or interpret any of the covenants,
conditions, agreements or provisions of this Guaranty, the prevailing party
in such action or proceeding shall be entitled to recover all costs and
expenses of such action or proceeding, including, without limitation,
attorneys' fees, charges, disbursements and the fees and costs of expert
witnesses.
5.11 JURISDICTION; SERVICE OF PROCESS. Any action or proceeding
seeking to enforce any provision of, or based on any right arising out of,
this Guaranty may be brought against any of the parties in the courts of the
State of California, County of Los Angeles, the Commonwealth of
Massachusetts, County of Suffolk, or, if it has or can acquire jurisdiction,
in the United States District Court for the Central District of California or
the United States District Court for the Commonwealth of Massachusetts, and
each of the parties consents to the jurisdiction of such courts (and of the
appropriate appellate courts) in any such action or proceeding and waives any
objection to venue laid therein. Process in any action or proceeding
referred to in the preceding sentence may be served on any party anywhere in
the world.
5.12 WAIVER OF JURY TRIAL. Phemus waives its respective right to
a jury trial of any claim or cause of action arising out of this Guaranty or
any dealings between any of the parties hereto relating to the subject matter
of this Guaranty. The scope of this waiver is intended to be
all-encompassing of any and all disputes that may be filed in any court and
that relate to the subject matter of this Guaranty, including, without
limitation, contract claims, tort claims and all other common law and
statutory claims. This waiver is irrevocable, meaning that it may not be
modified either orally or in writing, and this waiver shall apply to any
subsequent amendments, supplements or other modifications to this Guaranty or
to any other document or agreement relating hereto.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, Phemus has executed this Guaranty as of the
date first above written.
PHEMUS CORPORATION
By:____________________________________
Name:
Its:
By:____________________________________
Name:
Its:
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EXHIBIT C
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of ________, 1997 (this
"AGREEMENT"), by and among Apartment Investment and Management Company, a
Maryland corporation (the "COMPANY"), and the persons listed on SCHEDULE A
hereto (each, an "INVESTOR").
WHEREAS, pursuant to that certain Stock Purchase Agreement, dated
as of April 16, 1997 (the "ACQUISITION AGREEMENT"), by and among the Company,
Demeter Holdings Corporation, a Massachusetts corporation ("DEMETER"), and
Capricorn Investors, L.P., a Delaware limited partnership ("CAPRICORN"), the
Investors will receive up to _____ shares of the Company's Class A Common
Stock, par value $.01 per share (the "COMMON STOCK");
WHEREAS, in connection with the Acquisition Agreement, the Company
has agreed to register for sale by the Investors and certain transferees, the
shares of Common Stock received by the Investors pursuant to the Acquisition
Agreement (collectively, the "REGISTRABLE SHARES"); and
WHEREAS, the parties hereto desire to enter into this agreement to
evidence the foregoing agreement of the Company and the mutual covenants of
the parties relating thereto.
NOW, THEREFORE, in consideration of the foregoing and the covenants
of the parties set forth herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
subject to the terms and conditions set forth herein, the parties hereby
agree as follows:
Section 1. CERTAIN DEFINITIONS. In this Agreement the following
terms shall have the following respective meanings:
"ACCREDITED INVESTOR" shall have the meaning set forth in Rule 501
of the General Rules and Regulations promulgated under the Securities Act.
"AFFILIATE" shall mean, when used with respect to a specified
Person, another Person that directly, or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with
the Person specified.
"COMMISSION" shall mean the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.
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"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder, all as
the same shall be in effect at the relevant time.
"HOLDERS" shall mean (i) each of the Investors, and (ii) each
Person holding Registrable Shares as a result of a transfer or assignment to
that Person of Registrable Shares made by an Investor in accordance with this
Agreement other than pursuant to an effective registration statement or Rule
144.
"INDEMNIFIED PARTY" shall have the meaning ascribed to it in Section
4(c) of this Agreement.
"INDEMNIFYING PARTY" shall have the meaning ascribed to it in Section
4(c) of this Agreement.
"PERSON" shall mean an individual, corporation, partnership, estate,
trust, association, private foundation, joint stock company or other entity.
The terms "REGISTER," "REGISTERED" and "REGISTRATION" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act providing for the sale by the Holders of
Registrable Shares in accordance with the method or methods of distribution
designated by the Holders, and the declaration or ordering of the
effectiveness of such registration statement by the Commission.
"REGISTRABLE SHARES" shall have the meaning ascribed to it in the
recitals to this Agreement.
"REGISTRATION EXPENSES" shall mean all expenses (excluding Selling
Expenses) incurred by the Company in complying with Section 2 hereof,
including, without limitation, the following: (a) all registration, filing
and listing fees; (b) fees and expenses of compliance with federal and state
securities or real estate syndication laws (including, without limitation,
reasonable fees and disbursements of counsel in connection with state
securities and real estate syndication qualifications of the Registrable
Shares under the laws of such jurisdictions as the Holders may reasonably
designate); (c) printing (including, without limitation, expenses of printing
or engraving certificates for the Registrable Shares in a form eligible for
deposit with The Depository Trust Company and otherwise meeting the
requirements of any securities exchange on which they are listed and of
printing registration statements and prospectuses), messenger, telephone,
shipping and delivery expenses; (d) fees and disbursements of counsel for the
Company; (e) fees and disbursements of all independent public accountants of
the Company (including without limitation the expenses of any annual or
special audit and "cold comfort" letters required by the managing
underwriter); (f) securities act liability insurance if the Company so
desires; (g) fees and expenses of other Persons reasonably necessary in
connection with the registration, including any experts, retained by the
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Company; (h) fees and expenses incurred in connection with the listing of the
Registrable Shares on each securities exchange on which securities of the
same class are then listed; and (i) fees and expenses associated with any
NASD filing required to be made in connection with the registration statement.
"RIGHTS" shall have the meaning ascribed to it in Section 6 of this
Agreement.
"RULE 144" shall mean Rule 144 promulgated by the Commission under
the Securities Act, as amended from time to time, or any similar rule or
regulation of the Commission.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended,
and the rules and regulations of the Commission thereunder, all as the same
shall be in effect at the relevant time.
"SELLING EXPENSES" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to any sale of Registrable
Shares.
Section 2. REGISTRATION.
(a) The Company shall prepare and file with the Commission a
registration statement for the purpose of effecting a Registration of the
sale of Registrable Shares by the Holders thereof; shall use its best efforts
to effect such Registration within 10 days after the effectiveness of a
registration statement filed by the Company to effect the registration of
shares of Common Stock to be issued in connection with the proposed merger of
NHP Incorporated and a subsidiary of the Company, but not later than 6 months
after the date hereof (including, without limitation, the execution of an
undertaking to file post-effective amendments and appropriate qualification
under applicable state securities and real estate syndication laws); and
shall keep such Registration continuously effective until the earlier of (i)
the third anniversary of the date hereof or, if the Company has exercised its
Suspension Right hereunder, an additional number of days after such third
anniversary equal to the aggregate number of days that the Company has
deferred a filing or suspended sales under any filed registration statement,
and (ii) the date on which all Registrable Shares have been sold pursuant to
such registration statement or Rule 144; PROVIDED, HOWEVER, that the Company
shall not be obligated to take any action to effect any such Registration,
qualification or compliance pursuant to this Section 2 in any particular
jurisdiction in which the Company would be required to execute a general
consent to service of process in effecting such Registration, qualification
or compliance unless the Company is already subject to service in such
jurisdiction.
Notwithstanding the foregoing, the Company shall have the right
(the "SUSPENSION RIGHT") to defer such filing (or suspend sales under any
filed registration statement or defer the updating of any filed registration
statement and suspend sales
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thereunder) for a period of not more than 120 days during any one-year period
ending on December 31, if the Company shall furnish to the Holders a
certificate signed by the President or any other executive officer or any
director of the Company stating that (x) in the good faith judgment of the
Company, it would be detrimental to the Company and its shareholders to file
such registration statement or amendment thereto at such time (or continue
sales under a filed registration statement), or (y) the managing underwriter
or underwriters in an underwritten offering by the Company for the account of
the Company have requested in writing that the Holders refrain from any sale
or distribution of Common Stock, and, in either case, the Company has elected
to defer the filing of such registration statement (or suspend sales under a
filed registration statement) for the period of time specified in such
certificate (which shall not exceed 120 days during any one-year period).
Upon the Company's exercise of the Suspension Right, the Holders hereby agree
not to effect any sale or distribution of shares of Common Stock during the
period specified by the Company in such certificate.
(b) The Company shall promptly notify the Holders of the
occurrence of the following events:
(i) when any registration statement relating to the
Registrable Shares or post-effective amendment thereto filed with the
Commission has become effective;
(ii) the issuance by the Commission of any stop order
suspending the effectiveness of any registration statement relating to
the Registrable Shares;
(iii) the suspension of an effective registration
statement by the Company in accordance with the last paragraph of
Section 2(a) above;
(iv) the Company's receipt of any notification of the
suspension of the qualification of any Registrable Shares covered by a
registration statement for sale in any jurisdiction; and
(v) the existence of any event, fact or circumstance
that results in a registration statement or prospectus relating to
Registrable Shares or any document incorporated therein by reference
containing an untrue statement of material fact or omitting to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading during the distribution of
securities.
The Company agrees to use its best effort to obtain the withdrawal of any order
suspending the effectiveness of any such registration statement or any state
qualification at the earliest possible moment.
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(c) The Company shall provide to the Holders, at no cost to
the Holders, a copy of the registration statement and any amendment thereto
used to effect the Registration of the Registrable Shares, each prospectus
contained in such registration statement or post-effective amendment and any
amendment or supplement thereto and such other documents as the requesting
Holders may reasonably request in order to facilitate the disposition of the
Registrable Shares covered by such registration statement. The Company
consents to the use of each such prospectus and any supplement thereto by the
Holders in connection with the offering and sale of the Registrable Shares
covered by such registration statement or any amendment thereto. The Company
shall also file a sufficient number of copies of the prospectus and any
post-effective amendment or supplement thereto with the New York Stock
Exchange (or, if the Common Stock is no longer listed thereon, with such
other securities exchange or market on which the Common Stock is then listed)
so as to enable the Holders to the benefits of the prospectus delivery
provisions of Rule 153 under the Securities Act.
(d) The Company agrees to use its best efforts to cause the
Registrable Shares covered by a registration statement to be registered with or
approved by such state securities authorities as may be necessary to enable the
Holders to consummate the disposition of such shares pursuant to the plan of
distribution set forth in the registration statement.
(e) Subject to the Company's Suspension Right, if any event,
fact or circumstance requiring an amendment to a registration statement relating
to the Registrable Shares or supplement to a prospectus relating to the
Registrable Shares shall exist, immediately upon becoming aware thereof the
Company agrees to notify the Holders and prepare and furnish to the Holders a
post-effective amendment to the registration statement or supplement to the
prospectus or any document incorporated therein by reference or file any other
required document so that, as thereafter delivered to the purchasers of the
Registrable Shares, the prospectus will not contain an untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading.
(f) The Company agrees to use commercially reasonable efforts
(including the payment of any listing fees) to obtain the listing of all
Registrable Shares covered by the registration statement on each securities
exchange on which securities of the same class are then listed.
(g) The Company agrees to use its best efforts to comply with
the Securities Act and the Exchange Act, and, as soon as reasonably practicable
following the end of any fiscal year during which a registration statement
effecting a Registration of the Registrable Shares shall have been effective, to
make available to its security holders an earnings statement satisfying the
provisions of Section 11(a) of the Securities Act.
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(h) The Company agrees to cooperate with the selling Holders to
facilitate the timely preparation and delivery of certificates representing
Registrable Shares to be sold pursuant to a Registration and not bearing any
Securities Act legend; and enable certificates for such Registrable Shares to be
issued for such numbers of shares and registered in such names as the Holders
may reasonably request at least two business days prior to any sale of
Registrable Shares.
(i) If Holders notify the Company that they intend to effect an
underwritten offering of at least 300,000 Registrable Shares, the Company will
make available for inspection by any Holder disposing of such Registrable
Shares, any underwriter of such offering, and any attorney, accountant or other
agent retained by any such Holder or underwriter (collectively, the
"INSPECTORS"), all financial and other records and other information, pertinent
corporate documents and properties of any of the Company and its subsidiaries
(collectively, the "RECORDS"), as shall be reasonably necessary to enable them
to exercise their due diligence responsibility; PROVIDED, HOWEVER, that the
Records that the company determines, in good faith, to be confidential shall not
be disclosed to any Inspector unless (i) such Inspector signs a confidentiality
agreement reasonably satisfactory to the Company (which shall permit the
disclosure of such Records in such Registration Statement or the related
Prospectus if necessary to avoid or correct a material misstatement in or
material omission from such Registration Statement or Prospectus), (ii) after
consultation with counsel for the applicable Inspectors, the Holders and the
Company, the disclosure of such Records is necessary to avoid or correct a
misstatement or omission in such Registration Statement or (iii) the release of
such Records is ordered pursuant to a subpoena or other order from a court of
competent jurisdiction, PROVIDED that each Holder shall, promptly after learning
that disclosure of such Records is sought in a court having jurisdiction, give
notice to the Company and allow the Company, at the Company's expense, to
undertake appropriate action to prevent disclosure of such Records.
(j) If Holders notify the Company that they intend to effect an
underwritten offering of at least 300,000 Registrable Shares, the Company will
enter into such agreements (including an underwriting agreement in form, scope
and substance as is customary in underwritten offerings) and take all such other
appropriate and reasonable actions requested by the Holders owning a majority of
the Registrable Shares being sold in connection therewith (including those
reasonably requested by the managing underwriters) in order to expedite or
facilitate the disposition of such Registrable Shares and, in such connection,
(i) use its commercially reasonable efforts to obtain opinions of counsel to the
Company and updates thereof (which counsel and opinions (in form, scope and
substance) shall be reasonably satisfactory to the managing underwriters and
counsel to the Holders disposing of Registrable Shares), addressed to each
Holder selling Registrable Shares thereby and each of the underwriters as to the
matters customarily covered in opinions requested in underwritten offerings and
such other matters as may be reasonably requested by such counsel and
underwriters, (ii) use commercially reasonable efforts to obtain "cold comfort"
or "agreed-upon-procedures" letters and updates thereof from the independent
certified public accountants of the Company (and, if necessary, any
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other independent certified public accountants of any subsidiary of the
Company or of any business acquired by the Company for which financial
statements and financial data are, or are required to be, included in the
Registration Statement), addressed to each Holder selling Registrable Shares
covered thereby (unless such accountants shall be prohibited from so
addressing such letters by applicable standards of the accounting profession)
and each of the underwriters, such letters to be in customary form and
covering matters of the type customarily covered in "cold comfort" or
"agreed-upon-procedures" letters in connection with underwritten offerings,
and (iii) if requested and if an underwriting agreement is entered into, make
customary representations and warranties, and provide indemnification
provisions and procedures substantially to the effect set forth in Section 4
hereof with respect to all parties to be indemnified pursuant to said
Section. The above shall be done at each closing under such underwriting or
similar agreement, or as and to the extent required thereunder.
Section 3. EXPENSES OF REGISTRATION. The Company shall pay all
Registration Expenses incurred in connection with the registration,
qualification or compliance pursuant to Section 2 hereof. The Company shall
pay the fees and disbursements (not in excess of $25,000 in the aggregate) of
one counsel, other than the Company's counsel, selected to represent the Holders
by Holders owning a majority in number of the Registrable Shares. Except as set
forth in the immediately preceding sentence, each Holder shall pay the expenses
of its own counsel. All Selling Expenses incurred in connection with the sale
of Registrable Shares by any of the Holders shall be borne by the Holder selling
such Registrable Shares.
Section 4. INDEMNIFICATION.
(a) The Company will indemnify each Holder, each Holder's
officers and directors, and each person controlling such Holder within the
meaning of Section 15 of the Securities Act, against all expenses, claims,
losses, damages and liabilities (including reasonable legal expenses), arising
out of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any registration statement or prospectus relating to
the Registrable Shares, or any amendment or supplement thereto, or based on any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
PROVIDED, HOWEVER, that the Company will not be liable in any such case to the
extent that any such claim, loss, damage, liability or expense arises out of or
is based on any untrue statement or omission or alleged untrue statement or
omission, made in reliance upon and in conformity with information furnished in
writing to the Company by such Holder or underwriter for inclusion therein.
(b) Each Holder will indemnify the Company, each of its
directors and each of its officers who signs the registration statement, each
underwriter, if any, of the Company's securities covered by such registration
statement, and each person who controls the Company or such underwriter within
the meaning of Section 15 of the Securities Act, against all claims, losses,
damages and liabilities (including reasonable
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legal fees and expenses) arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any such
registration statement or prospectus, or any amendment or supplement thereto,
or based on any omission (or alleged omission) to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent,
that such untrue statement (or alleged untrue statement) or omission (or
alleged omission) is made in such registration statement or prospectus, in
reliance upon and in conformity with information furnished in writing to the
Company by such Holder for inclusion therein.
(c) Each party entitled to indemnification under this Section 4
(the "INDEMNIFIED PARTY") shall give notice to the party required to provide
indemnification (the "INDEMNIFYING PARTY") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, but the
omission to so notify the Indemnifying Party shall not relieve it from any
liability which it may have to the Indemnified Party otherwise than pursuant to
the provisions of this Section 4 and then, only to the extent of the actual
damages suffered by such delay in notification. The Indemnifying Party shall
assume the defense of such action, including the employment of counsel to be
chosen by the Indemnifying Party to be reasonably satisfactory to the
Indemnified Party, and payment of expenses. The Indemnified Party shall have
the right to employ its own counsel in any such case, but the legal fees and
expenses of such counsel shall be at the expense of the Indemnified Party,
unless the employment of such counsel shall have been authorized in writing by
the Indemnifying Party in connection with the defense of such action, or the
Indemnifying Party shall not have employed counsel to take charge of the defense
of such action or the Indemnified Party shall have reasonably concluded that
there may be defenses available to it or them which are different from or
additional to those available to the Indemnifying Party (in which case the
Indemnifying Party shall not have the right to direct the defense of such action
on behalf of the Indemnified Party), in any of which events such fees and
expenses shall be borne by the Indemnifying Party. No Indemnifying Party, in
the defense of any such claim or litigation, shall, except with the consent of
each Indemnified Party, consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party of a release from all
liability in respect to such claim or litigation.
(d) If the indemnification provided for in this Section 4 is
unavailable to a party that would have been an Indemnified Party under this
Section in respect of any expenses, claims, losses, damages and liabilities
referred to herein, then each party that would have been an Indemnifying Party
hereunder shall, in lieu of indemnifying such Indemnified Party, contribute to
the amount paid or payable by such Indemnified Party as a result of such
expenses, claims, losses, damages and liabilities in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party on the one
hand and such Indemnified Party on the other in connection with the statement or
omission which resulted in such expenses, claims, losses, damages and
liabilities, as well as any other relevant equitable considerations. The
relative fault shall be determined
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by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Indemnifying Party or
such Indemnified Party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and each holder of Registrable Shares agrees that it would not
be just and equitable if contribution pursuant to this Section were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to above in
this Section 4(d).
(e) No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
Section 5. INFORMATION TO BE FURNISHED BY HOLDERS. Each Holder shall
furnish to the Company such information as the Company may reasonably request
and as shall be required in connection with the Registration and related
proceedings referred to in Section 2 hereof. The Company's obligation to
include any Holder's Registrable Shares in a Registration hereunder shall be
subject to such Holder providing the Company with such information. The Company
shall not have any obligation to make more than three post-effective amendments
to any Registration hereunder to include any Registrable Shares of a Holder
providing such information after the effective date of such Registration, unless
such Holder agrees to pay all costs and expenses associated with any additional
post-effective amendment.
Section 6. TRANSFER OF REGISTRATION RIGHTS. The rights of each
Holder under Section 2 hereof and the related rights of each Holder hereunder
(the "RIGHTS") may be assigned by each Holder (i) if the Holder is a
corporation, to a shareholder or shareholders of such Holder, (ii) if the Holder
is a partnership, to a partner or partners of that partnership, (iii) if the
Holder is an individual, to an immediate family member, (iv) upon the death of
the Holder, to the heirs of the Holder by virtue of the Holder's will or the
laws of descent and distribution, (v) if the Holder is a corporation or a
partnership, to any Person into or with which the Holder is merged or
consolidated or to which the Holder sells all or substantially all of its
assets, (vi) in connection with a bona fide pledge of Registrable Shares, to the
pledgee, (vii) to an entity controlled by or under common control with the
Holder, or (viii) to any entity or person that acquires at least 300,000
Registrable Shares, in each case, only in connection with the transfer of
Registrable Shares issued to the Investors pursuant to the Acquisition
Agreement; PROVIDED that (w) in each case, the transferee is an Accredited
Investor, (x) such transfer is otherwise effected in accordance with applicable
securities laws and the Company shall have been provided by the transferor and
the transferee with such evidence thereof as the Company may request, including
representations by the transferee in form and content reasonably acceptable to
the Company, (y) the Company is given written notice of such transfer prior to
such transfer (or, in the case of the death of the Investor, as soon as
practicable following the death of the Investor), and (z) the transferee by
written agreement delivered to the Company acknowledges that such transferee is
bound by the
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terms of this Agreement. In the event of any such permitted transfer, the
defined term "HOLDERS" shall from and after such transfer include such
transferee.
Section 7. INTENTIONALLY OMITTED.
Section 8. RULE 144 SALES.
(a) The Company covenants that, until the third anniversary of
the date hereof, it will file the reports required to be filed by the Company
under the Exchange Act, so as to enable any Holder to sell Registrable Shares
pursuant to Rule 144 under the Securities Act.
(b) In connection with any sale, transfer or other disposition
by any Holder of any Registrable Shares pursuant to Rule 144 under the
Securities Act, the Company shall cooperate with such Holder to facilitate the
timely preparation and delivery of certificates representing Registrable Shares
to be sold and not bearing any Securities Act legend, and enable certificates
for such Registrable Shares to be for such number of shares and registered in
such names as the selling Holder may reasonably request at least two business
days prior to any sale of Registrable Shares.
Section 9. MISCELLANEOUS.
(a) GOVERNING LAW. This Agreement and the legal relations among
the parties hereto shall be governed by and construed and enforced in accordance
with the laws of the State of Maryland, without regard to its principles of
conflicts of law.
(b) ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement among the parties pertaining to the subject matter hereof and
supersedes all prior agreements, understandings, letters of intent, negotiations
and discussions, whether oral or written, of the parties, and there are no
warranties, representations or other agreements, express or implied, made to any
party by any other party in connection with the subject matter hereof except as
specifically set forth herein or in the documents delivered pursuant hereto or
in connection herewith.
(c) MODIFICATION; WAIVER. No supplement, modification,
waiver or termination of this Agreement shall be binding unless executed in
writing by the party to be bound thereby. No waiver of any provision of this
Agreement shall be deemed or shall constitute a waiver of any other provision
hereof (whether or not similar), nor shall such waiver constitute a
continuing waiver unless otherwise expressly provided.
(d) NOTICES. All notices, consents, requests, reports,
demands or other communications hereunder (collectively, "NOTICES") shall be
in writing and may be given personally, by registered mail, or by Federal
Express (or other reputable overnight delivery service). Notices shall be
addressed as follows: (i) if to an Investor, at such Investor's address set
forth below its signature hereon, or at such other address as the
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Investor shall have furnished to the Company in writing, (ii) if to any
assignee or transferee of an Investor, at such address as such assignee or
transferee shall have furnished the Company in writing, or (iii) if to the
Company, at the following address:
1873 South Bellaire Street, 17th Floor
Denver, Colorado 80222-4348
Attention: Mr. Terry Considine
Telephone: (303) 757-8600
or to such other address or such other person as the addressee party shall
have last designated by notice to the other party. Any notice or other
communication required to be given hereunder to a Holder in connection with a
registration may instead be given to the designated representative of such
Holder. All Notices shall be deemed to have been given (i) when delivered
personally, (ii) three days after being sent by registered mail, or (iii) one
day after being sent by Federal Express (or other reputable overnight
delivery service).
(e) ASSIGNMENT. Except as specifically provided to the
contrary in SECTION 6, no party hereto shall have the right, power, or
authority to assign or pledge this Agreement or any portion of this
Agreement, or to delegate any duties or obligations arising under this
Agreement, voluntarily, involuntarily, or by operation of law, without the
prior written consent of the other parties hereto.
(f) SEVERABILITY. Any provision or part of this Agreement
which is invalid or unenforceable in any situation in any jurisdiction shall,
as to such situation and such jurisdiction, be ineffective only to the extent
of such invalidity and shall not affect the enforceability of the remaining
provisions hereof or the validity or enforceability of any such provision in
any other situation or in any other jurisdiction.
(g) SUCCESSORS AND ASSIGNS; THIRD PARTIES. Subject to and
without waiver of the provisions of SECTION 9(e), all of the rights, duties,
benefits, liabilities and obligations of the parties shall inure to the
benefit of, and be binding upon, their respective successors, assigns, heirs
and legal representatives. Except as specifically set forth or referred to
herein, nothing herein expressed or implied is intended or shall be construed
to confer upon or give to any person or entity, other than the parties hereto
and their successors or permitted assigns, any rights or remedies under or by
reason of this Agreement.
(h) COUNTERPARTS. This Agreement may be executed in as many
counterparts as may be deemed necessary and convenient, and by the different
parties hereto on separate counterparts each of which, when so executed,
shall be deemed an original, but all such counterparts shall constitute one
and the same instrument.
(i) INTERPRETATION; REFERENCES. Any use of masculine,
feminine or neuter pronouns herein shall not be limiting, but shall be
construed as referring to
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persons of any gender, as the context may require. Any use of the singular
or plural form herein shall not be limiting, but shall be construed as
referring to either the plural or singular, as the context may require.
References to a "Section" are, unless otherwise specified, to a Section of
this Agreement. The Section headings of this Agreement are for convenience
of reference only and shall not be deemed to modify, explain, restrict, alter
or affect the meaning or interpretation of any provision hereof.
(j) TIME OF ESSENCE. Time shall be of the essence with respect
to all matters contemplated by this Agreement.
(k) ATTORNEYS' FEES. In the event that any party hereto brings
an action or proceeding against the other party to enforce or interpret any of
the covenants, conditions, agreements or provisions of this Agreement, the
prevailing party in such action or proceeding shall be entitled to recover all
costs and expenses of such action or proceeding, including, without limitation,
attorneys' fees, charges, disbursements and the fees and costs of expert
witnesses.
(l) WAIVER OF JURY TRIAL. Each party to this Agreement further
waives its respective right to a jury trial of any claim or cause of action
arising out of this Agreement or any dealings between any of the parties hereto
relating to the subject matter of this Agreement. The scope of this waiver is
intended to be all-encompassing of any and all disputes that may be filed in any
court and that relate to the subject matter of this Agreement, including,
without limitation, contract claims, tort claims and all other common law and
statutory claims. This waiver is irrevocable, meaning that it may not be
modified either orally or in writing, and this waiver shall apply to any
subsequent amendments, supplements or other modifications to this Agreement.
(m) NEGOTIATION OF AGREEMENT. Each of the parties acknowledges
that it has been represented by independent counsel of its choice throughout all
negotiations that have preceded the execution of this Agreement and that it has
executed the same with consent and upon the advice of said independent counsel.
Each party and its counsel cooperated in the drafting and preparation of this
Agreement and the documents referred to herein, and any and all drafts relating
thereto shall be deemed the work product of the parties and may not be construed
against any party by reason of its preparation. Accordingly, any rule of law or
any legal decision that would require interpretation of any ambiguities in this
Agreement against the party that drafted it is of no application and is hereby
expressly waived. The provisions of this Agreement shall be interpreted in a
reasonable manner to effect the intentions of the parties and this Agreement.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
By:_________________________________________
Name:_______________________________________
Title:______________________________________
INVESTOR:
Name:
By:_________________________________________
Name:_______________________________________
Title:______________________________________
Name:
By:_________________________________________
Name:_______________________________________
Title:______________________________________
Investor's Address:
____________________________________________
____________________________________________
____________________________________________
Phone:______________________________________
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SCHEDULE A TO
REGISTRATION RIGHTS AGREEMENT
INVESTORS
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EXHIBIT D
- --------------------------------------------------------------------------------
NHP INCORPORATED,
NHP FINANCIAL SERVICES, LTD.
AND
THE FIRST NATIONAL BANK OF BOSTON,
RIGHTS AGENT
RIGHTS AGREEMENT
DATED AS OF ________ __, 1997
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
PAGE
RECITALS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1. Certain Definitions. . . . . . . . . . . . . . . . . . . . 1
Section 2. Appointment of Rights Agent. . . . . . . . . . . . . . . . 4
Section 3. Evidence of Rights . . . . . . . . . . . . . . . . . . . . 4
Section 4. Effect of Maturity Time. . . . . . . . . . . . . . . . . . 5
Section 5. Covenants of the Company and the Spin-Off Entity . . . . . 6
Section 6. Record Date. . . . . . . . . . . . . . . . . . . . . . . . 9
Section 7. Recapitalization of the Spin-Off Entity. . . . . . . . . . 9
Section 8. Rights of Action . . . . . . . . . . . . . . . . . . . . . 9
Section 9. Agreement of Rights Holders. . . . . . . . . . . . . . . .10
Section 10. Right Holder Not Deemed a Spin-Off Entity Shareholder. . .10
Section 11. Concerning the Rights Agent. . . . . . . . . . . . . . . .11
Section 12. Merger or Consolidation or Change of Name of Rights Agent.11
Section 13. Duties of Rights Agent . . . . . . . . . . . . . . . . . .11
Section 14. Change of Rights Agent . . . . . . . . . . . . . . . . . .13
Section 15. Termination. . . . . . . . . . . . . . . . . . . . . . .14
Section 16. Notice of Certain Events.. . . . . . . . . . . . . . . . .14
Section 17. Notices. . . . . . . . . . . . . . . . . . . . . . . . . .15
Section 18. Supplements and Amendments . . . . . . . . . . . . . . . .16
Section 19. Successors; Certain Covenants. . . . . . . . . . . . . . .16
Section 20. Benefits of this Agreement . . . . . . . . . . . . . . . .16
Section 21. Determinations and Actions by the Board of Directors, etc.17
Section 22. Severability.. . . . . . . . . . . . . . . . . . . . . . .17
Section 23. Governing Law. . . . . . . . . . . . . . . . . . . . . . .17
Section 24. Counterparts.. . . . . . . . . . . . . . . . . . . . . . .17
Section 25. Descriptive Headings.. . . . . . . . . . . . . . . . . . .17
EXHIBIT A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
D-i
<PAGE>
RIGHTS AGREEMENT
This RIGHTS AGREEMENT, dated as of April __, 1997 (this "Agreement"),
is made and entered into by and between NHP Incorporated, a Delaware corporation
(the "Company"), NHP Financial Services, Ltd., a Delaware corporation (the
"Spin-Off Entity"), and The First National Bank of Boston, a ___________
corporation (the "Rights Agent").
RECITALS
WHEREAS, on April __, 1997, the Board of Directors of the Company
authorized and declared a dividend distribution of one right ("Right") for each
share of Common Stock, par value $.01 per share, of the Company (a "Common
Share") outstanding as of the Close of Business (as hereinafter defined) on
__________ __, 1997, (the "Record Date"), each Right representing the right to
receive, upon the Company's distribution of shares of common stock of NHP
Financial Services, Ltd., a Delaware corporation (the "Spin-Off Entity"), upon
the terms and subject to the conditions herein set forth, one-third of a Share
of the Spin-Off Entity, and further authorized and directed the issuance of one
Right with respect to each Common Share issued or delivered by the Company
(whether originally issued or delivered from the Company's treasury) after the
Record Date but prior to the Maturity Time (as hereinafter defined).
NOW THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms shall have the meanings indicated:
(a) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms, in Rule 12b-2 of the General Rules and
Regulations under the Exchange Act (as hereinafter defined), as in effect on the
date of this Agreement.
(b) "Business Day" shall mean any day other than a Saturday,
Sunday or a day on which banking institutions in the State of Massachusetts (or
such other state in which the principal office of the Rights Agent is located)
are authorized or obligated by law or executive order to close.
(c) "Close of Business" on any given date shall mean 5:00 P.M.,
Eastern time, on such date; PROVIDED, HOWEVER, that if such date is not a
Business Day it shall mean 5:00 P.M., Eastern time, on the next succeeding
Business Day.
(d) "Common Shares" shall mean the Common Stock, par value $.01
per share, of the Company.
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(e) "Company" shall mean NHP Incorporated, a Delaware
corporation.
(f) "Effective Time" shall have the meaning set forth in the
Merger Agreement.
(g) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
(h) "Exchange Agent" shall mean the Exchange Agent appointed
pursuant to the Merger Agreement.
(i) "Maturity Time" shall mean the earlier of the Effective Time
of the Merger and the Close of Business on December 1, 1997; provided, however,
that if the distribution of Shares pursuant to Section 4 of this Agreement is
prohibited by the terms of any agreement to which the Company or the Spin-Off
Entity is a party as in effect on the date of this Agreement and consent to such
distribution has not been obtained, or if the distribution of Shares requires
any governmental filing or approval or the effectiveness of any filing in order
to comply with applicable law, then the Maturity Time shall be deferred until
such time as any such consent is obtained, any such prohibition is no longer in
effect and all such filings or approvals have been made or obtained or such
filings have become effective.
(j) "Merger" shall mean the merger of AIMCO/NHP Acquisition
Corp., a Maryland corporation, with and into the Company pursuant to the Merger
Agreement.
(k) "Merger Agreement" shall mean the Agreement and Plan of
Merger dated as of April __, 1997 by and among Apartment Investment and
Management Company, a Maryland corporation, AIMCO/NHP Acquisition Corp., a
Delaware corporation, and the Company.
(l) "Nasdaq Stock Market" shall have the meaning set forth in
Rule 4200(v) of the Rules of the National Association of Securities Dealers,
Inc.
(m) "Person" shall mean any individual, firm, corporation,
partnership, limited liability company or other legal entity, and shall include
any successor (by merger or otherwise) of such entity.
(n) "Recapitalization" shall mean the action required pursuant
to Section 7 of this Agreement.
(o) "Registration Statement" shall mean an appropriate
registration statement (together with all amendments thereto) under the
Securities Act or the Exchange Act (as the Company determines to be appropriate)
relating to the distribution
D-2
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of the Shares on the terms set forth herein and relating to the reoffering or
resale within 30 days after the distribution of securities acquired pursuant
to the distribution to the extent requested by any Person who reasonably
expects to be an Affiliate of the Spin-Off Entity upon completion of the
distribution and who requests inclusion of Shares it expects to hold no later
than five Business Days prior to the effectiveness of the Registration
Statement, which statement shall be filed with the SEC.
(p) "Right" shall have the meaning set forth in the Recitals to
this Agreement.
(q) "Rights Agent" shall mean The First National Bank of Boston
unless and until a successor Rights Agent shall have become such pursuant to the
terms of this Agreement, and thereafter, "Rights Agent" shall mean such
successor Rights Agent.
(r) "SEC" shall mean the Securities and Exchange Commission.
(s) "Securities Act" shall mean the Securities Act of 1933, as
amended.
(t) "Share" shall mean a share of Common Stock, par value $.01
per share, of the Spin-Off Entity.
(u) "Share Registration Date" shall mean the date upon which the
Registration Statement shall have become effective.
(v) "Special Meeting" shall mean the meeting of the shareholders
of the Company to consider and vote on the approval of the Merger Agreement.
(w) "Spin-Off Entity" shall mean NHP Financial Services, Ltd.,
a Delaware corporation.
(x) "Subsidiary" when used with reference to any Person shall
mean any corporation or other entity of which a majority of the voting power of
the voting equity securities or equity interests is owned, directly or
indirectly, by such Person.
(y) "Summary of Rights to Purchase Shares" shall mean the
Summary of Rights to Purchase Shares, in substantially the form of Exhibit A
attached hereto.
(z) "Transfer Agent" shall mean the transfer agent for Shares as
appointed by the Spin-Off Entity from time to time.
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Section 2. APPOINTMENT OF RIGHTS AGENT. The Company and the Spin-Off
Entity hereby appoint the Rights Agent to act as agent for the Company and the
Spin-Off Entity, and the holders of the Rights in accordance with the terms and
conditions hereof, and the Rights Agent hereby accepts such appointment and
hereby certifies that it complies with the requirements of the New York Stock
Exchange governing transfer agents and registrars. The Company may from time to
time act as Co-Rights Agent or appoint such Co-Rights Agents as it may deem
necessary or desirable. Any actions which may be taken by the Rights Agent
pursuant to the terms of this Agreement may be taken by any such Co-Rights
Agent. To the extent that any Co-Rights Agent takes any action pursuant to this
Agreement, such Co-Rights Agent shall be entitled to all of the rights and
protections of, and subject to all of the applicable duties and obligations
imposed upon, the Rights Agent pursuant to the terms of this Agreement.
Section 3. EVIDENCE OF RIGHTS.
(a) (i) The Rights shall be evidenced by the certificates
representing Common Shares registered in the names of the record holders
thereof, (ii) the Rights shall be transferable only in connection with the
transfer of the underlying Common Shares, and (iii) the surrender for transfer
of any certificates evidencing Common Shares in respect of which Rights have
been issued shall also constitute the transfer of the Rights associated with the
Common Shares evidenced by such certificates.
(b) On the Record Date or as promptly as practicable thereafter,
the Company shall send a copy of the Summary of Rights by first-class, postage
prepaid mail, to each record holder of Common Shares as of the Close of Business
on the Record Date, at the address of such holder shown on the records of the
Company as of such date. With respect to certificates of Common Shares
outstanding as of the Record Date and until the Maturity Time, the Rights will
be evidenced by such certificates registered in the names of the holders. Until
the Maturity Time, the surrender for transfer of any certificate for Common
Shares outstanding on the Record Date shall also constitute the transfer of the
Rights associated with the Common Shares represented thereby.
(c) Rights shall be issued by the Company in respect of all
Common Shares issued or delivered by the Company (whether originally issued or
delivered from the Company's treasury) after the Record Date but prior to the
Maturity Time. Certificates evidencing such Common Shares shall have stamped
on, impressed on, printed on, written on or otherwise affixed to them the
following legend or such similar legend as the Company may deem appropriate and
as is not inconsistent with the provisions of this Agreement, or as may be
required to comply with any applicable law or with any rule or regulation made
pursuant thereto or with any rule or regulation of any stock exchange or
transaction reporting system on which the Common Shares may from time to time be
listed or quoted, or to conform to usage:
This Certificate also evidences and entitles the holder hereof to
certain Rights as set forth in a Rights Agreement between NHP
Incorporated, NHP Financial
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Services, Ltd. and The First National Bank of Boston dated as of
April __, 1997 (the "Rights Agreement"), the terms of which are
hereby incorporated herein by reference and a copy of which is on
file at the principal executive offices of NHP Incorporated. NHP
Incorporated will mail to the holder of this Certificate a copy of
the Rights Agreement without charge promptly after receipt of a
written request therefor.
With respect to such certificates containing the foregoing legend, the Rights
associated with the Common Shares represented by such certificates shall be
evidenced by such certificates alone, and the surrender for transfer of any such
certificate shall also constitute the transfer of the Rights associated with the
Common Shares represented thereby. In the event that the Company purchases or
acquires any Common Shares after the Record Date, any Rights associated with
such Common Shares shall be deemed canceled and retired so that the Company
shall not be entitled to exercise any Rights associated with the Common Shares
which are no longer outstanding.
Section 4. EFFECT OF MATURITY TIME.
(a) Without any action on the part of a holder of Rights, at the
Maturity Time, all Rights shall no longer be outstanding and shall automatically
cease to exist, and each record holder of Rights shall thereafter cease to have
any rights with respect to such Rights except the right to receive, without
interest, one-third of a Share of the Spin-Off Entity for each Right and cash
for fractional shares of the Spin-Off Entity in accordance with Section 4(b).
(b) No fractional Shares shall be issued with respect to
Rights. All fractional Shares that a holder of Rights would otherwise be
entitled to receive with respect to the Rights shall be aggregated and, if a
fractional share results from such aggregation, such holder shall be entitled
to receive, in lieu thereof, an amount in cash determined by multiplying (i)
the fraction of a Share to which such holder would otherwise have been
entitled by (ii) $9.15. No interest will be paid or will accrue on any cash
paid or payable in lieu of any fractional Shares.
(c) Subject to Section 4(d), as soon as reasonably practicable
after the Maturity Time, (i) the Company shall surrender to the Transfer Agent
all certificates it holds for Shares of the Spin-Off Entity along with executed
stock transfer powers and instructions to issue certificates in the names of
holders of record of Rights immediately prior to the Maturity Time (or such
other Person as may be properly designated pursuant to Section 4(e)) in
accordance with Section 4(a) and to deliver such certificates to the Rights
Agent for the benefit of the holders of Rights, (ii) the Spin-Off Entity shall
deposit (or cause to be deposited) with the Rights Agent, for the benefit of
holders of Rights, cash in an amount sufficient to pay the aggregate cash
required to be paid for fractional shares of the Spin-Off Entity pursuant to
Section 4(b), and (iii) the Rights Agent shall mail to each holder of record of
Rights immediately prior to the Maturity Time (or such other Person as may be
properly designated pursuant to Section 4(e)) the certificates for
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<PAGE>
Shares and cash to which such holder is entitled pursuant to Sections 4(a)
and 4(b), respectively.
(d) If the Maturity Time shall be the Effective Time, then (i)
the Company may, in lieu of instructing the Transfer Agent to deliver
certificates for Shares to the Rights Agent pursuant to Section 4(c)(i),
instruct the Transfer Agent to deliver certificates for all or some of the
Shares to the Exchange Agent, and instruct the Exchange Agent to deliver
certificates for such Shares upon surrender of certificates for Common Shares in
connection with the Merger, and (ii) the Spin-Off Entity may, in lieu of
depositing cash with the Rights Agent as required pursuant to Section 4(c)(ii),
deposit all or some of the cash with the Exchange Agent to deliver upon
surrender of certificates for Common Shares in connection with the Merger.
(e) The Company may instruct the Transfer Agent to issue
certificates for Shares in the name of a person other than the record holder of
Rights, and the Rights Agent or the Exchange Agent may deliver certificates for
Shares and cash to a person other than the record holder of Rights if, prior to
the Maturity Time, the Company receives (and transmits to the Rights Agent)
instructions to issue Shares in the name of and deliver Shares and cash to
another Person and such instructions are duly signed by the record holder and,
unless such record holder is a financial institution that is a member of the
Securities Transfer Agents Medallion Program (STAMP), the Stock Exchanges'
Medallion Program (SEMP) or the New York Stock Exchange, Inc. Medallion Program
(MSP) (each such entity, an "Eligible Institution"), the signature of the record
holder is guaranteed by an Eligible Institution.
Section 5. COVENANTS OF THE COMPANY AND THE SPIN-OFF ENTITY. The
Company and the Spin-Off Entity (as appropriate) covenant and agree that from
and after the Record Date until the Maturity Time.
(a) The Company and the Spin-Off Entity shall take all such
action as may be necessary to ensure that all Shares and/or other securities
delivered upon exercise of Rights, at the time of delivery of the certificates
for such securities, shall be duly and validly authorized and issued, fully paid
and nonassessable securities.
(b) The Company shall pay when due and payable any and all
federal and state transfer taxes and charges that may be payable in respect of
the issuance or delivery of the Shares; PROVIDED, HOWEVER, that the Company
shall not be required to pay any transfer tax or charge which may be payable in
respect of any transfer or delivery of Shares to a Person other than, or the
issuance or delivery of certificates representing Shares in a name other than
that of, the registered holder of the Rights immediately prior to the Maturity
Time, or to issue or deliver any certificates representing Shares until any such
tax or charge shall have been paid (any such tax or charge being payable by the
holder of such Rights at the time of surrender) or until it has been established
to the Company's reasonable satisfaction that no such tax is due.
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<PAGE>
(c) The Spin-Off Entity shall, and the Company shall cause the
Spin-Off Entity to, use its best efforts (i) to file on an appropriate form, in
connection with the filing of the proxy statement with respect to the Special
Meeting or otherwise as promptly as practicable, the Registration Statement with
respect to the Shares to be delivered upon maturity of the Rights, (ii) to cause
such Registration Statement to become effective as soon as practicable after
such filing, and (iii) to cause such Registration Statement to remain effective
(with a prospectus at all times meeting the requirements of the Securities Act)
until such time as is necessary to complete the distribution of Shares in
accordance with Section 4 and any reoffering or resale included in the
Registration Statement. The Spin-Off Entity shall also, and the Company shall
also cause the Spin-Off Entity to, take such action as may be appropriate under,
or to ensure compliance with, the securities or "blue sky" laws of the various
states in connection with the distribution of the Shares pursuant to this
Agreement. If the Spin-Off Entity shall determine that a registration statement
should be filed under any state securities laws, the Spin-Off Entity may
temporarily suspend the distribution of the Shares pursuant to this Agreement in
each relevant jurisdiction until such time as a registration statement has been
declared effective and, upon any such suspension, the Spin-Off Entity shall
issue a public announcement stating that the distribution of the Shares pursuant
to this Agreement has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect.
Notwithstanding anything in this Agreement to the contrary, the Shares shall not
be distributed pursuant to this Agreement in any jurisdiction if the requisite
registration or qualification in such jurisdiction shall not have been effected
or such distribution shall not be permitted under applicable law.
(d) Notwithstanding anything in this Agreement to the contrary,
after the Record Date, the Company and the Spin-Off Entity shall not, except as
permitted by Section 18 hereof, take (or permit any of their Subsidiaries to
take) any action the purpose of which is to, or if at the time such action is
taken it is reasonably foreseeable that the effect of such action will,
eliminate or otherwise materially diminish the benefits intended to be afforded
by the Rights.
(e) Notwithstanding anything in this Agreement to the contrary,
in the event that the Company shall consolidate with or merge with or into, any
other Person other than in connection with the Merger, regardless of whether the
Company shall or shall not be the continuing or surviving corporation of such
consolidation or merger, the Maturity Time shall become the date immediately
preceding the date of the effective time or consummation of any such merger or
consolidation. Prior to the effective time or consummation of any such merger
or consolidation, the Spin-Off Entity shall, and the Company shall cause the
Spin-Off Entity to, cause a registration statement to become and remain
effective with respect to the distribution of Shares pursuant to this Agreement.
(f) The Spin-Off Entity shall, and the Company shall cause the
Spin-Off Entity to, conduct the operations of the Spin-Off Entity in the
ordinary and usual
D-7
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course of business and consistent with past practice and use reasonable
efforts to keep available the services of its present officers and key
employees and preserve the goodwill and business relationships with all
Persons having business relations with it. Without limiting the generality
of the foregoing, and except as otherwise expressly permitted by this
Agreement, prior to the Maturity Time, the Spin-Off Entity shall not, and the
Company shall not permit the Spin-Off Entity to:
(i) transfer the assets of the Spin-Off Entity other
than in the ordinary course of business;
(ii) issue, sell, pledge or dispose of, grant or
otherwise create, or agree to issue, sell, pledge or dispose of, grant
or otherwise create any capital stock or other equity securities, any
debt or other securities convertible into or exchangeable for any of
its capital stock or other equity securities other than in connection
with a stock dividend, subdivision, combination or reclassification or
the exercise of options, warrants and other rights to acquire
securities issued and outstanding as of the Record Date except that
the Spin-Off Entity may (W) issue options (and securities issuable
upon exercise of such options) in connection with an amendment of
outstanding options to acquire Common Shares of the Company so that
each such option includes the right to receive the number of Shares
that would be distributed in connection with Rights that would be
associated with Common Shares obtainable upon exercise of such
options, (X) issue options (and Shares obtainable upon exercise of
such options) to acquire up to an additional 338,000 Shares (assuming
completion of the Recapitalization), provided that such options are
issued in connection with an employee stock option plan duly adopted
by the Spin-Off Entity, (Y) issue an additional 6,000 Shares (assuming
completion of the Recapitalization), provided that such Shares are
issued only to employees of the Spin-Off Entity and (Z) issue or agree
to issue Shares for an aggregate consideration of $5,000,000 at a
price per Share such that, if such Shares were issued immediately
after the Recapitalization, the price paid per Share would be $9.15;
or
(iii) declare, set aside, make or pay any dividend or
other distribution, payable in cash, stock (other than Shares),
property or otherwise, with respect to any of its capital stock or
other equity securities.
(g) The Company shall not:
(i) sell, pledge, distribute, dispose of or otherwise
transfer and shall not agree to sell, pledge, distribute, dispose of
or otherwise transfer any Shares except pursuant to the Rights; and
(ii) issue, sell, pledge or dispose of, grant or
otherwise create any Common Shares or other equity security to which
Rights attach, any debt or other securities convertible into or
exchangeable for Common Shares or
D-8
<PAGE>
any other equity security to which Rights attach other than in
connection with a stock dividend, subdivision, combination or
reclassification or the exercise of options, warrants and other
rights to acquire securities issued and outstanding as of the
Record Date.
(h) The Company and the Spin-Off Entity shall use their best
efforts to obtain any consent and to make any filings or obtain any approvals
necessary to distribute the Shares pursuant to Section 4 of this Agreement at or
prior to the Maturity Time.
Section 6. RECORD DATE. Each Person in whose name any certificate
representing Shares is issued pursuant to Section 4 shall for all purposes be
deemed to have become the holder of record of the Shares represented thereby on,
and such certificate shall be dated, the Maturity Time; PROVIDED, HOWEVER, that
if the Maturity Time is a date upon which the share transfer books of the Spin-
Off Entity are closed, such Person shall be deemed to have become the record
holder of such securities on, and such certificate shall be dated, the next
succeeding Business Day on which the Share transfer books of the Spin-Off Entity
are open.
Section 7. RECAPITALIZATION OF THE SPIN-OFF ENTITY. As soon as
practicable on or after the Maturity Time, the Spin-Off Entity shall, and the
Company shall cause the Spin-Off Entity to, (i) declare a dividend on the Shares
payable in Shares, (ii) subdivide the outstanding Shares or (iii) combine the
outstanding Shares into a smaller number of Shares, to the extent necessary so
that the number of Shares issued and outstanding immediately thereafter is equal
to the number of Rights outstanding; immediately prior to the Maturity Time
divided by three.
Section 8. RIGHTS OF ACTION. All rights of action in respect of
this Agreement, excepting the rights of action given to the Rights Agent
under Section 11 and Section 13 hereof, are vested in the respective
registered holders of the Common Shares; and any registered holder of any
Common Shares, without the consent of the Rights Agent or of the holder of
any other Common Shares, may in his, her or its own behalf and for his, her
or its own benefit enforce, and may institute and maintain any suit, action
or proceeding against the Company to enforce, or otherwise act in respect of,
his, her or its right to exercise the Rights evidenced by such Common Shares
in the manner provided in this Agreement. Without limiting the foregoing or
any remedies available to the holders of Rights, it is specifically
acknowledged that the holders of Rights would not have an adequate remedy at
law for any breach of this Agreement and shall be entitled to specific
performance of the obligations under this Agreement, and injunctive relief
against actual or threatened violations of the obligations of any Person
subject to this Agreement. Holders of Rights shall be entitled to recover
the reasonable costs and expenses, including reasonable attorneys fees,
incurred by them in any action to enforce the provisions of this Agreement.
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<PAGE>
Section 9. AGREEMENT OF RIGHTS HOLDERS. Every holder of a Right by
accepting the same shall be deemed to have consented and agreed with the Company
and the Rights Agent and with every other holder of a Right that:
(a) Until the Maturity Time, the Rights shall be transferable
only in connection with the transfer of the Common Shares;
(b) Except as provided in Section 4(e), the Company and the
Rights Agent may deem and treat the person in whose name the associated Common
Share certificate is registered as the absolute owner thereof and of the Rights
evidenced thereby (notwithstanding any notations of ownership or writing on the
associated Common Share certificate made by anyone other than the Company or the
Rights Agent) for all purposes whatsoever, and neither the Company nor the
Rights Agent shall be affected by any notice to the contrary;
(c) Such holder expressly waives any right to receive any
fractional Rights and any fractional securities upon maturity of a Right, except
as otherwise provided in Section 4(b) hereof; and
(d) Notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any holder
of a Right or other Person as a result of its inability to perform any of its
obligations under this Agreement by reason of any preliminary or permanent
injunction or other order, decree or ruling issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; PROVIDED, HOWEVER, that the Company shall use
its best efforts to have any such order, decree or ruling lifted or otherwise
overturned as soon as possible.
Section 10. RIGHT HOLDER NOT DEEMED A SPIN-OFF ENTITY SHAREHOLDER.
No holder, as such, of any Right shall be entitled to vote, receive dividends or
be deemed for any purpose the holder of the Shares or any other securities of
the Spin-Off Entity which may at any time be issuable in respect of the Rights,
nor shall anything contained herein be construed to confer upon the holder of
any Right, as such, any of the rights of a shareholder of the Spin-Off Entity or
any right to vote for the election of directors or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders (except as provided in Section 16 hereof), or to receive dividends
or subscription rights, or otherwise, until the Shares shall have been
distributed in accordance with the provisions of this Agreement.
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<PAGE>
Section 11. CONCERNING THE RIGHTS AGENT.
(a) The Company agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
other disbursements incurred in the administration and execution of this
Agreement and the exercise and performance of its duties hereunder. The Company
also agrees to indemnify the Rights Agent for, and to hold it harmless against,
any loss, liability, suit, action, proceeding or expense, incurred without gross
negligence, bad faith or willful misconduct on the part of the Rights Agent, for
anything done or omitted by the Rights Agent in connection with the acceptance
and administration of this Agreement, including the costs and expenses of
defending against any claim of liability arising therefrom, directly or
indirectly. The indemnity provided herein shall survive the distribution of
Shares in respect of the Rights.
(b) The Rights Agent shall be protected and shall incur no
liability for, or in respect of any action taken, suffered or omitted by it in
connection with, its administration of this Agreement in reliance upon any
certificate evidencing Common Shares or other securities of the Company or
certificate evidencing Shares or other securities of the Spin-Off Entity,
instrument of assignment or transfer, power of attorney, endorsement, affidavit,
letter, notice, direction, consent, certificate, statement, or other paper or
document believed by it to be genuine and to be signed, executed and, where
necessary, verified or acknowledged, by the proper Person or Persons, or
otherwise upon the advice of counsel as set forth in Section 13 hereof.
Section 12. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS
AGENT. Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation succeeding to the
stock transfer or corporate trust business of the Rights Agent or any successor
Rights Agent, shall be the successor to the Rights Agent under this Agreement
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, provided that such corporation would be eligible for
appointment as a successor Rights Agent under the provisions of Section 14
hereof.
Section 13. DUTIES OF RIGHTS AGENT. The Rights Agent undertakes the
duties and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company, the Spin-Off Entity and the holders of
Rights, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be
legal counsel for the Company), and the opinion of such counsel shall be full
and complete authorization and protection to the Rights Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion.
D-11
<PAGE>
(b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter be proved or established by the Company or the Spin-Off Entity prior to
taking or suffering any action hereunder, such fact or matter (unless other
evidence in respect thereof be herein specifically prescribed) may be deemed to
be conclusively proved and established by a certificate signed by any one of the
Chairman of the Board, the President or any Senior Vice President of the Company
or the Spin-Off Entity, as appropriate, and delivered to the Rights Agent; and
such certificate shall be full authorization to the Rights Agent for any action
taken or suffered in good faith by it under the provisions of this Agreement in
reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own
gross negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any
of the statements of fact or recitals contained in this Agreement (except its
countersignature thereof) or be required to verify the same, but all such
statements and recitals are and shall be deemed to have been made by the Company
only.
(e) The Rights Agent shall not be under any responsibility in
respect of the validity of this Agreement or the execution and delivery hereof
(except the due execution and delivery hereof by the Rights Agent); nor shall it
be responsible for any breach by the Company of any covenant or condition
contained in this Agreement, nor shall it be responsible for any adjustment
required under the provisions of Section 7 hereof or responsible for the manner,
method or amount of any such adjustment or the ascertaining of the existence of
facts that would require any such adjustment (except with respect to the
maturity of Rights after actual notice of any such adjustment); nor shall it by
any act hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any shares of stock or other securities to be
issued pursuant to this Agreement or as to whether any shares of stock or other
securities will, when issued, be validly authorized and issued, fully paid and
nonassessable.
(f) The Company and the Spin-Off Entity agree that they will
perform, execute, acknowledge and deliver or cause to be performed, executed,
acknowledged and delivered all such further and other acts, instruments and
assurances as may reasonably be required by the Rights Agent for the carrying
out or performing by the Rights Agent of the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the President or any Vice President of the
Company or the Spin-Off Entity, as appropriate, and to apply to such persons for
advice or instructions in connection with its duties, and it shall not be liable
for any action taken or suffered to be taken by it in good faith in accordance
with instructions of any such officer.
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(h) The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or the Spin-Off Entity or become pecuniarily
interested in any transaction in which the Company or the Spin-Off Entity may be
interested, or contract with or lend money to the Company or the Spin-Off Entity
or otherwise act as fully and freely as though it were not Rights Agent under
this Agreement. Nothing herein shall preclude the Rights Agent from acting in
any other capacity for the Company, the Spin-Off Entity or for any other legal
entity.
(i) The Rights Agent may execute and exercise any of the rights
or powers hereby vested in it or perform any duty hereunder either itself or by
or through its attorneys or agents, and the Rights Agent shall not be answerable
or accountable for any act, default, neglect or misconduct of any such attorneys
or agents or for any loss to the Company or the Spin-Off Entity resulting from
any such act, default, neglect or misconduct, provided reasonable care was
exercised in the selection and continued employment thereof. The Rights Agent
shall not be under any duty or responsibility to insure compliance with any
applicable federal or state securities laws in connection with the issuance,
transfer or exchange of Rights.
(j) No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder or in the exercise of its
rights if there shall be reasonable grounds for believing that repayment of such
funds or adequate indemnification against such risk or liability is not
reasonably assured to it.
Section 14. CHANGE OF RIGHTS AGENT. The Rights Agent or any
successor Rights Agent may resign and be discharged from its duties under this
Agreement upon 30 calendar days' notice in writing mailed to the Company, the
Spin-Off Entity and to each transfer agent of the Common Shares and Shares by
registered or certified mail, and to the holders of the Rights by first-class
mail. The Company may remove the Rights Agent or any successor Rights Agent
upon 30 calendar days' notice in writing, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent of the
Common Shares and Shares by registered or certified mail, and to the holders of
the Rights by first-class mail. If the Rights Agent shall resign or be removed
or shall otherwise become incapable of acting, the Company shall appoint a
successor Rights Agent. If the Company shall fail to make such appointment
within a period of 30 calendar days after giving notice of such removal or after
it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Rights Agent, then the registered holder of any
Rights may apply to any court of competent jurisdiction for the appointment of a
new Rights Agent. Any successor Rights Agent, whether appointed by the Company
or by such a court, shall be a corporation organized and doing business under
the laws of the United States or of any other state of the United States so long
as such corporation is in good standing and is authorized under such laws to
exercise corporate trust or stock transfer powers and is subject to supervision
or examination by federal or state authority and which has at the time of its
appointment as
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<PAGE>
successor Rights Agent a combined capital and surplus of at least $50
million. After appointment, the successor Rights Agent shall be vested with
the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver
any further assurance, conveyance, act or deed necessary for the purpose.
Not later than the effective date of any such appointment, the Company shall
file notice thereof in writing with the predecessor Rights Agent and each
transfer agent of the Common Shares and the Shares, and mail a notice thereof
in writing to the registered holders of the Rights. Failure to give any
notice provided for in this Section 14, however, or any defect therein, shall
not affect the legality or validity of the resignation or removal of the
Rights Agent or the appointment of the successor Rights Agent, as the case
may be.
Section 15. [Intentionally omitted.]
Section 16. NOTICE OF CERTAIN EVENTS.
(a) In case, after the Record Date, the Company or the Spin-Off
Entity shall propose (i) to pay any dividend payable in stock of any class to
the holders of Shares or to make any other distribution to the holders of Shares
(other than a regular periodic cash dividend), (ii) to offer to the holders of
Shares rights, options or warrants to subscribe for or to purchase any
additional Shares or shares of stock of any class or any other securities,
rights or options, (iii) to effect any reclassification of its Shares (other
than a reclassification involving only the subdivision of outstanding Shares),
(iv) to effect any consolidation or merger (other than the Merger) into or with,
or to effect any sale or other transfer (or to permit one or more of its
Subsidiaries to effect any sale or other transfer), in one or more transactions,
of assets or earning power (including, without limitation, securities creating
any obligation on the part of the Company and/or any of its Subsidiaries)
representing more than 50% of the assets and earning power of the Company and
its Subsidiaries, taken as a whole, to any other Person or Persons, or (v) to
effect the liquidation, dissolution or winding up of the Company, then, in each
such case, the Company shall give to each holder of a Right, in accordance with
Section 17 hereof, a notice of such proposed action, which shall specify the
record date for the purposes of such stock dividend, distribution or offering of
rights, options or warrants, or the date on which such reclassification,
consolidation, merger, share exchange, sale, transfer, liquidation, dissolution,
or winding up is to take place and the date of participation therein by the
holders of the Shares, if any such date is to be fixed, and such notice shall be
so given, in the case of any action covered by clause (i) or (ii) above, at
least 10 calendar days prior to the record date for determining holders of the
Common Shares for purposes of such action, and, in the case of any such other
action, at least 10 calendar days prior to the date of the taking of such
proposed action or the date of participation therein by the holders of the
Common Shares, whichever shall be the earlier.
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<PAGE>
(b) Upon the occurrence of the Special Meeting or the
termination of the Merger Agreement, the Company shall as soon as practicable
thereafter, make a public announcement and give to the Rights Agent and each
holder of a Right, in accordance with Section 17 hereof, a notice of the
occurrence of such event, which announcement and notice shall specify the
results of the vote on the approval of the Merger Agreement or the fact of the
termination of the Merger Agreement, and the consequences of the event to
holders of Rights; provided that no notice need be given if the Maturity Time is
expected to occur within 10 Business Days of the occurrence of the Special
Meeting.
Section 17. NOTICES.
(a) Notices or demands authorized by this Agreement to be given
or made by the Rights Agent or by the holder of any Right to or on the Company
shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing with the Rights
Agent) as follows:
NHP Incorporated
8065 Leesburg Pike
Suite 400
Vienna, Virginia 22182-2738
Attention: President and Chief Executive Officer
(b) Notices or demands authorized by this Agreement to be given
or made by the Rights Agent or by the holder of any Right to or on the Spin-Off
Entity shall be sufficiently given or made if sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing with the Rights
Agent) as follows:
NHP Financial Services, Ltd.
1593 Spring Hill Road, Suite 400
Vienna, Virginia 22182
Attention: President and Chief Executive Officer
(c) Subject to the provisions of Section 14 hereof, any notice
or demand authorized by this Agreement to be given or made by the Company or the
Spin-Off Entity, or by the holder of any Right to or on the Rights Agent shall
be sufficiently given or made if sent by first-class mail, postage prepaid,
addressed (until another address is filed in writing with the Company) as
follows:
________________________
________________________
________________________
Attention:
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(d) Notices or demands authorized by this Agreement to be given
or made by the Company, the Spin-Off Entity or the Rights Agent to the holder of
any Right certificate evidencing Common Shares shall be sufficiently given or
made if sent by first-class mail, postage prepaid, addressed to such holder at
the address of such holder as shown on the registry books of the Company.
Section 18. SUPPLEMENTS AND AMENDMENTS. Subject to the last sentence
of this Section 18, if the Company so directs, the Company and the Rights Agent
shall supplement or amend this Agreement without the approval of any holders of
Rights (i) to cure any ambiguity, (ii) to correct or supplement any provision
contained herein which may be defective or inconsistent with any other
provisions herein, (iii) to shorten or lengthen any time period hereunder, or
(iv) to supplement or amend the provisions hereunder in any manner which the
Company may deem desirable, which supplement or amendment shall not, in the good
faith determination of the Board of Directors of the Company, adversely affect
the interests of the holders of Rights (so long as the duties, liabilities and
indemnifications of the Rights Agent are not affected). Upon the delivery of a
certificate from an officer of the Company which states that the proposed
supplement or Amendment is in compliance with the terms of this Section 18, the
Rights Agent shall execute such supplement or amendment; provided, however, that
the failure or refusal of the Rights Agent to execute such supplement or
amendment shall not affect the validity of any supplement or amendment adopted
by the Company, any of which shall be effective in accordance with the terms
thereof. Notwithstanding anything in this Agreement to the contrary, no
supplement or Amendment shall be made which increases the period of time
remaining until the Maturity Time or terminates the Rights or makes the Rights
subject to redemption without the consent of the holders of a majority of the
issued and outstanding Rights, and this Agreement may be amended in any respect
upon the agreement of the Company, the Spin-Off Entity and the Rights Agent if
the consent of the holders of a majority of the issued and outstanding Rights
has been obtained with respect to such amendment.
Section 19. SUCCESSORS; CERTAIN COVENANTS. All the covenants and
provisions of this Agreement by or for the benefit of the Company, the Spin-Off
Entity or the Rights Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.
Section 20. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement
shall be construed to give to any Person other than the Company, the Spin-Off
Entity, the Rights Agent and the holders of the Rights any legal or equitable
right, remedy or claim under this Agreement; but this Agreement shall be for the
sole and exclusive benefit of the Company, the Spin-Off Entity, the Rights Agent
and the holders of the Rights.
Section 21. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS,
ETC. The Board of Directors of the Company shall have the exclusive power and
authority to administer this Agreement and to exercise all rights and powers
specifically granted to the Board, or the Company, or as may be necessary or
advisable in the administration
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<PAGE>
of this Agreement, including, without limitation, the right and power to (i)
interpret the provisions of this Agreement, and (ii) make all determinations
deemed necessary or advisable for the administration of this Agreement
(including, without limitation, to amend the Agreement and whether any
proposed amendment adversely affects the interests of the holders of Rights).
For all purposes of this Agreement, any calculation of the number of Shares
or Common Shares or other securities outstanding at any particular time shall
be made in accordance with the last sentence of Rule l3d-3(d)(l)(i) under the
Exchange Act as in effect on the date of this Agreement. All such actions,
calculations, interpretations and determinations (including, for purposes of
clause (y) below, all omissions with respect to the foregoing) which are done
or made by the Board of Directors of the Company in good faith, shall (x) be
final, conclusive and binding on the Company, the Rights Agent, the holders
of the Rights and all other parties, and (y) not subject the Board of
Directors of the Company to any liability to the holders of the Rights.
Section 22. SEVERABILITY. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated.
Section 23. GOVERNING LAW. This Agreement and each Right Certificate
issued hereunder shall be deemed to be a contract made under the internal
substantive laws of the State of Delaware and for all purposes shall be governed
by and construed in accordance with the internal substantive laws of such State
applicable to contracts to be made and performed entirely within such State.
Section 24. COUNTERPARTS. This Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constitute
but one and the same instrument.
Section 25. DESCRIPTIVE HEADINGS. Descriptive headings of the
several Sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.
[Remainder of page left intentionally blank.]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and their respective corporate seals to be hereunto affixed and
attested, all as of the day and year first above written.
[SEAL]
Attest:
NHP INCORPORATED
- ----------------------- -----------------------
Name: Name:
Title: Title:
[SEAL]
Attest:
NHP FINANCIAL SERVICES, INC.
- ----------------------- -----------------------
Name: Name:
Title: Title:
[SEAL]
Attest:
THE FIRST NATIONAL
BANK OF BOSTON
- ----------------------- -----------------------
Name: Name:
Title: Title:
D-18
<PAGE>
EXHIBIT A
SUMMARY OF RIGHTS TO
SHARES OF NHP FINANCIAL SERVICES, LTD.
The Board of Directors of NHP Incorporated (the "Company") has
declared a dividend distribution of one right (a "Right") for each outstanding
share of common stock, par value $.01 per share (the "Common Shares"), of the
Company. The distribution is payable on April __, 1997 (the "Record Date") to
the shareholders of record as of the close of business on the Record Date. Each
Right entitles the registered holder to receive from the Company upon maturity
of the Rights one-third of a share (the "Shares") of common stock, par value
$.01 per share, of NHP Financial Services, Ltd., a Delaware corporation (the
"Spin-Off Entity"), or any successor thereof, subject to the terms and
conditions set forth in a Rights Agreement, dated as of April__, 1997 (the
"Rights Agreement "), between the Company, the Spin-Off Entity and The First
National Bank of Boston as Rights Agent (the "Rights Agent "). No fractional
Shares will be issued and cash will be paid in lieu of fractional Shares at the
rate of $9.15 per Share. The distribution of Shares pursuant to the Rights will
result in 100% of the equity of the Spin-Off Entity being distributed to the
holders of Rights. Rights will also be issued with respect to any Common Share
issued prior to the time Shares become distributable in respect of Rights.
The Rights Agreement provides that the right to receive the Shares
shall not mature until the earlier of the Effective Time of the merger (the
"Merger") of a subsidiary of Apartment Investment and Management Company
("AIMCO") with and into the Company pursuant to an Agreement and Plan of Merger
dated as of April __, 1997 by and among AIMCO, such subsidiary and the Company
(the "Merger Agreement") December 1, 1997 (the time at which the Rights mature
being referred to as the "Maturity Time").
The Rights will be evidenced, with respect to any of the Common Share
certificates outstanding as of the Record Date, by such Common Share
certificates. Until the Maturity Time new Common Share certificates issued
after the Record Date upon transfer or new issuance of Common Shares will
contain a notation incorporating the Rights Agreement by reference. Until the
Maturity Time, the surrender for transfer of any certificates for Common Shares
will also constitute the transfer of the Rights associated with the Common
Shares represented by such certificates.
The Rights Agreement also contains certain covenants of the Company
and the Spin-Off Entity proscribing the following while the Rights are
outstanding: (i) a transfer of the assets of the Spin-Off Entity other than in
the ordinary course of business; (ii) issuance of securities by the Company
other than in connection with a stock dividend, subdivision, combination or
reclassification or the exercise of options, warrants and other rights to
acquire securities issued and outstanding as of the Record Date; (iii) issuance
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<PAGE>
of securities by the Spin-Off Entity other than in connection with a stock
dividend, subdivision, combination or reclassification or the exercise of
options, warrants and other rights to acquire securities issued and outstanding
as of the Record Date plus (W) the Spin-Off Entity may issue options (and
securities issuable upon exercise of such options) in connection with an
amendment of outstanding options to acquire Common Shares of the Company so that
each such option includes the right to receive the number of Shares that would
be distributed in connection with Rights that would be associated with Common
Shares obtainable upon exercise of such options, (X) the Spin-Off Entity may
issue options (and Shares obtainable upon exercise of such options) to acquire
up to an additional 338,000 Shares (assuming completion of the Recapitalization
contemplated by the Rights Agreement), provided that such options are issued in
connection with an employee stock option plan duly adopted by the Spin-Off
Entity, (Y) the Spin-Off Entity may issue an additional 6,000 Shares (assuming
completion of the Recapitalization contemplated by the Rights Agreement),
provided that such Shares are issued only to employees of the Spin-Off Entity
and (Z) issue or agree to issue Shares for an aggregate consideration of
$5,000,000 at a price expected to be $9.15 per Share (assuming completion of the
Recapitalization contemplated by the Rights Agreement); and (iv) the operation
of the Spin-Off Entity otherwise than in the ordinary course of business.
The Rights Agreement may be amended by the Company without the
approval of any holders of Right Certificates in certain events, including
amendments which add other events requiring adjustment to the number of Shares
or other securities issuable upon the exercise of the Rights provided that no
amendment may be made which (i) changes the number of Shares that may be
distributed in any way that results in less than all Shares held by the Company
at the Maturity Time being distributed in respect of the Rights, or
(ii) increases the period of time remaining until the Maturity Time, without the
consent of the holders of a majority of the issued and outstanding Rights, and
the Rights Agreement may be amended in any respect upon the agreement of the
Company, the Spin-Off Entity and the Rights Agent if the consent of the holders
of a majority of the issued and outstanding Rights has been obtained with
respect to such amendment.
A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A. A
copy of the Rights Agreement is available free of charge from the Company. This
summary description of the Rights is as of April __, 1997, does not purport to
be complete and is qualified in its entirety by reference to the Rights
Agreement, which is incorporated herein by this reference.
DA-2
<PAGE>
EXHIBIT E
FORM OF TRUST AGREEMENT
This Trust Agreement (the "Agreement") is made and entered this
________day of April, 1997 by and between _____________________, a ________
corporation ("AIMCO"), and [Demeter Holdings Corporation, a Massachusetts
corporation ("Demeter")], [Capricorn Investors, L.P., a Delaware Limited
Partnership ("Capricorn")] [other Capricorn Investors] (the "Seller").
WHEREAS, AIMCO has acquired ____ shares (the "Shares") of Common
Stock, par value $.01 per share ("NHP Stock") of NHP Incorporated, a Delaware
corporation ("NHP") from the Seller pursuant to that certain Stock Purchase
Agreement dated as of April , 1997 (the "Stock Purchase Agreement"), and
WHEREAS, in order to implement certain provisions of the Stock
Purchase Agreement, AIMCO and the Seller desires to enter into this Agreement on
the terms and conditions hereinafter set forth:
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements herein contained, the parties agree as follows:
Section 1. DEFINITIONS. Initially capitalized terms used in this
Agreement shall have the meanings ascribed thereto in the Stock Purchase
Agreement unless otherwise defined herein.
Section 2. TRUST ARRANGEMENTS. In furtherance of Section 2.1 and
5.8(c) of the Stock Purchase Agreement, AIMCO has agreed that the Seller shall
retain beneficial ownership of all Rights relating to the Shares, and that AIMCO
shall hold such Rights in trust for the benefit of the Seller. In furtherance
of the foregoing, upon and after receipt of the consideration referred to in
Section 2.2(b) of the Stock Purchase Agreement, AIMCO shall become record holder
of and obtain legal title to the Shares, and without any additional action by
the Seller or AIMCO, the Seller shall remain the beneficial owner of the Rights
with all of the rights (including without limitation the right to exercise the
Rights) and any obligations of any holders of the Rights. AIMCO agrees to not
sell, transfer or otherwise convey in any respect the rights or interests of the
Seller relating to the Rights retained by the Seller hereunder (it being
understood that a sale of the Shares transfers record ownership of the Rights
and shall not be deemed to sell, transfer or otherwise convey in any respect the
rights or interests of the Seller relating to the Rights retained by the Seller
hereunder and shall not be deemed to violate this Section 2 ).
Section 3. IRREVOCABLE PROXY. AIMCO hereby constitutes and appoints
the Seller as proxy for AIMCO, with full power of substitution and hereby
authorizes and empowers the Seller to represent and vote and take all action
with respect to, in its
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<PAGE>
sole discretion (including without limitation the right to exercise the
Rights or amend the Rights Agreement), Rights attached to all of the Shares.
This proxy is coupled with an interest and shall be effective for so long as
AIMCO shall hold the Rights in trust and for the benefit of the Seller
hereunder and shall not be earlier revoked, withdrawn, amended or modified
in any respect. Notwithstanding any other provision of this Agreement,
subject to Section 4(e) hereof, AIMCO shall retain all rights with respect to
the Shares (other than the Rights) and shall retain all rights to vote such
Shares, receive dividends in respect of the Shares and sell, assign, transfer
and dispose of the Shares.
Section 4. MISCELLANEOUS.
(a) GOVERNING LAW. This Agreement and the legal relations among
the parties hereto shall be governed by and construed and enforced in accordance
with the laws of The Commonwealth of Massachusetts, without regard to its
principles of conflicts of law.
(b) ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement among the parties pertaining to the subject matter hereof and
supersedes all prior agreements, understandings, letters of intent, negotiations
and discussions, whether oral or written, of the parties, and there are no
warranties, representations or other agreements, express or implied, made to any
party by any other party in connection with the subject matter hereof except as
specifically set forth herein or in the documents delivered pursuant hereto or
in connection herewith.
(c) MODIFICATION; WAIVER. No supplement, modification, waiver
or termination of this Agreement shall be binding unless executed in writing by
the party to be bound thereby. No waiver of any provision of this Agreement
shall be deemed or shall constitute a waiver of any other provision hereof
(whether or not similar), nor shall such waiver constitute a continuing waiver
unless otherwise expressly provided.
(d) NOTICES. All notices, consents, requests, reports, demands
or other communications hereunder (collectively, "NOTICES") shall be in writing
and may be given personally, by registered mail, or by Federal Express (or other
reputable overnight delivery service):
if to AIMCO, to it at:
1873 South Bellaire Street, 17th Floor
Denver, Colorado 80222-4348
Attention: Mr. Terry Considine
Telephone: (303) 757-8600
and
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<PAGE>
28200 Highway 189, Building F-240
P.O. Box 1060
Lake Arrowhead, California 92352
Attention: Mr. Peter K. Kompaniez
Telephone: (909) 336-4821
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
300 South Grand Avenue, Suite 3400
Los Angeles, California 90071
Attention: Rod A. Guerra, Esq.
Telephone: (213) 687-5000
if to the Seller, to it at:
_____________________________
_____________________________
_____________________________
_____________________________
with a copy to:
_____________________________
_____________________________
_____________________________
_____________________________
or to such other address or such other person as the addressee party shall have
last designated by notice to the other party. All Notices shall be deemed to
have been given (i) when delivered personally, (ii) three days after being sent
by registered mail, or (iii) one day after being sent by Federal Express (or
other reputable overnight delivery service).
(e) ASSIGNMENT. No party hereto shall have the right, power, or
authority to assign or pledge this Agreement or any portion of this Agreement,
or to delegate any duties or obligations arising under this Agreement,
voluntarily, involuntarily, or by operation of law, without the prior written
consent of the other parties hereto PROVIDED; HOWEVER, that AIMCO may transfer
the Shares to any person or entity. Notwithstanding any such assignment, AIMCO
shall remain liable for any failure to perform all obligations required to be
performed by it hereunder.
(f) SEVERABILITY. Any provision or part of this Agreement which
is invalid or unenforceable in any situation in any jurisdiction shall, as to
such situation and such jurisdiction, be ineffective only to the extent of such
invalidity and shall not
E-3
<PAGE>
affect the enforceability of the remaining provision hereof or the validity
or enforceability of any such provision in any other situation or in any
other jurisdiction.
(g) SUCCESSORS AND ASSIGNS; THIRD PARTIES. All of the rights,
duties, benefits, liabilities and obligations of the parties shall inure to the
benefit of, and be binding upon, their respective successors, assigns, heirs and
legal representatives. Except as specifically set forth or referred to herein,
nothing herein expressed or implied is intended or shall be construed to confer
upon or give to any person or entity, other than the parties hereto and their
successors or permitted assigns, any rights or remedies under or by reason of
this Agreement.
(h) COUNTERPARTS. This Agreement may be executed in as many
counterparts as may be deemed necessary and convenient, and by the different
parties hereto on separate counterparts each of which, when so executed, shall
be deemed an original, but all such counterparts shall constitute one and the
same instrument.
(i) INTERPRETATION; REFERENCES. Any use of masculine, feminine
or neuter pronouns herein shall not be limiting, but shall be construed as
referring to persons of any gender, as the context may require. Any use of the
singular or plural form herein shall not be limiting, but shall be construed as
referring to either the plural or singular, as the context may require.
References to a "Section" are, unless otherwise specified, to a Section of this
Agreement. The Section headings of this Agreement are for convenience of
reference only and shall not be deemed to modify, explain, restrict, alter or
affect the meaning or interpretation of any provision hereof.
(j) TIME OF ESSENCE. Time shall be of the essence with respect
to all matters contemplated by this Agreement.
(k) ATTORNEYS' FEES. In the event that any party hereto brings
an action or proceeding against the other party to enforce or interpret any of
the covenants, conditions, agreements or provisions of this Agreement, the
prevailing party in such action or proceeding shall be entitled to recover all
costs and expenses of such action or proceeding, including, without limitation,
attorneys' fees, charges, disbursements and the fees and costs of expert
witnesses.
(l) WAIVER OF JURY TRIAL. Each party to this Agreement further
waives its respective right to a jury trial of any claim or cause of action
arising out of this Agreement or any dealings between any of the parties hereto
relating to the subject matter of this Agreement. The scope of this waiver is
intended to be all-encompassing of any and all disputes that may be filed in any
court and that relate to the subject matter of this Agreement, including,
without limitation, contract claims, tort claims and all other common law and
statutory claims. This waiver is irrevocable, meaning that it may not be
modified either orally or in writing, and this waiver shall apply to any
subsequent amendments, supplements or other modifications, supplements or other
modifications to this Agreement.
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<PAGE>
(m) NEGOTIATION OF AGREEMENT. Each of the parties acknowledges
that it has been represented by independent counsel of its choice throughout all
negotiations that have preceded the execution of this Agreement and that it has
executed the same with consent and upon the advice of said independent counsel.
Each party and its counsel cooperated in the drafting and preparation of this
Agreement and the documents referred to herein, and any and all drafts relating
thereto shall be deemed the work product of the parties and may not be construed
against any party by reason of its preparation. Accordingly, any rule of law or
any legal decision that would require interpretation of any ambiguities in this
Agreement against the party that drafted it is of no application and is hereby
expressly waived. The provisions of this Agreement shall be interpreted in a
reasonable manner to effect the intentions of the parties and this Agreement.
(n) REMEDIES. In the event of a breach by any party of this
Agreement, a non-breaching party, in addition to being entitled to exercise all
rights granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement. The parties hereby
agree that monetary damages would not be adequate compensation for any loss
incurred by reason of a breach by any of them of any of the provisions of this
Agreement and hereby further agree that, in the event of any action for specific
performance in respect of such breach, they shall waive the defense that a
remedy at law would be adequate.
AIMCO:
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
SELLER:
-----------------------------------
By:
--------------------------------
Authorized Signatory
By:
--------------------------------
Authorized Signatory
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<PAGE>
[The Disclosure Schedule listed in the table of contents
preceding the Stock Purchase Agreement, dated as of April 16, 1997, by and among
Apartment Investment and Management Company, Demeter Holdings Corporation and
Capricorn Investors, L.P., have been omitted. A copy of such
Schedules will be furnished supplementally to the Securities and Exchange
Commission upon request.]
<PAGE>
EXHIBIT 5
LETTER AGREEMENT
This Letter Agreement ("Letter Agreement") is made and dated as of this 5th
day of May, 1997, by APARTMENT INVESTMENT AND MANAGEMENT COMPANY, a Maryland
corporation (the "REIT"), AIMCO PROPERTIES, L.P., a Delaware limited partnership
(together with the REIT, the "Guarantors"), and AIMCO/NHP HOLDINGS, INC. (the
"Acquisition Sub"). Capitalized terms used and not defined herein shall have
the meanings set forth in the Pledge Agreement, dated as of event date herewith,
by the REIT and the other parties listed therein (the "Pledge Agreement").
The Acquisition Sub hereby agrees that, in the event the Lenders exercise
their acceleration remedy pursuant to an Event of Default under the Credit
Agreement (Acquisition Sub Facility), dated of even date herewith, by and among
Acquisition Sub, BofA (as agent and as a lender), Smith Barney Holdings, Inc.,
as a lender, and the other lenders from time to time (the "Acquisition Sub
Credit Agreement"), the Acquisition Sub shall sell its holdings in NHP Stock to
the extent necessary in order to satisfy the Obligations owing to the Lenders
under the Credit Agreement as a result of such acceleration. The Acquisition
Sub shall sell such NHP Stock within 10 Business Days of receiving notice of
such an Event of Default; provided, however, such obligation to sell the NHP
Stock shall not be required if the Lenders exercise their acceleration remedy
due to an Event of Default resulting from any payment default on the Scheduled
Maturity Date or from the bankruptcy or insolvency of the Acquisition Sub.
<PAGE>
This Letter Agreement is made and entered into for the sole protection
and legal benefit of the parties hereto, and no other Person shall be a
direct or indirect legal beneficiary of, or have any direct or indirect cause
of action or claim in connection with, this Letter Agreement.
AIMCO/NHP HOLDINGS, INC.
By /s/ Peter Kompaniez
----------------------------------
Name: Peter Kompaniez
Title: Vice President
APARTMENT INVESTMENT AND
MANAGEMENT COMPANY
By /s/ Peter Kompaniez
----------------------------------
Name: Peter Kompaniez
Title: Vice Chairman
AIMCO PROPERTIES, L.P.
By: AIMCO-GP, Inc.,
General Partner
By /s/ Peter Kompaniez
----------------------------------
Name: Peter Kompaniez
Title: Vice President
2
