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EXHIBIT 7.2
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (as amended, supplemented or
otherwise modified, this "Agreement"), dated as of October 17, 1995, by and
among AMRE, Inc., a Delaware corporation (the "Corporation") and HFS
Incorporated, a Delaware corporation (the "Investor").
RECITALS:
A. The Corporation desires to raise money by the sale of
the Corporation's Senior Convertible Preferred Stock ("Preferred Stock") to the
Investor.
B. The Investor desires to purchase shares of Preferred
Stock on the terms and subject to the conditions hereinafter set forth.
AGREEMENT:
NOW, THEREFORE, in consideration of the mutual agreements,
covenants, representations and warranties contained in this Agreement, the
parties hereto hereby agree as follows:
1. AUTHORIZATION AND SALE OF PREFERRED STOCK.
a. AUTHORIZATION. The Corporation will
authorize and, to the extent necessary, the Corporation's stockholders will
approve, on or before the Closing (as defined hereinafter) the sale and
issuance of that number of shares of Preferred Stock, having the rights,
privileges and preferences set forth in the Certificate of Designation, a copy
of which is attached hereto as Exhibit A (the "Certificate of Designation").
b. SALE OF PREFERRED STOCK. Subject to the
terms and conditions hereof, the Corporation will issue and sell to the
Investor, and the Investor will purchase from the Corporation an aggregate of
300,000 shares of Preferred Stock (the "Shares"), for an aggregate purchase
price of $3,000,000.
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2. ISSUANCE AND PAYMENT.
a. CLOSING. Subject to the terms and conditions
hereof, the closing of the purchase and sale of the Shares (the "Closing")
shall be held at the offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx, 000 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx on, or about, the date upon which the Term of the
License Agreement commences (as defined therein), or at such other time and
place upon which the Corporation and the Investor shall agree (the "Closing
Date").
b. DELIVERY. At the Closing, the Corporation
will deliver to the Investor certificates, registered in the name of the
Investor, representing the Shares, against payment of the purchase price
therefor, by cashier's check payable to the Corporation, or by wire transfer
per the Corporation's instruction.
c. RESTRICTIONS ON ACQUISITIONS OF SHARES.
For so long as the Investor owns the Securities, neither Investor nor any
affiliate which it directly controls shall directly, indirectly, as part of a
Group (as defined in Section 13(d)(3) of the Securities Exchange Act of 1934,
as amended) or otherwise, without the prior written consent of the Corporation,
acquire or make any proposal to acquire, directly or indirectly, more than 20%
of the shares of Common Stock of the Corporation.
3. CORPORATION'S REPRESENTATIONS AND WARRANTIES.
Except as set forth in the disclosure schedule attached hereto as Exhibit B
(the "Disclosure Schedule"), the Corporation hereby represents and warrants to
the Investor as follows:
a. CORPORATE ORGANIZATION AND STANDING.
The Corporation is a corporation duly organized, validly existing and in good
standing under the laws of the State,of Delaware. The Corporation has the
requisite corporate power and authority to carry on its business as now
conducted, and as proposed or contemplated to be conducted in the future, and
to enter into and carry out the provisions of this Agreement and the
transactions contemplated hereby. The Corporation is qualified to do business
as a foreign corporation in all jurisdictions where the fail-
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ure to be so qualified would materially and adversely affect the Corporation's
business.
b. SUBSIDIARIES. The Corporation owns or
controls the subsidiaries or affiliated companies listed on Exhibit C and does
not otherwise own or control, directly or indirectly, any equity interest in
any corporation, association or business entity (collectively, the
"Subsidiaries"). Each Subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of each Subsidiary's jurisdiction
of incorporation.
c. CORPORATE CAPITALIZATION.
(i) Simultaneously with, the Closing,
the Corporation's authorized capital stock shall consist only of (A) shares of
the Corporation's preferred stock (other than the Preferred Stock), none of
which is issued and outstanding, (3) 200,000 shares of the Corporation's Series
A Junior Participating Preferred Stock, (C) 20,000,000 shares of the
Corporation's common stock, par value $0.01 per share (the "Common Stock"), of
which 12,849,822 are issued and outstanding, (D) 2,562,381 shares of Common
Stock as may be issued by the Corporation pursuant to options outstanding as of
the date hereof (including options to be issued to Xxxxx Xxxxx) and (E) 300,000
shares of the Preferred Stock.
(ii) Except as set forth on the
Corporation's Form 10-K for the year ending December 31, 1994 (the "Form
10-K"), filed pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), there are no outstanding preemptive or other rights, options,
warrants, conversion rights or agreements for the purchase or acquisition from
the Corporation of any shares of its capital stock, nor does the Corporation
have any obligation to repurchase any outstanding capital stock of the
Corporation.
(iii) As of the date hereof, the
Corporation does not have any declared and unpaid dividends (whether payable in
cash, securities or other consideration).
d. AUTHORIZATION. All corporate action on the
part of the Corporation, its directors and stock-
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holders necessary for the authorization, execution, delivery and performance of
this Agreement by the Corporation, the authorization, sale, issuance and
delivery of the Preferred Stock and the performance of all of the Corporation's
obligations hereunder has been taken or will be taken prior to the Closing.
This Agreement, when executed and delivered by the Corporation (and assuming
due execution and delivery by the Investor), shall constitute a valid and
binding obligation of the Corporation, enforceable in accordance with its
terms, except as may be limited by principles of public policy, and subject to
laws of general application relating to bankruptcy, insolvency and the relief
of debtors and rules of law governing specific performance, injunctive relief
or other equitable remedies. The Shares, when issued in compliance with the
provisions of this Agreement, will be validly issued, will be fully paid and
nonassessable (except as provided herein), will have the rights, preferences
and privileges set forth in the Certificate of Designation and the Shares will
be free of any liens or encumbrances.
e. FINANCIAL STATEMENTS. The Corporation has
delivered to the Investor the audited consolidated financial statements for the
fiscal year ended December 31, 1994 and the unaudited consolidated financial
statements of the Corporation for the period ending on June 30, 1995
(collectively the "Financial Statements"). The Financial Statements are
complete and correct in all material respects and have been prepared in
accordance with generally accepted accounting principles applied on a
consistent basis throughout the periods indicated, except for the absence of
footnotes and except for normal year end adjustments. The Financial Statements
fairly present the Corporation's financial condition and operating results and
that of its Subsidiaries as of the dates, and during the periods, indicated
therein. Since June 30, 1995, there has not been any material change in the
assets, liabilities, financial condition or operations of the Corporation or
its Subsidiaries, from that reflected in the Financial Statements, except
changes in the ordinary course of business which have not been, either
individually or in the aggregate, materially adverse to the Corporation and its
Subsidiaries taken as a whole and any changes that may result from the series
of transactions contemplated hereby, by the License Agreement and by other
related agreements.
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f. NO UNDISCLOSED LIABILITIES. Neither the
Corporation nor its Subsidiaries have any material liabilities or obligations,
absolute or contingent (individually or in the aggregate), except (i) the
liabilities and obligations set forth in the Financial Statements, and (ii)
liabilities and obligations which have been incurred subsequent to June 30,
1995, in the ordinary course of business which have not been, individually or
in the aggregate, materially adverse to the Corporation and its Subsidiaries
taken as a whole.
g. LITIGATION. There are no actions, proceedings
or, to the Corporation's best knowledge, governmental investigations pending,
or any threat thereof made by any person or agency, against the Corporation or
any of its Subsidiaries which, either individually or in the aggregate, might
result in any material adverse change in the business, prospects, condition,
affairs or operations of the Corporation or in any of its properties, assets or
Subsidiaries, or in any material impairment of the right or ability of the
Corporation or its Subsidiaries to carry on their respective businesses as
proposed to be conducted, nor which question the validity of this Agreement or
any action taken or to be taken in connection herewith. To the Corporation's
best knowledge, there is no reasonable basis for any material actions or
proceedings against the Corporation or its Subsidiaries that would have a
material adverse effect upon the Corporation or its Subsidiaries.
h. GOVERNMENTAL CONSENTS. No consent, approval,
order, authorization or registration, qualifications, designation, license,
declarations or filing with any Federal or state governmental authority is
required on the part of the Corporation in connection with the consummation of
the transactions contemplated herein to be consummated on the Closing Date
except for those set forth on the Disclosure Schedule, each of which are in
full force and effect as of the Closing Date. All filings of the Corporation
required by the Securities and "Exchange Commission have been made and since
January 1, 1993, such filings do not contain any untrue statement of a material
fact or omit to state a material fact necessary to make such filings not
misleading.
i. TITLE TO PROPERTY. The Corporation and its
Subsidiaries have good and marketable title to
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all of their respective properties and assets, free and clear of restrictions
or conditions on transfer or assignment (other than restrictions or
prohibitions on the transfer or assignment of the Corporation's interests or
rights under leases and contracts) and free and clear of mortgages, liens,
pledges, charges, encumbrances, equities, claims, easements, rights of way,
covenants, conditions or restrictions, except for current taxes and assessments
not delinquent or are being contested in good faith and adequate reserves have
been taken therefor in accordance with generally accepted accounting
principles, as in effect from time to time, applied on a consistent basis
("GAAP") and for matters that, in the aggregate, are not substantial in amount
and do not materially detract from or interfere with the present or intended
use of any of these assets, nor materially impair the business or proposed
operation of the Corporation or the Subsidiaries. Neither the Corporation nor
its Subsidiaries are in material breach of any leasehold interest.
j. TAX RETURNS. All tax returns required by law
to be filed by the Corporation and its Subsidiaries have been timely filed
(including allowable extensions) and are materially accurate and complete, and
any taxes, assessments or governmental charges or levies upon the Corporation,
its Subsidiaries, or upon their respective properties, assets or income, which
are due and payable have been paid or are being contested in good faith and
adequate reserves have been taken therefor in accordance with GAAP. The
Corporation has also withheld all taxes required by law to be withheld by the
Corporation.
k. BOOKS AND RECORDS. All books and records of
the Corporation, including minute books, Bylaws, stock ledgers and books of
account, are accurate in all material respects and reflect all material matters
and transactions which should currently be reflected therein.
l. NO VIOLATION OF LAW. The Corporation is not
in violation of any law, statute, regulation, ordinance, judgment, order or
decree applicable to it which violation, either individually or in the
aggregate, would materially and adversely affect the Investor's rights under
this Agreement or the property, business, prospects, operations or condition
(financial or other-
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wise) of the Company and its Subsidiaries taken as a whole.
m. CONTRACTS; COMPLIANCE WITH INSTRUMENTS.
Except as set forth on the Form 10-K, the Corporation and its Subsidiaries have
no contracts or commitments that are material to its business, financial
condition, operations or prospects. Neither the Corporation nor its
Subsidiaries are in violation, breach or default of any term of their
respective Certificate of Incorporation or Bylaws, or in any material respect,
of any material term or provision of any mortgage, indenture, contract,
agreement, instrument, judgment, decree, order, statute, rule or regulation
applicable to or binding upon the Corporation or its Subsidiaries. The
execution, delivery and compliance with and performance by the Corporation of
this Agreement does not and will not (1) conflict with or result in a breach of
the terms, conditions or provisions of, in any material respect,(2) constitute
a default under, (3) result in the creation of any material lien, security
interest, charge or encumbrance upon the Corporation's or its Subsidiaries,
capital stock or assets pursuant to, (4) give any third party the right to
accelerate any material obligation under, (5) result in a material violation
of, or (6) except as contemplated hereby, require any authorization, consent,
approval, permit, exemption or other action by or notice to any court or
administrative or governmental body pursuant to, the Certificate of
Incorporation or Bylaws of the Corporation or its Subsidiaries or any law,
statute, rule or regulation to which the Corporation or any Subsidiary is
subject or any material agreement, instrument, order, judgment or decree to
which the Corporation or any Subsidiary is subject. To the Corporation's best
knowledge, no third-party is in breach of any material agreement with the
Corporation or its Subsidiaries that would have a material adverse effect upon
the Corporation or its Subsidiaries taken as a whole.
n. INSURANCE. The Corporation and its
Subsidiaries maintain insurance with companies in such amounts and against such
risks as maintained by companies of similar size and in businesses similar to
the Corporation's business.
o. AGREEMENTS AMONG STOCKHOLDERS OR AFFILIATES.
(i) Except as set forth on the Form 10-K,
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there are no agreements between the Corporation and its stockholders or (ii) to
the Corporation's best knowledge, between and among the Corporation's
stockholders which are applicable to the Corporation, its business or its
capital stock. There are no agreements between the Corporation's officers,
directors or stockholders. There are no loans to or from the Corporation with
any officer, director or stockholder of the Corporation.
p. DISCLOSURE. No representation or warranty
by the Corporation in this Agreement or the Disclosure Schedule or in any
written statement or certificate furnished or to be furnished to the Investor
pursuant hereto contains or will contain any untrue statement of a material
fact or omits or will omit to state a material fact necessary to make the
statements made therein, in the light of the circumstances under which they
were made, not misleading in any material respect.
4. INVESTOR REPRESENTATIONS AND WARRANTIES. The
Investor represents and warrants to the Corporation that (i) the Investor is
acquiring the Shares, and any shares of Common Stock issuable pursuant to
conversion of the Shares (hereinafter collectively the "Securities") for
investment for its own account, and not with a view to, or resale in connection
with, any public distribution thereof and (ii) all corporate action on the part
of the Investor, its directors and stockholders necessary for the
authorization, execution, delivery and performance of this Agreement by the
Investor and the performance of all of the Investor's obligations hereunder has
been taken or will be taken prior to the Closing; This Agreement, when executed
and delivered by the Investor (and assuming due execution and delivery by the
Corporation), shall constitute a valid and binding obligation of the Investor,
enforceable in accordance with its terms, except as may be limited by
principles of public policy, and subject to laws of general application
relating to bankruptcy, insolvency and the relief of debtors and rules of
law,governing specific performance, injunctive relief or equitable remedies.
5. CERTIFICATE OF DESIGNATION. Prior to the Closing, the
Corporation shall file with the Secretary of State of the State of Delaware,
the Certificate of Designation to reflect the terms of the Preferred Stock and
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the provisions of Section 7 hereof, which such Certificate of Designation shall
be satisfactory to the Investor.
6. COVENANTS PENDING CLOSING. From the date of this
Agreement until the Closing Date (or later as specified below), the parties
hereto hereby covenant as hereinafter set forth:
a. Except as contemplated by this Agreement, the
Corporation will conduct its business and operations according to its ordinary
and usual course of business. Without limiting the generality of the foregoing,
and, except as otherwise expressly provided in this Agreement, prior to the
Closing Date, without the prior written consent of the Investor, the
Corporation will not:
(i) create, incur or assume any indebtedness of
any nature, including obligations in respect of capital leases except
as would be permitted under the terms of the Credit Agreement dated as
of the date hereof between the Corporation, as borrower, and the
Investor, as lender;
(ii) declare, set aside or pay an dividend or
other distribution (whether in cash, stock or property or any
combination thereof) in respect of the Common Stock, or redeem or
otherwise acquire any shares of the Common Stock;
(iii) (a) increase in any manner the compensation
of any of its directors, officers or other employees, except such
increases as are granted (1) in the ordinary course of business in
accordance with its customary practices (which shall include normal
periodic performance review and related compensation and benefit
increases but not any general across-the-board increases) or (2) by
the Corporation's Compensation Committee and approved by a
representative of the Investor or (b) increase the rate or terms of
any bonus, insurance, pension or other employee benefit plan, payment
or arrangement made to, for or with any such directors, officers or
key employees except increases occurring in the ordinary course of
business in accordance with its customary practices (which shall
include normal
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periodic performance reviews and related compensation and benefit
increases) and except pursuant to any Corporation plans; or
(iv) enter into any agreement, commitment or
transaction (including without limitation any borrowing, capital
expenditure or capital financing) material to the business, operations
or financial condition of the Company, except agreements, commitments
or transactions in the ordinary course of business or as contemplated
hereby,
b. The Corporation will (i) give the Investor
and its authorized representatives reasonable access to all books, records,
plants, offices, warehouses and other facilities and properties of the
Corporation and its Subsidiaries, (ii) permit the Investor to make such
inspections thereof during normal business hours as the Investor may reasonably
request and (iii) cause its officers to furnish the Investor with such
financial and operating data and other information with respect to the business
and properties of the Corporation and its Subsidiaries as the Investor may from
time to time reasonably request; provided, however, that any such investigation
shall be conducted in such a manner as not to interfere unreasonably with the
operation of the business of the Corporation.
c. Subject to the terms and conditions of this
Agreement, each of the parties hereto will use all reasonable efforts to take,
or cause to be taken, all 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 sale of the Shares pursuant to this
Agreement. From time to time after the date hereof, without further
consideration, the Corporation will execute and deliver such documents to the
Investor as the Investor may reasonably request in order more effectively to
vest in the Investor good title to the Shares.
d. The Investor and the Corporation will make or
cause to be made all filings and submissions as may be required under
applicable laws and regulations, if any, for the consummation of the
transactions contemplated by this Agreement. The Investor and the Corporation
will coordinate and cooperate with one another in
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exchanging such information and reasonable assistance as another may request in
connection with all of the foregoing.
e. The Corporation shall, after the Closing
Date, ensure that it at all times maintains an adequate number of authorized
shares of Common Stock so as to allow the conversion of the Preferred Stock
pursuant to the terms of the Certificate of Designation.
7. INVESTOR DIRECTORS. For so long, as (i) the Investor
or any affiliate thereof holds 50% of the Securities, (ii) the Credit Agreement
is in full force and effect or (iii) any other loan is outstanding from the
Corporation or its Subsidiaries to the Investor, the Investor shall have the
right to designate two (2) members of the Corporation's Board of Directors and
the Corporation shall provide for the election of such designated members to
the Board of Directors.
8. CONDITIONS TO INVESTOR'S OBLIGATIONS. The obligation
of the Investor to purchase the Shares pursuant to this Agreement is subject to
the satisfaction at or prior to the Closing Date of the following conditions,
any or all of which may be waived by the Investor:
a. The representations and warranties of the
Corporation contained in Section 3 hereof shall be true and correct in all
material respects on and as of the Closing Date as if made on and as of such
date;
b. The Corporation shall have performed and
complied in all material respects with all covenants and agreements required by
this Agreement to be performed or complied with by it at or prior to the
Closing Date;
c. The Investor shall have received duly
executed certificates representing the Shares and duly registered in the name
of the Investor or its designated agent on the Closing Date;
d. The Investor shall have received certificates
dated the Closing Date signed on behalf of the Corporation by its duly
authorized officer or duly authorized officers to the effect that all of the
conditions to the Closing set forth in Sections 8a and 8b have been satisfied;
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e. The Investor shall have received opinions,
dated the Closing Date, from Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P., the
Corporation's counsel, acceptable to Investor's counsel;
f. There shall be no action or proceeding
commenced or, to the knowledge of the parties, threatened before any legal or
administrative tribunal or by any administrative organization, and no judgment,
order or injunction shall have been rendered by any such tribunal or
organization for the purpose of restraining or prohibiting the transactions
contemplated in this Agreement or otherwise adversely affecting Investor's
ownership of the shares; and
g. The conditions precedent contained in Section
3 of the Credit Agreement shall have been fulfilled.
9. CONDITIONS TO THE CORPORATION'S OBLIGATIONS.
The obligations of the Corporation to issue and sell the Shares pursuant to
this Agreement are subject to the satisfaction, at or prior to the Closing
Date, of the following conditions, any or all of which may be waived by the
Corporation:
a. The representations and warranties of the
Investor contained in Section 4 hereof shall be true and correct in all
material respects on and as of the Closing Date as if made on and as of such
date;
b. The Investor shall have performed and
complied in all material respects with all covenants and agreements required by
this Agreement to be performed or complied with by the Investor at or prior to
the Closing Date; and
c. The Corporation shall have received
certificates dated the Closing Date signed on behalf of the Investor by a duly
authorized officer or duly authorized officers to the effect that all the
conditions to Closing set forth in Sections 9a and 9b have been satisfied.
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10. INVESTOR REGISTRATION RIGHTS.
a. DEMAND REGISTRATION. At any time after the
Preferred Stock is converted into Common Stock of the Corporation, the Investor
may make a written request for registration ("Demand Registration") under the
Securities Act of 1933 (the "Securities Act") of all or part of its Common
Stock into which its Preferred Stock has so been converted (the "Registrable
Securities"). Subject to the provisions of this paragraph, the Corporation
shall not be obligated to effect more than one such Demand Registration.
Notwithstanding the foregoing, (a) the Corporation shall not be obligated to
effect a registration pursuant to this Section 10a during the period starting
with the date thirty (30) days prior to the Corporation's estimated date of
filing of, and ending on a date ninety (90) days following the effective date
of, a registration statement pertaining to an underwritten public offering of
Common Stock for the account of the Corporation, and (b) if the Corporation is
required to effect a registration pursuant to this Section 10a and the
Corporation furnishes to the Investor a certificate signed by the President of
the Corporation stating that in the good faith judgment of the Board of
Directors of the Corporation it would be materially adverse to the Corporation
and its shareholders for such registration statement to be filed on or before
the date such filing would otherwise be required hereunder and it is therefor
necessary to defer the filing of such registration statement, then the
Corporation shall have the right to defer such filing for a period not to
exceed 90 days after receipt of the request for such registration from
Investor; provided that during such time the Corporation may not file a
registration statement for securities to be issued and sold for its own account
or that of anyone other than Investor other than on Form X-0, X-0 or any
successor similar forms or any other form not available for registering the
Registrable Securities for sale to the public. The Corporation shall at all
times use its best efforts to register such Registrable Securities. A
registration will not count as a Demand Registration until it has become
effective, unless the cause of such failure shall be directly attributable to
actions of the Investor. The Investor shall determine the method of
distribution for Registrable Securities. If, for any reason, Registrable
Securities requested to be registered are excluded from a Demand Registration,
the Investor
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shall have the right to one additional Demand Registration with respect to such
issue of Registrable Securities. If any Demand Registration is in the form of
an underwritten offering, the Investor shall have the right to designate the
underwriter(s) with the approval of the Corporation, which approval shall not be
unreasonably withheld.
If a requested registration pursuant to this Section 10a
involves an underwritten offering, and the managing underwriter shall advise
the Corporation in writing (with a copy to the Investor) that, in its opinion,
the number of securities requested to be included in such registration exceeds
the number which can be sold in such offering within a price range acceptable
to the Investor, then the Registrable Securities requested to be registered
pursuant to this Section 10a shall either (i) be reduced to the number of
Registrable Securities which the Corporation is so advised can be sold in (or
during the time of) such offering, or, (ii) in the alternative, the Investor
may elect to cancel the Demand Registration, which shall not then count as a
Demand Registration hereunder.
b. PIGGY-BACK REGISTRATION. If, at any time
prior to the third anniversary of the date of the issuance of the Preferred
Stock, the Corporation proposes to register any of its securities under the
Securities Act of 1933, as amended (the "Securities Act") (other than by a
registration on Form X-0, X-0 or any successor similar forms or any other form
not available for registering the Registrable Securities for sale to the public
and other than pursuant to Section 10a hereof), whether for sale for its own
account or other security holders, the Corporation will, each such time, at
least 30 days prior to filing the registration statement, give written notice
to the Investor of its intention to do so and upon the written request of the
Investor made within 15 days after the receipt of any such notice (which
request shall specify the Registrable Securities intended to be disposed of by
the Investor), the Corporation will use best efforts to effect the registration
under the Securities Act of all Registrable Securities which the Corporation
has been so requested to register by the Investor, to the extent requisite to
permit the disposition of the Registrable Securities so to be registered;
provided, however, that if at any time after giving written notice of its
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intention to register any securities and prior to the effective date of the
registration statement filed in connection with such registration, the
Corporation shall determine for any reason not to register or to delay
registration of such securities, the Corporation may, at its election, give
written notice of such determination to the Investor and, thereupon, (i) in the
case of a determination not to register, shall be relieved of its obligation to
register any Registrable Securities in connection with such registration,
without prejudice, however, to any rights of the Investor to request that such
registration be effected as a registration under Section 10a hereof, and (ii)
in the case of a determination to delay registering, shall be permitted to
delay registering any Registrable Securities being registered pursuant to this
Section 10b for the same period as the delay in registering such other
securities. No registration effected under this Section 10b shall relieve the
Corporation of its obligation to effect any registration upon request required
under Section 10a hereof.
c. PRIORITY IN PIGGY-BACK REGISTRATIONS. If
(i) a registration pursuant to this Section 10b involves an underwritten
offering of the securities so being registered, whether or not for sale for the
account of the Corporation, to be distributed (on a firm commitment basis) by
or through one or more underwriters of recognized standing, whether or not the
Registrable Securities so requested to be registered for sale for the account
of the investor are also to be included in such underwritten offering, and (ii)
the managing underwriter of such underwritten offering shall inform the
Corporation and the Investor of its belief that the number of securities
requested to be included in such registration exceeds the number which can be
sold in (or during the time of) such offering, then the Corporation may include
in such offering all securities proposed by the Corporation to be sold for its
own account and all securities proposed to be sold by other holders of
Registrable Securities exercising demand registration rights (if any) and may
decrease the number of Registrable Securities and other securities of the
Corporation that requested to be included in such registration by decreasing
the Registrable Securities requested to be included in such registration (pro
rata among the holders requesting such registration on the basis of the number
of shares of such securities held by such holder immediately prior to the
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filing of the registration statement with respect to such registration). The
Corporation shall not be required under this Section 10c to include any of the
Investor's Registrable Securities in such underwriting unless Investor accepts
the terms of the underwriting as determined by the Corporation and the
underwriters selected by the Corporation.
d. PROCEDURES. If and whenever the Corporation
is required to use best efforts to effect the registration of any Registrable
Securities under the Securities Act as provided in Sections 10a and 10b hereof,
the Corporation will, subject to the limitations provided herein:
(i) promptly prepare and as soon as
practicable file with the Securities and Exchange Commission (the "SEC") the
requisite registration statement to effect such registration, and thereafter,
subject to the provisions of Section 10 hereof, use best efforts to cause such
registration statement to become promptly effective;
(ii) promptly prepare and file with the
SEC such amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to keep such
registration statement effective and to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by
such registration statement until such time as all of such securities have been
disposed of in accordance with the intended methods of disposition by the
seller or sellers thereof set forth in such registration statement; provided,
however, that the Corporation shall not in any event be required to keep the
registration statement effective for a period of more than six months after
such registration statement becomes effective; and provided, further that the
Corporation may delay the filing or suspend the effectiveness of any
registration under this Agreement, or without suspending such effectiveness,
instruct the Investor not to sell any Registrable Securities included in any
such registration, only in the case of: (A) if the Corporation shall have
determined upon the advice of counsel that the Corporation would be required to
disclose any actions taken or proposed to be taken by the Corporation in good
faith and for valid business reasons, including without limitation,
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the acquisition or divestiture of assets, which disclosure would have a
material adverse effect on the Corporation or on such actions, or (B) if
required by law, to update the prospectus relating to any such registration to
include updated financial statements (a "Suspension Period") by providing the
Investor with written notice of such Suspension Period and the reasons
therefor. In addition, the Corporation shall not be required to keep any
registration effective, or may without suspending such effectiveness, instruct
the Investor if it has Registrable Securities included in such registration not
to sell such securities, during any period which the Corporation is instructed,
directed, ordered or otherwise requested by any governmental agency or
self-regulatory organization to stop or suspend such trading or sales
("Supplemental Extension Period"). The Corporation shall use its best efforts
to terminate any such Suspension Period or Supplemental Extension Period and in
any event, such periods shall end within 30 days thereafter. In the event of a
Suspension Period or Supplemental Extension Period, the period during which any
registration under this Agreement is to remain effective pursuant to this
Section 10d shall be tolled until the end of any such Suspension Period or
Supplemental Extension Period;
(iii) promptly furnish to the Investor
such number of conformed copies of such registration statement and of each such
amendment and supplement thereto (in each case including all exhibits), such
number of copies of the prospectus contained in such registration statement
(including each preliminary prospectus and any summary prospectus) and any
other prospectus filed under Rule 424 under the Securities Act, and such other
documents, as the Investor may reasonably request;
(iv) use best efforts to register or
qualify all Registrable Securities and other securities covered by such
registration statement under such other securities or blue sky laws of such
jurisdiction as each seller thereof shall reasonably request and to keep such
registration or qualification in effect for so long as such registration
statement remains in effect (provided, however, that the Corporation shall not
in any event be required to keep such registration or qualification in effect
for a period of more than six months after such registration or qualification
becomes effective), and
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take any other action which may be reasonably necessary or advisable to enable
Investor to consummate the disposition in such jurisdictions of the securities
owned by Investor, except that the Corporation shall not for any such purpose
be required to qualify generally to do business as a foreign corporation in any
jurisdiction wherein it would not but for the requirements of this Section 10d
be obligated to be so qualified or to consent to general service of process in
any such jurisdiction, and further provided that (anything in this Agreement to
the contrary notwithstanding with respect to the bearing of expenses) if any
jurisdiction in which the securities shall be qualified shall require that
expenses incurred in connection with the qualification of the securities in
that jurisdiction be borne by Investor, then such expenses shall be payable by
Investor, to the extent required by such jurisdiction;
(v) use best efforts to cause all
Registrable Securities covered by such registration statement to be registered
with or approved by such other United States Federal or state governmental
agencies or authorities as may be necessary to enable the Investor to promptly
consummate the disposition of such Registrable Securities;
(vi) if Registrable Securities are
covered by such registration statement, promptly notify the Investor at any
time when a prospectus relating thereto is required to be delivered under the
Securities Act, upon discovery that, or upon the happening of any event as a
result of which the prospectus included in such registration statement, as then
in effect, includes an untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances under which
they were made, and at the request of the Investor prepare and furnish to the
Investor a reasonable number of copies of a supplement to or an amendment of
such prospectus as may be necessary so that, as thereafter delivered to the
purchasers of such securities, such prospectus shall not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in
the light of the circumstances under which they were made;
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(vii) otherwise use best efforts to comply
with all applicable rules and regulations of the SEC and make available to its
securityholders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve months beginning with the first full
calendar month after the effective date of such registration statement, which
earnings statement shall satisfy the provisions of Section 11(a) of the
Securities Act;
(viii) provide and cause to be maintained a
transfer agent for all Registrable Securities covered by such registration
statement from and after a date not later than the effective date of such
registration statement; and
(ix) use best efforts to list all
Registrable Securities covered by such registration statement on any securities
exchange on which any of the Corporation's Common Stock is then listed.
e. INVESTOR INFORMATION REQUIREMENTS. It shall
be a condition precedent to the obligations of the Corporation to take any such
action with respect to registering the Investor's Registrable Securities
pursuant to this Section 10 that the Investor furnish the Corporation in
writing such information regarding the Investor, the Registrable Securities and
the distribution of such securities as the Corporation may from time to time
reasonably request in writing. If the Investor fails to provide the Corporation
with any such information, the Corporation may exclude the Investor's
Registrable Securities from the registration statement unless the Investor
provides the Corporation with an opinion of Skadden, Arps, Slate, Xxxxxxx &
Xxxx or other counsel reasonably acceptable to the Corporation to the effect
that such information need not be included in the registration statement.
The Investor agrees that upon receipt of any notice from the
Corporation of the happening of any event of the kind described in Section
10d(v), the Investor will forthwith discontinue the Investor's disposition of
Registrable Securities pursuant to the registration statement relating to such
Registrable Securities until the Investor's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 10d(v) and,
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if so directed by the Corporation, will deliver to the Corporation copies,
other than permanent file copies then in the Investor's possession, of the
prospectus relating to such Registrable Securities current at the time of
receipt of such notice.
f. REQUESTED UNDERWRITTEN OFFERINGS. If
requested by the underwriters for any underwritten offering of Registrable
Securities pursuant to a registration requested under Section 10 hereof, the
Corporation will enter into an underwriting agreement with such underwriters
for such offering, such agreement to be reasonably satisfactory in substance
and form to the Investor and the underwriters and to contain such customary
representations and warranties, covenants and indemnities by the Corporation
and such other terms as are generally required in agreements of this type. The
Investor will cooperate with the Corporation in the negotiation of the
underwriting agreement and will give consideration to the reasonable requests
of the Corporation regarding the form thereof. If requested by the underwriters
of any underwritten offering pursuant to a registration under Section 10
hereof, provided the Corporation has complied with Section 10b, the Investor
agrees to enter into an agreement with such underwriters not to sell its shares
of stock in the Corporation for a period of time (not to exceed 90 days) after
the effectiveness of a registration statement equal to the period of time which
the sellers of securities in such registration have agreed not to sell their
shares after the effectiveness of such registration statement. The Investor
shall be a party to such underwriting agreement. The Investor shall not be
required to make any representations, warranties or agreements with the
Corporation other than representations, warranties or agreements regarding the
Investor, the Investor's Registrable Securities, the Investor's intended method
of distribution and any representations, warranties or agreements required by
law.
g. INCIDENTAL UNDERWRITTEN OFFERINGS. If the
Corporation at any time proposes to register any of its securities under the
Securities Act as contemplated by Section 10b hereof and such securities are to
be distributed by or through one or more underwriters, the Corporation will, if
requested by the Investor as provided in Section 10b hereof and subject to the
provisions of Section 10c hereof, use best efforts to arrange for such
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underwriters to include all the Registrable Securities to be offered and sold
by the Investor to be distributed by such underwriters, provided that the
Investor has accepted the terms of the underwriting as determined hereunder and
the Underwriter(s) selected by the Corporation. In such event, the Investor
shall be a party to the underwriting agreement between the Corporation and such
underwriters. The Investor shall not be required to make any representations or
warranties to or agreements with the Corporation other than representations,
warranties or agreements regarding the Investor, the Investor's Registrable
Securities, the Investor's intended method of distribution and any
representations, warranties or agreements required by law.
h. REASONABLE INVESTIGATION. In connection with
the preparation and filing of each registration statement under the Securities
Act pursuant to this Agreement, the Corporation will give the Investor and its
agent and advisors and the underwriters, if any, the reasonable opportunity to
participate in the preparation of such registration statement, each prospectus
included therein or filed with the Commission, and each amendment thereof or
supplement thereto, and will give each of them such access to its books and
records and such opportunities to discuss the business of the Corporation with
its officers and the independent public accountants who have certified its
financial statements as shall be reasonably necessary to conduct a reasonable
investigation within the meaning of the Securities Act. Subject to the rights
and obligations of the Corporation under the Securities Act and other
applicable laws, the Investor shall have the right to review such registration
statement and to approve those portions of such registration statement that
directly pertain to the Investor.
i. EXPENSES AND INDEMNIFICATION. All expenses
incurred by the Corporation in connection with the registration of Registrable
Securities (excluding underwriters' discounts and commissions), including
without limitation, all registration and qualification fees, printers' and
accounting fees, fees and disbursements of counsel for the Corporation and fees
and disbursements of counsel for the Investor (not to exceed $10,000) shall be
borne by the Corporation. In connection with any public offering of Securities
pursuant to this Section, the Corporation agrees to indemnify the Investor
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to the same extent as the Corporation indemnifies any underwriter participating
therein. If required pursuant to the terms of an underwritten offering, the
Investor shall indemnify the Corporation, but only to the same extent that an
underwriter participating therein indemnifies the Corporation and, in any
event, only with respect to information provided by the Investor in any event.
j. ASSIGNMENT OF REGISTRATION RIGHTS. The
registration rights of the Investor under this Section may be transferred to
any person or entity who acquires at least 25% of the Registrable Securities
and agrees in writing to be bound by the provisions of this Agreement;
provided, however, that the Corporation shall be given written notice by the
Investor at the time of such transfer stating the name and address of the
transferee and identifying the Securities with respect to which the rights
under this Section are being assigned and provided further, that any such
assignment shall only be to an affiliate of the Investor.
k. NO MORE FAVORABLE REGISTRATION RIGHTS.
The Corporation covenants and agrees that it has not granted to any other
securityholder any registration rights that are materially more favorable and
will not grant to any other securityholder any registration rights that are
more favorable than those granted to the Investor pursuant to this Section,
unless it also grants such additional registration rights to the Investor.
11. TERMINATION.
a. TERMINATION. This Agreement may be terminated
and the transactions contemplated hereby may be abandoned at any time (i) by
mutual agreement of the Investor and the Corporation or (ii) prior to the
Closing, by either the Corporation or the Investor if the Closing shall not
have occurred by January 2, 1996; provided, however, that a party who has
violated or breached this Agreement may not terminate this Agreement if such
violation or breach is continuing.
b. EFFECT OF TERMINATION. In the event of
termination of this Agreement pursuant to clause a. above, written notice
thereof shall forthwith be given by the party electing to terminate to the
other party and
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the transactions contemplated by this Agreement shall be terminated and
abandoned, without further action by or on the part of either the Investor or
the Corporation. Termination of this Agreement pursuant to this Section shall
not in any way limit or restrict the rights and remedies of any party hereto
against any other party hereto who has violated or breached any representation,
warranty, agreement or other provision of this Agreement prior to the
termination hereof.
12. MISCELLANEOUS.
a. SUCCESSORS AND ASSIGNS. Except as otherwise
expressly provided herein, the provisions hereof shall inure to the benefit of,
and be binding upon, the successors, assigns, heirs, executors and
administrators of the parties hereto; provided, however, that the Corporation
may not assign its rights hereunder without the prior written consent of the
Investor.
b. ENTIRE AGREEMENT. This Agreement and any
schedules and exhibits attached hereto and the other documents delivered
pursuant hereto constitute the full and entire understanding and agreement
between and among the parties with regard to the subjects hereof and thereof.
c. NOTICE. Any notice, payment, report or other
communication required or permitted to be given by one party to any other party
by this Agreement shall be in writing and either (i) served personally on the
other party or parties or (ii) sent by overnight courier, express, registered
or certified first class mail, postage prepaid, addressed as follows:
(a) If to the Corporation, at
AMRE, Inc.
0000 Xxxxx Xxxxxxxx Xxxxxxx
Xxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: President
Telephone: (000) 000-0000
Fax: (000) 000-0000
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(b) If to the Investor, at
HFS Incorporated
000 Xxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx
Executive Vice President and
General Counsel
Telephone: (000) 000-0000
Fax: (000) 000-0000
or to such other address as shall have theretofore furnished to the other party
by like notice. Such notice shall be deemed received on the date on which
personally delivered, or three (3) business days after the same shall have been
deposited in the United States mail.
d. FINDER'S AND BROKER'S FEES. Each party hereto
represents and warrants that it has retained no finder or broker in connection
with the transactions contemplated by this Agreement, other than the engagement
by the Investor of Bear Xxxxxxx & Co. and Xxxxx Xxxxx, and hereby agrees to
indemnify and to hold the other harmless from any liability for any finder's or
broker's fee to any broker or other person or firm (and the costs and expenses
of defending against such liability or asserted liability) for which such
indemnifying person, or any of its employees or representatives, are
responsible.
e. EXPENSES. All cost and expenses incurred in
connection with this Agreement shall be paid by the party incurring such costs
and expenses.
f. TITLE AND SUBTITLES. The titles of the
Sections and subsections of this Agreement are for the convenience of reference
only and are not to be considered in construing this Agreement.
g. COUNTERPARTS. This Agreement may be executed
in any number of counterparts, each of which may be executed by less than all
of the parties, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute one
instrument.
h. GOVERNING LAW; SUBMISSION TO JURISDICTION.
(i) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
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OF THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED
BY THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE PRINCIPLES
THEREOF RELATING TO CONFLICTS OF LAW).
(ii) Any legal action or proceeding with
respect to this Agreement and any action for enforcement of any judgment in
respect thereof may be brought in the courts of the United States of America
for the Southern District of New York, and, by execution and delivery of this
Agreement, the Corporation hereby accepts for itself and in respect of its
property, generally and unconditionally, the non-exclusive jurisdiction of the
aforesaid courts and appellate courts from any thereof. The Corporation
irrevocably consents to the service of process out of any of the aforementioned
courts in any such action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, to the Corporation at its
address set forth above. The Corporation hereby irrevocably waives any
objection which it may now or hereafter have to the laying of venue of any of
the aforesaid actions or proceedings arising out of or in connection with this
Agreement brought in the courts referred to above and hereby further
irrevocably waives and agrees not to plead or claim in any such court that any
such action or proceeding brought in any such court has been brought in an
inconvenient forum.
i. NO WAIVERS; AMENDMENTS. No failure or delay
on the part of any party in exercising any right, power or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise
thereof preclude any other or future exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies herein provided shall
be cumulative and not exclusive of any rights or remedies provided by law. Any
provisions of this Agreement may be amended or waived if, but only if, such
amendment or waiver is in writing and is signed by the Corporation and the
Investor. No waiver of or consent to any departure by either party from any
provision of this Agreement shall be effective unless signed in writing by the
party entitled to the benefit of such provision. Any amendment, supplement or
modification of or to any provision of this Agreement, any waiver of any
provision of this Agreement, and any consent to any departure from the terms of
any
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provision to this Agreement, shall be effective only in the specific instance
and for the specific purpose for which made or given.
j. SEVERABILITY. The invalidity or
unenforceability of any provision of this Agreement in any jurisdiction shall
not affect the validity or enforceability of the remainder of this Agreement in
that jurisdiction or the validity or enforceability of this Agreement,
including that provision, in any other jurisdiction.
k. PUBLICITY. No public release, announcement
or other form of publicity concerning the transactions contemplated hereby
shall be issued by either party without the prior consent of the other party,
except to the extent that in the reasonable judgment of the Corporation or the
Investor, as the case may be, may be required to make such release or
announcement by law or the rules or regulations of any securities exchange.
l. WAIVER OF TRIAL BY JURY. TO THE EXTENT
PERMITTED BY APPLICABLE LAW, EACH OF THE CORPORATION AND THE INVESTOR HEREBY
IRREVOCABLY WAIVES ALL RIGHT OF TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY MATTER
ARISING HEREUNDER.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
AMRE, INC.
By: /s/ XXXXXX X. XXXXXX
----------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
HFS INCORPORATED
By: /s/ XXXXX X. XXXXXXX
----------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Executive Vice President
Attachments
Exhibit A - Certificate of Designation
Exhibit B - Disclosure Schedule
Exhibit C - Subsidiaries
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EXHIBIT B
1. Corporate Capitalization:
There are no outstanding preemptive or other rights, options, warrants,
conversion rights or agreements for the purchase or acquisition from the
Corporation of any shares of its capital stock, nor does the Corporation have
any obligation to repurchase any outstanding capital stock of the Corporation,
except as follows:
1. There are outstanding options granted under the Corporation's
stock option plan to purchase an aggregate of 819,881 shares
of common stock of the Corporation at exercise prices ranging
from $3.00 to $8.50 per share.
2. There are outstanding options to purchase an aggregate of
1,342,500 shares of common stock of the Corporation which were
granted outside of the Corporation's stock option plan. These
options are held by directors (two of whom are also officers),
a former director, a former employee and the widow of a former
director, and are exercisable at prices ranging from $3.50 to
$7.875 per share.
3. Options to purchase an aggregate of 500,000 shares of common
stock of the Corporation may be granted to Xxxxx Xxxxx in
connection with transactions being entered into concurrently
with this Agreement. These options will be at prices ranging
from $4.00 to $7.00 per share.
2. Contracts: Compliance with instruments
Contracts material to the business, financial condition, operations or
prospects of the Corporation are listed below.
1. License Agreement dated as of January 1, 1995, with Sears,
Xxxxxxx and Co.
2. Amended and restated Merchant Agreement with Household Bank
(Illinois), N.A. dated April 24, 1995.
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3. Agreements among stockholders or affiliates
1. Voting Trust Agreements with Xxxxxx X. Xxxxxxxx and
with Xxxxxx and Olgn Xxxxx, dated as of January 22,
1993.
2. Rights of First Refusal Agreements with Xxxxxx X.
Xxxxxxxx and with Xxxxxx and Olgn Xxxxx dated as of
January 22, 1993.
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EXHIBIT C
The Subsidiaries of the Corporation, all of which are wholly-owned, are as
follows:
1. American Remodeling, Inc., a Texas corporation
2. CANRE Remodeling, Corp., incorporated under the Canadian
Business Corporations Act
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EXHIBIT A
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
TO THE
SENIOR CONVERTIBLE PREFERRED STOCK
OF
AMRE, INC.
Amre, Inc., a corporation duly organized and existing under the laws
of the State of Delaware (the "COMPANY"), DOES HEREBY CERTIFY:
That pursuant to authority conferred upon the Board of Directors of
the Company (the "BOARD") by Article FOURTH of the Certificate of
Incorporation, as amended, and as it may be amended or restated from time to
time, of the Company (the "CERTIFICATE OF INCORPORATION") and pursuant to the
provisions of Section 151 of the General Corporation Law of the State of
Delaware, the Board has duly adopted the following resolution at a meeting held
on October 11, 1995:
RESOLVED, that pursuant to the authority expressly granted to and
vested in the Board by the provisions of the Certificate of Incorporation, the
Board hereby creates the Senior Convertible Preferred Stock from the authorized
but unissued preferred stock, $.10 par value, of the Company, which shall
consist of 400,000 shares:
RESOLVED, that the Board hereby fixes the designation, powers,
preferences and relative, participating, optional and other special rights, and
the qualifications, limitations or restrictions thereof, of the shares of such
Senior Convertible Preferred Stock (in addition to the powers, designation,
preferences and relative, participating, optional or other special rights, and
the qualifications, limitations or restrictions thereof, set forth in the
Certificate of Incorporation which are applicable to any series of preferred
stock) as follows:
SECTION I. DESIGNATION, NUMBER AND RANKING
The series of 400,000 shares of preferred stock created by these
resolutions shall be designated the Senior Convertible Preferred Stock, par
value $0.10 per share of the Company (the "SENIOR CONVERTIBLE PREFERRED
STOCK"), and such Senior Convertible Preferred Stock shall rank senior to all
other series of preferred stock issued or hereinafter to be issued by the
Company with respect to dividends and the distribution of assets.
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SECTION II. DEFINITIONS
A. For purposes of this resolution, the following terms
shall have the meanings indicated:
The term "COMMON STOCK" means shares of Company common stock,
par value $.01, both currently outstanding and as may be issued from
time to time pursuant to the terms of the Certificate of
Incorporation.
The term "CONVERSION DATE" has the meaning set forth in
Section VI.C. hereof.
The term "CONVERSION PRICE" has the meaning set forth in
Section VI.B. hereof.
B. All capitalized terms used herein and not expressly
defined herein shall have the meanings given to them in the
Certificate of Incorporation.
SECTION III. DIVIDENDS
The holders of the then outstanding Senior Convertible Preferred Stock
shall be entitled to receive, when, as and if declared by the Board, and out of
any funds legally available therefor, cumulative dividends at the rate per
share of 8% of the liquidation preference of the Senior Convertible Preferred
Stock per annum, payable quarterly in cash on the last day of March, June,
September and December of each year commencing March 1, 1996 (each such date
being referred to herein as a "QUARTERLY DIVIDEND PAYMENT DATE"). Dividends on
the Senior Convertible Preferred Stock shall be fully cumulative and accrue on
each such share from the date of its original issue and shall accrue from day
to day thereafter, whether or not earned or declared. The amount of dividends
so payable shall be determined on the basis of twelve 30-day months and a
360-day year. Accrued but unpaid dividends shall not bear interest. Dividends
paid on the shares of Senior Convertible Preferred Stock in an amount less than
the total amount of such dividends at the time accrued and payable on such
shares shall be allocated pro rata on a share-by-share basis among all such
shares at the time outstanding. The Board may fix a record date for the
determination of holders of shares of Senior Convertible Preferred Stock
entitled to receive payment of a dividend declared thereon, which record date
shall be no more than 60 days prior to the date fixed for the payment thereof.
No dividends shall be declared or paid or set apart for payment on any class of
Common Stock or any other class or series of preferred stock of the Company
unless full cumulative dividends have been or contemporaneously are declared
and paid on the Senior Convertible Preferred Stock for all dividend payment
periods terminating on or prior to the date of payment of such common stock
dividends.
SECTION IV. LIQUIDATION PREFERENCE
A. In the event of any involuntary or voluntary
liquidation, dissolution or winding up of the affairs of the Company,
before any payment or distribution of the assets of the Company, the
holders of Senior Convertible Preferred Stock shall be entitled, after
provision for the payment of the Company's debts and other
liabilities, to
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be paid out of the assets of the Company (x) $10 per share of Senior
Convertible Preferred Stock, before any distribution is made to any
holder of shares of any class of Common Stock or any other class or
series of preferred stock of the Company and (y) an amount equal to
all accrued and unpaid dividends on the Senior Convertible Preferred
Stock through and including such date.
B. Except as provided herein, holders of Senior
Convertible Preferred Stock shall not be entitled to any distribution
in the event of any liquidation, dissolution or winding up of the
affairs of the Company.
SECTION V. VOTING RIGHTS; DIRECTORS
A. In addition to any voting rights provided elsewhere
in this Certificate of Designation, Preferences and Rights to the
Senior Convertible Preferred Stock (the "CERTIFICATE OF DESIGNATION"),
the Certificate of Incorporation, and by applicable law, the holders
of shares of Senior Convertible Preferred Stock shall be entitled to
vote upon all matters upon which holders of the Common Stock have the
right to vote, and shall be entitled to the number of votes equal to
the largest number of full shares of Common Stock into which such
shares of Senior Convertible Preferred Stock could be converted
pursuant to the provisions of Section VI hereof at the record date for
the determination of the stockholders entitled to vote on such matters
or, if no such record date is established, at the date such vote is
taken or any written consent of stockholders is solicited, such votes
to be counted together with all other shares of capital stock having
general voting powers and not separately as a class. In all cases
where the holders of shares of Senior Convertible Preferred Stock have
the right to vote separately as a class, all such holders shall be
entitled to the number of votes equal to the largest number of full
shares of Common Stock into which such shares of Senior Convertible
Preferred Stock could be converted pursuant to the provisions of
Section VI hereof at the record date for the determination of the
stockholders entitled to vote on such matters or, if no such record
date is established, at the date such vote is taken or any written
consent of stockholders is solicited.
B. Holders of Senior Convertible Preferred Stock shall
have a right to a separate class vote with respect to the election of
two members of the Board of Directors of the Company. Upon the failure
by the Company to pay dividends on any two consecutive Quarterly
Dividend Payment Dates (any such period a "NON-PAYMENT PERIOD") and
provided that the earlier of such Quarterly Dividend Payment Dates is
not part of a previous Non-Payment Period, then thereafter until such
time as such unpaid dividends are paid (i) the number of members of
the Board of Directors shall be increased by one and (ii) the holder
of the Senior Convertible Preferred Stock shall have the right to
elect an additional member to the Board of Directors.
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SECTION VI. CONVERSION RIGHTS.
The Senior Convertible Preferred Stock shall be convertible into
Common Stock as follows:
A. Optional Conversion. Subject to and upon compliance
with the provisions of this Section VI, the holder of any shares of
Senior Convertible Preferred Stock shall have the right at such
holder's option, at any time, to convert any or all of such shares of
Senior Convertible Preferred Stock into the number of fully paid and
nonassessable shares of Common Stock set forth in paragraph "B" of
this Section VI.
B. Conversion Price. Each share of Senior Convertible
Preferred Stock converted pursuant to Paragraph A of this Section VI
shall be converted, at the election of the holder, into such number of
shares of Common Stock as is determined by dividing $10 by the
Conversion Price (as defined below) per share in effect on the
Conversion Date (as defined below). The initial "CONVERSION PRICE"
shall be $5.90. The initial Conversion Price shall be subject to
adjustment as set forth in paragraph "E" of this Section VI. No
payment or adjustment shall be made for any dividends on the Common
Stock issuable upon such conversion.
C. Mechanics of Conversion. The holder of any shares of
Senior Convertible Preferred Stock may exercise the conversion right
specified in paragraph "A" of this Section VI by surrendering to the
Company or any transfer agent of the Company the certificate or
certificates for the shares to be converted, accompanied by written
notice stating that the holder elects to convert any or all of the
shares represented thereby. Conversion shall be considered to have
been effected on the date when delivery of notice of an election to
convert and certificates for the shares to be converted is made and
such date is referred to herein as the "CONVERSION DATE." Subject to
the provisions of paragraph "E" of this Section VI, as promptly as
practicable thereafter (and after surrender of the certificate or
certificates representing shares of the Senior Convertible Preferred
Stock to the Company or any transfer agent of the Company or delivery
to the Company of the affidavit and indemnity referenced in paragraph
"E" of Section XI hereof with respect to such certificates), the
Company shall issue and deliver to or upon the written order of such
holder a certificate or certificates for the number of full shares of
Common Stock to which such holder is entitled. Subject to the
provisions of paragraph "E" of this Section VI, the Person in whose
name the certificate or certificates for Common Stock are to be issued
shall be considered to have become a holder of record of such Common
Stock on the Conversion Date.
D. Fractional Shares. No fractional shares of Common
Stock shall be issued upon conversion of shares of Senior Convertible
Preferred Stock. If the Senior Convertible Preferred Stock held by any
one holder shall be surrendered for conversion at any one time by the
same holder, the number of full shares of Common Stock (as specified
in the notice required by paragraph "G" of this Section VI) issuable
upon conversion thereof shall be computed on the basis of the
aggregate number of shares of Senior Convertible Preferred Stock so
surrendered. Instead of any fractional shares of Common Stock which
would otherwise be issuable upon conversion of any shares of
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Senior Convertible Preferred Stock, the Company shall round such
fractional interest up to the next highest integral number.
E. Conversion Price Adjustments. The Conversion Price
shall be subject to adjustment from time to time as follows:
1. Other Issuances of Common Stock. If the
Company shall issue any Common Stock for a consideration per
share less than the Conversion Price (other than (i) shares
issued pursuant to options outstanding on and as of the date
hereof, (ii) any options which may in the future be granted
under the AMRE, Inc. Stock Option Plan with Limited Stock
Appreciation Rights and (iii) any options issued pursuant to
agreements with Xxxxx Xxxxx) immediately prior to such
issuance, the Conversion Price shall immediately be reduced to
such consideration. For the purpose of any adjustment of the
Conversion Price pursuant to this paragraph "E", the following
provisions shall be applicable:
a. Cash. In the case of the issuance of
Common Stock for cash, the amount of the
consideration received by the Company shall be
considered to be the amount of the cash proceeds
received by the Company for such Common Stock before
deducting therefrom any discounts, commissions, taxes
or other expenses allowed, paid or incurred by the
Company for any underwriting or otherwise in
connection with the issuance and sale thereof.
b. Consideration Other Than Cash. In
the case of the issuance of Common Stock (otherwise
than upon the conversion of shares of capital stock
or other securities of the Company) for a
consideration in whole or in part other than cash,
including securities acquired in exchange therefor
(other than securities by their terms so
exchangeable), the consideration other than cash
shall be deemed to be the fair value thereof as
reasonably determined by the Board, irrespective of
any accounting treatment; provided, however, that
such fair value as reasonably determined by the Board
shall not exceed the aggregate market price of the
shares of Common Stock being issued as of the date
the Board authorizes the issuance of such shares.
c. Options and Convertible Securities.
In the case of options, warrants or other rights to
purchase or acquire Common Stock (whether or not at
the time exercisable), and securities by their terms
convertible into or exchangeable for Common Stock
(whether or not at the time so convertible or
exchangeable):
(1) the aggregate maximum number of
shares of Common Stock deliverable upon
exercise of such options, warrants or other
rights to purchase or acquire Common Stock
shall be considered to have been issued at
the time such options, warrants or rights
were issued and for a consideration equal to
the
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consideration (determined in the manner
provided in subclauses "a" and "b" of this
clause "1"), if any, received by the Company
upon the issuance of such options, warrants
or rights plus the minimum purchase price
provided for in such options, warrants or
rights for the Common Stock covered thereby;
(2) the aggregate maximum number of
shares of Common Stock deliverable upon
conversion of or in exchange for any such
convertible or exchangeable securities, or
upon the exercise of options, warrants or
other rights to purchase or acquire such
convertible or exchangeable securities and
the subsequent conversion or exchange
thereof, shall be considered to have been
issued at the time such securities were
issued or such options, warrants or rights
were issued and for a consideration equal to
the consideration, if any, received by the
Company for any such securities and related
options, warrants or rights (excluding any
cash received on account of accrued interest
or accrued dividends), plus the minimum
additional consideration, if any, to be
received by the Company upon the conversion
or exchange of such securities and the
exercise of any related options, warrants or
rights (the consideration in each case to be
determined in the manner provided in
subclauses "a" and "b" of this clause "1");
(3) on any change in the number of
shares of Common Stock deliverable upon
exercise of any such options warrants or
rights or conversion of or exchange for such
convertible or exchangeable securities or any
change in the consideration to be received by
the Company upon such exercise, conversion or
exchange, including, but not limited to, a
change resulting from the anti-dilution
provisions thereof, the Conversion Price as
then in effect shall forthwith be readjusted
to such Conversion Price as would have been
obtained had an adjustment been made upon the
issuance of such options, warrants or rights
not exercised prior to such change, or
securities not converted or exchanged prior
to such change, on the basis of such change;
(4) on the expiration or
cancellation of any such options, warrants or
rights, or the termination of the right to
convert or exchange such convertible or
exchangeable securities, if the Conversion
Price shall have been adjusted upon the
issuance thereof, the Conversion Price shall
forthwith be readjusted to such Conversion
Price as would have been obtained had an
adjustment been made upon the issuance of
such options, warrants, rights or securities
on the basis of the issuance of only the
number of shares of Common Stock actually
issued upon the exercise of such options,
warrants or rights, or upon the conversion or
exchange of such securities; and
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(5) If the Conversion Price shall
have been adjusted upon the issuance of any
such options, warrants, rights or convertible
or exchangeable securities, no further
adjustment of the Conversion Price shall be
made for the actual issuance of Common Stock
upon the exercise, conversion or exchange
thereof;
provided, however, that no increase in the Conversion
Price shall be made pursuant to subclauses "1", "2"
or "3" of this subclause "c".
2. Common Stock Dividends. In case the Company
shall pay or make a dividend or other distribution on any
class or series of capital stock of the Company exclusively in
Common Stock, the Conversion Price in effect at the opening of
business on the day following the date fixed for the
determination of stockholders entitled to receive such
dividend or other distribution shall be reduced by multiplying
such Conversion Price by a fraction of which the numerator
shall be the number of shares of Common Stock outstanding at
the close of business on the date fixed for such determination
and the denominator shall be the sum of such number of shares
and the total number of shares constituting such dividend or
other distribution, such reduction to become effective
immediately after the opening of business on the day following
the date fixed for such determination. For the purposes of
this subparagraph (2), the number of such shares of Common
Stock at any time outstanding shall not include shares held in
the treasury of the Company. The Company shall not pay any
dividend or make any distribution exclusively in Common Stock
on shares of any class or series of capital stock of the
Company held in the treasury of the Company.
3. Common Stock Splits. In case outstanding
shares of Common Stock shall be subdivided into a greater
number of shares of Common Stock, the Conversion Price in
effect at the opening of business on the day following the day
upon which such subdivision becomes effective shall be
proportionately reduced and, conversely, in case outstanding
shares of Common Stock shall each be combined into a smaller
number of shares of Common Stock, the Conversion Price in
effect at the opening of business on the day following the day
upon which such combination becomes effective shall be
proportionately increased, such reduction or increase, as the
case may be, to become effective immediately after the opening
of business on the day following the day upon which such
subdivision or combination becomes effective.
4. Partial Liquidation. Subject to the last
sentence of this subparagraph (4), in case the Company shall,
by dividend or otherwise, distribute to all holders of its
Common Stock evidences of its indebtedness, shares of any
class or series of capital stock, cash or assets (including
securities, but excluding any rights or warrants referred to
in subparagraph (1), any dividend or distribution paid
exclusively in cash and any dividend or distribution referred
to in subparagraph (1) of this paragraph E., the Conversion
Price shall be reduced so that the same shall equal the price
determined by multiplying the Conversion
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Price in effect immediately prior to the effectiveness of the
Conversion Price reduction contemplated by this subparagraph
(4) by a fraction of which the numerator shall be the current
market price per share (determined as provided in subparagraph
6(a)) of the Common Stock on the date fixed for the payment of
such distribution (the "REFERENCE DATE") less the fair market
value (as determined in good faith by the Board of Directors,
whose determination shall be conclusive and described in a
resolution of the Board of Directors), on the Reference Date,
of the portion of the evidences of indebtedness, shares of
capital stock, cash and assets so distributed applicable to
one share of Common Stock and the denominator shall be such
current market price per share of the Common Stock, such
reduction to become effective immediately prior to the opening
of business on the day following the Reference Date. In the
event that such dividend or distribution is not so paid or
made, the Conversion Price shall again be adjusted to be the
Conversion Price which would then be in effect is such
dividend or distribution had not occurred. If the Board of
Directors determines the fair market value of any distribution
for purposes of this subparagraph (4) by reference to the
actual or when issued trading market for any securities
comprising such distribution, it must in doing so consider the
prices in such market over the same period used in computing
the current market price per share of Common Stock (determined
as provided in subparagraph 6(a)). For purposes of this
subparagraph (4), any dividend or distribution that includes
shares of Common Stock or rights or warrants to subscribe for
or purchase shares of Common Stock shall be deemed instead to
be (a) a dividend or distribution of the evidences of
indebtedness, shares of capital stock, cash or assets other
than such shares of Common Stock or such rights or warrants
(making any Conversion Price reduction required by this
subparagraph (4)) immediately followed by (b) a dividend or
distribution of such shares of Common Stock or such rights or
warrants (making any further Conversion Price reduction
required by subparagraph (2), except (i) the Reference Date of
such dividend or distribution as defined in this subparagraph
(4) shall be substituted as (A) "the date fixed for the
determination of stockholders entitled to receive such
dividend or other distribution," (B) "the date fixed for the
determination of stockholders entitled to receive such
dividend or other distribution," and (C) "the date fixed for
the determination of stockholders entitled to receive such
determination" within the meaning of subparagraphs (1) and (2)
and (ii) any shares of Common Stock included in such dividend
or distribution shall not be deemed "outstanding at the close
of the business on the date fixed for such determination"
within the meaning of subparagraph (4).
5. Cash Dividends. In case the Company shall pay
or make a dividend or other distribution on its Common Stock
exclusively in cash (excluding, in the case of any regular
cash dividend on the Common Stock, the portion thereof that
does not exceed the per share amount of the next preceding
regular cash dividend on the Common Stock (as adjusted to
appropriately reflect any of the events referred to in
subparagraphs (1), (2), (3), (4), (5) and (6)), or all of such
regular cash dividend if the annualized amount thereof per
share of Common Stock does not exceed 15% of the current
market price per share
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(determined as provided in subparagraph 6(a)) of the Common
Stock on the business day next preceding the date of
declaration of such dividend, the Conversion Price shall be
reduced so that the same shall equal the price determined by
multiplying the Conversion Price in effect immediately prior
to the effectiveness of the Conversion Price reduction
contemplated by this subparagraph (5) by a fraction of which
the numerator shall be the current market price per share
(determined as provided in subparagraph (7)) of the Common
Stock on the date fixed for the payment of such distribution
less the amount of cash so distributed and not excluded as
provided applicable to one share of Common Stock and the
denominator shall be such current market price per share of
the Common Stock, such reduction to become effective
immediately prior to the opening of business on the day
following the date fixed for the payment of such distribution;
provided, however, that in the event the portion of the cash
so distributed applicable to one share of Common Stock is
equal to or greater than the current market price per share
(as defined in subparagraph 6(a)) of the Common Stock on the
record date mentioned above, in lieu of the foregoing
adjustment, adequate provision shall be made so that each
holder of shares of Senior Convertible Preferred Stock shall
have the right to receive upon conversion the amount of cash
such holder would have received had such holder converted each
share of the Senior Convertible Preferred Stock immediately
prior to the record date for the distribution of the cash. In
the event that such dividend or distribution is not so paid or
made, the Conversion Price shall again be adjusted to be the
Conversion Price which would then be in effect if such record
date had not been fixed.
6. Tender Offer; Exchange Offer. In case a tender or
exchange offer (other than an odd-lot offer) made by the Company or
any Subsidiary of the Company for all or any portion of the Company's
Common Stock shall expire and such tender or exchange offer shall
involved the payment by the Company or such Subsidiary of
consideration per share of Common Stock having a fair market value (as
determined in good faith by the Board of Directors, whose
determination shall be conclusive and described in a resolution of the
Board of Directors) at the last time (the "EXPIRATION TIME") tenders
or exchanges may be made pursuant to such tender or exchange offer (as
it shall have been amended) that exceeds 110% of the current market
price per share (determined as provided in subparagraph 6(a)) of the
Common Stock on the business day next succeeding the expiration date
of any such offer, the Conversion Price shall be reduced so that the
same shall equal the price determined by multiplying the Conversion
Price in effect immediately prior to the effectiveness of the
Conversion Price reduction contemplated by this subparagraph (6) by a
fraction of which the numerator shall be the number shares of Common
Stock outstanding (including any tendered or exchanged shares) at the
expiration time multiplied by the current market price per share
(determined as provided in subparagraph 6(a)) of the Common Stock on
the business day next succeeding the Expiration Date of such offer and
the denominator shall be the sum of (x) the fair market value
(determined as aforesaid) of the aggregate consideration payable to
stockholders based on the acceptance (up to any maximum specified in
the terms of the tender or exchange offer) of all shares validly
tendered or exchanged and not withdrawn as of the expiration date of
such offer (the shares deemed so accepted, up
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to any such maximum, being referred to as the "Purchased Shares") and
(y) the product of the number of shares of Common Stock outstanding
(less any Purchased Shares) at the expiration date of such offer and
the current market price (determined as provided in subparagraph 6(a))
of the Common Stock on the business day next succeeding the expiration
time, such reduction to become effective immediately prior to the
opening of business on the day following the expiration date of such
offer.
a. Current Market Price. For the purpose of any
computation under subparagraphs (1), (2), (3), (4), (5), (6)
and (7), the "current market price" per share of Common Stock
on any date in question shall be deemed to be the average of
the daily Closing Prices for the five consecutive business
days selected by the Company commencing not more than 20
business days before, and ending not later than, the earlier
of the day in question and, if applicable, the day before the
"ex" date with respect to the issuance or distribution
requiring such computation; provided, however, that if another
event occurs that would required an adjustment pursuant to
subparagraphs (1) through (6), inclusive, the Board of
Directors may make such adjustments to the closing prices
during such five business day period as it deems appropriate
to effectuate the intent of the adjustments in this paragraph
6(a), in which case any such determination by the Board of
Directors shall be set forth in a Board Resolution and shall
be conclusive. For purposed of this paragraph, the term "ex"
date, (1) when used with respect any issuance or distribution,
means the first date on which the Common Stock trades regular
way on the New York Stock Exchange or on such successor
securities exchange as the Common Stock may be listed or in
the relevant market from which the Closing Prices were
obtained without the right to receive such issuance or
distribution, and (2) when used with respect to any tender or
exchange offer means the first date on which the Common Stock
trades regular way on such securities exchange or in such
market after the expiration date of such offer.
b. Other Reductions. The Company may make such
reductions in the Conversion Price, in addition to those
required by subparagraphs (1), (2), (3), (4), (5) and (6), as
it considers to be advisable to avoid or diminish any income
tax to holders of Common Stock or rights to purchase Common
Stock resulting from any dividend or distribution of stock (or
rights to acquire stock) or from any event treated as such for
income tax purposes. The Company from time to time may reduce
the Conversion Price by any amount for any period of time if
the period is at least twenty (20) days, the reduction is
irrevocable during the period, and the Board of Directors of
the Company shall have made a determination that such
reduction would be in the best interest of the Company, which
determination shall be conclusive. Whenever the Conversion
Price is reduced pursuant to the preceding sentence, the
Company shall mail to holders of record of the Senior
Convertible Preferred Stock a notice of the reduction at least
fifteen (15) days prior to the date the reduced Conversion
Price takes effect, and such notice shall state the reduced
Conversion Price and the period it will be in effect.
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c. Minimum Adjustment. No adjustment to the
Conversion Price shall be required unless such adjustment
would require an increase or decrease of at least 1% in the
Conversion Price; provided, however, that any adjustments
which be reason of this subparagraph (c) are not required to
be made shall be carried froward and taken into account in
determining whether any subsequent adjustment shall be
required.
7. Reclassification, Consolidation, Merger or
Sale of Assets. In the event that the Company shall be a party
to any transaction (including without limitations (a) any
recapitalization or reclassification of the Common Stock
(other than a change in par value, or from par value to no par
value, or from no par value to par value, or as a result of a
subdivision or combination of the Common Stock), (b) any
consolidation of the Company with, or merger of the Company
into, any other person, any merger of another person into the
Company (other than a merger which does not result in a
reclassification, conversion, exchange or cancellation of
outstanding shares of Common Stock of the Company), (c) any
sale or transfer of all or substantially all of the assets of
the Company or (d) any compulsory share exchange) pursuant to
which the Common Stock is converted into the right to receive
other securities, cash or other property, then lawful
provision shall be made as a part of the terms of such
transaction whereby the holder of the Senior Convertible
Preferred Stock shall have the right thereafter to convert the
Senior Convertible Preferred Stock only into, the kind and
amount of securities, cash and other property receivable upon
consummation of such transaction by a holder of the number of
shares of Common Stock of the Company into which such Senior
Convertible Preferred Stock could have been converted
immediately prior to such transaction, after giving effect to
any adjustment in the Conversion Price required by the
provision hereof.
The Company or the person formed by such
consolidation or resulting from such merger or which acquired
such assets or which acquires the Company's shares, as the
case may be, shall make provision in this certificate or
articles of incorporation or other constituent document to
establish such right. Such certificate or articles of
incorporation or other constituent document shall provide for
adjustments which, for events subsequent to the effective date
of such certificate or articles of incorporation or other
constituent document, shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section
VI. The above provisions shall similarly apply to successive
transactions of the foregoing type.
8. Adjustments in Case of Fundamental Changes.
a. Notwithstanding any other provision
in this Section VI to the contrary, if any Fundamental Change
occurs, then the Conversion Price in effect will be adjusted
immediately after such Fundamental Change as described below.
In addition, in the event of a Common Stock Fundamental
Change, the Senior Convertible Preferred Stock shall be
convertible solely into Common Stock of the kind and amount
received by holders of Common Stock as the result of
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such Common Stock Fundamental Change as more specifically
provided in the following clauses (i) and (ii).
For purposes of calculating any adjustment to be made
pursuant to this Section VI in the event of a Fundamental
Change, immediately after such Fundamental Change:
(i) in the case of a Non-Stock
Fundamental Change, the Conversion Price of the Senior
Convertible Preferred Stock shall thereupon become the
Conversion Price in effect immediately prior to such Non-Stock
Fundamental Change, but after giving effect to any other prior
adjustments effected pursuant to this Section VI; and
(ii) in the case of a Common Stock
Fundamental Change, the Conversion Price of the Senior
Convertible Preferred Stock in effect immediately prior to
such Common Stock Fundamental Change, but after giving effect
to any other prior adjustments effected pursuant to this
Section VI, shall thereupon be adjusted by multiplying such
Conversion Price by a fraction of which the numerator shall be
the Purchaser Stock Price and the denominator shall be the
Applicable Price; provided, however, that in the event of a
Common Stock Fundamental change in which (A) 100% of the value
of the consideration received by a holder of Common Stock is
common stock of the successor, acquiror or other third party
(and cash, if any, is paid only with respect to any fractional
interests in such common stock resulting from such Common
Stock Fundamental Change) and (B) all of the Common Stock
shall have been exchanged for, converted into or acquired for
common stock (and cash with respect to fractional interests)
of the successor, acquiror or other third party, the
Conversion Price of the Senior Convertible Preferred Stock in
effect immediately prior to such Common Stock Fundamental
Change shall thereupon be adjusted by multiplying such
conversion price by a fraction of which the numerator shall be
one and the denominator shall be the number of shares of
common stock of the successor, acquiror, or other third party
received by a stockholder for one share of Common Stock as a
result of such Common Stock Fundamental Change.
b. Definitions. The following definitions shall
apply to terms used in this subparagraph 8:
(1) "Applicable Price" shall mean (i) in
the event of a Non-Stock Fundamental Change in which the
holders of the Common Stock receive only cash, the amount of
cash received by a stockholder for one share of Common Stock
and (ii) in the event of any other Non-Stock Fundamental
Change or any Common Stock Fundamental Change, the average of
the daily Closing Prices of the Common Stock for the ten (10)
consecutive Trading Days prior to and including the record
date for the determination of the holders of Common Stock
entitled to receive securities, cash or other property (such
record date or distribution date being hereinafter referred to
as the "ENTITLEMENT DATE"), in each
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case, as adjusted in good faith by the Company to
appropriately reflect any of the events referred to in
subparagraphs (1) - (8) of this Paragraph E.
(2) "Closing Price" of any common stock
on any day shall mean the last reported 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 of such common stock, in each case on the NYSE
Composite Tape or, if the common stock is not listed or
admitted to trading, or, if not listed or admitted to trading
on any national securities exchange, the average of the
closing bid and asked prices as furnished by any New York
Stock Exchange, Inc. member firm selected from time to time by
the Board of Directors of the Company for that purpose or, if
not so available in such manner, as otherwise determined in
good faith by the Board of Directors.
(3) "Common Stock Fundamental Change"
shall mean any Fundamental Change in which more than 50% of
the value (as determined in good faith by the Board of
Directors) of the consideration received by holders of Common
Stock consists of common stock that for each of the ten
consecutive Trading Days prior to the Entitlement Date has
been admitted for listing or admitted for listing subject to
notice of issuance on a national securities exchange or quoted
on the National Market System of the National Association of
Securities Dealers, Inc.; provided, however, that a
Fundamental Change shall not be a Common Stock Fundamental
Change unless the Company continues to exist after the
occurrence of such Fundamental Change and the outstanding
Senior Convertible Preferred Stock continue to exist as
outstanding Senior Convertible Preferred Stock.
(4) "Fundamental Change" shall mean the
occurrence of any transaction or event in connection with a
plan pursuant to which all or substantially all of the Common
Stock shall be exchanged for, converted into, acquired for or
constitute solely the right to receive securities, cash or
other property (whether by means of an exchange offer,
liquidation, tender offer, consolidation, merger, combination,
reclassification, recapitalization or otherwise); provided,
however, in the case of a plan involving more than one such
transaction or event, for purposes of adjustment of the
Conversion Price, such Fundamental Change shall be deemed to
have occurred when substantially all of the Common Stock of
the Company shall be exchanged for, converted into, or
acquired for or constitute solely the right to receive
securities, cash or other property, but the adjustment shall
be based upon the highest weighted average of consideration
per share that a holder of Common Stock could have received in
such transactions or events as a result of which more than 50%
of the Common Stock of the Company shall have been exchanged
for, converted into, or acquired for or constitute solely the
right to receive securities, cash or other property.
(5) "Non-Stock Fundamental Change" shall
mean any Fundamental Change other than a Common Stock
Fundamental Change.
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(6) "Purchaser Stock Price" shall mean,
with respect to any Common Stock Fundamental Change, the
average of the daily Closing Prices of the common stock
received in such Common Stock Fundamental Change for the ten
consecutive Trading Days prior to and including the
Entitlement Date, as adjusted in good faith by the Board of
Directors to appropriately reflect any of the events referred
to in subparagraphs (1) - (8) of this Paragraph E.
(7) "Trading Day" shall mean a day on
which the Common Stock is traded on the national securities
exchange or quotation system used to determine the Closing
Price.
9. Dividend or Interest Reinvestment Plans.
Notwithstanding the foregoing provisions, the issuance of any
shares of Common Stock pursuant to any plan providing for the
reinvestment of dividends or interest payable on securities of
the Company and the investment of additional optional amounts
in shares of Common Stock under any such plan, and the
issuance of any shares of Common Stock options or rights to
purchase such shares pursuant to any employee benefit plan or
program of the Company or pursuant to any option, warrant,
right or exercisable, exchangeable or convertible security
outstanding as of the date of the Senior Convertible Preferred
Stock were first issued, shall not be deemed to constitute an
issuance of Common Stock or exercisable, exchangeable or
convertible securities by the Company to which any of the
adjustment provisions described above applies. There shall
also be no adjustment of the Conversion Price in case of the
issuance of any stock (or securities convertible into or
exchangeable for stock) of the Company except as specifically
described in this Section VI.
10. Certain Additional Rights. In case the
Company shall, by dividend or otherwise, declare or make a
distribution on its Common Stock referred to in subparagraphs
2 or 3 of this Paragraph E, the holder of the Senior
Convertible Preferred Stock, upon the conversion thereof
subsequent to the close of business on the date fixed for the
determination of stockholders entitled to receive such
distribution and prior to the effectiveness of the Conversion
Price adjustment in respect of such distribution, shall also
be entitled to receive for each share of Common Stock into
which the Senior Convertible Preferred Stock are converted,
the portion of the shares of Common Stock, rights, warrants,
evidences of indebtedness, shares of capital stock, cash and
assets so distributed applicable to one share of Common Stock;
provided, however, that, at the election of the Company (whose
election shall be evidenced by a resolution of the Board of
Directors), the Company may, in lieu of distributing to the
holders of the Senior Convertible Preferred Stock any such
portion of such distribution not consisting of cash or
securities of the Company, pay such holder of the Senior
Convertible Preferred Stock an amount in cash equal to the
fair market value thereof (as determined in good faith by the
Board of Directors, whose determination shall be conclusive
and described in a resolution of the Board of Directors). If
any conversion of Senior Convertible Preferred Stock described
in the immediately preceding sentence occurs prior to the
payment date for a distribution to holders
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of Common Stock which the holder of Senior Convertible
Preferred Stock so converted is entitled to receive in
accordance with the immediately preceding sentence, the
Company may elect (such election to be evidenced by a
resolution of the Board of Directors) to distribute to such
holder a due xxxx for the shares of Common Stock, rights,
warrants, evidences of indebtedness, shares of capital stock,
cash or assets to which such holder is so entitled, provided,
that such due xxxx (i) meets any applicable requirements of
the principal national securities exchange or other market on
which the Common Stock is then traded and (ii) requires
payment or delivery of such shares of Common Stock, rights,
warrants, evidences of indebtedness, shares of capital stock,
cash or assets no later than the date of payment or delivery
thereof to holders of shares of Common Stock receiving such
distribution.
11. Rounding of Calculations. All calculations
under this Section VI shall be made to the nearest cent. Any
provision of this Section VI to the contrary notwithstanding,
no adjustment in the Conversion Price applicable to any share
of Senior Convertible Preferred Stock shall be made if the
amount of such adjustment would be less than $0.01, but any
such amount shall be carried forward and an adjustment with
respect thereto shall be made at the time of and together with
any subsequent adjustment which, together with such amount and
any other amount or amounts so carried forward, shall
aggregate $0.01 or more. Pursuant to the terms of paragraph
"D" of Section VI, no fractional shares of Common Stock shall
be issued, and any fractional interests shall be rounded up to
the next highest integral number.
12. Timing of Issuance of Additional Common Stock
Upon Certain Adjustments. In any case in which the provisions
of this Section VI shall require that an adjustment shall
become effective immediately after a record date for an event,
the Company may defer until the occurrence of such event
issuing to the holder of any shares of Senior Convertible
Preferred Stock converted after such record date and before
the occurrence of such event the additional shares of Common
Stock issuable upon such conversion by reason of the
adjustment required by such event over and above the shares of
Common Stock issuable upon such conversion before giving
effect to such adjustment provided, however, that the Company
upon request shall deliver to such holder a due xxxx or other
appropriate instrument evidencing such holder's right to
receive such additional shares, upon the occurrence of the
event requiring such adjustment.
F. Statement Regarding Adjustments. Whenever the
Conversion Price shall be adjusted as provided in this Section VI, the
Company shall forthwith file at the principal office of the Company, a
statement showing in detail the facts requiring such adjustment and
the Conversion Price that shall be in effect after such adjustment,
and the Company shall also cause a copy of such statement to be sent
by mail, first class postage prepaid, to each holder of shares of
Senior Convertible Preferred Stock at the address appearing on the
Company's records. Each such statement shall be signed by the
Company's independent public accountants. Where appropriate, such copy
may be given
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in advance and may be included as part of a notice required to be
mailed under the provisions of paragraph "G" of this Section VI.
G. Notice to Holders. In the event the Company shall
propose to take any action of the type described in clauses "1" (but
only if the action of the type described in clause "1" would result in
an adjustment in the Conversion Price), "2", "3", "4", "5" "6", "7" or
"8" of paragraph "E" of this Section VI, the Company shall give notice
to each holder of shares of Senior Convertible Preferred Stock
affected by such action in the manner set forth in this paragraph "G"
of this Section VI which notice shall specify the record date, if any,
with respect to any such action and the approximate date on which such
action is to take place. Such notice shall also set forth such facts
with respect thereto as shall be reasonably necessary to indicate the
effect of such action (to the extent such effect may be known at the
date of such notice) on the Conversion Price and the number, kind or
class of shares or other securities or property which shall be
deliverable or purchasable upon the occurrence of such action or
deliverable upon conversion of shares of Senior Convertible Preferred
Stock. In the case of any action which would require the fixing of a
record date, such notice shall be given at least ten (10) days prior
to the date so fixed, and in the case of any other action, such notice
shall be given at least ten (10) days prior to the taking of such
proposed action. Failure to give such notice, or any defect therein,
shall not affect the legality or validity any such action.
H. Treasury Stock. For the purpose of this Section VI,
the sale or other disposition of any Common Stock theretofore held in
its treasury shall be deemed to be an issuance thereof.
I. Costs. The Company shall pay all documentary, stamp,
transfer or other transactional taxes attributable to the issuance or
delivery of shares of Common Stock of the Company upon conversion of
any shares of Senior Convertible Preferred Stock; provided, however,
that the Company shall not be required to pay any taxes which may be
payable in respect of any transfer involved in the issuance or
delivery of any certificate for such shares in a name other than that
of the holder of the shares of Senior Convertible Preferred Stock in
respect of which such shares are being issued.
SECTION VII. REDEMPTION
A. Optional Redemption. From the period commencing
January 1, 1999 and extending through December 31, 2000, the Company
may redeem the Senior Convertible Preferred Stock at any time in
whole, or from time to time in part, at the liquidation price plus
accrued and unpaid dividends on the Senior Convertible Preferred Stock
as of such date.
1. Selection of Senior Convertible Preferred
Stock to be Redeemed. If less than all of the shares of Senior
Convertible Preferred Stock are to be redeemed, the Company
shall select the shares of Senior Convertible Preferred Stock
to be redeemed on a pro rata basis or in such other fair and
equitable manner as may be prescribed by resolution of the
Board.
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2. Procedure for Redemption.
(a) In the event the Company shall
redeem shares of Senior Convertible Preferred Stock, notice of
such redemption shall be given by first class mail, postage
prepaid, mailed not less than thirty (30) days nor more than
sixty (60) days prior to the redemption date, to each holder
of record of the shares to be redeemed at such holder's
address as the same appears on the stock register of the
Company; provided, however, that no failure to mail such
notice nor any defect therein shall affect the validity of the
proceeding for the redemption of any shares of Senior
Convertible Preferred Stock to be redeemed except as to the
holder to whom the Company has failed to mail said notice or
except as to the holder whose notice was defective. Each such
notice shall state: (a) the redemption date; (b) the number of
shares of Senior Convertible Preferred Stock to be redeemed
and, if less than all the shares held by such holder are to be
redeemed from such holder, the number of shares to be redeemed
from such holder; (c) the redemption price; (d) the place or
places where certificates for such shares are to be
surrendered for payment of the redemption price; and (e) that
dividends on the shares to be redeemed will cease to accrue on
such redemption date unless the Company defaults in making
such payment.
(b) Notice having been mailed as
aforesaid, from and after the redemption date (unless the
Company shall fail to provide money for the payment of the
redemption price of the shares called for redemption)
dividends on the shares of Senior Convertible Preferred Stock
so called for redemption shall cease to accrue, and said
shares shall no longer be deemed to be outstanding, and all
rights of the holders thereof as stockholders of the Company
(except the right to receive from the Company the redemption
price and an amount equal to any accrued and unpaid dividends)
shall cease. Upon surrender in accordance with said notice of
the certificates for any shares so redeemed (properly endorsed
or assigned for transfer, if the Board shall so require and
the notice shall so state), such shares shall be redeemed by
the Company at the redemption price aforesaid. In case fewer
than all the shares represented by any such certificate are
redeemed, a new certificate shall be issued representing the
unredeemed shares without cost to the holder thereof.
(c) Notice having been mailed as
aforesaid, each holder of record of the shares of Senior
Convertible Preferred Stock shall have until five (5) business
days prior to the date of redemption to exercise their
conversion rights as provided for in Section VI herein, or
such rights shall expire.
B. Mandatory Redemption. On January 1, 2001, the Company
must redeem and the holders must surrender the Senior Convertible
Preferred Stock in whole at the liquidation price provided in Section
IV herein, provided, however, that immediately prior to authorizing or
making any such redemption, the Company by resolution of the Board
shall declare a dividend on the Senior Convertible Preferred Stock
payable on the redemption date in an amount equal to any accrued and
unpaid dividends on the Senior
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Convertible Preferred Stock as of such date. The procedures for such
redemption shall be as described in clause "2" of paragraph "A" of
this Section VII.
SECTION VIII. REACQUIRED SHARES
Any shares of Senior Convertible Preferred Stock converted, redeemed,
purchased or otherwise acquired by the Company in any manner whatsoever shall
not be reissued and shall be cancelled promptly after the acquisition thereof.
All such shares shall upon their cancellation become authorized but unissued
shares of preferred stock, par value $.10 per share, of the Company and may be
reissued as part of another series of preferred stock, par value $.10 per
share, of the Company to be created by resolution or resolutions of the Board,
subject to the conditions or restrictions on issuance set forth herein.
SECTION IX. RESTRICTIONS ON TRANSFER
The Senior Convertible Preferred Stock is restricted. Except as
otherwise required by law, no holder of shares of Senior Convertible Preferred
Stock of record may sell, transfer or assign, and the Company shall not
register the sale, transfer or assignment of, any shares of Senior Convertible
Preferred Stock or any interest therein, whether by sale, assignment, gift,
bequest, appointment or otherwise. Any attempted sale, transfer or assignment
shall be void and without effect; provided, however, that the Senior
Convertible Preferred Stock may be transferred to any affiliate of HFS
Incorporated.
SECTION X. CERTAIN RESTRICTIONS
Whenever quarterly dividends or other dividends or distributions
payable on the Senior Convertible Preferred Stock (as provided in the forgoing
paragraphs of this certificate) are in arrears, thereafter and until all
accrued and unpaid dividends and distributions, whether or not declared, on
shares of Senior Convertible Preferred Stock outstanding shall have been paid
in full, the Company shall not:
(i) declare or pay dividends on, make any other
distributions on (other than dividends or distributions in shares of
stock junior to the Senior Convertible Preferred Stock), or redeem or
purchase or otherwise acquire for consideration any shares of stock
ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Senior Convertible Preferred Stock;
(ii) declare or pay dividends on or make any other
distributions on (other than dividends or distributions in shares of
stock junior to the Senior Convertible Preferred Stock) any shares of
stock ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Senior Convertible Preferred
Stock, except dividends paid ratably on the Senior Convertible
Preferred Stock and all such parity stock on which dividends are
payable or in arrears in proportion to the total amounts to which the
holders of all such shares are then entitled;
(iii) except as permitted by subparagraph (iv) immediately
below, redeem or purchase or otherwise acquire for consideration
shares of any stock ranking
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on a parity (either as to dividends or upon liquidation, dissolution
or winding up) with the Senior Convertible Preferred Stock, provided
that the Company may at any time redeem, purchase or otherwise acquire
shares of any such parity stock in exchange for shares of any stock of
the Company ranking junior (either as to dividends or upon
dissolution, liquidation or winding up) to the Senior Convertible
Preferred Stock; or
(iv) purchase or otherwise acquire for consideration any
shares of Senior Convertible Preferred Stock, or any shares of stock
ranking on a parity with the Senior Convertible Preferred Stock,
except in accordance with a purchase offer made in writing or by
publication (as determined by the Board of Directors) to all holders
of such shares upon such terms as the Board of Directors, after
consideration of the respective annual dividend rates and other
relative rights and preferences of the respective series and classes,
shall determine in good faith will result in fair and equitable
treatment among the respective series or classes.
The Company shall not permit any subsidiary of the Company to purchase
or otherwise acquire for consideration any shares of stock of the Company
unless the Company could, under the immediately preceding paragraph of this
resolution purchase or otherwise acquire such shares at such time and in such
manner.
SECTION XI. GENERAL
A. All shares of Common Stock which may be issued upon
conversion of the shares of Senior Convertible Preferred Stock will,
upon issuance by the Company, be duly and validly issued, fully paid
and nonassessable and free from all taxes, liens and charges with
respect to the issuance thereof and the Company shall take no action
which will cause a contrary result.
B. The section headings contained in this certificate
are for reference purposes only and shall not affect in any way the
meaning of this certificate.
C. The Company shall reserve at all times so long as any
shares of Senior Convertible Preferred Stock remain outstanding, free
from preemptive rights, out of its treasury stock or its authorized
but unissued shares of Common Stock, or both, solely for the purpose
of effecting the conversion of the shares of Senior Convertible
Preferred Stock, sufficient shares of Common Stock to provide for the
conversion of all outstanding shares of Senior Convertible Preferred
Stock.
D. Shares of Senior Convertible Preferred Stock which
have been issued and have been converted, redeemed, repurchased or
reacquired in any manner by the Company shall become authorized and
unissued shares of the Company's undesignated preferred stock, par
value $.10 per share, but shall not be reissued as shares of Senior
Convertible Preferred Stock.
E. Upon receipt by the Company of (i) an affidavit in
term and content reasonably acceptable to the Company stating that the
stock certificate or certificates representing Senior Convertible
Preferred Stock have been lost, stolen or destroyed, and
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(ii) an indemnity in form and content reasonably acceptable to the
Company that indemnifies the Company against any claim that may be
made against the Company with respect to the certificate or
certificates alleged to have been lost, stolen or destroyed, the
Company shall issue a new certificate or certificates in place of any
certificate or certificates alleged to have been lost, stolen or
destroyed.
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IN WITNESS WHEREOF, the Company has caused this certificate to be
signed by its __________________ and attested by its _________________ this
_______ day of ____________________, 199__.
AMRE, INC.
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Name:
------------------------
Title:
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ATTEST:
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Name:
------------------------
Title:
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