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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
between
XXXXXXX INNS, INC.
and
SIGNATURE INNS, INC.
Dated as of January 27, 1999
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TABLE OF CONTENTS
ARTICLE I
THE MERGER.............................................................................................-1-
1.01. The Merger....................................................................................-1-
1.02. Effective Time of the Merger..................................................................-2-
1.03. Articles of Incorporation, By-laws, Directors and Officers....................................-2-
1.04. Conversion of Shares..........................................................................-2-
1.05. Employee Stock Options........................................................................-3-
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SIGNATURE............................................................-4-
2.01. Organization; Good Standing; Power, Etc.......................................................-4-
2.02. Authorization of Agreement, Etc...............................................................-4-
2.03. Capitalization................................................................................-7-
2.04. Absence of Certain Changes or Events..........................................................-8-
2.05. Signature SEC Reports.........................................................................-9-
2.06. Defaults.....................................................................................-10-
2.07. Tax Matters..................................................................................-10-
2.08. Trademarks, Copyrights, Etc..................................................................-11-
2.09. Title to Properties: Absence of Liens and Encumbrances: Leases, etc..........................-12-
2.10. Employee Benefit Plans.......................................................................-13-
2.11. Litigation...................................................................................-17-
2.12. Insurance....................................................................................-17-
2.13. Brokers and Finders..........................................................................-17-
2.14. Compliance with Laws.........................................................................-18-
2.15. Information Supplied.........................................................................-19-
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF XXXXXXX.............................................................-20-
3.01. Organization, Good Standing, Power, Etc......................................................-20-
3.02. Authorization of Agreement. Etc..............................................................-20-
3.03. Tax Matters..................................................................................-22-
3.04. Capitalization...............................................................................-23-
3.05. Issuance of Xxxxxxx Common Stock and Xxxxxxx Series S Preferred Stock........................-23-
3.06. No Material Adverse Change...................................................................-23-
3.07. Brokers and Finders..........................................................................-23-
3.08. Xxxxxxx SEC Reports..........................................................................-24-
3.09. Litigation...................................................................................-24-
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3.10. Compliance with Laws.........................................................................-25-
3.11. Information Supplied.........................................................................-26-
ARTICLE IV
COVENANTS OF SIGNATURE................................................................................-26-
4.01. Approvals....................................................................................-26-
4.02. Investigation by Xxxxxxx.....................................................................-27-
4.03. No Solicitation..............................................................................-27-
4.04. Conduct of Business..........................................................................-30-
4.05. No Charter Amendments........................................................................-32-
4.06. No Issuance or Disposition of Securities.....................................................-32-
4.07. No Dividends.................................................................................-32-
4.08. No Disposal of Property......................................................................-33-
4.09. No Acquisitions..............................................................................-33-
4.10. No Breach or Default.........................................................................-33-
4.11. No Indebtedness..............................................................................-33-
4.12. Payment of Liabilities.......................................................................-33-
4.13. Employee Matters.............................................................................-33-
4.14. Stockholders Meeting.........................................................................-34-
4.15. Notice and Cure..............................................................................-35-
4.16. Cooperation of Management Pending Merger.....................................................-35-
4.17. Furnish Information for Xxxxxxx Statements...................................................-35-
4.18. Affiliates Undertakings......................................................................-35-
4.19. Filings; Other Actions.......................................................................-36-
4.20. Comfort Letter...............................................................................-36-
4.21. REIT-Related Transactions....................................................................-36-
4.22 Signature Property Restructuring.............................................................-37-
ARTICLE V
COVENANTS OF XXXXXXX..................................................................................-37-
5.01. Approvals....................................................................................-37-
5.02. Investigation by Signature...................................................................-37-
5.03. Conduct of Business..........................................................................-38-
5.04. Stockholders' Meeting........................................................................-38-
5.05. Blue Sky Permits.............................................................................-38-
5.06. Registration Statement.......................................................................-38-
5.07. Issuance of Xxxxxxx Common Stock and Xxxxxxx Series S Preferred Stock........................-38-
5.08. Notice and Cure..............................................................................-39-
5.09. Nasdaq National Market Listing...............................................................-39-
5.10. Tax Covenants................................................................................-39-
5.11. No Breach or Default.........................................................................-39-
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5.12. Notice and Cure..............................................................................-39-
5.13. Cooperation of Management Pending Merger.....................................................-40-
5.14. Furnish Information for Signature Proxy Statements...........................................-40-
5.15. Comfort Letters..............................................................................-40-
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS
OF XXXXXXX AND SIGNATURE..............................................................................-40-
6.01. Consents and Approvals.......................................................................-40-
6.02. Registration Statement.......................................................................-41-
6.03. Stockholder Approval.........................................................................-41-
6.04. Nasdaq National Market Listings..............................................................-41-
6.05. Certain Actions, etc.........................................................................-41-
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF XXXXXXX........................................................-41-
7.01. Accuracy of Representations and Warranties...................................................-41-
7.02. Performance of Covenants, Agreements and Conditions..........................................-42-
7.03. Officers' Certificate, Etc...................................................................-42-
7.04. Employment Agreements........................................................................-42-
7.05. Opinion of Signature Counsel.................................................................-42-
7.06. Undertakings by Signature Affiliates.........................................................-45-
7.07. Rights Agreement.............................................................................-46-
7.08. Opinions of Professionals....................................................................-46-
7.09. Auditors' letters............................................................................-46-
7.10. Resignations.................................................................................-46-
7.11. Fairness Opinion.............................................................................-46-
7.12. No Material Adverse Change...................................................................-47-
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF SIGNATURE......................................................-47-
8.01. Accuracy of Representations and Warranties...................................................-47-
8.02. Performance of Covenants, Agreements and Conditions..........................................-47-
8.03. Officers' Certificates Etc...................................................................-47-
8.04. Opinion of Counsel for Xxxxxxx...............................................................-48-
8.05. Authorization of Xxxxxxx Stock...............................................................-50-
8.06. Fairness Opinion.............................................................................-50-
8.07. Tax Opinion..................................................................................-51-
8.08. No Material Adverse Change...................................................................-51-
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8.09. Auditors' Letters............................................................................-51-
ARTICLE IX
TERMINATION, AMENDMENTS AND WAIVER....................................................................-51-
9.01. Termination..................................................................................-52-
9.02. Effect of Termination........................................................................-53-
9.03. Amendment....................................................................................-53-
9.04. Waiver.......................................................................................-53-
ARTICLE X
OTHER AGREEMENTS; NONSURVIVAL
OF REPRESENTATIONS AND WARRANTIES ....................................................................-54-
10.01. Confidentiality..............................................................................-54-
10.02. Public Announcements.........................................................................-54-
10.03. Indemnification..............................................................................-54-
10.04. Additional Agreements........................................................................-55-
10.05. Break-up Fee.................................................................................-55-
10.06. Available Remedies...........................................................................-55-
10.07. Nonsurvival of Representations and Warranties................................................-55-
ARTICLE XI
MISCELLANEOUS.........................................................................................-56-
11.01. Closing......................................................................................-56-
11.02. Expenses.....................................................................................-56-
11.03. Notices......................................................................................-56-
11.04. Entire Agreement.............................................................................-57-
11.05. Binding Effect: Benefits.....................................................................-57-
11.06. Assignment...................................................................................-57-
11.07. Applicable Law...............................................................................-57-
11.08. Article and Section Headings.................................................................-57-
11.09. Construction.................................................................................-58-
11.10 Severability.................................................................................-58-
11.11. Incorporation of Exhibits and Schedules......................................................-58-
11.12. Counterparts.................................................................................-58-
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LIST OF EXHIBITS AND SCHEDULES
Exhibits
Exhibit A - Agreement of Merger.
Exhibit A-1 - Form of Certificate of Designation for Xxxxxxx Series S Preferred
Stock Exhibit B - Amendment of Signature Rights Agreement.
Exhibit C - Form of Employment Agreements.
Exhibit D - Assignment and Assumption Agreement - Signature Operating Assets and Liabilities
Schedules
Schedule 1.05 - Options to purchase Common Stock of Signature.
Schedule 2.01 - Subsidiaries of Signature.
Schedule 2.02(c) - Consents
Schedule 2.04 - Changes since the September 30, 1998.
Schedule 2.07 - Signature Tax Matters.
Schedule 2.08 - Intellectual Property Rights.
Schedule 2.09 - Real Property.
Schedule 2.10 - Employee Benefit Plans.
Schedule 2.11 - Signature Litigation
Schedule 2.12 - Insurance.
Schedule 2.14 - Compliance with Laws.
Schedule 3.03 - Xxxxxxx Tax Matters
Schedule 3.09 - Xxxxxxx Litigation
Schedule 3.10 - Xxxxxxx Compliance with Laws
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DEFINITIONS
Capitalized terms used herein shall have the meanings ascribed to them in the
sections set forth below.
Affiliate: as defined in Section 2.10(a).
Agreement: as defined in the first sentence of this document.
Average Price: as defined in Section 1.04.
Closing: as defined in Section 1.01.
Code: as defined in Section 2.10.
Commission: as defined in Section 2.05.
Dissolved Partnerships: as defined in Section 2.02(h)
Earnings and Profits: as defined in Section 7.08(a).
Effective Time of the Merger: as defined in Section 1.02.
Employee Pension Benefit Plans: as defined in Section 2.10.
Employee Welfare Benefit Plans: as defined in Section 2.10.
Encumbrance: as defined in Section 2.09.
Environmental Laws: as defined in Section 2.14.
ERISA: as defined in Section 2.10.
Georgia Law: as defined in Section 1.01.
Governmental Entity: as defined in Section 2.02.
Indiana Law: as defined in Section 1.01.
IRS: as defined in Section 2.10(c).
Intellectual Property: as defined in Section 2.08
Xxxxxxx Common Stock: as defined in Section 3.04.
Xxxxxxx SEC Reports: as defined in Section 3.08.
Xxxxxxx Series A Preferred Stock: as defined in Section 3.04.
Xxxxxxx Series S Preferred Stock: as defined in Section 3.05.
Xxxxxxx Stockholder Meeting: as defined in Section 5.04
Knowledge: as defined in Section 11.09.
Legal Requirements: as defined in Section 2.14.
Material Adverse Effect: as defined in Section 2.02.
Merger: as defined in the recitals.
Merger Agreement: as defined in Section 1.01.
PBGC: as defined in Section 4.13(c).
Person: as defined in Section 2.02.
Property Restriction: as defined in Section 2.10.
Proxy Statement: as defined in Section 2.15.
Registration Statement: as defined in Section 2.15.
REIT: as defined in Section 3.03.
Rights: as defined in Section 2.03.
Rights Agreement: as defined in Section 2.03.
1933 Act: as defined in Section 2.02.
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0000 Xxx: as defined in Section 2.02.
Significant Subsidiary: as defined in Section 4.03.
Subsidiary: as defined in Section 2.01.
Superior Proposal: as defined in Section 4.03.
Surviving Corporation: as defined in Section 1.01.
Signature Common Stock: as defined in Section 2.03.
Signature Partnerships: as defined in Section 2.02.
Signature Preferred Stock: as defined in Section 2.03.
Signature Properties: as defined in Section 2.09.
Signature SEC Reports: as defined in Section 2.05.
Signature Series One Preferred Stock: as defined in Section 2.03.
Signature Stockholder Meeting: as defined in Section 4.14.
Takeover Proposal: as defined in Section 4.03.
Tax Returns: as defined in Section 2.07.
Tax: as defined in Section 2.07.
Worker Safety Laws: as defined in Section 2.14.
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AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger is dated as of January 27,
1999 (this "Agreement"), by and among Xxxxxxx Inns, Inc., a Georgia corporation
("Xxxxxxx"), and Signature Inns, Inc., an Indiana corporation ("Signature").
WHEREAS, the Boards of Directors of Xxxxxxx and Signature deem
it advisable and in the best interests of their respective corporations that
Signature be merged with and into Xxxxxxx; and
WHEREAS, the Boards of Directors of Xxxxxxx and Signature, by
resolutions duly adopted, have approved this Agreement providing for the merger
of Signature with and into Xxxxxxx (the "Merger"), with Xxxxxxx surviving such
Merger, and the respective Boards of Directors of Xxxxxxx and Signature have
recommended the Merger Agreement for approval by their respective stockholders
in accordance with the terms of this Agreement, Georgia and Indiana Law and the
Nasdaq Stock Market; and
WHEREAS, Xxxxxxx and Signature desire to make certain
representations, warranties, covenants and agreements in connection with the
transactions contemplated by this Agreement and to prescribe various conditions
precedent to such transactions;
NOW, THEREFORE, in consideration of the premises and the
mutual representations, warranties, covenants and agreements herein set forth,
the parties to this Agreement have agreed, and hereby agree subject to the terms
and conditions hereinafter set forth, as follows:
ARTICLE I
THE MERGER
1.01. The Merger. (a) At the Effective Time of the Merger, in
accordance with the provisions of the Georgia Business Corporation Code and
other applicable Georgia law ("Georgia Law"), the Indiana Business Corporation
Law and other applicable Indiana law ("Indiana Law"), and the terms of this
Agreement, Signature shall be merged with and into Xxxxxxx, with Xxxxxxx
surviving the merger ("Surviving Corporation"), all as more fully provided for
in the form of Agreement of Merger, which is attached hereto as Exhibit A and
incorporated herein by reference (the "Merger Agreement").
(b) The consummation of the transactions contemplated by
Section 1.01(a) hereof and by this Agreement is herein called the "Closing."
1.02. Effective Time of the Merger. The Merger shall not
become effective until, and, subject to the terms and conditions of this
Agreement, shall become effective when, appropriate Articles of Merger shall
have been filed, in accordance with the requirements of Georgia Law and
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Indiana Law, in the offices of the Secretary of State of the State of Georgia
and the offices of the Secretary of State of Indiana. The date and time when the
Merger shall become effective as aforesaid is herein referred to as the
"Effective Time of the Merger."
1.03. Articles of Incorporation, By-laws, Directors and
Officers. (a) The Amended and Restated Articles of Incorporation of Xxxxxxx as
in effect immediately prior to the Effective Time of the Merger shall be the
Amended and Restated Articles of Incorporation of the Surviving Corporation from
and after the Effective Time of the Merger until amended in accordance with
Georgia Law.
(b) The By-laws of Xxxxxxx, as in effect immediately prior
to the Effective Time of the Merger, shall be the By-laws of the Surviving
Corporation from and after the Effective Time of the Merger until amended in
accordance with Georgia Law and the Restated Articles of Incorporation and the
By-laws of the Surviving Corporation.
(c) The officers of Xxxxxxx in office immediately prior to
the Effective Time of the Merger shall be the officers of the Surviving
Corporation from and after the Effective Time of the Merger, each to hold office
in accordance with the Restated Articles of Incorporation and Bylaws of the
Surviving Corporation.
(d) The directors of Xxxxxxx in office immediately prior to
the Effective Time of the Merger shall be the directors of the Surviving
Corporation from and after the Effective Time of the Merger, and each shall hold
such office until his successor shall have been elected or qualified or as
otherwise provided in the By-laws or Restated Articles of Incorporation of the
Surviving Corporation.
1.04. Conversion of Shares. At the Effective Time of the
Merger:
(a) Each share of Signature Common Stock issued and
outstanding immediately prior to the Effective Time of the Merger shall, by
virtue of the Merger and without any action on the part of the holder thereof,
be converted into one-half of one fully paid and nonassessable share of Xxxxxxx
Common Stock and the right to receive cash in the amount of $1.50 less the
amount of the per share extraordinary dividend paid for the purpose of
distributing any current and anticipated undistributed Earnings and Profits of
Signature as contemplated by Section 4.21. No fractional shares of Xxxxxxx
Common Stock shall be issued. Any holder of Signature Common Stock who, at the
Effective Time of the Merger, otherwise becomes entitled to receive a fractional
share of Xxxxxxx Common Stock shall, in lieu thereof, be entitled to receive
cash equal to such fraction multiplied by the average of the per share closing
prices for the Xxxxxxx Common Stock (the "Average Price") on the Nasdaq National
Market for the five (5) consecutive trading days ending on the last trading day
of the calendar week preceding the calendar week of the Effective Time of the
Merger.
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(b) Each share of Signature Preferred Stock shall, by virtue
of the Merger and without any action on the part of the holder thereof, be
converted into one share of Xxxxxxx Series S Preferred Stock which shall have
the rights, preferences and terms set forth in the Designation of Preferences,
Rights, Privileges and Restrictions of $1.70 Series S Cumulative Preferred Stock
set forth in the Articles of Amendment of the Xxxxxxx Articles of Incorporation
to be filed with the Secretary of State of Georgia and attached hereto as
Exhibit A-1.
(c) Each share of Signature Common Stock held in the
treasury of Signature immediately prior to the Effective Time of the Merger
shall be canceled, without any payment or other distribution in respect thereof.
(d) At the Effective Time of the Merger, each outstanding
certificate which theretofore represented shares of the Signature Common Stock
(and associated Rights) shall be deemed for all purposes to evidence ownership
of and to represent that number of shares of Xxxxxxx Common Stock and the right
to receive the cash payment into which the shares of the Signature Common Stock
represented thereby shall have been converted and all Rights associated with
such shares of Signature Common Stock shall be thereby canceled and shall cease
to exist. Also, at the Effective Time of the Merger, each outstanding
certificate which theretofore represented shares of the Signature Preferred
Stock shall be deemed for all purposes to evidence ownership of and to represent
that number of shares of Xxxxxxx Preferred Stock into which the shares of the
Signature Preferred Stock represented thereby shall have been converted.
1.05. Employee Stock Options. At the Effective Time of the
Merger, the outstanding options to purchase shares of the Common Stock of
Signature reflected on Schedule 1.05 hereto which are then unexercised will be
canceled. Each of the Signature employees who held canceled options to purchase
shares of Signature Common Stock shall be granted options under the Xxxxxxx 1993
Stock Incentive Plan providing for the purchase of that number of shares of
Xxxxxxx Common Stock (the "Xxxxxxx Replacement Options") equal to the number of
shares of Signature Common Stock covered by the canceled options. The exercise
price of the Xxxxxxx Replacement Options will be equal to the closing sales
price for Xxxxxxx Common Stock as reported on the Nasdaq National Market on the
Effective Date of the Merger. Such options shall become exercisable with respect
to one-third of the shares covered thereby on each of the first three
anniversary dates of the Effective Date of the Merger. Subject to the foregoing,
the exercise, termination and other provisions of the Xxxxxxx Replacement
Options shall be as comparable to the provisions of the canceled options prior
to the Effective Time of the Merger (and without regard to any acceleration of
the vesting of the options due to the Merger) as practicable in light of the
terms, provisions and requirements of the Xxxxxxx 1993 Stock Incentive Plan and
the rules and regulations of the Code.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SIGNATURE
Signature hereby represents and warrants to Xxxxxxx as
follows:
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2.01. Organization; Good Standing; Power, Etc. Signature is a
corporation duly incorporated and validly existing under the laws of the State
of Indiana and has all requisite power and authority to own, operate and lease
its properties and assets and to carry on its business as now being conducted.
Signature has no Subsidiaries, as defined below, other than those listed on
Schedule 2.01 hereto. Each Signature Subsidiary is a corporation duly organized
and validly existing under the laws of the State of Indiana and has all
requisite power and authority to own, operate and lease its properties and
assets and to carry on its business as now being conducted. Signature and each
Signature Subsidiary, as hereafter defined, is duly qualified to do business and
is in good standing as a foreign corporation or other entity in each other
jurisdiction in which the ownership, operation or leasing of its properties or
assets or the nature of its business requires such qualification except where
the failure so to qualify would not have a Material Averse Effect on the
business, financial condition or properties of Signature and its Subsidiaries
taken as a whole. As used in this Agreement, the term "Subsidiary" shall mean
any corporation 50% or more of the outstanding voting power of which, or any
partnership, joint venture, limited liability company, limited partnership or
other entity 50% or more of the total equity interest of which, is directly or
indirectly owned by another entity.
2.02. Authorization of Agreement, Etc. (a) Signature has all
requisite corporate power and authority to enter into and perform all of its
obligations under this Agreement. The execution and delivery of this Agreement
by Signature and the consummation by Signature of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of Signature, subject only, with respect to the Merger, to the approval of
holders of a majority of the outstanding shares of Signature Common Stock
entitled to vote and the holders of a majority of the outstanding shares of
Signature Preferred Stock entitled to vote, voting separately as a class. This
Agreement has been duly executed and delivered by Signature and constitutes the
legal, valid and binding obligation of Signature, enforceable against Signature
in accordance with its terms except as enforceability may be subject to (i) any
applicable bankruptcy, insolvency, reorganization or other law relating to or
affecting creditors' rights generally and (ii) general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
(b) Assuming the approval of the holders of at least a
majority of the outstanding shares of Signature Common Stock and the holders of
at least a majority of the outstanding shares of Signature Preferred Stock,
voting separately as a class, is obtained, neither the execution and delivery of
this Agreement by Signature nor the consummation of the transactions
contemplated hereby to be performed by Signature will (i) violate or conflict
with any provision of the Articles of Incorporation, as amended, or Bylaws, as
currently in effect, of Signature or (ii) violate or conflict with any provision
of any law, rule, regulation, order, permit, certificate, writ, judgment,
injunction, decree, determination, award or other decision of any foreign,
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality ("Governmental Entity"), other regulatory or
self-regulatory body or association or arbitrator binding upon Signature or any
of its properties, except where such violations or conflicts would not in the
aggregate have a Material Adverse Effect on the business, properties, financial
condition or results of operations of Signature or on the ability of Signature
to consummate the transactions contemplated hereby, and
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except for violations that will be cured, waived or terminated prior to the
Effective Time of the Merger. The term "Material Adverse Effect," with respect
to any entity, shall mean a material adverse effect on or change in the
financial condition, assets or results of operations of such entity and its
subsidiaries (including any subsidiary partnership) taken as a whole (without
regard, however, to changes in conditions generally applicable to the hotel
industry or general economic conditions globally, in the United States or in the
geographical regions thereof in which such entity conducts business, and any
changes in the financial condition or results of operations or assets of such
entity and its subsidiaries, taken as a whole, that are caused primarily or
substantially by such changes or events or as a result of the announcement of
this Agreement and the transactions contemplated hereby, including the payment
of any costs, expenses, fees or similar charges incurred by such entity's
contemplation, negotiation, execution or consummation of this Agreement or the
transactions contemplated hereby). The term "entity" shall mean and include a
company, a partnership, a limited partnership, a joint venture, a limited
liability company, a corporation, a trust, an unincorporated organization and a
government or any department or agency thereof.
(c) Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby to be performed by
Signature will result in a breach of or constitute a default (or with notice or
lapse of time or both result in a breach of or constitute a default) under, or
give rise to a right of termination, cancellation, acceleration or repurchase of
any obligation or a right of first refusal with respect to any material property
or asset or a loss of a material benefit or the imposition of a material penalty
under, any of the terms, conditions or provisions of (i) any mortgage,
indenture, loan or credit agreement or any other agreement or instrument
evidencing indebtedness for money borrowed to which Signature or any Signature
Subsidiary is a party or by which it or any of its properties is bound or
affected, or pursuant to which Signature or any Signature Subsidiary has
guaranteed the indebtedness or preferred stock of any natural person, firm,
partnership, association, corporation, limited liability company, company,
trust, entity, public body or government. or entity ("Person"), or (ii) any
lease, license, tariff, contract or other agreement or instrument to which
Signature is a party or by which it or any of its properties is bound or
affected, except for any such breaches, defaults, rights, losses or penalties
that do not have a Material Adverse Effect on the business, properties,
financial condition or results of operations of Signature or such Signature
Subsidiary or on the ability of Signature to consummate the transactions
contemplated hereby, or with respect to which the consents, waivers or releases
listed on Schedule 2.02(c) attached hereto will be obtained prior to the
Effective Time of the Merger.
(d) Neither the execution and delivery by Signature of this
Agreement nor the consummation of the transactions contemplated hereby to be
performed by Signature will result in, or require, the creation or imposition of
any mortgage, deed of trust, pledge, lien, security interest or other charge or
encumbrance of any nature upon or with respect to any of the properties or other
assets now or hereafter owned by Signature or any Signature Subsidiary, except
where such would not in the aggregate have a Material Adverse Effect on the
business, properties, financial condition or results of operations of Signature
or any Signature Subsidiary or on the ability of Signature to consummate the
transactions contemplated hereby.
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(e) No consent, approval, order, certificate or
authorization of, or registration, declaration or filing with, any Governmental
Entity is required by or with respect to Signature in connection with the
execution and delivery of this Agreement by Signature or the consummation by
Signature of the transactions contemplated hereby, other than (i) in connection
or compliance with any applicable provisions of Georgia Law, Indiana Law, the
Securities Act of 1933, as amended ("1933 Act"), the Securities Exchange Act of
1934, as amended ("1934 Act"), and any applicable state securities laws or
regulations, and (ii) such filings or registrations that, if not made, and such
authorizations, consents or approvals, that, if not received, would not in the
aggregate have a Material Adverse Effect on the business, properties, financial
condition or results of operations of Signature or any Signature Subsidiary or
on the ability of Signature to consummate the transactions contemplated hereby.
(f) Signature and each Signature Subsidiary has made or
obtained each registration, filing, submission, license, permit, certificate,
determination or governmental approval necessary to enable it to carry on its
business, except for those which the failure to have does not have a Material
Adverse Effect on the business, properties, financial condition or results of
operations of Signature or such Signature Subsidiary. All such registrations,
filings and submissions with any Governmental Entity relating to the operations
of Signature or any Signature Subsidiary were in material compliance with
applicable law when filed, and no material deficiencies have been asserted by
any such authority with respect to such registrations, filing or submissions.
(g) SM Limited Partnership (the "Signature Partnership") is
a limited partnership duly organized, validly existing and in good standing
under the laws of the State of Indiana and is duly qualified to do business and
is in good standing in each jurisdiction in which the nature of its business
activities or its ownership or leasing of property makes such qualification
necessary, except where the failure to qualify would not or could not reasonably
be expected to have a Material Adverse Effect on such Signature Partnership. The
Signature Partnership has full power and authority to own or lease and to
operate and use its properties and to carry on its business as now conducted.
True and correct copies of the partnership agreement of the Signature
Partnership, as amended to date, has been delivered to Xxxxxxx. The general
partner of the Signature Partnership is P&N Corporation and the sole limited
partner of the Signature Partnership is GPI Hotel Properties, L.P.
(h) Each of the limited partnerships listed on Schedule 2.02
(h) hereto (the "Dissolved Signature Partnerships") was a limited partnership
duly organized under Indiana law and prior to the date hereof has been dissolved
in accordance with Indiana Law and the requirements of the agreement of limited
partnership applicable thereto. Prior to or in connection with the liquidation
and dissolution of each Dissolved Signature Partnership, good and marketable
title to the hotel property or properties owned and operated thereby were sold
or otherwise transferred to Signature or the Signature Subsidiary indicated on
Schedule 2.02 (h) free of liens, charges, mortgages, encumbrances, security
interests or other adverse claims except those that were expressly specified in
the title insurance policies covering such properties, copies of which have been
provided to Xxxxxxx. The transfers of such properties and the dissolution of the
Dissolved Signature
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15
Partnerships were effected in material compliance with all requirements of
Indiana Law, the terms of the respective agreements and certificates of limited
partnership, and the terms of any loan agreements, mortgages, deeds of trust,
security agreements, management agreements, leases, franchise agreements or
other documents applicable thereto. Without limiting the generality of the
foregoing, it is represented that all required notices were given, all required
consents, waivers or approvals of partners, lenders, Government Entities and
other third Persons required in connection therewith were obtained, true,
accurate and complete final accountings were prepared and provided to each
partner of each Dissolved Signature Partnership and no claims have been asserted
against Signature, the general partner of any Dissolved Signature Partnership or
any other Subsidiary or Affiliate of Signature with respect to either the
transfers of the properties to Signature or its Subsidiaries or the dissolution
of the Dissolved Signature Partnerships and the distribution of the partnership
assets to the partners thereof in connection therewith, and Signature is not
aware of any facts or circumstances which could reasonably be a basis for any
such claim. None of the limited partners or other investors in the Dissolved
Partnerships has any dissenters' appraisal rights or other claims or rights
regarding either the act of liquidating and dissolving the Dissolved
Partnerships or the value, fairness, propriety or legality of the transfers of
the hotel properties or other acts involved in the liquidation and dissolution
of the Dissolved Partnerships.
2.03. Capitalization. (a) The authorized capital stock of
Signature consists of 5,000,000 shares of preferred stock, no par value and
25,000,000 shares of common stock, no par value ("Signature Common Stock"). As
of the date of this Agreement, 2,105,703 shares of Signature Common Stock
(including the corresponding number of Rights (as defined below) to purchase
Signature Series One Preferred Stock (as defined below) pursuant to the Rights
Agreement (as defined below)) and 2,256,000 shares of Signature $1.70 Cumulative
Convertible Preferred Stock, Series A ("Signature Preferred Stock") are issued
and outstanding. The only outstanding options, warrants, or other rights to
purchase shares of Signature Common Stock are the employee stock options
covering a total of 80,168 shares of Signature Common Stock referred to in
Section 1.05 above and which are listed in Schedule 1.05 thereto. All shares of
capital stock of Signature have been duly authorized, validly issued, fully paid
and nonassessable, and are not subject to, or issued in violation of, any
preemptive rights. Except as set forth above, there are no shares of capital
stock of Signature authorized or outstanding, and there are no subscriptions,
options to purchase shares of the capital stock of Signature, conversion or
exchange rights, warrants, preemptive rights or other agreements, claims or
commitments of any nature whatsoever (whether firm or conditional) obligating
Signature to issue, transfer, deliver or sell, or cause to be issued,
transferred, delivered or sold, additional shares of the capital stock or other
securities or interests of Signature or obligating Signature to grant, extend or
enter into any such agreement or commitment.
(b) Signature has approved the Amendment of the Rights
Agreement as set forth on Exhibit B. The term "Rights" means a stock purchase
right entitling the holder thereof the right to purchase one hundredth of one
share of Signature Non-cumulative Preferred Stock, Series One, without par value
("Signature Series One Preferred Stock") at an initial exercise price of $40 per
one-hundredth of one share, subject to adjustment. The "Rights Agreement" is the
agreement that provides said stock purchase rights to the holders of Signature
Common Stock. The Company has
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16
executed the Amendment to the Rights Agreement and has taken all other action,
if any, necessary (so long as this Agreement has not been terminated) to (i)
render the Rights inapplicable to the Merger and the other transactions
contemplated by this Agreement and (ii) ensure that (y) neither Xxxxxxx nor any
of its affiliates is an Acquiring Person (as defined in the Rights Agreement)and
(z) a Stock Acquisition Date or an Exercisability Date (as defined in the Rights
Agreement) does not occur by reason of the announcement or consummation of the
Merger or the consummation of any of the other transactions contemplated by this
Agreement. Upon consummation of the Merger, the Rights will be canceled and
shall cease to exist and none of the Persons who owned Signature Common Stock,
Signature Preferred Stock or any associated Rights will have any rights, claims
or interests thereunder or with respect thereto.
2.04. Absence of Certain Changes or Events. Except as has
occurred in the ordinary course of business consistent with prior practices and
custom or as disclosed in Schedule 2.04, since September 30, 1998, neither
Signature nor any Signature Subsidiary has (i) borrowed, or agreed to borrow,
funds, (ii) incurred or become subject to, or agreed to incur or become subject
to, any material obligation or liability, contingent or otherwise, except
current liabilities incurred, and obligations under contracts entered into, in
the ordinary course of its business, (iii) discharged or satisfied any material
lien, charge or encumbrance or paid any material obligation or liability,
contingent or otherwise, other than current liabilities shown in the Interim
Balance Sheet, current liabilities incurred since September 30, 1998 in the
ordinary course of its business and prepayments of obligations in accordance
with normal and customary past practices, (iv) declared, set aside or paid any
dividend or other distribution (whether in cash, stock or property) in respect
of its capital stock, except for the cumulative dividends which accrued and
became payable under the terms of the Signature Preferred Stock, (v) mortgaged,
pledged or subjected to lien, charge or other encumbrance, or agreed so to do,
any of the assets material to the operation of its business, tangible or
intangible, (vi) sold, assigned, transferred, conveyed, leased or otherwise
disposed of or agreed to sell, assign, transfer, convey, lease or otherwise
dispose of any of its assets or properties, (vii) canceled or compromised any
debt or claim, except for immaterial adjustments made in the ordinary course of
business, or waived or released any rights, regardless of whether in the
ordinary course of business, which, in the aggregate, are material, (viii)
entered into any material transaction, contract or commitment, (ix) declared,
set aside, or made any payment to its executives, board members, employees or
any other person either in contemplation of this Agreement or otherwise in the
form of a bonus or other form of incentive or other nonrecurring compensation,
(x) increased, or agreed to increase, the monthly rate of compensation payable
or to become payable by it to any of its officers, directors or other key
management employees over the rate being paid to them or accrued for at
September 30, 1998, (xi) increased, or agreed to increase, the rate of
compensation payable or to become payable by it to any of its employees (other
than officers, directors and other key management employees) over the rate being
paid to them or accrued for at September 30, 1998, or other than in accordance
with its established procedures for annual or other periodic reviews and
increments, (xii) made or permitted, or agreed to make or permit, any amendment
or termination of any material contract, mortgage, lease, license, agreement or
other instrument to which it is a party or by which any of its properties or
assets are bound, (xiii) made, or agreed to make, any accrual or arrangement for
or payment of bonuses or special compensation in excess of $25,000 of any kind
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17
to any employee (or $100,000 in the aggregate for all employees), (xiv) directly
or indirectly paid, or agreed to pay, any severance or termination pay to any
employee in excess of $10,000 (or $50,000 in the aggregate for all employees)
which was not accrued for at September 30, 1998, (xv) made, or agreed to make,
any changes in its accounting methods or practices, (xvi) made capital
expenditures which, in the aggregate, exceed $100,000, or, entered into any
commitment therefor, or (xvii) experienced any material adverse change in its
financial condition, assets, liabilities, earnings or business.
2.05. Signature SEC Reports. Signature has delivered or made
available to Xxxxxxx (i) each registration statement, report on Form 8-K, proxy
statement or information statement prepared by it since January 1, 1996, (ii)
Annual Reports on Form 10-KSB for the years ended December 31, 1997, December
31, 1996, and December 31, 1995 and (iii) the Company's Quarterly Reports on
Form 10-QSB for the quarterly periods ended March 31, June 30, and September 30,
of 1996, 1997 and 1998, each in the form (including exhibits) filed with the
Securities and Exchange Commission ("Commission") (collectively, the "Signature
SEC Reports"). As of their respective dates, the Signature SEC Reports did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements made therein,
in light of the circumstances in which they were made, not misleading. Each of
the balance sheets included in or incorporated by reference into the Signature
SEC Reports (including the related notes and schedules) fairly presents the
financial position of Signature as of its date and each of the statements of
income, of stockholders' equity and of cash flows included in or incorporated by
reference into the Signature SEC Reports (including the related notes and
schedules) fairly presents the results of operations, stockholders' equity and
cash flows, as the case may be, of Signature for the periods set forth therein
(subject, in the case of unaudited statements, to normal year-end audit
adjustments which will not be material to Signature in amount or effect), in
each case in accordance with generally accepted accounting principles
consistently applied during the periods involved except as noted therein. Other
than the Signature SEC Reports, Signature has not filed any other definitive
reports or statements with the Commission since January 1, 1996.
2.06. Defaults. There exists no event of default by Signature
or any Signature Subsidiary under the terms of its Articles of Incorporation, as
amended, or Bylaws, as amended. In addition, there exists no event of default or
breach by Signature or any Signature Subsidiary, to the Knowledge of Signature,
or SEC by any other party which has occurred under the terms of any contract,
agreement, document, lease, commitment, mortgage, loan, note, license,
franchise, permit, authorization, concession, order, law, rule or regulation,
which violation could reasonably be expected to have a Material Adverse Effect
on Signature or any such Subsidiary or its properties or operations, and no
event has occurred that is, or which with notice or lapse of time or both would
constitute, such a default or breach.
2.07. Tax Matters. (a) Except as provided in Schedule 2.07,
(a) all (i) returns and reports ("Tax Returns") of or with respect to any Tax
which is required to be filed on or before the Closing Date by or with respect
to Signature or the business operations of Signature have been or will be duly
and timely filed, (ii) items of income, gain, loss, deduction and credit or
other items
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required to be included in each such Tax Return have been or will be so included
and all information provided in each such Tax Return is true, correct and
complete, (iii) Taxes which have become or will become due with respect to the
period covered by each such Tax Return have been or will be timely paid in full,
and (iv) withholding Tax requirements imposed on or with respect to Signature
have been or will be satisfied in full in all respects. In addition, no penalty,
interest or other charge is or will become due with respect to the late filing
of any such Tax Return or late payment of any such Tax. For purposes of this
Agreement, the term "Tax" (and, with correlative meaning, "Taxes" and "Taxable")
shall mean any federal, state, local or foreign income, gross receipts,
property, sales, use, license, excise, franchise, employment, payroll,
withholding, alternative or add-on minimum, ad valorem, value added, occupancy,
hospitality, transfer or excise Tax, or any other Tax, custom, duty,
governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest or penalty, imposed by any Governmental Entity.
Signature's Tax Returns have included all of the corporate Signature
Subsidiaries on a consolidated basis.
(b) To the extent related to federal or state income taxes,
all Tax Returns of or with respect to Signature have been examined by the
applicable Governmental Entity, or the applicable statute of limitations has
expired, for all periods up to and including the periods set forth in Schedule
2.07.
(c) There is no claim against Signature for any Taxes, and
no assessment, deficiency or adjustment has been asserted or proposed with
respect to any Tax Return of or with respect to Signature.
(d) Except as set forth in Schedule 2.07, there is not in
force any extension of time with respect to the due date for the filing of any
Tax Return of or with respect to Signature or any waiver or agreement for any
extension of time for the assessment or payment of any Tax of or with respect to
Signature.
(e) The total amounts set up as a reserve for current and
prior tax liabilities, excluding any amounts recorded as deferred tax
liabilities, in the Interim Balance Sheet are sufficient to cover the payment of
all Taxes, whether or not assessed or disputed, which are, or are hereafter
found to be, or to have been, due by or with respect to Signature and its
business and properties up to and through taxable periods ending on or before
the Closing Date.
(f) Signature is not a party to any Tax allocation or
sharing agreement and no payments are due or will become due by Signature
pursuant to any such agreement or arrangement.
(g) Except as set forth in Schedule 2.07, none of the
property of Signature is held in an arrangement that could be classified as a
partnership for Tax purposes.
(h) The final Tax Returns for all of the Dissolved Signature
Partnerships have been filed with the appropriate Governmental Entities and all
reports and notices required to be provided to the partners thereof have been so
provided. There have been no claims, notices or other
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correspondence or communication received from any Governmental Entity regarding
audits, assessments, or other actions that might be taken in respect of such Tax
Returns or the information and data contained therein.
(i) As of December 31, 1998, Signature has (and at the
Effective Time of the Merger it will have) no consolidated deferred intercompany
income or gains as defined under Internal Revenue Code Section 1502 and
Regulations Section 1.1502-13 ( "Deferred Intercompany Gains").
2.08. Trademarks, Copyrights, Etc. (a) Signature and its
Subsidiaries own or have the right to use all patents, patent rights,
trademarks, trade names, service marks, trade secrets, copyrights and other
proprietary intellectual property rights ("Intellectual Property"), as set forth
in Schedule 2.08, as are necessary in connection with the business of Signature
and its Subsidiaries, taken as a whole, except where the failure to have such
Intellectual Property, individually or in the aggregate, has not had, and would
not reasonably be expected to have, a Material Adverse Effect on Signature.
(b) There have not been asserted against Signature any
claims that any product, activity, name, xxxx, design or operation of Signature
infringes upon or involves, or had resulted in the infringement of, any
proprietary right of any other person, corporation or other entity; and no
proceedings have been instituted, are pending or are threatened which challenge
the rights of Signature with respect thereto, in each case, which would have a
Material Adverse Effect on the business, properties, financial condition or
results of operations of Signature.
2.09. Title to Properties: Absence of Liens and Encumbrances:
Leases, etc. Signature and its Subsidiaries own, and have good, valid and
marketable title to, the assets purported to be owned by them and which are
material to the conduct of the business of Signature and for such purpose each
hotel property owned by Signature or its Affiliates (a "Signature Property")
shall be deemed to be material. Except as set forth in Schedule 2.09 hereto,
such assets are owned by Signature free and clear of any charge, claim,
community property interest, condition, equitable interest, lien, option,
pledge, security interest, right of first refusal, or restriction of any kind,
including any restriction on use, voting, transfer, receipt of income, or
exercise of any other attribute of ownership ("Encumbrance"), except for (i) any
lien for current taxes not yet due and payable and (ii) liens that have arisen
in the ordinary course of business and that do not materially detract from the
value of the assets subject thereto or materially impair the use or operation of
such assets or the business, operations or affairs of of Signature or any of its
Subsidiaries. The material items of equipment and tangible assets owned by or
leased to Signature and its Subsidiaries are adequate for the uses to which they
are being put and are in good condition and repair (ordinary wear and tear
excepted). Except as set forth in Schedule 2.09 hereto, all of the real property
owned or leased by Signature and its Subsidiaries was disclosed in Signature's
annual report on Form 10-KSB for the year ended December 31, 1997, which was
filed with the SEC. Valid policies of title insurance have been issued insuring
Signature's or any of its Subsidiaries' title to the Signature Properties owned
in fee in amounts at least equal to the purchase price or construction cost
thereof (whichever is
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applicable), subject only to the matters set forth therein or disclosed above,
and such policies are, at the date hereof, in full force and effect and there
are no pending claims against any such policy. Any material certificate, permit
or license from any governmental authority having jurisdiction over any
Signature Property and any agreement, easement or other right which is necessary
to permit the material lawful use and operation of the buildings and
improvements on any of the Signature Properties or which is necessary to permit
the lawful use and operation in all material respects of all driveways, roads
and other means of egress and ingress, which Signature has rights to, to and
from any of the Signature Properties which are currently occupied and are
material to the operation of the property has been obtained and is in full force
and effect. Signature is not in receipt of any written notice of any violation
of any material federal, state or municipal law, ordinance, order, regulation or
requirement affecting any portion of any of the Signature Properties issued by
any governmental authority other than such violations which would not reasonably
be expected to have a Material Adverse Effect on Signature or any of its
Subsidiaries. To the Knowledge of Signature, (A) there are no material
structural defects relating to Signature Properties, (B) there are no Signature
Properties whose building systems are not in working order in any material
respect (except for normal maintenance and operating systems failures which in
any event are the subject of adequate pending repair procedures), (C) there is
no physical damage to any Signature Property in excess of $50,000 for which
there is no insurance in effect covering the cost of the restoration as of the
date hereof, or (D) no current renovation or restoration to any Signature
Property is underway or for which contracts have been entered into the cost of
which exceeds $50,000, except in each case, as set forth in Schedule 2.09.
Neither Signature nor any of its Subsidiaries has received any written notice to
the effect that (x) any condemnations or material rezoning proceedings are
pending or threatened with respect to any of the Signature Properties where the
fair market value of the object of such proceedings exceeds $100,000 or (y) any
zoning, building or similar law, code, ordinance or regulation is or will be
violated in any material respect by Signature or its Subsidiaries by the
continued maintenance, operation, or use of any buildings or other improvements
on any of the Signature Properties as currently maintained, used or operated by
Signature or its Subsidiaries which is not insured over and where the remedying
of such violations would materially and adversely affect the relevant Signature
Property. All work to be performed, payments to be made and actions to be taken
by Signature or any of its Subsidiaries prior to the date hereof pursuant to any
agreement entered into with a governmental body or authority in connection with
a site approval, zoning reclassification or other similar action relating to the
Signature Properties has been performed, paid or taken, as the case may be, in
all material respects, and Signature is not aware of any planned or proposed
work, payments or actions that may be required after the date hereof pursuant to
such agreements.
2.10. Employee Benefit Plans.
(a) Employee Welfare Benefit Plans. Schedule 2.10 lists each
and every "employee welfare benefit plan" (as defined in Section 3(1) of
Employee Retirement Income Security Act ("ERISA")) maintained at any time since
January 1, 1990 by Signature or any corporation or other trade or business
aggregated with Signature for treatment as a single employer under Section
414(t) of the Internal Revenue Code of 1986, as amended ("Code") or
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21
Section 3(40)(B), 4001(a)(14) or 4001(b) of ERISA), either currently or at any
time since January 1, 1990 with Signature (hereafter "Affiliate"), or to which
Signature or any affiliate contributes, is required to contribute or has
contributed, including any such type of plan established, maintained or
contributed to under the laws of any foreign country (such plans being
hereinafter collectively referred to as the "Employee Welfare Benefit Plans")
for employees or former employees of Signature, and Signature has prior to the
date of this Agreement delivered to Xxxxxxx true and complete copies of each and
every Employee Welfare Benefit Plan together with all documents or instruments
establishing or constituting any related trust or other funding instrument.
(b) Employee Pension Benefit Plans.
(i) Schedule 2.10 lists each and every "employee
pension benefit plan" (as defined in Section 3(2) of ERISA)
maintained at any time since January 1, 1990 by Signature or
any Affiliate, or to which Signature or any Affiliate
contributes, is required to contribute or has contributed,
including any multiemployer pension plans (as defined in
either Section 3(37) or Section 4001(a) (3) of ERISA) and
including any such type of plan established, maintained or
contributed to under the laws of any foreign country (such
employee benefit plans being hereinafter collectively referred
to as the "Employee Pension Benefit Plans") for employees or
former employees of Signature, and Signature has prior to the
date of this Agreement delivered to Xxxxxxx true and complete
copies of each and every such Employee Pension Benefit Plan
together with such copies of all documents or instruments
establishing or constituting any related trust or other
funding instruments.
(ii) Concerning each Employee Pension Benefit Plan
that is in whole or in part an "individual account plan" (as
defined in Section 3(34) of ERISA), there is set forth in
Schedule 2.10, (A) the amount of any Signature unpaid
liability for contributions due with respect to each such
Employee Pension Benefit Plan for periods up to the date
hereof and (B) the amount of any contribution expected to be
accrued or paid with respect to such Employee Pension Benefit
Plan for the current plan year; with respect to any such
Employee Pension Benefit Plan, no such plan has been
terminated or partially terminated and no assets of any such
plan have been used or employed in a manner so as to subject
them to an excise Tax imposed under Section 4980 of the Code;
and each such Employee Pension Benefit Plan permits
termination thereof.
(iii) From and after July 1, 1974, neither Signature
nor any Affiliate (including entities that were, but are no
longer, Affiliates) has contributed to, been required to
contribute to or maintained any Employee Pension Benefit Plan
subject to Title IV of ERISA.
(c) ERISA, Code and Other Laws Compliance. Signature has
established and maintained all Employee Pension Benefit Plans and Employee
Welfare Benefit Plans and any related
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trust agreements or any other documents relating to the administration or
funding of such plans in all material respects in compliance with the provisions
of ERISA, the Code, and any other applicable laws; and favorable determinations
as to the qualification under the Code of each of the Employee Pension Benefit
Plans (and each amendment thereto) have been made by the Internal Revenue
Service ("IRS"), except as to amendments with respect to legislation enacted
after the Tax Reform Act of 1986 and other recent changes in applicable statutes
and regulations or as set forth on Schedule 2.10 hereof. Each voluntary
employees' beneficiary association (or so-called "VEBA Trust") maintained by
Signature or any Affiliate is intended to satisfy the requirements of Section
501(c) (9) of the Code and satisfies such provisions in all matreial respects.
Each Employee Pension Benefit Plan is intended to satisfy the requirements of
Section 401(a) and 501(a) of the Code and satisfies such provisions in all
material respects. No benefits provided or to be provided under an Employee
Welfare Benefit Plan will result in the imposition of excise Taxes under Section
4976 of the Code. No Employee Welfare Benefit Plan has or will have been deemed
unrelated business income under Section 512(a)(3) of the Code.
(d) Administration of Plans. Except as set forth in Schedule
2.10, the administration of all Employee Pension Benefit Plans and all Employee
Welfare Benefit Plans and any trusts relating to such plans has been consistent
with and in compliance in all material respects with applicable requirements of
the Code, ERISA and any other applicable law, including, without limitation,
compliance on a timely basis with all requirements for reporting and disclosure
concerning each Employee Welfare Benefit Plan and Employee Pension Benefit Plan,
and all notices and coverages required under Parts 6 and 7 of Title I of ERISA.
None of the exceptions set forth in Schedule 2.10 will adversely affect the
deductibility of the contributions made by Signature for Tax purposes.
(e) Prohibited Transactions and Fiduciary Matters. To the
Knowledge of Signature, neither Signature, any Affiliate nor any plan fiduciary
of any Employee Pension Benefit Plan or Employee Welfare Benefit Plan has (i)
since January 1, 1990, engaged in any transaction or acted or failed to act in a
manner which violates Section 404 or 406 of ERISA nor engaged in any "prohibited
transaction" (as defined in Section 4975(c) (1) of the Code or Section 406 of
ERISA) for which there exists neither a statutory nor regulatory exemption and
which results in material liability, or (ii) acted or failed to act in any
manner which violates Section 404 of ERISA and results in material liability to
Signature, any Affiliate or any such plan.
(f) Other Employee Benefit Arrangements. Signature has
delivered to Xxxxxxx copies of each and every other personnel policy, stock
option plan, nonqualified deferred compensation plan, collective bargaining
agreement, bonus, incentive award, fringe benefit, disability or sick pay,
vacation pay, severance pay, consulting agreement or any other employee benefit
plan, agreement, arrangement or understanding which Signature or any Affiliate
maintains or has maintained at any time since January 1, 1990, or to which
Signature or any Affiliate contributes, is required to contribute or has
contributed and which is not required under Section 3.12 (a) or (b) above to be
listed in Schedule 2.10 (including with respect to any plans that are unwritten,
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a written description of eligibility, participation, benefits, funding
arrangements, assets and any other matters which relate to the obligations of
Signature).
(g) Other Plan Documents: Reports. True and complete copies
of each plan, agreement, arrangement or understanding referred to in Section
2.10(f), the most recent determination letter issued by the IRS with respect to
each Employee Pension Benefit Plan, annual reports on Form 5500 required to be
filed with any governmental agency for each Employee Welfare Benefit Plan and
each Employee Pension Benefit Plan for the six most recent plan years for which
such filings are due prior to the date of this Agreement have been delivered by
Signature to Xxxxxxx.
(h) Validity of Plans. All Employee Welfare Benefit Plans,
Employee Pension Benefit Plans, related trust agreements and any other related
documents, and all plans, agreements, arrangements and understandings referred
to in Section 2.10(f) are legally valid and binding and in full force and effect
and Signature is not in default under any of the provisions of any such plans or
arrangements.
(i) Claims and Litigation. (i) Signature has no Knowledge of
any threatened or pending claims, suits or other proceedings by any of
Signature's or its Affiliates' employees, former employees, plan participants,
beneficiaries or spouses of any of the above involving any employee benefit plan
described in Section 2.10 or any rights or benefits under any employee benefit
plan described in Section 2.10 other than ordinary and usual claims for benefits
by participants or beneficiaries, (ii) to Signature's Knowledge, neither
Signature nor any of its Affiliates nor any of their directors, officers,
employees or any other "fiduciary," as such term is defined in Section 3(21) of
ERISA, has any liability for an act or for a failure to act in connection with
either the administration or investment of assets of such plans or the
transactions contemplated by this Agreement, and (iii) there is no pending or,
to Signature's Knowledge, threatened audit, legal action or proceeding or
investigation against or involving any employee benefit plan described in
Section 2.11 and Signature has no Knowledge of facts or circumstances which
could reasonably constitute the basis for any such audit, legal action,
proceeding or investigation.
(j) No Union Contracts. Neither Signature nor any Affiliate
is now nor has it ever been a party to any agreement with, and no employees are
or have been represented by, any union or collective bargaining unit.
(k) Certain Severance Arrangements. Signature is not a party
to or obligated under any agreement, plan, contract or other arrangement
pursuant to which Signature or any Affiliate or Xxxxxxx is or might be required
to make payments that would not be deductible or capitalizable for federal
income Tax purposes by reason of the application of Section 280G of the Code.
(l) Certain Liabilities. The aggregate amount of liabilities
of Signature in connection with any written or oral plans, contracts, agreements
or other arrangements described in this Section 2.10 is set forth on Schedule
2.10, and Schedule 2.10 sets forth the calculation of such
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aggregate liability including a statement of the specific liabilities of
Signature and its Affiliates with respect to each of such plans, contracts,
agreements or other arrangements.
(m) Plans May Be Terminated. Each and every employee benefit
plan, practice, arrangement or understanding and each and every Signature
personnel or payroll practice described in this Section 2.10 may be terminated
by Xxxxxxx in its sole discretion at any time after the Effective Time of the
Merger without any liability to any of Xxxxxxx, Signature or its Affiliates to
any person, entity or government agency for any conduct or practice of Signature
which occurred prior to the Effective Time of the Merger except for liabilities
to and the rights of employees thereunder accrued prior to the Effective Time of
the Merger.
2.11. Litigation. Except as described in the Signature SEC
Reports or set forth on Schedule 2.11,
(a) there is no claim, action, suit, proceeding,
arbitration, investigation or inquiry before any Governmental Entity, other
regulatory or self-regulatory body or association or arbitrator, now pending or,
to the Knowledge of Signature, threatened against, relating to or affecting
Signature or any Signature Subsidiary or its assets, properties or business
which questions the validity of this Agreement or affects the transactions
contemplated herein; nor is there any basis for any such claim, action, suit,
proceeding, arbitration, investigation or inquiry; and
(b) neither Signature nor any of its officers, directors or
employees has been permanently or temporarily enjoined or prohibited by order,
judgment or decree of any Governmental Entity, other regulatory or
self-regulatory body or association, or arbitrator from engaging in or
continuing any conduct or practice in connection with the business engaged in by
Signature; and
(c) there is not in existence any order, judgment or decree
of any Governmental Entity, other regulatory or self-regulatory body or
association or arbitrator enjoining or prohibiting Signature from taking, or
requiring Signature to take, any action of any kind or to which Signature or any
of its business, or any of the properties or assets material to the operations
of such business, are subject or bound; and
(d) Signature is not in default in any respect under any
order, writ, injunction or decree of any Governmental Entity, other regulatory
or self-regulatory body or association or arbitrator.
2.12. Insurance. The insurance coverage maintained by
Signature at the date of this Agreement is in the judgment of Signature adequate
in scope and amount in view of the properties owned and operations carried on by
it. Signature has complied in all material respects with the provisions of all
such policies. Schedule 2.12 lists each of the insurance policies issued to
Signature or any Signature Subsidiary providing coverage for Signature, its
Subsidiaries or any of their respective directors, officers, employees, agents
or other representatives, for property damage,
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liability, workers' compensation, employers' liability, casualty, auto,
executive or key man life, officer and director liability, fiduciary liability,
business interruption, and any other coverage deemed by Signature to be material
to its operations, assets or personnel. Such Schedule 2.12 sets forth the
coverage of each of such policies and the limits of such coverage.
2.13. Brokers and Finders. No person other than McDonald &
Company has acted on behalf of Signature in connection with any negotiations
relative to this Agreement and the transactions contemplated hereby, and such
negotiations have been carried on by it without the intervention of any other
person acting on behalf of Signature in such a manner as to give rise to any
valid claim for a brokerage commission, finder's fee or other like payment
against Xxxxxxx or Signature.
2.14. Compliance with Laws. Except as described in the
Signature SEC Reports or Schedule 2.14 hereto;
(a) Signature is in compliance in all material respects with
all orders, judgments, writs, injunctions, determinations, awards, decrees,
laws, statutes, rules or regulations ("Legal Requirements") applicable to any of
its properties or assets and/or the ownership, operation and use thereof, and
Signature has not received notice of any noncompliance or alleged noncompliance
with any Legal Requirement relating or applicable to any of its properties or
assets or to the operation of its business, the existence or enforcement of
which would have a Material Adverse Effect on Xxxxxxx'x ability to operate them
on the same basis as currently conducted and operated or which would require the
payment of material refunds, fines, penalties or restitution in respect of
matters occurring prior to the Effective Time of the Merger, including, without
limitation, any Legal Requirement relating to (i) wages, hours, hiring,
non-discrimination, promotion, retirement, benefits, pensions or working
conditions, (ii) air, water, noise, odor or solid or liquid waste (including the
generation, treatment, storage, disposal or transportation thereof), (iii)
health and safety, (iv) zoning, (v) the production, processing, advertising,
sales or warranty of products or services of its business or (vi) trade or
antitrust regulations.
(b) Without limiting the generality of the foregoing, except
as otherwise set forth in Schedule 2.14 hereto, (i) the properties, assets and
operations of Signature and its Subsidiaries are in compliance in all material
respects with all applicable federal, state, local, regional and foreign laws,
rules and regulations, orders, decrees, common law, judgments, permits and
licenses relating to public and worker health and safety(collectively, "Worker
Safety Laws") and the protection, regulation and clean-up of the indoor and
outdoor environment and activities or conditions related thereto, including,
without limitation, those relating to the generation, handling, disposal,
transportation or release of hazardous or toxic materials, substances, wastes,
pollutants and contaminants including, without limitation, asbestos, petroleum,
radon and polychlorinated biphenyls (collectively,"Environmental Laws"), except
for any violation that, individually or in the aggregate, has not had, or would
not reasonably be expected to have, a Material Adverse Effect on Signature; and
(ii) with respect to such properties, assets and operations, including any
previously owned, leased or operated properties, assets or operations, as of the
date hereof and at the Effective
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Time, there are no past, present or, to the Knowledge of Signature, reasonably
anticipated future events, conditions, circumstances, activities, practices,
incidents, actions or plans of Signature or any of its Subsidiaries that may
interfere with or prevent compliance or continued compliance with applicable
Worker Safety Laws and Environmental Laws, other than any such interference or
prevention that, individually or in the aggregate, has not had, or would not
reasonably be expected to have, a Material Adverse Effect on Signature.
(c)(i)Signature and its Subsidiaries have not caused or
permitted any property, asset, operation, including any previously owned
property, asset or operation, to use generate, manufacture, refine, transport,
treat, store, handle, dispose, transfer or process hazardous or toxic materials,
substances, wastes, pollutants or contaminants, except in material compliance
with all Environmental Laws and Worker Safety Laws, other than any such activity
that, individually or in the aggregate, has not had, and would not reasonably be
expected to have, a Material Adverse Effect on Signature or any Signature
Subsidiary; (ii) Signature and its Subsidiaries have not reported to any
Governmental Entity any material violation of an Environmental Law or any
release, discharge or emission of any hazardous or toxic materials, substances,
wastes, pollutants or contaminants, other than any such violation, release,
discharge or emission that, individually or in the aggregate, has not had, and
would not reasonably be expected to have, a Material Adverse Effect on
Signature, and (iii) as of the date hereof and at the Effective Time of the
Merger, Signature has no Knowledge of any pending, threatened or reasonably
anticipated claims or liabilities under CERCLA, 42 U.S.C. sec. 9601 et seq.,
RCRA, 42 U.S.C. sec.6901 et seq., or equivalent state law provisions and no
Knowledge that any current or former property, asset or operation is identified
or currently proposed for the National Priorities List at 40 CFR sec. 300,
Appendix B, or the CERCLIS or equivalent state lists or hazardous substances
release sites.
(d) All sales by Signature of securities of Signature were
at all relevant times duly registered under or effected in a manner which was
exempt from the registration requirements of the 1933 Act and all applicable
state securities or blue sky laws.
(e) All sales by any of the Dissolved Signature Partnerships
and the Signature Partnership of limited partnership interests and any other
securities of such Partnerships were at all relevant times duly registered under
or effected in a manner which was exempt from the registration requirements of
the 1933 Act and all applicable state securities or blue sky laws.
2.15. Information Supplied. None of the information supplied
or to be supplied by the Signature for inclusion or incorporation by reference
in (a) the registration statement on Form S-4 to be filed with the SEC by
Xxxxxxx in connection with the Merger (such registration statement, together
with any amendments or supplements thereto, the "Registration Statement") and
(b) the Proxy Statement (as defined below) to be filed with the SEC by Signature
and Xxxxxxx (such proxy statement, together with any amendments or supplements
thereto, the "Proxy Statement") will, at the time their filing with the SEC, or
at any time of their amending or supplementation, or at the time they become
effective under the Securities Act or at the time the Proxy Statement is mailed
to the Signature stockholders and the Xxxxxxx stockholders, as the case may be,
contain any untrue
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27
statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF XXXXXXX
Xxxxxxx hereby represents and warrants to Signature as follows:
3.01. Organization, Good Standing, Power, Etc. Xxxxxxx and
each Xxxxxxx Subsidiary is a corporation or other entity duly organized, validly
existing and in good standing under the laws of its state of incorporation or
organization and has all requisite power and authority and all licenses,
permits, certificates, determinations, authorizations and franchises to own,
operate and lease its respective properties and assets and to carry on its
respective businesses as now being conducted. Xxxxxxx and each Xxxxxxx
Subsidiary, is duly qualified to do business and is in good standing as a
foreign corporation or other entity in each other jurisdiction in which the
ownership, operation or leasing of its properties or assets or the nature of its
business require such qualification, except where the failure so to qualify
would not have a Material Adverse Effect on the business, financial condition or
properties of Xxxxxxx and the Xxxxxxx Subsidiaries taken as a whole. Xxxxxxx has
furnished to Signature true, correct and complete copies of its Articles of
Incorporation and Bylaws, in each case as amended and supplemented to the date
hereof.
3.02. Authorization of Agreement. Etc.
(a) Xxxxxxx has all requisite corporate power and authority
to enter into and perform all of its obligations under this Agreement. The
execution and delivery of this Agreement by Xxxxxxx and the consummation by
Xxxxxxx of the transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Xxxxxxx, subject only, with respect to
the Merger, to the approval of holders of a simple majority of the issued and
outstanding shares of the Xxxxxxx Common Stock present and entitled to vote
Xxxxxxx Stockholder Meeting. This Agreement has been duly executed and delivered
by Xxxxxxx and constitutes the legal, valid and binding obligation of Xxxxxxx,
enforceable against Xxxxxxx in accordance with its terms except as
enforceability may be subject to (i) any applicable bankruptcy, insolvency,
reorganization or other law relating to or affecting creditors' rights generally
and (ii) general principles of equity (regardless of whether such enforceability
is considered in a proceeding in equity or at law).
(b) Neither the execution and delivery of this Agreement by
Xxxxxxx, nor, assuming the approval of holders of at least a majority of the
issued and outstanding shares of Xxxxxxx Common Stock, the consummation of the
transactions contemplated hereby to be performed by Xxxxxxx, will (i) violate or
conflict with any provision of the Articles of Incorporation, as amended, or
By-laws, as currently in effect, of Xxxxxxx or (ii) violate or conflict with any
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provision of any law, rule, regulation, order, permit, certificate, writ,
judgment, injunction, decree, determination, award or other decision of any
Governmental Entity, other regulatory or self-regulatory body or association or
arbitrator binding upon Xxxxxxx or any Xxxxxxx Subsidiary or any of their
respective properties, except where such violations or conflicts would not in
the aggregate have a Material Adverse Effect on the business, financial
condition or properties of Xxxxxxx or any Xxxxxxx Subsidiary taken as a whole or
on the ability of Xxxxxxx to consummate the transactions contemplated hereby and
except for violations that will be cured, waived or terminated prior to the
Effective Time of the Merger.
(c) Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby to be performed by
Xxxxxxx will result in a breach of or constitute a default (or with notice or
lapse of time or both result in a breach of or constitute a default) under, or
give rise to a right of termination, cancellation, acceleration or repurchase of
any obligation or a right of first refusal with respect to any material property
or asset or a loss of a material benefit or the imposition of a material penalty
under, any of the terms, conditions or provisions of (i) any mortgage,
indenture, loan or credit agreement or any other agreement or instrument
evidencing indebtedness for money borrowed to which Xxxxxxx is a party or by
which it or any of its respective properties is bound or affected, or pursuant
to which Xxxxxxx has guaranteed the indebtedness or preferred stock of any
person or entity or (ii) any lease, license, tariff, contract or other agreement
or instrument to which Xxxxxxx is a party or by which it or any of its
properties is bound or affected, except for any such breaches, defaults, rights,
losses or penalties that in the aggregate do not have any Material Adverse
Effect on the business, financial condition, or properties of Xxxxxxx or any
Xxxxxxx Subsidiary or on the ability of Xxxxxxx to consummate the transactions
contemplated hereby or for which Xxxxxxx will have obtained required consents,
waivers or releases prior to the Effective Time of the Merger.
(d) Neither the execution and delivery by Xxxxxxx of this
Agreement nor the consummation of the transactions contemplated hereby to be
performed by Xxxxxxx will result in, or require, the creation or imposition of
any mortgage, deed of trust, pledge, lien, security interest or other charge or
encumbrance of any nature upon or with respect to any of the properties now
owned by Xxxxxxx or any Xxxxxxx Subsidiary, except where such would not in the
aggregate have a Material Adverse Effect on the business, financial condition,
or properties of Xxxxxxx or any Subsidiary or on the ability of Xxxxxxx to
consummate the transactions contemplated hereby.
(e) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is required by
or with respect to Xxxxxxx or any Xxxxxxx Subsidiary in connection with the
execution and delivery of this Agreement by Xxxxxxx or the consummation by
Xxxxxxx of the transactions contemplated hereby, other than (i) in connection or
compliance with any applicable provisions of Georgia Law, Indiana Law, the 1933
Act and the 1934 Act and any applicable state securities laws or regulations,
and (ii) such filings or registrations which, if not made, and such
authorizations, consents or approvals which, if not received, would not have any
Material Adverse Effect on the business, financial condition, or properties of
Xxxxxxx or
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29
any Xxxxxxx subsidiary or on the ability of Xxxxxxx to consummate the
transactions contemplated hereby.
(f) Xxxxxxx and each Xxxxxxx Subsidiary has made or obtained
each registration, filing, submission, license, permit, certificate,
determination or governmental approval necessary to enable it to carry on its
business, except for those which the failure to have does not have a Material
Adverse Effect on the business, properties, financial condition or results of
operations of Xxxxxxx and its Subsidiaries, taken as a whole. All such
registrations, filings and submissions with any Governmental Entity relating to
the operations of Xxxxxxx or any Xxxxxxx Subsidiary were in material compliance
with applicable law when filed, and no material deficiencies have been asserted
by any such authority with respect to such registrations, filing or submissions.
3.03. Tax Matters. Except as provided in Schedule 3.03, (a)
all (i) Tax Returns of or with respect to any Tax which is required to be filed
on or before the Closing Date by or with respect to Xxxxxxx or the business
operations of Xxxxxxx have been or will be duly and timely filed, (ii) items of
income, gain, loss, deduction and credit or other items required to be included
in each such Tax Return have been or will be so included and all information
provided in each such Tax Return is true, correct and complete, (iii) Taxes
which have become or will become due with respect to the period covered by each
such Tax Return have been or will be timely paid in full, and (iv) withholding
Tax requirements imposed on or with respect to Xxxxxxx have been or will be
satisfied in full in all respects. In addition, no penalty, interest or other
charge is or will become due with respect to the late filing of any such Tax
Return or late payment of any such Tax. Xxxxxxx'x Tax Returns have included all
of the Xxxxxxx Subsidiaries on a consolidated basis.
(b) There is no claim against Xxxxxxx for any Taxes, and no
assessment, deficiency or adjustment has been asserted or proposed with respect
to any Tax Return of or with respect to Xxxxxxx.
(c) Except as set forth in Schedule 3.03 there is not in
force any extension of time with respect to the due date for the filing of any
Tax Return of or with respect to Xxxxxxx or any waiver or agreement for any
extension of time for the assessment or payment of any Tax of or with respect to
Xxxxxxx.
(d) Xxxxxxx is not a party to any Tax allocation or sharing
agreement and no payments are due or will become due by Xxxxxxx pursuant to any
such agreement or arrangement.
(e) Xxxxxxx is organized in conformity with the
requirements for qualification as a real estate investment trust ("REIT") under
Sections 856 through 860 of the Code, has duly elected to be taxed as a REIT
commencing with the taxable year ending December 31, 1994, and such election has
not been terminated or revoked.
(f) Xxxxxxx is operated in such a manner that it continues
to qualify as a REIT and is taxed as a REIT.
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(g) Each Xxxxxxx Subsidiary constitutes a "qualified REIT
subsidiary" within the meaning of Section 856(i) of the Code.
(h) Xxxxxxx has not received any net income from prohibited
transactions within the meaning of Section 852(b)(6)(B) of the Code.
3.04. Capitalization. The authorized capital stock of Xxxxxxx
consists of 40,000,000 shares of common stock, par value $.10 per share
("Xxxxxxx Common Stock"), and 10,000,000 shares of preferred stock, par value
$1.00 per share. On the date of this Agreement, there were 9,857,731 shares of
Xxxxxxx Common Stock and 1,200,000 shares of its 9.25% Series A Cumulative
Preferred Stock ("Xxxxxxx Series A Preferred Stock") issued and outstanding. All
the outstanding shares of Xxxxxxx Common Stock and Xxxxxxx Series A Preferred
Stock have been duly authorized and validly issued and are fully paid and
nonassessable, and are not subject to, or issued in violation of, any preemptive
rights. Except for (i) outstanding employee and director stock options (which at
the date of this Agreement covered 848,114 shares of Xxxxxxx Common Stock), (ii)
72,727 shares of Xxxxxxx Series A Preferred Stock to be issued to Xxxxxx X.
Xxxxxxx and Xxxxxx Xxxxxxx in connection with the acquisition by Xxxxxxx of the
outdoor advertising assets of Xxxxxxx Hospitalility LLC, and (iii) rights under
the Xxxxxxx dividend reinvestment plan, there are no shares of capital stock of
Xxxxxxx authorized or outstanding, and there are no subscriptions, options to
purchase shares of the capital stock of Xxxxxxx, conversion or exchange rights,
warrants, preemptive rights or other agreements, claims or commitments of any
nature whatsoever (whether firm or conditional) obligating Xxxxxxx to issue,
transfer, deliver or sell, or cause to be issued, transferred, delivered or
sold, additional shares of the capital stock or other securities or interests of
Xxxxxxx or obligating Xxxxxxx to xxxxx, extend or enter into any such agreement
or commitment.
3.05. Issuance of Xxxxxxx Common Stock and Xxxxxxx Series S
Preferred Stock. As and when required by the terms of this Agreement and the
Merger Agreement and subject to the terms and conditions hereof, Xxxxxxx shall
issue and deliver the shares of Xxxxxxx Common Stock and Xxxxxxx $1.70
Cumulative Convertible Preferred Stock; Series S (the "Xxxxxxx Series S
Preferred Stock") to be issued and delivered in accordance with this Agreement
and the Merger Agreement. Such shares have been duly authorized and, when issued
in accordance with this Agreement and the Merger Agreement, will be validly
issued, fully paid and nonassessable.
3.06. No Material Adverse Change. Since September 30, 1998,
there has been no material adverse change in the business, properties, financial
condition or results of operations of Xxxxxxx and the consolidated Xxxxxxx
Subsidiaries taken as a whole.
3.07. Brokers and Finders. No person other than
Xxxxxxxx-Xxxxxxxx Company, L.L.C. has acted on behalf of Xxxxxxx or any Xxxxxxx
subsidiary in connection with any negotiations relative to this Agreement and
the transactions contemplated hereby, and such negotiations have been carried on
by such parties without intervention of any person acting on behalf of either
Xxxxxxx or any Xxxxxxx subsidiary, in such a manner as to give rise to any valid
claim for
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31
a brokerage commission, finder's fee or any other like payment against Xxxxxxx,
any Xxxxxxx Subsidiary, or the stockholders of Xxxxxxx.
3.08. Xxxxxxx SEC Reports. Xxxxxxx has delivered to Signature
(i) each registration statement, report on Form 8-K, proxy statement or
information statement prepared by it since January 1, 1996, (ii) Xxxxxxx'x
Annual Reports on Form 10-K for the years ended December 31, 1997, 1996, and
1995 and (iii) the Company's Quarterly Reports on Form 10-Q for the quarterly
periods ended March 31, June 30, and September 30, 1996, 1997 and 1998, each in
the form (including exhibits) filed with the Commission (collectively, the
"Xxxxxxx SEC Reports"). As of their respective dates, the Xxxxxxx SEC Reports
did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
made therein, in light of the circumstances in which they were made, not
misleading. Each of the consolidated balance sheets included in or incorporated
by reference into the Xxxxxxx SEC Reports (including the related notes and
schedules) fairly presents the consolidated financial position of Xxxxxxx and
its subsidiaries as of its date and each of the consolidated statements of
income, of stockholders' equity and of cash flows included in or incorporated by
reference into the Xxxxxxx SEC Reports (including any related notes and
schedules) fairly presents the results of operations, stockholders' equity and
cash flows, of Xxxxxxx and its subsidiaries for the periods set forth therein
(subject, in the case of unaudited statements, to normal year-end audit
adjustments which will not be material to Xxxxxxx and its subsidiaries taken as
a whole in amount or effect), in each case in accordance with generally accepted
accounting principles consistently applied during the periods involved, except
as may be noted therein. Other than the Xxxxxxx SEC Reports, Xxxxxxx has not
filed any other definitive reports or statements with the SEC since January 1,
1996.
3.09. Litigation. Except as described in the Xxxxxxx SEC
Reports or Schedule 3.09,
(a) there is no claim, action, suit, proceeding,
arbitration, investigation or inquiry before any Governmental Entity, other
regulatory or self-regulatory body or association or arbitrator, now pending or,
to the Knowledge of Xxxxxxx, threatened against, relating to or affecting
Xxxxxxx or any Xxxxxxx Subsidiary or its assets, properties or business which
questions the validity of this Agreement or affects the transactions
contemplated herein; nor is there any basis for any such claim, action, suit,
proceeding, arbitration, investigation or inquiry; and
(b) neither Xxxxxxx nor any of its officers, directors or
employees has been permanently or temporarily enjoined or prohibited by order,
judgment or decree of any Governmental Entity, other regulatory or
self-regulatory body or association, or arbitrator from engaging in or
continuing any conduct or practice in connection with the business engaged in by
Xxxxxxx; and
(c) there is not in existence any order, judgment or decree
of any Governmental Entity, other regulatory or self-regulatory body or
association or arbitrator enjoining or prohibiting Xxxxxxx from taking, or
requiring Xxxxxxx to take, any action of any kind or to which Xxxxxxx or
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any of its business, or any of the properties or assets material to the
operations of such business, are subject or bound; and
(d) Xxxxxxx is not in default in any respect under any
order, writ, injunction or decree of any Governmental Entity, other regulatory
or self-regulatory body or association or arbitrator.
3.10. Compliance with Laws. Except as described in the
Xxxxxxx SEC Reports or Schedule 3.10 hereto;
(a) Xxxxxxx is in compliance in all material respects with
Legal Requirements applicable to any of its properties or assets and/or the
ownership, operation and use thereof, and Xxxxxxx has not received notice of any
noncompliance or alleged noncompliance with any Legal Requirement relating or
applicable to any of its properties or assets or to the operation of its
business, the existence or enforcement of which would have a Material Adverse
Effect on Xxxxxxx'x ability to operate them on the same basis as currently
conducted and operated or which would require the payment of refunds, fines,
penalties or restitution in respect of matters occurring prior to the Effective
Time of the Merger, including, without limitation, any Legal Requirement
relating to (i) wages, hours, hiring, non-discrimination, promotion, retirement,
benefits, pensions or working conditions, (ii) air, water, noise, odor or solid
or liquid waste (including the generation, treatment, storage, disposal or
transportation thereof), (iii) health and safety, (iv) zoning, (v) the
production, processing, advertising, sales or warranty of products or services
of its business or (vi) trade or antitrust regulations.
(b) Without limiting the generality of the foregoing,
except as otherwise set forth in Schedule 3.10 hereto, (i) the properties,
assets and operations of Xxxxxxx and its Subsidiaries are in compliance with all
applicable Worker Safety Laws and Environmental Laws, except for any violation
that, individually or in the aggregate, has not had, or would not reasonably be
expected to have, a Material Adverse Effect on Xxxxxxx; and (ii) with respect to
such properties, assets and operations, including any previously owned, leased
or operated properties, assets or operations, as of the date hereof and at the
Effective Time, there are no past, present or, to the Knowledge of Xxxxxxx,
reasonably anticipated future events, conditions, circumstances, activities,
practices, incidents, actions or plans of Xxxxxxx or any of its Subsidiaries
that may interfere with or prevent compliance or continued compliance with
applicable Worker Safety Laws and Environmental Laws, other than any such
interference or prevention that, individually or in the aggregate, has not had,
or would not reasonably be expected to have, a Material Adverse Effect on
Xxxxxxx.
(c)(i) Xxxxxxx and its Subsidiaries have not caused or
permitted any property, asset, operation, including any previously owned
property, asset or operation, to use generate, manufacture, refine, transport,
treat, store, handle, dispose, transfer or process hazardous or toxic materials,
substances, wastes, pollutants or contaminants, except in material compliance
with all Environmental Laws and Worker Safety Laws, other than any such activity
that, individually or in the aggregate, has not had, and would not reasonably be
expected to have, a Material Adverse Effect on Xxxxxxx
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or any Xxxxxxx Subsidiary; (ii) Xxxxxxx and its Subsidiaries have not reported
to any Governmental Entity any material violation of an Environmental Law or any
release, discharge or emission of any hazardous or toxic materials, substances,
wastes, pollutants or contaminants, other than any such violation, release,
discharge or emission that, individually or in the aggregate, has not had, and
would not reasonably be expected to have, a Material Adverse Effect on Xxxxxxx,
and (iii) as of the date hereof and at the Effective Time of the Merger, Xxxxxxx
has no Knowledge of any pending, threatened or anticipated claims or liabilities
under CERCLA, 42 U.S.C. sec. 9601 et seq., RCRA, 42 U.S.C. sec.6901 et seq., or
equivalent state law provisions and no Knowledge that any current or former
property, asset or operation is identified or currently proposed for the
National Priorities List at 40 CFR sec. 300, Appendix B, or the CERCLIS or
equivalent state lists or hazardous substances release sites.
3.11. Information Supplied. None of the information supplied
or to be supplied by the Xxxxxxx for inclusion or incorporation by reference in
(a) the Registration Statement and (b) the Proxy Statement will, at the time
their filing with the SEC, or at any time of their amending or supplementation,
or at the time they become effective under the Securities Act or at the time the
Proxy Statement is mailed to the Xxxxxxx stockholders and the Signature
stockholders, as the case may be, contain any 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, in light of the circumstances in which
they were made, not misleading.
ARTICLE IV
COVENANTS OF SIGNATURE
Signature covenants and agrees with Xxxxxxx that, at all times
prior to the Effective Time of the Merger, Signature at its expense will comply
with all covenants and provisions of this Article IV, except to the extent
Xxxxxxx may otherwise consent in writing or to the extent otherwise expressly
required or permitted by this Agreement.
4.01. Approvals. Signature will (i) take all reasonable steps
and use all reasonable efforts necessary or desirable to recommend the granting
of and to obtain, as promptly as practicable, all approvals, authorizations,
certificates, franchises, licenses, consents and clearances of Governmental
Entities and of third parties, required of Signature to consummate the
transactions contemplated hereby, (ii) provide such other information and
communications to such Governmental Entities as Xxxxxxx or such authorities may
reasonably request, and (iii) cooperate with Xxxxxxx in obtaining, as promptly
as practicable, all approvals, authorizations, certificates, franchises,
licenses, consents and clearances of Governmental Entities required of Xxxxxxx
to consummate the transactions contemplated hereby.
4.02. Investigation by Xxxxxxx. Signature will provide
Xxxxxxx, its counsel, accountants, actuaries and other representatives with
reasonable access, upon prior notice and during normal business hours, to all
facilities, officers, directors, employees, agents, accountants, actuaries,
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34
assets, properties, books and records of Signature, and will furnish Xxxxxxx and
such other persons during such period with all such other information and data
concerning the business, operations and affairs of Signature or the transactions
contemplated hereby as Xxxxxxx or any of such other persons reasonably may
request.
4.03. No Solicitation. (a) Except as may be required pursuant
to this Agreement, Signature shall not, nor shall it permit any of its
Subsidiaries to, nor shall it authorize or permit any officer, director or
employee of or any investment banker, attorney, accountant, agent or other
advisor or representative of Signature or any of its Subsidiaries to, (i)
solicit, initiate, or encourage the submission of, any Takeover Proposal, (ii)
except to the extent permitted by paragraph (b), enter into any agreement with
respect to any Takeover Proposal or (iii) participate in any discussions or
negotiations regarding or furnish to any person any information with respect to
Signature's business, properties or assets, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes, or may
reasonably be expected to lead to, any Takeover Proposal; provided, however,
that if prior to the Signature Stockholder Meeting (as defined in Section 4.14),
Signature shall have received an unsolicited written Takeover Proposal, which
offer appears in the good faith determination of the Signature Board of
Directors, based on the advice of Signature's outside counsel and financial
advisors, to be a "Superior Proposal" (as defined below) and which Signature's
Board of Directors is legally obligated to consider by principles of fiduciary
duty to stockholders under applicable law, the foregoing restrictions shall not
apply to such proposal. For all purposes of this Agreement, "Takeover Proposal"
means any proposal, other than a proposal by Xxxxxxx or an affiliate of Xxxxxxx,
for a merger, consolidation, share exchange, business combination or other
similar transaction involving Signature or any of its Significant Subsidiaries
or any proposal or offer (including, without limitation, any proposal or offer
to stockholders of Signature), other than a proposal or offer by Xxxxxxx or an
affiliate of Xxxxxxx (i) to acquire in any manner, directly or indirectly, an
equity interest in or any voting securities of, Signature or any of its
Significant Subsidiaries or (ii) to acquire or lease in any manner, directly or
indirectly, any property, business or other assets that, individually or in the
aggregate, would satisfy any of the tests for a "significant subsidiary" within
the meaning of Rule 1-02 of Regulation S-X of the SEC. Signature immediately
shall cease and cause to be terminated all existing discussions or negotiations
with any persons conducted heretofore with respect to, or that could reasonably
be expected to lead to, any Takeover Proposal. As used herein, a "Significant
Subsidiary" means any Subsidiary that would constitute a "significant
subsidiary" within the meaning of Rule 1-02 of Regulation S-X of the SEC.
(b) Neither the Board of Directors of Signature nor any
committee thereof shall (i) withdraw or modify, or propose to withdraw or
modify, in a manner adverse to Xxxxxxx, the approval or recommendation by the
Board of Directors of Signature or any such committee of this Agreement, any of
the transactions contemplated by this Agreement, or the Merger, (ii) approve or
recommend, or propose to approve or recommend, any Takeover Proposal, or (iii)
take action to render the Rights inapplicable to any Takeover Proposal.
Notwithstanding the foregoing, the Board of Directors of Signature, to the
extent required by the fiduciary obligations thereof, as determined by the
advice of Xxxxxxxxx, Daily, Xxxxxxx & XxXxx or Bass, Xxxxx & Xxxx, PLC, or other
legal counsel to Signature reasonably acceptable to Xxxxxxx, may approve or
recommend (and, in
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connection therewith, withdraw or modify its approval or recommendation of this
Agreement or the Merger) a Superior Proposal. If, prior to the approval of this
Agreement and the transactions contemplated hereby by the stockholders of
Signature, Signature's Board of Directors determines in good faith, after it has
received a Superior Proposal (as defined below) and after it has received advice
from such outside counsel that the failure to do so would result in a reasonable
possibility that Signature's Board of Directors would breach its fiduciary duty
under applicable law, Signature shall (i) notify Xxxxxxx in writing that it
intends to accept a Superior Proposal and enter into such a binding, written
agreement with respect to the transaction contemplated thereby, and (ii) attach
the most current version of such agreement or a full and complete summary of the
terms thereof to such notice. Xxxxxxx shall have the opportunity, within five
calendar days of receipt of Signature's written notice, to make an offer that
the Board of Directors of Signature determines, in good faith after consultation
with its financial advisors and outside counsel, is at least as favorable, from
a financial point of view, to the stockholders of Signature as the Superior
Proposal. Signature agrees that it will not enter into a binding agreement
referred to in clause (i) above until at least the sixth calendar day after it
has provided the notice to Xxxxxxx required thereby and to notify Xxxxxxx
promptly if its intention to enter into a written agreement referred to in its
notification shall change at any time after giving such notification. For all
purposes of this Agreement, "Superior Proposal" means a bona fide written
proposal made by a third party to acquire Signature pursuant to a tender or
exchange offer, a merger, a share exchange, a sale of all or substantially all
its assets or otherwise on terms which, the Board of Directors of Signature
determines, based on the advice of McDonald & Company and in light of all
relevant circumstances (including the apparent likelihood of such third party
being able to obtain any financing that it may require to consummate the
proposed transaction), are financially superior to those provided for in the
Merger. If, to the extent permitted by this Section 4.3(b), the Board of
Directors of Signature approves or recommends a Superior Proposal, Signature may
take appropriate action to render the Rights inapplicable to such Superior
Proposal.
(c) Each of Xxxx X. Xxxxxxxxx, Xxxx X. Xxxxxx, Xx X. Xxxxxx,
Xxxxx X. Xxxxxx, Xxxxxxx X. Xxxx, Xxxxxx X. Xxxxxx, Xxxxxxx X. Xxxxxxx and
Xxxxxxx X. Xxxxxx, by such individual's execution of this Agreement, agrees,
solely in his capacity as a stockholder of Signature, to vote all of the shares
of capital stock of Signature owned by such individual at the date of this
Agreement that have the power to vote in favor of the Merger; provided, however,
that such individuals shall be free to vote their shares in their sole
discretion if the Board of Directors of Signature terminates this Agreement in
accordance with Section 9.01(f) hereof. Each of such stockholders represents,
covenants and agrees for the benefit of Xxxxxxx that, until the earlier of the
Effective Time of the Merger or the termination of this Agreement pursuant to
Article IX hereof and subject to the foregoing provisions, he:
(1) has the power, authority and legal capacity to execute
and deliver this Agreement (only as applicable to this Section 4.03(c))
and perform his obligations under this Agreement;
(2) is the sole beneficial owner of at least that number of
shares of Signature Common Stock and/or Signature Preferred Stock
indicated as owned by him in the Signature
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Proxy Statement used in connection with the solicitation of proxies for
the Signature Annual Meeting of Stockholders held in 1998 and has the
full and exclusive authority to enter into this Agreement and to vote
his shares as contemplated hereby;
(3) will not sell, transfer, pledge, hypothecate, encumber,
assign, tender or otherwise dispose of, or enter into any contract,
option or other arrangement or understanding with respect to the sale,
transfer, pledge, hypothecation, encumbrance, assignment, tender or
other disposition of any of the Signature Common Stock or Signature
Preferred Stock owned by him;
(4) will not, other than as expressly contemplated by this
Agreement, grant any powers of attorney or proxies or consents in
respect of any of the Signature Common Stock or Signature Preferred
Stock owned by him, deposit any of the Signature Common Stock or
Signature Preferred Stock owned by him into a voting trust, enter into
a voting agreement with respect to any of the Signature Common Stock or
Signature Preferred Stock owned by him or otherwise restrict his
ability to freely exercise all voting rights with respect to any of the
Signature Common Stock or Signature Preferred Stock owned by him;
(5) will not (i) cause Signature to take any action or (ii)
consent to Signature taking any action prohibited by the Agreement;
(6) will use his reasonable efforts to take, or cause to be
taken, all action, and do, or cause to be done, all things necessary or
advisable in order to consummate and make effective the transactions
contemplated by this Agreement; and
(7) acknowledges that his agreement and commitment contained
in this Section 4.03(c) are an integral part of the transactions
contemplated by this Agreement, that damages may be an inadequate
remedy for any breach by it of the provisions of this Agreement and
that the obligations of the parties hereunder shall be specifically
enforceable.
(d) Signature shall promptly (but in any event within one day)
advise Xxxxxxx orally and in writing of any Takeover Proposal or any inquiry
regarding the making of a Takeover Proposal, including any request for
information, the material terms and conditions of such request, Takeover
Proposal or inquiry, and the identity of the Person making such request,
Takeover Proposal or inquiry. Signature will, to the extent reasonably
practicable, keep Xxxxxxx fully informed of the status and details (including
amendments or proposed amendments) of any such request, Takeover Proposal or
inquiry.
(e) Except to the extent reasonably required in connection
with Signature's obligations under this Agreement, during the period from the
date of this Agreement through the Effective Time of the Merger, Signature shall
not terminate, amend, modify or waive any provision of any confidentiality or
standstill or similar agreement to which Signature or any of its Subsidiaries is
a party (other than any involving Xxxxxxx) unless, in the written opinion of
counsel to Signature,
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failure to take such action would violate the fiduciary obligations of the Board
of Directors of Signature, under applicable law. During such period, Signature
agrees to enforce, to the fullest extent permitted under applicable law, the
provisions of any such agreements, including, but not limited to, obtaining
injunctions to prevent any breaches of such agreements and to enforce
specifically the terms and provisions thereof in any court of the United States
or any state thereof having jurisdiction.
(f) Nothing contained in this Section 4.03 shall prohibit
Signature from taking and disclosing to its stockholders a position contemplated
by Rule 14e-2 promulgated under the 1934 Act or from making any disclosure to
Signature's stockholders which, in the good faith judgment of the Board of
Directors of Signature based on the written opinion of outside counsel, is
required under applicable law.
4.04. Conduct of Business. Signature will conduct its business
only in the ordinary course and consistent with past practice and custom.
Without limiting the generality of the foregoing:
(a) Signature will use all reasonable efforts to (i)
preserve intact Signature's present business organization, reputation and
customer relations, (ii) preserve its relationships with customers, suppliers,
licensors, lessors and others having business dealings with it to the end that
its goodwill and ongoing business shall not be impaired to any material extent
at the Effective Time of the Merger, (iii) keep available the services of
Signature's present officers, employees, agents, consultants and other similar
representatives, (iv) maintain all licenses, qualifications and authorizations
of Signature to do business in each jurisdiction in which it is so licensed,
qualified or authorized, (v) maintain all assets and properties of Signature in
good working order and condition, ordinary wear and tear excepted and (vi)
continue all current marketing activities relating to the business, operations
or affairs of Signature.
(b) Signature will cause the books and records of Signature
to be maintained in the usual manner and consistent with past practice and
custom and will not permit a material change in any operational, financial
reporting or accounting practice or policy of Signature or in any assumption
underlying such a practice or policy, or in any method of calculating any bad
debt, contingency or other reserve for financial reporting purposes or for other
accounting purposes.
(c) Signature will (i) prepare properly and file duly,
validly and timely all reports and all Tax Returns required to be filed with any
governmental or regulatory authorities with respect to the business, operations
or affairs of such corporation, and (ii) pay duly and fully all Taxes indicated
by such Tax Returns or otherwise levied or assessed upon such corporation or any
of its assets and properties, and withhold or collect and pay to the proper
Taxing authorities or hold in separate bank accounts for such payment all Taxes
that such corporation is required to so withhold or collect and pay, unless such
Taxes are being contested in good faith and, if appropriate, reasonable reserves
therefor have been established and reflected in the books and records of such
corporation and in accordance with generally accepted accounting principles
consistently applied.
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(d) Signature will use all reasonable efforts to maintain in
full force and effect until the Effective Time of the Merger substantially the
same levels of coverage as the insurance afforded under the contracts in force
as of the date of this Agreement.
(e) Signature will comply, in all material respects, with
all Legal Requirements applicable to its business, operations or affairs.
(f) Except in the ordinary course of business consistent
with past practice and custom, Signature will not, without the prior written
consent of Xxxxxxx, (i) enter into or execute any contract, agreement, lease,
indenture, note or other commitment; (ii) hire, terminate, promote, transfer,
change the salary or other form of compensation of, grant any leave of absence
to or change any policies of Signature or employment arrangements or agreements
Signature may have with respect to any officers, directors or employees of
Signature whose compensation from Signature in the last preceding year (12
months) exceeded $50,000 or increase the annual level of compensation of any
other officer, director or employee of Signature; (iii) not create or establish
any employee plans, policies or programs, except as required by law; (iv) amend,
cancel, modify, alter or otherwise change the terms of any of its leases or
other material agreements, arrangements, commitments, or other rights or
obligations to which it may be entitled or subject; or (v) waive or relinquish
any of its rights, claims or authority, or give any material consents to action
or inaction, under any of the agreements, arrangements, commitments, leases or
other bases of its rights or obligations.
Notwithstanding anything herein to the contrary, without the
prior written consent of Xxxxxxx or except as otherwise required hereby,
Signature will not (i) enter into any real property lease or, directly or
indirectly, terminate, modify, assign, release, relinquish or waive any material
right of Signature under any existing real property lease or increase its
obligations under real property leases, (ii) enter into any long-term (in excess
of one year) material contract or other commitment involving an expenditure,
commitment or obligation of Signature in excess of $50,000, (iii) make or agree
to make any new capital expenditure or expenditures which, individually, is in
excess of $50,000 or which, in the aggregate, are in excess of $250,000 other
than refurbishment expenses contemplated by Schedule 2.04; (iv) pay, discharge
or satisfy any claims, liabilities or obligations (absolute, accrued, asserted
or unasserted, contingent or otherwise), other than the payment, discharge or
satisfaction, in the ordinary course of business (a) consistent with past
practice, of liabilities reflected or reserved against in, or contemplated by
the most recent consolidated financial statements (or the notes thereto) of
Signature included in the Signature SEC Documents, or (b) incurred in the
ordinary course of business consistent with past practice; (v) settle or
compromise any material federal, state, local or foreign Tax liability; or (vi)
authorize, recommend, propose or announce an intention to do any of the
foregoing, or enter into any contract, agreement, commitment or arrangement to
do any of the foregoing.
4.05. No Charter Amendments. Signature will not amend or
propose to amend its Articles of Incorporation, as amended, Bylaws or other
charter or organizational documents or take any action with respect to any such
amendment.
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4.06. No Issuance or Disposition of Securities. Signature will
not (i) authorize or issue any shares of such corporation's capital stock or
other equity securities or enter into any contract granting any option, warrant
or right calling for the authorization or issuance of any such shares or other
equity securities except pursuant to the exercise of options, warrants or other
rights which are outstanding on the date of the Agreement and disclosed herein
or the Schedules hereto, (ii) create or issue any securities directly or
indirectly convertible into or exchangeable for any such shares or other equity
securities, (iii) create or issue any options, warrants or rights to purchase
any such convertible securities, (iv) pledge, assign, transfer or otherwise
dispose of or encumber any shares of, or any options, warrants or rights to
purchase any shares of, any equity securities of Signature, or (v) split,
combine or reclassify any equity securities of Signature.
4.07. No Dividends. Signature will not declare, set aside or
pay any dividend or other distribution in respect of its capital stock or other
equity securities, or directly or indirectly redeem, purchase or otherwise
acquire any shares of Signature's capital stock or other equity securities, or
any interest in or right to acquire any such shares or other equity securities
(other than (i) dividends declared and paid on the Signature Preferred Stock in
the ordinary course of business and customary with past practice, and dividends
and other distributions by direct or indirect wholly owned Subsidiaries, and
(ii) extraordinary dividends declared and paid such that, in the opinion of
Signature's independent accountants, the distribution is necessary to eliminate
all current and anticipated earnings and profits of Signature prior to the
Effective Time of the Merger so that Xxxxxxx may continue to qualify as a real
estate investment trust under the Code from and after the Effective Time of the
Merger).
4.08. No Disposal of Property. Except as expressly provided in
this Agreement and in a manner consistent with Section 4.03 hereof, Signature
will not (i) dispose of or assign any of its assets or properties or permit any
of its assets and properties to be subjected to any liens, easements,
rights-of-way or other encumbrances except to the extent any such disposition or
any such lien, easement, right-of-way or other encumbrance is made or incurred
in the ordinary course of the business consistent with past practice and custom
and is not material to the business, operations or assets of Signature or any of
its Subsidiaries, or (ii) sell any material part of its operations or business
to any third party.
4.09. No Acquisitions. Signature will not (i) merge,
consolidate or otherwise combine or agree to merge, consolidate or otherwise
combine with any other person, (ii) acquire all or substantially all, or a
material portion of all, the assets, capital stock or other equity securities of
any other person, or any business division of any other person or (iii)
otherwise acquire control or ownership of any other person.
4.10. No Breach or Default. Signature will not violate, breach
or default, or take or fail to take any action that (with or without notice or
lapse of time or both) would constitute a violation, breach or default under,
any term or provision of any contract to which Signature is a party or by which
any of its assets are or may be bound and as to which such violation, breach or
default, individually or in the aggregate, has or reasonably may be expected to
have a Material Adverse
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Effect on the validity or enforceability against Signature of this Agreement or
on the business, properties, financial condition or results of operations of
Signature.
4.11. No Indebtedness. Except in the ordinary course of
business consistent with past practice and custom, Signature will not create,
incur, assume, guarantee or otherwise become liable for (i) any debt, obligation
or other liability for money borrowed, or (ii) any other debt, obligation or
other liability. Signature will not cancel, pay, agree to cancel or pay, or
otherwise provide for a complete or partial discharge in advance of a scheduled
payment date with respect to, any debt, obligation or other liability, or waive,
cancel or compromise any right to receive any direct or indirect payment or
other benefit under any debt, obligation or other liability owing to such
corporation, except in the ordinary course of business consistent with past
practice and custom.
4.12. Payment of Liabilities. Signature will not delay or
postpone beyond normal past practice and custom the payment of any material
account payable or other debt, obligation or other liability.
4.13. Employee Matters.
(a) Continued Administration. Between the date of this
Agreement and the Effective Time of the Merger, Signature agrees to employ its
reasonable efforts to administer each and every employee benefit plan described
in Section 2.10 in all material respects, or cause them to be so administered,
in accordance with the provisions of the Code, ERISA, and any other applicable
law.
(b) No Changes to Plans: Funding. Except as specifically
provided in this Agreement, between the date of this Agreement and the Effective
Time of the Merger, Signature agrees not to amend or terminate, partially or
completely, any employee benefit plan described in Section 2.10 without the
prior written consent of Xxxxxxx.
(c) Claims or Litigation. Signature agrees to notify
Xxxxxxx in writing of receipt of any notice of audit, investigation or
administrative proceeding by the IRS, Department of Labor, Pension Benefit
Guaranty Corporation ("PBGC") or other Governmental Entity, involving any
employee benefit plan described in Section 2.10, or of any action or claim by
any person under any employee benefit plan described in Section 2.10 other than
ordinary and usual claims for benefits by participants or beneficiaries, and
promptly furnish to Xxxxxxx a copy of any such written notice.
(d) Other Employee Benefit Plans or Arrangements. Signature
agrees that the coverage of any employee of Signature who remains an employee of
Signature from and after the Effective Time of the Merger under any Employee
Welfare Benefit Plan or any other employee benefit plan described in Section
2.10 may be terminated or continued for the benefit of such employees on or
after the Effective Time of the Merger at the sole discretion of Xxxxxxx. No
such employee of Signature shall be entitled to benefits under any such employee
benefit plan from and after the Effective Time of the Merger except to the
extent that either (i) such benefits are expressly
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provided under the terms of said plan such as the continuation of benefits or
payment of earned but unpaid benefits in the event of termination of coverage or
(ii) Xxxxxxx and/or Signature elects to continue coverage from and after the
Effective Time of the Merger under a particular plan.
(e) Employee Benefit Plans. Prior to the Closing, Signature
shall cause each of the plans listed on Schedule 2.10, if and to the extent that
Xxxxxxx and Signature have mutually agreed, to be terminated (i) in a manner
such that Signature has no further obligation with respect thereto, (ii) except
as otherwise mtually agreed, at no cost to Signature except for benefits earned
but unpaid prior to the termination and (iii) without any payments made
thereunder subject to the golden parachute provisions of Section 280G or Section
4999 of the Code.
4.14. Stockholders Meeting. Signature will promptly duly call
a meeting of all of the holders of Signature Common Stock and Signature
Preferred Stock (the "Signature Stockholder Meeting") entitled to vote on the
Merger Agreement to be held as soon as practicable following the effectiveness
under the 1933 Act of the Registration Statement, as hereinafter defined, but in
any event not more than forty days after such effectiveness, for the purpose of
voting upon and approving the Merger Agreement and the transactions contemplated
thereby. Signature will, through its Board of Directors, recommend to its
stockholders approval of such matters and shall not withdraw such
recommendation, except to the extent that the Board of Directors of Signature
shall have withdrawn or modified its approval or recommendation of this
Agreement of the Merger as permitted by Section 4.03(b). Without limiting the
generality of the foregoing, Signature agrees that its obligations pursuant to
the first sentence of this Section 4.14 shall not be affected by the
commencement, public proposal, public disclosure or communication to Signature
of any Takeover Proposal. Signature and Xxxxxxx shall coordinate and cooperate
with respect to the timing of such meeting.
4.15. Notice and Cure. Signature will notify Xxxxxxx promptly
in writing of, and contemporaneously will provide Xxxxxxx with true, complete
and correct copies of any and all information or documents relating to, and will
use all reasonable efforts to cure before the Effective Time of the Merger, any
event, transaction or circumstance occurring after the date of this Agreement
that results in or will result in any covenant or agreement of Signature under
this Agreement to be breached, or that renders or will render untrue any
representation or warranty of Signature contained in this Agreement as if the
same were made on or as of the date of such event, transaction or circumstance.
Signature also will use all reasonable efforts to cure, at the earliest
practicable date and before the Effective Time of the Merger, any violation or
breach of any representation, warranty, covenant or agreement made by Signature
in this Agreement, whether occurring or arising before or after the date of this
Agreement.
4.16. Cooperation of Management Pending Merger. Signature
covenants and agrees that between the date hereof and the Effective Time of the
Merger, Signature's management will cooperate with Xxxxxxx and endeavor to help
persons designated by Xxxxxxx to become familiar with Signature's business, its
operations, properties, business prospects, needs, employees and any other
matters pertaining to Signature's business and operations and to begin
implementation of the transitional plan to be developed by Xxxxxxx and
Signature.
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4.17. Furnish Information for Xxxxxxx Statements. Signature
will furnish Xxxxxxx all the information concerning Signature required for
inclusion in the Registration Statement, in applications required under the Blue
Sky laws of various states, and in listing applications to be filed with the
Nasdaq Stock Market respecting the shares of Xxxxxxx Common Stock and Xxxxxxx
Series S Preferred Stock to be delivered pursuant to this Agreement, or in any
statement or application made by Xxxxxxx to any governmental body in connection
with the transactions contemplated in this Agreement. Signature will promptly
notify Xxxxxxx in writing upon the occurrence of any material event which
warrants the preparation and filing of any amendment of or supplement to any
such registration statement, application or statement.
4.18. Affiliates Undertakings. Signature shall use its best
efforts to obtain written undertakings, in form and substance satisfactory to
Xxxxxxx, signed by each person who in the opinion of counsel for Xxxxxxx is at
the Effective Time of the Merger, or was at the time of the Signature
Stockholder Meeting, an "affiliate" of Signature within the meaning of Rule 145
of the Commission under the 1933 Act, to the effect that such person will not
offer or sell or otherwise distribute the shares of Xxxxxxx Common Stock to be
received by him or her upon consummation of the Merger, provided that such
undertaking shall not extend to such shares as may be sold (i) in the manner and
to the extent permitted by paragraph (d) of said Rule 145, as it may be amended
form time to time, (ii) pursuant to an offering which has been registered under
the 1933 Act and any applicable state securities laws, or (iii) in a manner
which is exempt from the registration requirements of the 1933 Act and any
applicable state securities laws. In addition, each of the persons named in
Section 7.04 will agree to not sell any of the shares of Xxxxxxx Common Stock or
Xxxxxxx Series S Preferred Stock received by him in connection with the
consummation of the Merger for a period of one year from the Effective Time of
the Merger without the prior consent of Xxxxxxx.
4.19. Filings; Other Actions. Signature and Xxxxxxx shall
promptly prepare and file with the SEC the Proxy Statement and Signature will
cooperate with Xxxxxxx in the preparation and filing with the SEC the
Registration Statement, in which the Proxy Statement will be included as a
prospectus. Signature shall furnish all information concerning Signature and the
holders of Signature Common Stock and Signature Preferred Stock as may be
reasonably requested in connection with the actions of Xxxxxxx required to be
taken under any applicable state securities laws in connection with the issuance
of the Xxxxxxx Common stock and Xxxxxxx Series S Preferred Stock in the Merger,
including information relating to the number of shares of Xxxxxxx Common Stock
and Xxxxxxx Series S Preferred Stock required to be registered.
4.20. Comfort Letter. Signature shall use all reasonable
efforts to cause to be delivered to Xxxxxxx "comfort" letters of KPMG Peat
Marwick, Signature's independent public accountants, as contemplated by Section
7.09 of this Agreement.
4.21. REIT-Related Transactions. Signature shall take such
further action and engage in such further transactions as determined by Xxxxxxx,
based on the advice of its attorneys and/or independent accountants, to be
reasonably necessary to preserve Xxxxxxx'x status as a "real
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estate investment trust" under the Code, so long as such actions have no
material adverse economic effect on Signature and its stockholders in the event
that the Merger is not consummated (for these purposes, the tax consequences to
any Signature stockholders resulting from a dividend or distribution by
Signature to them shall not be considered a material economic effect on them).
Without limiting the generality or breadth of the foregoing, it is agreed that
not later than immediately prior to the Effective Time of the Merger, (i) each
Signature Subsidiary will be liquidated and dissolved; (ii) Signature will enter
into that certain Assignment and Assumption Agreement substantially in the form
of Exhibit D hereto with Xxxxxxx Hospitality, LLC whereby not later than
immediately prior to the Effective Date of the Merger, Signature will sell,
assign and transfer to Xxxxxxx Hospitality, LLC those operating assets and
operations more specifically described in Exhibit E hereto and all of
Signature's rights and interests in and to the trade name or trademark
"Signature Inns"; and (iii) prior to the Effective Time of the Merger, Signature
will declare and pay an extraordinary dividend to the holders of the outstanding
Signature Common Stock in an aggregate amount not less than the amount of the
undistributed Earnings and Profits, if any, that the independent accountants of
Signature estimate that Signature would have at the Effective Time of the Merger
if such dividend were not declared and paid, it being understood and agreed that
the amount of any such dividend per share of Signature Common Stock will reduce
the amount of the cash payment per share due to the holders of the Signature
Common Stock by virtue of the consummation of the Merger as provided in Section
1.04(a) hereof. In addition, Signature and the Signature Partnership will enter
into amendments of the management and franchise agreements between such parties
which will result in the cancellation and termination of those agreements in
conjunction with the consummation of the Merger and will provide for the
execution of a lease with Xxxxxxx Hospitality LLC covering the Signature
Property owned by the Signature Partnership immediately following the Effective
Time of the Merger. Also in connection with the execution of the lease between
the Signature Partnership and Xxxxxxx Hospitality, LLC, the dissolution of the
general partner of the Signature Partnership and the substitution of Signature
as the general partner in connection therewith and the amendments of the said
management and franchise agreements Signature will use its best efforts to
obtain any limited partner approval of such actions that may be required under
the terms of the certificate or agreement of limited partnership and Indiana
Law.
4.22 Signature Property Restructuring. At the request of
Xxxxxxx, shortly before the Effective Time of the Merger, Signature will create
one or more limited liability companies and/or limited partnerships, as Xxxxxxx
may specify, which, at such time will be wholly owned by Signature, and transfer
the Signature Properties thereto.
ARTICLE V
COVENANTS OF XXXXXXX
Xxxxxxx covenants and agrees with Signature that, at all times
prior to the Effective Time of the Merger, Xxxxxxx at its expense will comply
with all covenants and provisions of this Article V, except to the extent
Signature may otherwise consent in writing or to the extent otherwise expressly
required or permitted by this Agreement.
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5.01. Approvals. Xxxxxxx will (i) take all reasonable steps
and use all reasonable efforts necessary or desirable to recommend the granting
of and to obtain, as promptly as practicable, all approvals, authorizations and
clearances of Governmental Entities and of third parties, required of Xxxxxxx to
consummate the transactions contemplated hereby, (ii) provide such other
information and communications to such Governmental Entities as Signature or
such authorities may reasonably request, and (iii) cooperate with Signature in
obtaining, as promptly as practicable, all approvals, authorizations and
clearances of Governmental Entities required of Signature to consummate the
transactions contemplated hereby.
5.02. Investigation by Signature. Xxxxxxx will provide
Signature, its counsel, accountants, actuaries and other representatives with
reasonable access, upon prior notice and during normal business hours, to all
facilities, officers, directors, employees, agents, accountants, actuaries,
assets, properties, books and records of Xxxxxxx, and will furnish Signature and
such other persons during such period with all such other information and data
concerning the business, operations and affairs of Xxxxxxx for the transactions
contemplated hereby as Signature or any of such other persons reasonably may
request.
5.03. Conduct of Business. Xxxxxxx agrees that during the
period from the date of this Agreement to the Effective Time of the Merger,
except as expressly contemplated by this Agreement or to the extent that
Signature may otherwise consent in writing, Xxxxxxx will not engage in any
activity or suffer any event, which, if engaged in or suffered prior to the date
of this Agreement, would have resulted in a misrepresentation under Article III.
5.04. Stockholders' Meeting. Xxxxxxx will promptly call a
meeting of all of the holders of Xxxxxxx Common Stock of Xxxxxxx (the "Xxxxxxx
Stockholder Meeting") entitled to vote on the Merger Agreement to be held as
soon as practicable following the effectiveness under the 1933 Act of the
Registration Statement, as hereinafter defined, but in any event not more than
forty days after such effectiveness, for the purpose of voting upon and
approving the Merger Agreement and the transactions contemplated thereby and
hereby. Xxxxxxx will, through its Board of Directors, recommend to its
stockholders approval of such matters. Signature and Xxxxxxx shall coordinate
and cooperate with respect to the timing of such meeting.
5.05. Blue Sky Permits. Xxxxxxx will use its reasonable
efforts to obtain all necessary Blue Sky permits and approvals required to carry
out the transactions contemplated by this Agreement; provided, however, that
notwithstanding anything herein to the contrary, Xxxxxxx shall not be required
to qualify to do business as a foreign corporation in any jurisdiction in which
it is not otherwise required to be so qualified.
5.06. Registration Statement. Xxxxxxx will file with the
Commission the Registration Statement with respect to the shares of Xxxxxxx
Common Stock and Xxxxxxx Series S Preferred Stock to be issued pursuant to this
Agreement, provided that it shall have received from Signature all information
with respect to Signature required to be included therein, and will use its best
efforts to effect the registration of such shares under the 1933 Act. If at any
time after the
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effectiveness of the Registration Statement and before the Effective Time of the
Merger, an event occurs which, in the opinion of counsel to Xxxxxxx,
necessitates the resolicitation of proxies for the Xxxxxxx Stockholder Meeting
or the Signature Stockholder Meeting, Xxxxxxx will promptly prepare and file a
post-effective amendment to the Registration Statement as necessary to effect
such resolicitation.
5.07. Issuance of Xxxxxxx Common Stock and Xxxxxxx Series S
Preferred Stock. Prior to the Effective Time of the Merger, Xxxxxxx will take
all such reasonable actions as may be required or appropriate to approve the
Articles of Amendment of its Articles of Incorporation in the form of Exhibit
A-1 hereto, thereby creating, designating and authorizing the issuance of the
Xxxxxxx Series S Preferred Stock to be issued in connection with the
consummation of the Merger. Xxxxxxx will issue as of the Effective Time of the
Merger the shares of Xxxxxxx Common Stock and Xxxxxxx Series S Preferred Stock
required to be paid and delivered to the stockholders of Signature upon
conversion of the Signature Common Stock and Signature Preferred Stock pursuant
to the terms of the Merger Agreement.
5.08. Notice and Cure. Xxxxxxx will notify Signature promptly
in writing of, and contemporaneously will provide Signature with true, complete
and correct copies of any and all information or documents relating to, and will
use all reasonable efforts to cure prior to the Effective Time of the Merger,
any event, transaction or circumstance occurring after the date of this
Agreement that results in or will result in any covenant or agreement of Xxxxxxx
under this Agreement to be breached, or that renders or will render untrue any
representation or warranty of Xxxxxxx contained in this Agreement as if the same
were made on or as of the date of such event, transaction or circumstance.
Xxxxxxx also will use all reasonable efforts to cure, at the earliest
practicable date and before the Effective Time of the Merger, any violation or
breach of any representation, warranty, covenant or agreement made by it in this
Agreement, whether occurring or arising before or after the date of this
Agreement.
5.09. Nasdaq National Market Listing. Xxxxxxx will use its
best efforts to have the shares of Xxxxxxx Common Stock and Xxxxxxx Series S
Preferred Stock to be issued in connection with the transactions contemplated by
this Agreement duly listed, subject to official notice of issuance, on the
Nasdaq National Market.
5.10. Tax Covenants. For one year following the Effective Time
of the Merger, Xxxxxxx will not take or fail to take, nor will it permit the
Surviving Corporation to take or fail to take, any action that would cause the
Merger not to constitute a "reorganization" within the meaning of Sections 368
of the Code.
5.11. No Breach or Default. Xxxxxxx will not violate, breach
or default, or take or fail to take any action that (with or without notice or
lapse of time or both) would constitute a violation, breach or default under,
any term or provision of any contract to which Xxxxxxx is a party or by which
any of its assets are or may be bound and as to which such violation, breach or
default, individually or in the aggregate, has or reasonably may be expected to
have a Material Adverse
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Effect on the validity or enforceability against Xxxxxxx of this Agreement or on
the business, properties, financial condition or results of operations of
Xxxxxxx and its Subsidiaries taken as a whole.
5.12. Notice and Cure. Xxxxxxx will notify Signature promptly
in writing of, and contemporaneously will provide Signature with true, complete
and correct copies of any and all information or documents relating to, and will
use all reasonable efforts to cure before the Effective Time of the Merger, any
event, transaction or circumstance that results in or will result in any
covenant or agreement of Xxxxxxx under this Agreement to be breached, or that
renders or will render untrue any representation or warranty of Xxxxxxx
contained in this Agreement as if the same were made on or as of the date of
such event, transaction or circumstance. Xxxxxxx will use all reasonable efforts
to cure, at the earliest practicable date and prior to the Effective Time of the
Merger, any violation or breach of any representation, warranty, covenant or
agreement made by Xxxxxxx in this Agreement, whether occurring or arising before
or after the date of this Agreement.
5.13. Cooperation of Management Pending Merger. Xxxxxxx
covenants and agrees that between the date hereof and the Effective Time of the
Merger, Xxxxxxx'x management will cooperate with Signature and endeavor to help
persons designated by Signature to become familiar with Xxxxxxx'x business, its
operations, properties, business prospects, needs, employees and any other
matters pertaining to Xxxxxxx'x business and operations and to begin
implementation of the transitional plan to be developed by Xxxxxxx and
Signature.
5.14. Furnish Information for Signature Proxy Statements.
Xxxxxxx will furnish Signature all the information concerning Xxxxxxx required
for inclusion in the Signature Proxy Statement to be prepared and delivered to
the Signature stockholders in connection with the Signature Stockholders
Meeting, or in any statement or application made by Signature to any
Governmental Entity in connection with the transactions contemplated in this
Agreement.
5.15. Comfort Letters. Xxxxxxx shall use all reasonable
efforts to cause to be delivered to Signature "comfort" letters of Ernst &
Young, LLP, Xxxxxxx'x independent public accountants, as contemplated by Section
8.09 of this Agreement.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS
OF XXXXXXX AND SIGNATURE
Notwithstanding any other provision of this Agreement, the
obligation of each of Xxxxxxx and Signature to consummate the transactions
contemplated hereby shall be subject to the fulfillment, prior to or at the
Effective Time of the Merger, of each of the following conditions precedent, any
one of which may be waived by such entity:
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6.01. Consents and Approvals. All approvals of, and consents
by, all Governmental Entities and other persons, and all permits by and all
filings with and submissions to all such Governmental Entities and other persons
as may be required for the consummation of the transactions contemplated by this
Agreement, shall have been obtained or made and reasonably satisfactory evidence
thereof shall have been received.
6.02. Registration Statement. The Registration Statement shall
have become effective in accordance with the provisions of the 1933 Act. No stop
order suspending the effectiveness of the Registration Statement shall have been
issued by the SEC and no proceedings for that purposes shall have been initiated
or, to the Knowledge of Xxxxxxx or Signature, threatened by the SEC. All
necessary state securities or blue sky authorizations shall have been received.
6.03. Stockholder Approval. At or prior to the Effective Time
of the Merger, the Merger Agreement shall have been duly approved by the
requisite vote of holders of the Signature Common Stock, Signature Preferred
Stock and Xxxxxxx Common Stock in accordance with applicable law and the
Restated Articles of Incorporation, as amended, and Bylaws of Signature and
Xxxxxxx, respectively.
6.04. Nasdaq National Market Listings. The shares of Xxxxxxx
Common Stock and the Xxxxxxx Series S Preferred Stock issuable in the Merger
shall have been approved for listing on the Nasdaq National Market.
6.05. Certain Actions, etc. There shall not have been
instituted and be continuing or threatened against Xxxxxxx and Signature or any
of their respective directors or officers any action, suit or proceeding by or
before any Governmental Entity that would (i) restrain, prohibit or invalidate,
or result in the payment of substantial damages in respect of, the Merger or any
other transaction contemplated by this Agreement, (ii) impose or confirm
material limitations on the ability of Xxxxxxx effectively to exercise full
rights of ownership of the shares of capital stock of Signature or (iii)
prohibit Xxxxxxx'x or Signature's ownership or operation of all or a material
portion of Xxxxxxx'x or Signature's business, properties or assets, or compel
Xxxxxxx to dispose of or hold separate all or a material portion of Xxxxxxx'x or
Signature's business, properties or assets.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF XXXXXXX
Notwithstanding any other provision of this Agreement, the
obligation of Xxxxxxx to consummate the transactions contemplated hereby shall
be subject to the fulfillment, prior to or at the Effective Time of the Merger,
of each of the following conditions precedent, any one of which may be waived by
Xxxxxxx:
7.01. Accuracy of Representations and Warranties. The
representations and warranties of Signature set forth in Article II shall be
true and correct in all material respects as of
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the date of this Agreement and as of the Effective Time of the Merger with the
same effect as though such representations and warranties had been made at and
as of the Effective Time of the Merger except for such changes with respect
thereto which are contemplated by this Agreement or the passage of time.
7.02. Performance of Covenants, Agreements and Conditions.
Signature shall have duly performed, complied with and satisfied in all material
respects all covenants, agreements and conditions required by this Agreement to
be performed, complied with or satisfied by it at or prior to the Effective Time
of the Merger.
7.03. Officers' Certificate, Etc. Xxxxxxx shall have received
(i) a certificate, dated the date of the Effective Time of the Merger and signed
by the President and the Treasurer of Signature, to the effect set forth in
Sections 7.01, 7.02 and 7.12 and (ii) such other certificates, instruments and
documents as shall be reasonably requested by Xxxxxxx for the purpose of
verifying the accuracy of such representations and warranties and the
performance and satisfaction of such covenants and conditions.
7.04. Employment Agreements. Xxxxxxx Hospitality LLC shall
have entered into employment agreements in the forms of Exhibit C to this
Agreement with the following officers and key employees of Signature: Xxxx X.
Xxxxxxxxx. Xxxx X. Xxxxxx, Xx X. Xxxxxx, Xxxxx X. Xxxxxx and Xxxxxx X. Xxxx.
7.05. Opinion of Signature Counsel. Xxxxxxx shall have
received an opinion, dated the date of the Effective Time of the Merger, of
Xxxxxxxxx, Daily, Xxxxxxx & Xxxxx, counsel for Signature, in form and substance
satisfactory to Xxxxxxx, to the effect that:
(a) Signature is a corporation duly organized and validly
existing under Indiana Law and has all requisite corporate power and authority
to own, operate and lease its properties and assets and to carry on its business
as now being conducted;
(b) Signature is duly qualified to do business and is in
good standing as a foreign corporation in each jurisdiction set forth in
Schedule 2.01 to this Agreement;
(c) Each of the Signature Subsidiaries has been dissolved
and liquidated in accordance with Indiana Law, its articles of incorporation and
bylaws and Signature has obtained all material consents, waivers, approvals and
authority as may be reasonable required or necessary in connection therewith;
(d) The Signature Partnership is a limited partnership
validly existing and in good standing under the laws of the State of Indiana and
is duly qualified to do business and is in good standing in each jurisdiction in
which the nature of its business activities or its ownership or leasing of
property makes such qualification necessary and in which the failure to qualify
would not or could not reasonably be expected to have a Material Adverse Effect.
The Signature Partnership has full
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power and authority to own or lease and to operate and use its properties and to
carry on its business as now conducted;
(e) Signature has the requisite corporate power and authority
to enter into and perform its obligations under this Agreement; the execution
and delivery of this Agreement by Signature and the consummation by Signature of
the transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Signature; this Agreement has been duly executed
and delivered by Signature and constitutes the legal, valid and binding
obligation of Signature, enforceable against Signature in accordance with its
terms except as enforceability may be subject to (i) any applicable bankruptcy,
insolvency, reorganization or other law relating to or affecting creditors'
rights and (ii) general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law);
(f) Neither the execution and delivery of this Agreement by
Signature, nor the consummation of the transactions contemplated hereby to be
preformed by Signature, will (i) violate or conflict with any provision of the
Articles of Incorporation, as amended, or Bylaws, as currently in effect, of
Signature or any Signature Subsidiary, or (ii) violate or conflict with any
provision of any Indiana or federal law, rule or regulation, or of any order,
permit, certificate, writ, judgment, injunction, decree, determination, award or
other decision known to such counsel of any Governmental Entity, other
regulatory or self-regulatory body or association or arbitrator binding upon
Signature or any of its Subsidiaries or any of the properties of Signature or
any Signature Subsidiary, except where such violations or conflicts would not
individually or in the aggregate have a Material Adverse Effect on the business,
financial condition or properties of Signature or any Signature Subsidiary or on
the ability of Signature to consummate the transactions contemplated hereby;
(g) To such counsel's knowledge, neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby to be performed by Signature will result in a breach of or constitute a
default (or with notice or lapse of time or both result in a breach of or
constitute a default) under, or give rise to a right of termination,
cancellation, acceleration or repurchase of any obligation or a right of first
refusal with respect to any material property or asset or a loss of a material
benefit or the imposition of a material penalty under, any of the terms,
conditions or provisions of (i) any mortgage, indenture, loan or credit
agreement or any other agreement or instrument evidencing indebtedness for money
borrowed to which Signature or any Signature Subsidiary is a party or by which
Signature or any Signature Subsidiary or the properties of Signature or any
Signature Subsidiary is bound or affected, or pursuant to which Signature or any
Signature Subsidiary has guaranteed the indebtedness or preferred stock of any
person or entity, or (ii) any lease, contract or other agreement or instrument
to which Signature or any Signature Subsidiary is a party or by which Signature
or any Signature Subsidiary or any of the properties of Signature or any
Signature Subsidiary is bound or affected, except in the case of each of clauses
(i) and (ii) above, for any such breaches, defaults, rights, losses or penalties
that in the aggregate would not have any Material Adverse Effect on the
business, financial condition or
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properties of Signature or any Signature Subsidiary or on the ability of
Signature to consummate the transactions contemplated hereby;
(h) Each Dissolved Signature Partnership has been liquidated
and dissolved in compliance with the requirements of its certificate or
agreement of limited partnership and Indiana Law and neither Signature nor any
of its Subsidiaries has assumed, either contractually or by operation of law,
any liabilities, obligations or duties of the Dissolved Signature Partnership or
any of the partners thereof except for any responsibility or liability it may
have solely by reason of its position as the general partner of the Dissolved
Signature Partnership. Such counsel has no knowledge of any outstanding
indebtedness, claims, liabilities or obligations of any Dissolved Signature
Partnership to which Signature or any Signature Subsidiary may be subject and
which has not been disclosed in this Agreement or in any of the Schedules to
this Agreement.
(i) To such counsel's knowledge, except as contemplated in
this Agreement, neither the execution and delivery by Signature of this
Agreement nor the consummation of the transactions contemplated hereby to be
performed by Signature will result in, or require, the creation or imposition of
any mortgage, deed of trust, pledge, lien, security interest or other charge or
encumbrance of any nature upon or with respect to any of the properties now
owned by Signature or any Signature Subsidiary, except where such would not in
the aggregate have a Material Adverse Effect on the business, financial
condition or properties of Signature or any Signature Subsidiary or on the
ability of Signature to consummate the transactions contemplated hereby;
(j) No consent, approval, order, certificate or authorization
of, or registration, declaration or filing with, any federal or Indiana
Governmental Entity is required by or with respect to Signature or any Signature
Subsidiary in connection with the execution and delivery of this Agreement by
Signature or the consummation by Signature of the transactions contemplated
hereby, other than in connection or compliance with any applicable provisions of
Indiana Law, Georgia Law and applicable state and Federal securities laws.
(k) The authorized capital stock of Signature consists of
25,000,000 shares of Signature Common Stock and 5,000,000 shares of Signature
Preferred Stock; to the knowledge of such counsel, there are no options to
purchase any shares of capital stock of Signature outstanding other than the
employee stock options described in Schedule 1.05 hereto; and all shares of
capital stock of Signature are duly authorized, validly issued, fully paid and
nonassessable, and are not subject to or issued in violation of, any preemptive
rights.
(l) All such shares of Signature Common Stock (and the
associated Rights), when converted into the right to receive shares of Xxxxxxx
Common Stock and cash pursuant to the terms of the Merger Agreement, shall no
longer be outstanding and shall automatically be canceled and retired and shall
cease to exist and each holder of a certificate representing any such shares
(and the associated Rights) shall cease to have any rights with respect thereto
other than the right to receive the shares of Xxxxxxx Common Stock and cash
payment described in Section 1.04(a) hereof. By virtue of the Amendment to the
Rights Agreement and at the Effective Time of the Merger, the
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Rights shall be canceled and shall cease to exist by reason of the Merger and
the holders of the Signature Common Stock shall have no rights with respect
thereto upon consummation of the Merger.
(m) Such matters relating to the formation of one or more
limited liability companies or limited partnerships to hold title to the
properties in certain of the states pursuant to Section 4.22 and the
effectiveness of the transfer of title to such properties thereto as Xxxxxxx may
reasonably request.
In addition, such counsel shall state that no facts have come
to such counsel's attention which lead such counsel to believe that either the
Registration Statement or the Proxy Statement, or any amendment or supplement
thereto (other than the financial statements and other financial and statistical
information contained therein as well as expertized portions thereof, as to
which such counsel need not comment), both as of their respective issue or
effective dates and as of the Effective Time of the Merger, contained an untrue
statement of a material fact with respect to Signature or omitted to state a
material fact with respect to Signature required to be stated therein or
necessary to make the statements therein with respect to Signature not
misleading.
In rendering the above opinions, such counsel may rely on such
local or other counsel to which Xxxxxxx has reasonably agreed with respect to
matters particularly within the expertise of such counsel and/or not normally
opined on by outside counsel.
7.06. Undertakings by Signature Affiliates. Xxxxxxx shall have
received written undertakings, in form and substance satisfactory to Xxxxxxx,
signed by each person who in the opinion of counsel for Xxxxxxx is at the
Effective Time of the Merger, or was at the time of the Signature Stockholder
Meeting, an "affiliate" of Signature within the meaning of Rule 145 of the
Commission under the 1933 Act, to the effect that such person will not offer or
sell or otherwise distribute the shares of Xxxxxxx Common Stock or Xxxxxxx
Series S Preferred Stock to be received by him upon consummation of the Merger,
provided that such undertaking shall not extend to such shares as may be sold
(i) in the manner and to the extent permitted by paragraph (d) of said Rule 145,
as it may be amended from time to time, (ii) pursuant to an offering which has
been registered under the 1933 Act and any applicable state securities laws, or
(iii) in a manner which is exempt from the registration requirements of the 1933
Act and any applicable state securities laws. In addition, each of the persons
named in Section 7.04 will have agreed to not sell any of the shares of Xxxxxxx
Common Stock or Xxxxxxx Series S Preferred Stock received by him in connection
with the consummation of the Merger for a period of one year from the Effective
Time of the Merger without the prior consent of Xxxxxxx.
7.07. Rights Agreement. The Rights shall not have become
nonredeemable, exercisable, distributed or triggered pursuant to the terms of
the Rights Agreement.
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7.08. Opinions of Professionals.
(a) Xxxxxxx will have received an opinion from the
independent accountants of Signature, in form and substance reasonably
satisfactory to Xxxxxxx and its counsel, to the effect that at the Closing Date
Signature does not then have any undistributed earnings and profits as defined
under Internal Revenue Code Section 312 and the Regulations thereunder
("Earnings and Profits").
(b) On the Closing Date, the opinion of Xxxxxx & Xxxxxxx, A
Professional Corporation, counsel to Xxxxxxx, shall have been delivered to
Xxxxxxx in form and substance reasonably satisfactory to Xxxxxxx stating (i)
that Xxxxxxx is a "real estate investment trust" for federal income Tax
purposes, (ii) that consummation of the transactions contemplated by this
Agreement will not cause Xxxxxxx to cease to qualify as a "real estate
investment trust" for federal income Tax purposes, and (iii) that the Merger
will be treated for federal income Tax purposes as a reorganization within the
meaning of section 368(a) of the Code, and that each of Xxxxxxx and Signature
will be a party to that reorganization within the meaning of section 368(b) of
the Code. In rendering such opinion, such counsel shall be entitled to rely upon
the opinion rendered pursuant to paragraph (a) above as well as certificates of
officers of Signature and Xxxxxxx as to such factual matters as such counsel may
reasonably request.
7.09. Auditors' letters. Xxxxxxx shall have received from KPMG
Peat Marwick a letter dated the effective date of the Registration Statement and
a letter dated the Effective Time of the Merger, each such letter to be in form
and substance satisfactory to Xxxxxxx and to the effect that:
(a) in their opinion, the financial statements of Signature
examined by them and included in the Registration Statement comply as to form in
all material respects with the applicable accounting requirements of the 1933
Act and the published rules and regulations thereunder; and
(b) based upon limited procedures described in such letter,
certain data and information appearing in said Registration Statement and
specified in said letter has been obtained from the accounting records of
Signature is in agreement with such records or computations made therefrom.
7.10. Resignations. If requested, Xxxxxxx shall have received
the resignations of each officer and director of each of the Signature
Subsidiaries.
7.11. Fairness Opinion. Xxxxxxx shall have received a letter
from The Xxxxxxxx-Xxxxxxxx Company, L.L.C. for inclusion in the Registration
Statement in form and substance satisfactory to Signature to the effect that in
the opinion of The Xxxxxxxx-Xxxxxxxx Company, L.L.C., the terms of the Merger
contemplated by this Agreement are fair to the stockholders of Xxxxxxx from a
financial point of view.
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7.12. No Material Adverse Change. Since the date of this
Agreement, there shall have been no event or occurrence which has had or
reasonably could be expected to have a Material Adverse Effect on the business,
properties, financial condition or results of operations of Signature or on the
ability of Signature to consummate the transactions contemplated hereby.
ARTICLE VIII
CONDITIONS PRECEDENT TO OBLIGATIONS OF SIGNATURE
Notwithstanding any other provision of this Agreement, the
obligations of Signature to consummate the transactions contemplated hereunder
(other than the obligations of Signature set forth in Section 10.05) shall be
subject to the fulfillment, prior to or at the Effective Time of the Merger, of
each of the following conditions precedent, any one of which may be waived by
Signature.
8.01. Accuracy of Representations and Warranties. The
representations and warranties of Xxxxxxx set forth in Article III shall be true
and correct in all material respects as of the date of this Agreement and as of
the Effective Time of the Merger with the same effect as though such
representations and warranties had been made at and as of the Effective Time of
the Merger except for such changes with respect thereto which are contemplated
by this Agreement or the passage of time.
8.02. Performance of Covenants, Agreements and Conditions.
Xxxxxxx shall have duly performed, complied with and satisfied all covenants,
agreements and conditions required by this Agreement to be performed, complied
with or satisfied by them, at or prior to the Effective Time of the Merger.
8.03. Officers' Certificates Etc. Signature shall have
received (i) certificates, dated the date of the Effective Time of the Merger
and signed by the President or any Vice President of Xxxxxxx, to the effect set
forth in Sections 8.01, 8.02 and 8.08, insofar as such Sections relate to
Xxxxxxx and (ii) such other certificates, instruments and documents as shall be
reasonably requested by Signature for the purpose of verifying the accuracy of
such representations and warranties and the performance and satisfaction of such
covenants and conditions.
8.04. Opinion of Counsel for Xxxxxxx. Signature shall have
received an opinion, dated the date of the Effective Time of the Merger, of
Xxxxxx & Xxxxxxx, A Professional Corporation, counsel for Xxxxxxx, in form and
substance satisfactory to Signature, to the effect that:
(a) Xxxxxxx is a corporation duly organized, validly
existing and in good standing under the laws of the state of its incorporation
and Xxxxxxx has all requisite corporate power and authority to own, operate and
lease its respective properties and assets and to carry on its respective
businesses as now being conducted;
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(b) Xxxxxxx and each Xxxxxxx Subsidiary is duly qualified to
do business and is in good standing as a foreign corporation in each
jurisdiction specified in such opinion;
(c) Xxxxxxx has the requisite corporate power and authority
to enter into and perform its obligations under this Agreement; the execution
and delivery of this Agreement by Xxxxxxx and the consummation by Xxxxxxx of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Xxxxxxx; this agreement has been duly executed
and delivered by Xxxxxxx and constitutes the legal, valid and binding obligation
of Xxxxxxx, enforceable against Xxxxxxx in accordance with its terms except as
enforceability may be subject to (i) any applicable bankruptcy, insolvency,
reorganization or other law relating to or affecting creditors' rights and (ii)
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law);
(d) Neither the execution and delivery of this Agreement by
Xxxxxxx, nor the consummation of the transactions contemplated hereby to be
performed by Xxxxxxx, will (i) violate or conflict with any provision of the
Articles of Incorporation, as amended, or By-laws, as currently in effect, of
Xxxxxxx or (ii) violate or conflict with any provision of any law, rule,
regulation, order, permit, certificate, writ, judgment, injunction, decree,
determination, award or other decision of any Governmental Entity, other
regulatory or self-regulatory body or association or arbitrator binding upon
Xxxxxxx or any Xxxxxxx Subsidiary or any of their respective properties, except
where such violations or conflicts would not in the aggregate have a Material
Adverse Effect on the business, financial condition or properties of Xxxxxxx and
its Subsidiaries taken as a whole or on the ability of Xxxxxxx to consummate the
transactions contemplated hereby;
(e) To the knowledge of counsel, neither the execution and
delivery of this Agreement nor the consummation of the transactions contemplated
hereby to be performed by Xxxxxxx will result in a breach of or constitute a
default (or with notice or lapse of time or both result in a breach of or
constitute a default) under, or give rise to a right of termination,
cancellation, acceleration or repurchase of any obligation or a right of first
refusal with respect to any material property or asset or a loss of a material
benefit or the imposition of a material penalty under, any of the terms,
conditions or provisions of (i) any mortgage, indenture, loan or credit
agreement or any other agreement or instrument evidencing indebtedness for money
borrowed to which Xxxxxxx is a party or by which it or any of its respective
properties is bound or affected, or pursuant to which Xxxxxxx has guaranteed the
indebtedness or preferred stock of any person or entity or (ii) any lease,
license, tariff, contract or other agreement or instrument to which Xxxxxxx is a
party or by which it or any of its properties is bound or affected, except in
the case of each of clauses (i) and (ii) above, for any such breaches, defaults,
rights, losses or penalties that in the aggregate do not have any Material
Adverse Effect on the business, financial condition, or properties of Xxxxxxx
and its subsidiaries taken as a whole or on the ability of Xxxxxxx to consummate
the transactions contemplated hereby;
(f) To the knowledge of counsel, except as contemplated in
this Agreement, neither the execution and delivery of Xxxxxxx of this Agreement
nor the consummation of the transactions
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contemplated hereby to be performed by Xxxxxxx will result in, or require, the
creation or imposition of any mortgage, deed of trust, pledge, lien, security
interest or other charge or encumbrance of any nature upon or with respect to
any of the properties now or hereafter owned by Xxxxxxx or its Subsidiaries,
except where such would not in the aggregate have a Material Adverse Effect on
the business, financial condition, or properties of Xxxxxxx or any Xxxxxxx
Subsidiary or on the ability of Xxxxxxx to consummate the transactions
contemplated hereby;
(g) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity, is required
by or with respect to Xxxxxxx or any of its subsidiaries in connection with the
execution and delivery of this Agreement by Xxxxxxx or the consummation by
Xxxxxxx of the transactions contemplated hereby, other than in connection or
compliance with any applicable provisions of Georgia Law, Indiana Law or
applicable state and Federal securities laws.
(h) The authorized capital stock of Xxxxxxx consists of
40,000,000 shares of Xxxxxxx Common Stock and 10,000,000 shares of preferred
stock, par value $1.00 per share. On the date of this Agreement, there were
9,857,731 shares of Xxxxxxx Common Stock and 1,200,000 shares of Xxxxxxx Series
A Preferred Stock issued and outstanding. All the outstanding shares of Xxxxxxx
Common Stock and Xxxxxxx Series A Preferred Stock have been duly authorized and
validly issued and are fully paid and nonassessable. To the knowledge of such
counsel, there are no options to purchase any shares of capital stock of Xxxxxxx
except as set forth in Section 3.04 of this Agreement. The shares of Xxxxxxx
Series S Preferred Stock have been validly designated and authorized by the
filing of the Articles of Amendment substantially in the form of Exhibit A-1 to
this Agreement. The shares of Xxxxxxx Common Stock and Xxxxxxx Series S
Preferred Stock to be issued pursuant to this Agreement have been duly
authorized and, when issued in accordance with the provisions hereof, will be
validly issued, fully paid and nonassessable; and the Xxxxxxx stockholders have
no preemptive rights to acquire such shares.
(i) The Registration Statement has become effective under
the 1933 Act and to the best of such counsel's knowledge, no stop order
suspending the effectiveness of the Registration Statement has been issued and
no proceedings for that purpose have been instituted or are pending or
contemplated under the 1933 Act; and the resale of the shares of Xxxxxxx Common
Stock and Xxxxxxx Series S Preferred Stock issued pursuant to this Agreement and
the Merger Agreement will not require registration under the 1933 Act except as
such registration may be required by law, if any, with respect to certain
distributions by those "affiliates" of Signature who deliver the undertakings to
Xxxxxxx contemplated by Section 7.06 herein.
(j) The issuance of the shares of Xxxxxxx Common Stock and
Xxxxxxx Series S Preferred Stock in connection with the transactions
contemplated by this Agreement has been registered or is subject to applicable
exemptions from the registration requirements under the state securities or Blue
Sky laws of the various states in which the stockholders of Signature reside.
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In addition, such counsel shall state that no facts have come
to such counsel's attention which lead such counsel to believe that either the
Registration Statement or the Proxy Statement or any amendment or supplement
thereto (other than the financial statements and other financial and statistical
information contained therein as well as expertized portions thereof, as to
which such counsel need not comment), both as of their respective issue or
effective dates and as of the Effective Time of the Merger, contained an untrue
statement of a material fact with respect to Xxxxxxx and the Xxxxxxx
Subsidiaries or omitted to state a material fact with respect to Xxxxxxx and the
Xxxxxxx Subsidiaries required to be stated therein or necessary to make the
statements therein with respect to Xxxxxxx and the Xxxxxxx Subsidiaries not
misleading.
In rendering the above opinions, such counsel may rely upon
such local or other counsel to which Signature has reasonably agreed with
respect to matters particularly within the expertise of such counsel and/or not
normally opined on by outside counsel. It is agreed that such counsel may rely
on the opinion of Xxxxxx X. Xxxxxx, Esq. regarding matters of Georgia Law.
8.05. Authorization of Xxxxxxx Stock. The Board of Directors
of Xxxxxxx shall have taken all necessary corporate action to provide for the
issuance and reservation of such number of shares of Xxxxxxx Common Stock and
Xxxxxxx Series S Preferred Stock as may be required to carry out the terms of
this Agreement.
8.06. Fairness Opinion. Signature shall have received a letter
from McDonald Investments, Inc. no earlier than three business days prior to the
effective date of the Registration Statement for inclusion in the Registration
Statement in form and substance satisfactory to Signature to the effect that in
the opinion of McDonald Investments, Inc., the consideration to be received in
the Merger by the holders of the Signature Common Stock and Signature Preferred
Stock contemplated by this Agreement is fair to the stockholders of Signature
from a financial point of view.
8.07. Tax Opinion. Signature shall have received a written
opinion of Xxxxxx & Xxxxxxx, A Professional Corporation, to the effect that (i)
Xxxxxxx is a "real estate investment trust" for federal income Tax purposes,
(ii) consummation of the transactions contemplated by this Agreement will not
cause Xxxxxxx to cease to qualify as a "real estate investment trust" for
federal income Tax purposes, and (iii) the Merger will be treated for federal
income Tax purposes as a reorganization within the meaning of Section 368(a) of
the Code, and that each of Xxxxxxx and Signature will be a party to that
reorganization within the meaning of Section 368(b) of the Code, and (iv) that
Signature and the Signature stockholders exchanging Signature Common Stock and
Preferred Stock will recognize no gain or loss for federal income tax purposes
as a result of the consummation of the Merger (except as to the cash
consideration received by Signature stockholders and except for any gain that
Signature may realize in connection with the sale of its operating assets to
Hospitality, LLC as contemplated by Section 4.21). In connection with the Tax
opinion, such counsel shall be entitled to assume the accuracy of the
representations and warranties of Signature and Xxxxxxx and shall be entitled to
make such other factual assumptions as are reasonable or
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customary in similar Tax opinions. In rendering such opinion, such counsel shall
be entitled to rely upon the opinion rendered pursuant to Section 7.08(a) above.
8.08. No Material Adverse Change. Since the date of this
Agreement, there shall have been no event or occurrence which has had or
reasonably could be expected to have a Material Adverse Effect on the business,
properties, financial condition or results of operations of Xxxxxxx or on the
ability of Xxxxxxx to consummate the transactions contemplated hereby.
8.09. Auditors' Letters. Signature shall have received from
Ernst & Young, LLP, a letter dated the effective date of the Registration
Statement and a letter dated the Effective Time of the Merger, each such letter
to be in form and substance satisfactory to Signature and to the effect that:
(a) in their opinion, the financial statements of Xxxxxxx
examined by them and included in the Registration Statement comply as to form in
all material respects with the applicable accounting requirements of the 1933
Act and the published rules and regulations thereunder; and
(b) based upon limited procedures described in such letter,
certain data and information appearing in said Registration Statement and
specified in said letter has been obtained from the accounting records of
Xxxxxxx is in agreement with such records or computations made therefrom.
ARTICLE IX
TERMINATION, AMENDMENTS AND WAIVER
9.01. Termination. This Agreement may be terminated at any
time prior to the Effective Time of the Merger, whether before or after approval
by the stockholders of Xxxxxxx and Signature:
(a) by mutual written consent of Xxxxxxx and Signature; or
(b) by either Xxxxxxx or Signature if the Merger shall not
have been consummated on or before July 31, 1999 (other than due to the failure
of the party seeking to terminate this Agreement to perform its obligations
under this Agreement required to be performed at or prior to the Effective
Time); or
(c) by either Xxxxxxx or Signature, if any United States
federal or state court of competent jurisdiction or other governmental entity
shall have issued a final order, decree or ruling or taken any other action
permanently enjoining, restraining or otherwise prohibiting the Merger and such
order, decree, ruling or other action shall have become final and nonappealable,
provided that the party seeking to terminate shall have used its best efforts to
appeal such order, decree, ruling or other action; or
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(d) by either Xxxxxxx or Signature, if any required approval
of the stockholders of Xxxxxxx or Signature that is a condition to the
obligations of Xxxxxxx or Signature under Section 6.03 shall not have been
obtained by reason of the failure to obtain the required vote upon a vote held
at a duly held meeting of stockholders or at any adjournment thereof; or
(e) by Xxxxxxx if the Board of Directors of Signature shall
or shall resolve to (i) not recommend, or withdraw its approval or
recommendation of, the Merger, this Agreement or any of the transactions
contemplated hereby, (ii) modify such approval or recommendation in a manner
adverse to Xxxxxxx or (iii) approve or recommend a Superior Proposal pursuant to
Section 4.03(b); or
(f) by the Board of Directors of Signature if (i) to the
extent permitted by Section 4.03(b), the Board of Directors of Signature
authorizes Signature to enter into a binding written agreement concerning a
transaction that constitutes a Superior Proposal and Signature provides
notification to Xxxxxxx in accordance with Section 4.03(b), and (ii) Xxxxxxx
does not make, within five calendar days of receipt of Signature's written
notification of its intention to enter into a binding agreement for a Superior
Proposal, an offer that the Board of Directors of Signature determines, in good
faith after consultation with its financial advisors and outside counsel, is at
least as favorable, from a financial point of view, to the stockholders of
Signature as the Superior Proposal, and (iii) Signature, prior to such
termination has paid to Xxxxxxx in cash the full amounts required to be paid by
Section 10.05; or
(g) by Xxxxxxx, if Signature has failed to perform in any
respect any of its obligations required to be performed by it under this
Agreement and such failure continues for more than 30 days after notice unless
failure to so perform has been caused by or results from a breach of this
Agreement by Xxxxxxx, except where such failure or failures would not in the
aggregate have a Material Adverse Effect on the business, properties, financial
condition or results of operations of Signature or Xxxxxxx on the ability of
Signature or Xxxxxxx to consummate the transactions contemplated hereby; or
(h) by Signature, if Xxxxxxx shall have failed to perform in
any respect any of its obligations required to be performed by it under this
Agreement and such failure continues for more than 30 days after notice unless
failure to so perform has been caused by or results from a breach of this
Agreement by Signature, except where such failure or failures would not in the
aggregate have a Material Adverse Effect on the business, properties, financial
condition or results of operations of Signature or on the ability of Signature
to consummate the transactions contemplated hereby; or
(i) by Signature, if the average of the closing sales prices
for Xxxxxxx Common Stock as reported on the Nasdaq National Market for the
period of ten consecutive trading days ending five business days prior to the
date of the Signature Stockholder Meeting is less than $7.00 per share.
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9.02. Effect of Termination. If either Xxxxxxx or Signature
terminates this Agreement as provided in the foregoing Section, this Agreement
will forthwith become void, and there will be no liability or obligation on the
part of Xxxxxxx or Signature or their officers or directors except as set forth
in Sections 10.05 and 11.02 (relating to noncompletion expenses and fees), 2.13
and 3.07 (relating to brokers or finders), and 10.01 (relating to
confidentiality), and except to the extent that such termination results from
the willful breach by a party of any of its representations, warranties or
agreements in this Agreement.
9.03. Amendment. This Agreement may be amended by the parties
hereto, by action taken (in the case of Signature or Xxxxxxx) by their
respective Boards of Directors at any time before or after approval hereof by
the stockholders of Signature and Xxxxxxx. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto.
9.04. Waiver. Any term or provision of this Agreement may be
waived in writing at any time by Xxxxxxx, if it is entitled to the benefits
thereof, or by Signature, if it is entitled to the benefits thereof.
ARTICLE X
OTHER AGREEMENTS; NONSURVIVAL
OF REPRESENTATIONS AND WARRANTIES
10.01. Confidentiality. The parties agree that the
commitments, covenants, terms and obligations under Sections 1 through 5 and
Section 9 of that certain Mutual Confidential Disclosure Agreement dated as of
December 16, 1998 shall continue in full force and effect; provided, however,
that nothing in the last paragraph of Section 2 thereof shall affect, limit or
restrict the representations and warranties of the parties under Articles II and
III hereof.
10.02. Public Announcements. None of the parties hereto will
make any public announcement without prior approval of the other, except as may
otherwise be required by law.
10.03. Indemnification. (a) Xxxxxxx agrees that all rights to
indemnification and exculpation from liabilities for acts or omissions occurring
prior to the Effective Time of the Merger now existing in favor of any current
or former employees, agents, directors or officers of Signature and its
Subsidiaries as provided in their respective Articles of Incorporation or
By-laws (or comparable organizational documents) and any indemnification
agreements of Signature disclosed in a schedule hereto shall survive the Merger
and shall continue in full force and effect in accordance with their terms for a
period of not less than five years from the Effective Time of the Merger and the
obligations of Signature in connection therewith shall be assumed by Xxxxxxx;
provided that in the event any claim or claims are asserted or made within such
five year period, all rights to indemnification in respect of any such claim
shall continue until final disposition of such claim.
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(b) Xxxxxxx agrees that from and after the Effective Time
of the Merger, Xxxxxxx shall cause the policies or director and officer
liability insurance maintained by Signature on the date hereof to be maintained
in effect for the period of time directors and officers are entitled to
indemnification under Section 10.03(a) above; provided that Xxxxxxx may
substitute therefor policies of at least the same coverage containing terms and
conditions which are no less advantageous to the Indemnified Parties, provided
that such substitution shall not result in any gaps or lapses in coverage with
respect to matters occurring prior to the Effective Time of the Merger.
(c) In the event Xxxxxxx merges or is acquired in a
transaction in which it is not the surviving corporation, or if Xxxxxxx sells
substantially all of its assets, Xxxxxxx will use its reasonable efforts to
cause proper provision to be made in such transaction so that Xxxxxxx'x
successor or acquiror will assume the obligations set forth in Section 10.03(a)
above. The parties agree that Signature's directors and officers are the third
party beneficiaries of, and entitled to enforce, the provisions of this Section
10.03.
(d) The provisions of this Section 10.03 are intended to be
for the benefit of, and shall be enforceable by, each person who is or has been
a director or officer of Signature or a Subsidiary of Signature, and such
director's or officer's heirs and personal representatives and shall be binding
on all successors and assigns of Xxxxxxx.
10.04. Additional Agreements. Subject to this Agreement, each
of the parties agrees to use its best 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
transactions contemplated by this Agreement, subject to the appropriate approval
of stockholders of Signature or Xxxxxxx required so to approve. If at any time
after the Effective Time of the Merger any further action is necessary or
desirable to carry out the purposes of this Agreement, the proper officers and
directors of each corporation that is a party to this Agreement will take all
such necessary action.
10.05. Break-up Fee. If
(a) this Agreement is terminated pursuant to Section
9.01(e), (g) or (f) without the Closing having occurred, or
(b) the stockholders of Signature do not approve the Merger
Agreement and either (i) the Signature Board of Directors does not
recommend approval of the Merger Agreement or at any time prior to the
Signature Stockholder Meeting changes its recommendation for approval,
or (ii) any tender or exchange offer for the shares of Signature Common
Stock or Signature Preferred Stock or solicitation of proxies voting
against approval of the Merger Agreement is commenced by any third
party (including any affiliate of Signature) at any time prior to the
date on which the Signature Stockholder Meeting is scheduled and the
Signature Board of Directors fails to take a position recommending that
such offer not be accepted or that such proxies not be granted,
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then Signature agrees to pay Xxxxxxx $2,000,000 in cash plus an amount equal to
all of the out-of pocket fees and expenses reasonably incurred by Xxxxxxx in
connection with this Agreement and the transactions contemplated hereby, not to
exceed $500,000 in the aggregate.
10.06. Available Remedies. Each party expressly agrees that,
consistent with its intention and agreement to be bound by the terms of this
Agreement and to consummate the transactions contemplated hereby, subject only
to the performance or satisfaction of conditions precedent, the remedy of
specific performance shall be available to a non-breaching and non-defaulting
party to enforce performance of this Agreement by a breaching or defaulting
party, including, without limitation, to require the consummation of the Closing
pursuant to Section 1.01.
10.07. Nonsurvival of Representations and Warranties. The
representations and warranties of the parties hereto contained in Articles II
and III shall expire at the Closing and be of no further force or effect.
ARTICLE XI
MISCELLANEOUS
11.01. Closing. Subject to the terms and conditions hereof,
the closing of the transactions contemplated hereby shall take place at the
offices of Xxxxxxxxx, Daily, Xxxxxxx & Xxxxx, 0000 Xxx Xxxxxxx Xxxxxx,
Xxxxxxxxxxxx, Xxxxxxx 00000-0000 at 10:00 am., Eastern Time, on the day after
the meeting of the stockholders of Signature referred to in Section 4.14 or at
such other place and time as the parties hereto shall agree.
11.02. Expenses. Except as otherwise provided herein, each of
Xxxxxxx and Signature will pay its own costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby, including the fees
and expenses of its counsel, irrespective of when incurred and regardless of
whether the Merger is consummated; provided, however, that in the event that
this Agreement is terminated without the Merger being consummated pursuant to
any subparagraph of Section 9.01 other than Subparagraph 9.01(f) or 9.01(g),
Xxxxxxx shall reimburse Signature for one-half of the fees and expenses paid or
payable to the independent accountants of Signature for the analysis and review
undertaken by that firm to determine the Earnings and Profits of Signature for
purposes of Sections 4.21.
11.03. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been given if delivered
personally or sent by telex, facsimile transmis sion, a nationally recognized
overnight delivery service or registered or certified mail (return receipt
requested), postage prepaid, to the parties to this Agreement at the following
addresses or at such other address for a party as shall be specified by like
notice:
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If to Xxxxxxx: Xxxxxxx Inns, Inc.
0 Xxxxxxxxx Xxxxxx Xxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000-0000
Fax No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx
with a copy to: Xxxxxx & Xxxxxxx, A Professional Corporation
0000 Xxxxx Xxxxx Tower
00 Xxxx 0xx Xxxxxx
Xxxxx, Xxxxxxxx 00000
Fax No.: (000) 000-0000
Attention: Lynnwood X. Xxxxx, Xx.
If to Signature: Signature Inns, Inc.
One Parkwood Crossing
000 Xxxx 00xx Xxxxxx, Xxxxx 000
Xxxxxxxxxxxx, Xxxxxxx 00000
Fax No.: (000) 000-0000
Attention: Xxxx X Xxxxxxxxx
with a copy to: Xxxxxxxxx, Daily, Xxxxxxx & Xxxxx
0000 Xxx Xxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000-0000
Fax No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx
and to: Bass, Xxxxx & Xxxx, PLC
0000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000-0000
Fax No.: (000) 000-0000
Attention: Xxxxxx X. Xxxxx, III
All such notices and communications shall be deemed to have been received on the
date of delivery or on the third business day after the mailing thereof.
11.04. Entire Agreement. This Agreement (including the
documents and instruments referred to herein) constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
prior agreements and undertakings, written and oral.
11.05. Binding Effect: Benefits. This Agreement shall be
binding upon and inure to the benefit of the parties to this Agreement and their
respective successors and permitted assigns. Except for parties referred to in
Section 10.03, nothing expressed or implied in this Agreement is
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intended to or shall be construed to give any person other than the parties to
this Agreement or their respective successors or permitted assigns any legal or
equitable right, remedy or claim under or in respect of this Agreement, it being
the intention of the parties to this Agreement that this Agreement shall be for
the sole and exclusive benefit of such parties or such successors or assigns and
for the benefit of no other person.
11.06. Assignment. Neither this Agreement nor any right,
remedy, obligation or liability arising hereunder or by reason hereof shall be
assignable by any party to this Agreement without the prior written consent of
the other parties.
11.07. Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Georgia applicable to
contracts made and to be performed within that State.
11.08. Article and Section Headings. The article, section and
other headings contained in this Agreement are for reference purposes only and
shall not affect the meaning or interpretation of this Agreement.
11.09. Construction. The parties have participated jointly in
the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. As used in Articles II
and III, "Knowledge" shall mean and a Person will be deemed to have "Knowledge"
of a particular fact or other matter if such Person is actually aware of such
fact or other matter or has been presented information or evidence which lead a
reasonable and prudent individual to determine the existence of such fact or
other matter without the necessity of conducting a further comprehensive
investigation concerning the existence of such fact or other matter. A Person
(other than an individual) will be deemed to have "Knowledge" of a particular
fact or other matter if any individual who is serving, or who has at any time
served, as a director, executive officer, partner, executor or trustee of, or
partner in, such Person (or in any similar capacity) has, or at any time had,
Knowledge of such fact or other matter.
11.10 Severability. Any term or provision of this Agreement
that is invalid or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdiction. If
any provision of this Agreement is so broad or excessive as to be unenforceable,
such provision shall be interpreted (or deemed to be revised) to be only so
broad, or to provide for the maximum amount, as in enforceable.
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11.11. Incorporation of Exhibits and Schedules. The Exhibits
and Schedules identified in this Agreement are incorporated herein by reference
and made a part hereof.
11.12. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original and all
of which together shall be deemed to be a single agreement.
IN WITNESS WHEREOF, the parties to this Agreement have caused this
Agreement to be duly executed as of the date first written above.
Xxxxxxx Inns, Inc.
By /s/ Xxxxxx X. Xxxxxxx
-------------------------------------
Xxxxxx X. Xxxxxxx, Chief Executive
Officer
Signature Inns, Inc.
By /s/ Xxxx X. Xxxxxxxxx
------------------------------------
Xxxx X. Xxxxxxxxx, President and
Chief Executive Officer
The undersigned are executing this Agreement solely for the purpose of
agreeing to and confirming irrevocably the provisions of Section 4.03(c) of this
Agreement provided, however, that none of the undersigned makes any agreement or
understanding by executing below in his capacity as such director or officer,
rather such person signs this Agreement solely in his capacity as the beneficial
owner and registered owner of Signature Common Stock or Signature Preferred
Stock, and nothing herein shall limit or affect any actions taken by any of the
undersigned in his capacity as an officer or director of Signature, including,
without limitation, any action taken in such person's capacity as a director or
officer of Signature consistent with the provisions of Section 4.03(a) or (b) of
the Agreement.
/s/ Xxxx X. Xxxxxxxxx
------------------------------
Xxxx X. Xxxxxxxxx
/s/ Xxxx X. Xxxxxx
------------------------------
Xxxx X. Xxxxxx
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/s/ Xx X. Xxxxxx
------------------------------
Xx X. Xxxxxx
/s/ Xxxxx X. Xxxxxx
------------------------------
Xxxxx X. Xxxxxx
/s/ Xxxxxxx X. Xxxx
------------------------------
Xxxxxxx X. Xxxx
/s/ Xxxxxx X Xxxxxx
------------------------------
Xxxxxx X Xxxxxx
/s/ Xxxxxxx X. Xxxxxxx
------------------------------
Xxxxxxx X. Xxxxxxx
/s/ Xxxxxxx X. Xxxxxx
------------------------------
Xxxxxxx X. Xxxxxx
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