EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
between
XXXXXXX INNS, INC.
and
SIGNATURE INNS, INC.
Dated as of January 27, 1999
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-
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3.08. Xxxxxxx SEC Reports.................................................... -24-
3.09. Litigation............................................................. -24-
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-
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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-
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-
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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-
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-
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11.11. Incorporation of Exhibits and Schedules................................ -58-
11.12. Counterparts........................................................... -58-
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.
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Rights Agreement: as defined in Section 2.03.
1933 Act: as defined in Section 2.02.
1934 Act: 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."
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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 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 By-laws 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
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"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.
(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.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SIGNATURE
Signature hereby represents and warrants to Xxxxxxx as follows:
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
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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 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.
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(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.
(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.
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(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 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 t-his 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
-7-
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 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
-8-
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 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
-9-
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 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.
-10-
(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 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
-11-
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 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
-12-
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 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
-13-
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 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 material 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.
-14-
(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, 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
-15-
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 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.
-16-
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, 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
-17-
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 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.
-18-
(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 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.
-19-
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 By-laws, 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
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
-20-
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 any Xxxxxxx subsidiary or on the ability of Xxxxxxx to consummate the
transactions contemplated hereby.
-21-
(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.
-22-
(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
-23-
of either Xxxxxxx or any Xxxxxxx subsidiary, in such a manner as to give rise to
any valid claim for 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
-24-
(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 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.
-25-
(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 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
-26-
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, 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.
-27-
(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 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
-28-
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 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.
-29-
(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, 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.
-30-
(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.
(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
-31-
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.
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).
-32-
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 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
-33-
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 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
-34-
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.
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
-35-
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 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
-36-
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.
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
-37-
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 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
-38-
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 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
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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:
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.
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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 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.
-41-
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 power and authority to own or lease and to
operate and use its properties and to carry on its business as now conducted;
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(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 properties of Signature or any Signature Subsidiary or on the ability of
Signature to consummate the transactions contemplated hereby;
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(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 Rights shall be canceled
and shall cease to exist by reason of the Merger and the holders of the
-44-
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
-47-
authority to own, operate and lease its respective properties and assets and to
carry on its respective businesses as now being conducted;
(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
-48-
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 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.
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(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.
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
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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 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
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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
(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
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(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.
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.
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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.
(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
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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.
------------
(a) If 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,
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.
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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 transmission, 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:
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 0/xx/ Xxxxxx
Xxxxx, Xxxxxxxx 00000
Fax No.: (000) 000-0000
Attention: Lynnwood X. Xxxxx, Xx.
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If to Signature: Signature Inns, Inc.
One Parkwood Crossing
000 Xxxx 00/xx/ 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 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.
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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.
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.
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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
/s/ Xx X. Xxxxxx
______________________________
Xx X. Xxxxxx
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/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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