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EXHIBIT 4.2
RIGHTS AGREEMENT
RIGHTS AGREEMENT, dated as of the ____ day of __________, 1996 (the
"Agreement"), between Signature Inns, Inc., an Indiana corporation (the
"Company"), and _______________________________________ (the "Rights Agent").
RECITALS
WHEREAS, on _________________, 1996 (the "Rights Dividend Declaration
Date"), the Board of Directors of the Company (the "Board") authorized and
declared a distribution of one Right (as defined in Section 1 hereof) for each
share of the Company's common stock, without par value ("Common Stock"),
outstanding on the Record Date (as defined in Section 1 hereof), subject to the
execution of this Agreement and to certain other conditions, and the issuance of
one Right (as such number may hereinafter be adjusted pursuant hereto) with
respect to each share of Common Stock issued (whether originally issued or
delivered from the Company's treasury) between the Record Date and the earlier
of the Exercisability Date (as defined in Section 3(a) hereof) or the Expiration
Date (as defined in Section 7(a) hereof), each Right initially representing the
right to purchase, upon the terms and subject to the conditions hereinafter set
forth, one hundredth of one share of Series A Preferred Stock, without par value
(the "Preferred Stock"), having the relative rights, preferences and limitations
set forth in the Company's Amended and Restated Articles of Incorporation (the
"Articles of Incorporation");
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
Section 1. Certain Definitions.
For purposes of this Agreement, the following terms have the meanings
indicated:
(a) "Acquiring Person" means (i) any Person which (or which, together
with all its Affiliates and Associates) shall be the Beneficial Owner of [20%]
or more of the shares of Common Stock then outstanding (other than as a result
of a Permitted Offer) or (ii) any Adverse Person. Notwithstanding the foregoing,
(x) the term "Acquiring Person" shall not include the Company, any Subsidiary of
the Company, any employee benefit plan maintained by the Company or any of its
Subsidiaries, or any trustee or fiduciary with respect to such plan acting in
such capacity or Xxxx Xxxxxxxxx (either alone or together with his Affiliates
and Associates); and (y) no Person shall become an "Acquiring Person" as the
result of (A) the acquisition of Common Stock (or other securities convertible
into shares of Common Stock or other rights with respect to Common Stock)
directly from the Company, or (B) an acquisition of Common Stock by the Company
which, by reducing the number of shares outstanding, increases the proportionate
number of shares beneficially owned by such Person (alone or together with all
Affiliates and Associates) to [20%] or more of the shares of Common Stock then
outstanding; provided, however, that if a Person (together with its
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Affiliates and Associates) becomes the Beneficial Owner of [20%] or more of the
Common Stock then outstanding by reason of share purchases by the Company, and
such Person (or an Affiliate or Associate) subsequently becomes the Beneficial
Owner of any additional Common Stock, then such Person shall be deemed to be an
"Acquiring Person."
(b) "Adverse Person" means any person declared by the Board to be an
Adverse Person after (i) a determination by the Board that such Person, alone or
together with its Affiliates and Associates, has become the Beneficial Owner of
[10%] or more of the shares of Common Stock then outstanding; and (ii) a
determination by the Board, after reasonable inquiry and investigation
(including such consultation, if any, with such persons as such directors shall
deem appropriate), that:
(A) such Beneficial Ownership by such Person is intended to, is
reasonably likely to, or will, either cause the Company to repurchase the
Common Stock beneficially owned by such Person or cause pressure on the
Company to take action or enter into a transaction or series of
transactions that would provide such Person with short-term financial
gain under circumstances where the Board determines that the best
long-term interests of the Company and its shareholders, but for the
actions and possible actions of such Person, would not be served by
taking such action or entering into such transactions or series of
transaction at that time; or
(B) such Beneficial Ownership is causing or reasonably likely to
cause a material adverse impact (including, but not limited to,
impairment of relationships with customers or impairment of the Company's
ability to maintain its competitive position) on the business or
prospects of the Company;
provided, however, that the Board may not declare a Person to be an Adverse
Person if, prior to the time that such Person acquired [10%] or more of the
Common Stock, such Person provided to the Board a written statement of such
Person's acquisition of such Common Stock, together with any other information
reasonably requested of such Person by the Board, and the Board, based on such
statement and reasonable inquiry and investigation (including such consultation,
if any, with such persons as the directors shall deem appropriate), determines
to notify and notifies such Person in writing that it will not declare such
Person to be an Adverse Person; and provided, further, that the Board may
expressly condition in any manner a determination not to declare a Person an
Adverse Person on such conditions as the Board may select, including, without
limitation, that such Person shall not acquire more than a specified amount of
Company stock and/or that such Person shall not take actions inconsistent with
the purposes and intentions disclosed by such Person in the statement provided
by such Person to the Board. In the event that the Board should at any time
determine, upon reasonable inquiry and investigation (including consultation
with such persons as the directors shall deem appropriate), that such Person has
not met or complied with any condition specified by the Board, the Board may at
any time thereafter declare such Person to be an Adverse Person. No
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delay or failure by the Board to declare a Person to be an Adverse Person shall
in any way waive or otherwise affect the power of the Board subsequently to
declare a Person to be an Adverse Person.
(c) "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as in
effect on the date of this Agreement.
(d) A Person shall be deemed the "Beneficial Owner" of, and shall be
deemed to "beneficially own," any securities:
(i) of which such Person or any of such Person's Affiliates or
Associates is considered to be a "beneficial owner" under Rule 13d-3 of
the General Rules and Regulations under the Exchange Act (the "Exchange
Act Regulations") as in effect on the date hereof; provided, however,
that a Person shall not be deemed the "Beneficial Owner" of, or to
"beneficially own," any security under this subparagraph (i) as a result
of an agreement, arrangement or understanding to vote such security if
such agreement, arrangement or understanding (A) arises solely from a
revocable proxy given in response to a proxy or consent solicitation made
pursuant to, and in accordance with, the applicable provisions of the
Exchange Act and the Exchange Act Regulations, and (B) is not reportable
by such Person on Schedule 13D under the Exchange Act (or any comparable
or successor report);
(ii) which are beneficially owned, directly or indirectly, by any
other Person (or any Affiliate or Associate of such other Person) with
which such Person (or any of such Person's Affiliates or Associates) has
any agreement, arrangement or understanding (whether or not in writing)
for the purpose of acquiring, holding, voting (except pursuant to a
revocable proxy as described in the proviso to subparagraph (i) of this
paragraph (d)) or disposing of such securities (other than customary
agreements with and between underwriters and selling group members with
respect to a bona fide public offering of securities); or
(iii) which such Person or any of such Person's Affiliates or
Associates, directly or indirectly, has the right to acquire (whether
such right is exercisable immediately or only after the passage of time
or upon the satisfaction of conditions) pursuant to any agreement,
arrangement or understanding (whether or not in writing) or upon the
exercise of conversion rights, exchange rights, rights, warrants or
options, or otherwise;
provided, however, that under this paragraph (d), a Person shall not be deemed
the "Beneficial Owner" of, or to "beneficially own," (x) securities tendered
pursuant to a tender or exchange offer made by or on behalf of such Person or
any of such Person's Affiliates or Associates until such tendered securities are
accepted for purchase or exchange, (y) securities issuable upon exercise of
Rights at any time prior to the occurrence of a Triggering Event, or (z)
securities issuable upon exercise of Rights from and after the occurrence of a
Triggering Event, which Rights were acquired
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by such Person or any of such Person's Affiliates or Associates prior to the
Exercisability Date or pursuant to Section 3(a) or Section 22 hereof (the
"Original Rights") or pursuant to Section 11(i) hereof in connection with an
adjustment made with respect to any Original Rights.
Notwithstanding anything in this definition of Beneficial Ownership to
the contrary, the phrase "then outstanding," when used with reference to a
person's Beneficial Ownership of securities of the Company, shall mean the
number of securities then issued and outstanding together with the number of
such securities not then actually issued and outstanding which such Person would
be deemed to own beneficially hereunder.
(e) "Board" has the meaning set forth in the Recitals.
(f) "Business Day" means any day other than a Saturday, a Sunday, or a
day on which banking institutions in Indianapolis, Indiana or are authorized or
obligated by law or executive order to close.
(g) "Close of Business" on any given date means 5:00 P.M., Indianapolis,
Indiana local time, on such date; provided, however, that if such date is not a
Business Day it shall mean 5:00 P.M., Indianapolis, Indiana local time, on the
next succeeding Business Day.
(h) "common stock" of any Person other than the Company means such
Person's capital stock with the greatest voting power, or, if such Person shall
have no capital stock, the equity securities or other equity interest having
power to control or direct the management of such Person.
(i) "Common Stock" means the shares of common stock, without par value,
of the Company or, in the event of a stock split or reverse stock split with
respect to such shares of Common Stock, the shares of Common Stock of the
Company resulting from such stock split or reverse stock split.
(j) "Continuing Director" means any Person who is a member of the Board,
while such Person is a member of the Board, who is not an Acquiring Person, or
an Affiliate or Associate of an Acquiring Person, or a nominee or representative
of an Acquiring Person or of an Acquiring Person's Affiliate or Associate, and
who (i) was a member of the Board prior to the date of this Agreement, or (ii)
becomes a member of the Board after the date of this Agreement if such Person's
nomination for election to the Board is recommended or approved by a majority of
the Continuing Directors.
(k) "Exercisability Date" has the meaning set forth in Section 3(a)
hereof.
(l) "Exercise Price" has the meaning set forth in Section 7(b) hereof.
(m) "Expiration Date" has the meaning set forth in Section 7(a) hereof.
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(n) "Final Expiration Date" has the meaning set forth in Section 7(a)
hereof.
(o) "Permitted Offer" means a tender or exchange offer which is for all
outstanding shares of Common Stock at a price and on terms determined, prior to
the purchase of shares under such tender or exchange offer and by at least a
majority of the members of the Board of Directors who qualify as Continuing
Directors, to be adequate (taking into account all factors that such Directors
deem relevant including, without limitation, prices that reasonably could be
achieved if the Company or its assets were sold on an orderly basis designed to
realize maximum value) and otherwise in the best interests of the Company and
its shareholders, other than the Person or any Affiliate or Associate thereof on
whose basis the offer is being made (taking into account all factors that such
Directors may deem relevant).
(p) "Person" means any individual, partnership, firm, corporation,
association, trust, unincorporated organization or other entity, as well as any
syndicate or group deemed to be a person under Section 14(d)(2) of the Exchange
Act.
(q) "Record Date" means that date, if any, that the Company's
Registration Statement on Form S-__ (File No. 333- ) is declared
to be effective by the Securities and Exchange Commission (the "SEC").
(r) "Redemption Date" has the meaning set forth in Section 7(a) hereof.
(s) "Right" means one of the stock purchase rights created hereunder.
(t) "Rights Certificate" has the meaning set forth in Section 3(a)
hereof.
(u) "Rights Dividend Declaration Date" has the meaning set forth in the
Recitals.
(v) "Section 11(a)(ii) Event" means any event described in Section
11(a)(ii) hereof.
(w) "Section 13 Event" means any event described in clause (x), (y) or
(z) of Section 13(a) hereof.
(x) "Stock Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition, shall include, without
limitation, a report filed pursuant to Section 13(d) of the Exchange Act) by the
Company or an Acquiring Person that an Acquiring Person has become such.
(y) "Subsidiary" means, with reference to any Person, any corporation of
which an amount of voting securities sufficient to elect at least a majority of
the directors of such corporation is beneficially owned, directly or indirectly,
by such Person, or otherwise controlled by such Person.
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(z) "Triggering Event" means any Section 11(a)(ii) Event or any Section
13 Event.
Section 2. Appointment of Rights Agent.
The Company hereby appoints the Rights Agent to act as agent for the
Company in accordance with the terms and conditions hereof, and the Rights Agent
hereby accepts such appointment. The Company may from time to time appoint such
Co-Rights Agents as it may deem necessary or desirable.
Section 3. Issuance of Rights Certificates.
(a) Until the earlier of:
(i) the Close of Business on the tenth day after the Stock
Acquisition Date (or, if the tenth day after the Stock Acquisition Date
occurs before the Record Date, the Close of Business on the Record Date),
and
(ii) the Close of Business on such date as a majority of the Board
shall determine, which date shall follow the commencement of a tender
offer (as determined by reference to Rule 14d-2(a) under the Exchange
Act) or exchange offer by any Person, if upon consummation thereof such
Person would become an Acquiring Person (the earlier of (i) and (ii)
above being the "Exercisability Date"),
the Rights:
(x) will be evidenced (subject to the provisions of paragraph (b)
of this Section 3) by the certificates for shares of Common Stock
registered in the names of the holders thereof as of and subsequent to
the Record Date (which certificates for shares of Common Stock shall be
deemed also to be certificates for Rights) and not by separate
certificates, and
(y) will be transferable only in connection with the transfer of
the underlying shares of Common Stock (including a transfer to the
Company).
As soon as practicable after the Exercisability Date, the Rights Agent will send
by first-class, postage prepaid mail, to each record holder of shares of Common
Stock as of the Close of Business on the Exercisability Date, at the address of
such holder shown on the records of the Company, a certificate for Rights,
substantially in the form of Exhibit A attached hereto (the "Rights
Certificate"), evidencing one Right for each share of Common Stock so held,
subject to adjustment as provided herein. In the event that an adjustment in the
number of Rights per share of Common Stock has been made pursuant to Section 11
hereof, then at the time of distribution of the Rights Certificates, the Company
shall make the necessary and appropriate rounding adjustments (in accordance
with Section 14(a) hereof) so that Rights Certificates representing only whole
numbers of Rights are
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distributed and cash is paid in lieu of any fractional Rights. As of and after
the Exercisability Date, the Rights will be evidenced solely by such Rights
Certificates.
(b) On the Record Date or as soon as practicable thereafter, the Company
will send a copy of a Summary of Rights to Purchase Preferred Stock, in
substantially the form attached hereto as Exhibit B (the "Summary of Rights"),
by first-class, postage prepaid mail, to each record holder of Common Stock as
of the Close of Business on the Record Date at the address of such holder shown
on the records of the Company. With respect to certificates for Common Stock
outstanding as of the Record Date, until the earlier of the Exercisability Date,
the Expiration Date and the Final Expiration Date (as such terms are defined in
this Section 3 and in Section 7 hereof), the Rights will be evidenced by such
certificates for Common Stock registered in the names of the holders thereof
(together with a copy of the Summary of Rights). Until the earlier of the
Exercisability Date, the Expiration Date and the Final Expiration Date, the
surrender for transfer of any certificate for Common Stock outstanding on the
Record Date, with or without a copy of the Summary of Rights attached thereto,
shall also constitute the transfer of the Rights associated with the Common
Stock represented thereby.
(c) Rights shall, without any further action, be issued in respect of all
shares of Common Stock which are issued (including any shares of Common Stock
held in treasury) after the Record Date but prior to the earlier of the
Exercisability Date and the Expiration Date. Certificates representing such
shares of Common Stock issued after the Record Date shall bear the following
legend:
This certificate also evidences and entitles the holder hereof to
certain rights as set forth in the Rights Agreement between Signature
Inns, Inc. (the "Company") and _____________________________ (the "Rights
Agent") dated as of______________ 1996 (the "Rights Agreement"), the
terms of which are hereby incorporated herein by reference and a copy of
which is on file at the principal office of the stock transfer
administration office of the Rights Agent. Under certain circumstances,
as set forth in the Rights Agreement, such Rights will be evidenced by
separate certificates and will no longer be evidenced by this
certificate. The Company will mail to the holder of this certificate a
copy of the Rights Agreement, as in effect on the date of mailing,
without charge promptly after receipt of a written request therefor.
Under certain circumstances set forth in the Rights Agreement, Rights
issued to, or held by, any Person who is, was or becomes an Acquiring
Person or any Affiliate or Associate thereof (as such terms are defined
in the Rights Agreement), whether currently held by or on behalf of such
Person or by any subsequent holder, may become null and void.
With respect to certificates representing shares of Common Stock (whether or not
such certificates include the foregoing legend), until the earlier of the
Exercisability Date and the Expiration Date, (i) the Rights associated with the
shares of Common Stock represented by such certificates shall be evidenced by
such certificates alone, (ii) registered holders of the shares of Common Stock
shall also
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be the registered holders of the associated Rights, and (iii) the transfer of
any of such certificates shall also constitute the transfer of the Rights
associated with the shares of Common Stock represented by such certificates.
Section 4. Form of Rights Certificates.
(a) The Rights Certificates (and the forms of election to purchase
Preferred Stock and of assignment to be printed on the reverse thereof) shall
each be substantially in the form of Exhibit A attached hereto and may have such
marks of identification or designation and such legends, summaries or
endorsements printed thereon as the Company may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or any rule or regulation thereunder or with any
rule or regulation of any stock exchange on which the Rights may from time to
time be listed, or to conform to usage. Subject to the provisions of Section 11
and Section 22 hereof, the Rights Certificates, whenever distributed, shall be
dated as of the Record Date and on their face shall entitle the holders thereof
to purchase such number of one hundredths of a share of Preferred Stock as shall
be set forth therein at the price per share set forth therein (the "Exercise
Price"), but the amount and type of securities, cash or other assets that may be
acquired upon the exercise of each Right and the Exercise Price thereof shall be
subject to adjustment as provided herein.
(b) Any Rights Certificate issued pursuant hereto that represents Rights
that are beneficially owned by:
(i) an Acquiring Person or any Affiliate or Associate of an
Acquiring Person,
(ii) a transferee of an Acquiring Person (or of any such Affiliate
or Associate) which becomes a transferee after the Acquiring Person
becomes such, or
(iii) a transferee of an Acquiring Person (or of any such Affiliate
or Associate) which becomes a transferee prior to or concurrently with
the Acquiring Person becoming such and which receives such Rights
pursuant to either (A) a transfer (whether or not for consideration) from
the Acquiring Person (or any such Affiliate or Associate) to holders of
equity interests therein, or to any Person with whom such Acquiring
Person (or Affiliate or Associate) has any continuing agreement,
arrangement or understanding regarding the transferred Rights, shares of
Common Stock, or the Company, or (B) a transfer which a majority of the
Board has determined to be part of a plan, arrangement or understanding
which has as a primary purpose or effect the avoidance of Section 7(e)
hereof, and any Rights Certificate issued pursuant to Section 6 or
Section 11 hereof upon transfer, exchange, replacement or adjustment of
any other Rights Certificate referred to in this sentence,
shall, upon the written direction of a majority of the Board, contain (to the
extent feasible) the following legend:
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The Rights represented by this Rights Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person or
an Affiliate or Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement). Accordingly, this Rights Certificate
and the Rights represented hereby may become null and void in the
circumstances specified in Section 7(e) of such Agreement.
The provisions of Section 7(e) of this Rights Agreement shall be operative
whether or not the foregoing legend is contained on any Rights Certificate.
Section 5. Countersignature and Registration.
(a) Rights Certificates shall be executed on behalf of the Company by its
Chairman of the Board, Chief Executive Officer, President, any Vice President,
or Treasurer and shall be attested by its Secretary or one of its Assistant
Secretaries. The signature of any of these officers on the Rights Certificates
may be manual or facsimile. The Rights Certificates shall be countersigned by
the Rights Agent, by manual signature (or by facsimile signature if permitted by
law) of an authorized officer, and no Rights Certificate shall be entitled to
any benefit under this Agreement or be valid for any purpose unless so
countersigned. A Rights Certificate bearing the manual or facsimile signatures
of individuals who were the proper officers of the Company at the actual date of
execution of such Rights Certificate shall bind the Company, notwithstanding
that such individuals or any of them ceased to hold such offices prior to the
countersignature of such Rights Certificate or did not hold such offices at the
date of execution of this Rights Agreement. Such countersignature upon any
Rights Certificate shall be conclusive evidence, and the only evidence, that
such Rights Certificate has been duly countersigned as required hereunder.
(b) Following the Exercisability Date, the Rights Agent will keep or
cause to be kept, at its office designated as the appropriate place for
surrender of Rights Certificates upon exercise or transfer, books for
registration and transfer of the Rights Certificates issued hereunder. Such
books shall show the name and address of each holder of a Rights Certificate,
the number of Rights evidenced on its face by each Rights Certificate, and the
certificate number and date of each Rights Certificate.
Section 6. Transfer. Split Up. Combination and Exchange of Rights
Certificates: Mutilated. Destroyed. Lost or Stolen Rights
Certificates.
(a) Subject to the provisions of Sections 4(b), 7(e) and 14 hereof, at
any time after the Close of Business on the Exercisability Date, and at or prior
to the Close of Business on the Expiration Date, any Rights Certificate or
Certificates may be transferred, split up, combined, or exchanged for another
Rights Certificate or Certificates entitling the registered holder to purchase a
like number of one hundredths of a share of Preferred Stock (or, following a
Triggering Event,
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other securities, cash or other assets, as the case may be) as the Rights
Certificate or Certificates surrendered then entitle such holder to purchase.
Any registered holder desiring to transfer, split up, combine or exchange any
Rights Certificate or Certificates shall make such request in writing delivered
to the Rights Agent and shall execute and surrender the Rights Certificate or
Certificates to be transferred, split up, combined or exchanged at the office of
the Rights Agent designated for such purpose. Neither the Rights Agent nor the
Company shall be obligated to take any action whatsoever with respect to the
transfer of any such surrendered Rights Certificate until the registered holder
shall have completed and signed the certificate contained in the form of
assignment set forth on the reverse side of such Rights Certificate and shall
have provided such additional evidence of the identity of the Beneficial Owner
or former Beneficial Owner (or Affiliates or Associates thereof) of the Rights
represented by such Rights Certificate as the Company shall reasonably request;
whereupon the Rights Agent shall, subject to the provisions of Sections 4(b),
7(e) and 14 hereof, countersign and deliver to the Person entitled thereto a
Rights Certificate or Rights Certificates, as the case may be, as so requested.
The Company may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer, split
up, combination or exchange of Rights Certificates.
(b) If a Rights Certificate shall be mutilated, lost, stolen or
destroyed, upon request by the registered holder of the Rights represented
thereby, there shall be issued, in exchange for and upon cancellation of the
mutilated Rights Certificate, or in substitution for the lost, stolen or
destroyed Rights Certificate, a new Rights Certificate, in substantially the
form of the prior Rights Certificate, of like tenor and representing the
equivalent number of Rights; provided, however, that a new Rights Certificate
shall be issued only upon reimbursement to the Company or the Rights Agent (as
the case may be) of all reasonable expenses incidental thereto, if such
reimbursement is requested by the Company or the Rights Agent; and provided
further, that, in the case of loss, theft or destruction of a Rights
Certificate, a new Rights Certificate shall be issued only upon receipt of
evidence satisfactory to the Company and the Rights Agent of such loss, theft or
destruction and, if requested by the Company or the Rights Agent, indemnity or
security reasonably satisfactory to the Company or the Rights Agent (as the case
may be).
Section 7. Exercise of Rights: Exercise Price: Expiration Date of Rights.
(a) At any time after the Exercisability Date and prior to the earlier of
(i) the Close of Business on the tenth anniversary of the Record Date (the
"Final Expiration Date"), or (ii) the time at which the Rights are redeemed as
provided in Section 23 hereof (the "Redemption Date") (the earlier of (i) and
(ii) being the "Expiration Date"), the registered holder of any Rights
Certificate may, subject to the provisions of Section 7(e) hereof, exercise the
Rights evidenced thereby in whole or in part upon surrender of the Rights
Certificate, with the form of election to purchase and the certificate on the
reverse side thereof duly executed, to the Rights Agent at the office of the
Rights Agent designated for such purpose, together with payment of the aggregate
Exercise Price (as hereinafter defined) for the total number of one hundredths
of a share of Preferred Stock (or,
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following a Triggering Event, other securities, cash or other assets, as the
case may be) for which such surrendered Rights are then exercisable.
(b) The purchase price for each one hundredth of a share of Preferred
Stock upon exercise of the Rights initially shall be [$ , subject to adjustment
from time to time as provided in the next sentence and in Sections 11 and 13(a)
hereof (such purchase price, as so adjusted, being the "Exercise Price"), and
shall be payable in accordance with paragraph (c) below. Anything in this
Agreement to the contrary notwithstanding, in the event that, at any time after
the effective date of this Agreement and prior to the Exercisability Date, the
Company shall (i) declare a dividend on the Common Stock payable in shares of
Common Stock, (ii) subdivide the outstanding Common Stock, (iii) combine the
outstanding Common Stock into a smaller number of shares, or (iv) issue any
shares of its capital stock in a reclassification of the Common Stock; then, in
any such case, each share of Common Stock outstanding following such dividend,
subdivision, combination or reclassification shall continue to have a Right
associated therewith, and the Exercise Price following any such event shall be
proportionately adjusted to equal the result obtained by multiplying the
Exercise Price immediately prior to such event by a fraction, the numerator of
which shall be the total number of shares of Common Stock outstanding
immediately prior to the occurrence of the event and the denominator of which
shall be the total number of shares of Common Stock outstanding immediately
following the occurrence of such event. The adjustment provided for in the
preceding sentence shall be made successively whenever such a dividend is
declared or such a subdivision, combination or reclassification is effected.
(c) Upon receipt of a Rights Certificate representing exercisable Rights,
with the form of election to purchase and the certificate duly executed,
accompanied by payment in the manner described below, with respect to each Right
so exercised, of the Exercise Price for the one hundredth of a share of
Preferred Stock (or, following a Triggering Event, other securities, cash or
other assets, as the case may be) to be purchased thereby, and of an amount
equal to any applicable transfer tax required to be paid by the holder in
accordance with Section 6 hereof or evidence satisfactory to the Company of
payment of such tax), the Rights Agent shall, subject to Section 20(j) hereof,
thereupon promptly:
(i) requisition from the transfer agent for the Preferred Stock
certificates for such total number of one hundredths of a share of
Preferred Stock as are to be purchased, and the Company will direct the
transfer agent to comply with such request;
(ii) requisition from the Company the amount of cash, if any, to be
paid in lieu of fractional shares in accordance with Section 14 hereof;
(iii) after receipt of such Preferred Stock certificates, cause the
same to be delivered to or upon the order of the registered holder of
such Rights Certificate, registered in such name or names as may be
designated by such holder; and
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(iv) after receipt of such cash, if any, deliver the same to or
upon the order of the registered holder of such Rights Certificate.
In the event that the Company is obligated to issue other securities of the
Company, pay cash and/or distribute other property pursuant to Section 11(a)
hereof, the Company will make all arrangements necessary so that such other
securities, cash and/or other property are available for distribution by the
Rights Agent, if and when appropriate. The payment of the Exercise Price (as
such amount may be reduced pursuant to Section 11(a)(iii) hereof) may be made in
cash or by certified or bank check or bank draft payable to the order of the
Company. The Company reserves the right to require prior to the occurrence of a
Triggering Event that, upon any exercise of Rights, a number of Rights be
exercised so that only whole shares of Preferred Stock would be issued.
(d) In the event of an exercise of the Rights by a holder pursuant to
Section 11(a)(ii) hereof, the Rights Agent shall return such Rights Certificate
to the registered holder thereof after imprinting, stamping, or otherwise
indicating thereon that the rights represented by such Rights Certificate no
longer include the rights provided by Section 11(a)(ii) of the Rights
Agreement. In addition, in the event that the registered holder of any Rights
Certificate shall exercise less than all the Rights evidenced thereby, a new
Rights Certificate evidencing the Rights remaining unexercised (and, if some of
the Rights exercised were exercised pursuant to Section 11 (a)(ii), indicating
by imprint, stamp or otherwise the number of Rights remaining which continue to
include rights provided by Section 11 (a)(ii)) shall be issued by the Rights
Agent and delivered to, or upon the order of, the registered holder of such
Rights Certificate, registered in such name or names as may be designated by
such holder, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, from and
after the first occurrence of a Section 11(a)(ii) Event, any Rights
beneficially owned by any of the Persons described below shall be null and void
without any further action, and no holder of such Rights shall have any rights
whatsoever with respect to such Rights, whether under any provision of this
Agreement or otherwise:
(i) an Acquiring Person or an Affiliate or Associate of an
Acquiring Person;
(ii) a transferee of an Acquiring Person (or of any such Affiliate
or Associate) which becomes a transferee after the Acquiring Person
becomes such; or
(iii) a transferee of an Acquiring Person (or of any such Affiliate
or Associate) which becomes a transferee prior to or concurrently with
the Acquiring Person becoming such and which receives such Rights
pursuant to either (A) a transfer (whether or not for consideration) from
the Acquiring Person (or any such Affiliate or Associate) to holders of
equity interests therein, or to any Person with whom such Acquiring
Person (or Affiliate or Associate) has any continuing agreement,
arrangement or understanding regarding the transferred Rights, shares of
Common Stock, or the Company, or (B) a transfer which a
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majority of the Board has determined to be part of a plan, arrangement or
understanding which has as a primary purpose or effect the avoidance of
this Section 7(e).
The Company shall use all reasonable efforts to ensure that the provisions of
this Section 7(e) and Section 4(b) hereof are complied with, but shall have no
liability to any holder of Rights or any other Person as a result of its failure
to make any determination under this Section 7(e) or such Section 4(b) with
respect to an Acquiring Person or its Affiliates, Associates or transferees.
(f) Notwithstanding anything in this Agreement or any Rights Certificate
to the contrary, neither the Rights Agent nor the Company shall be obligated to
undertake any action with respect to a registered holder upon the occurrence of
any purported exercise by such registered holder unless such registered holder
shall have (i) completed and executed the certificate following the form of
election to purchase set forth on the reverse side of the Rights Certificate
surrendered for such exercise, and (ii) provided such additional evidence of the
identity of the Beneficial Owner or former Beneficial Owner (or Affiliates or
Associates thereof) of the Rights represented by such Rights Certificate as the
Company shall reasonably request.
Section 8. Cancellation and Destruction of Rights Certificates.
All Rights Certificates surrendered for the purpose of exercise,
transfer, split up, combination or exchange shall, if surrendered to the Company
or any of its agents, be delivered to the Rights Agent for cancellation or in
canceled form, or, if surrendered to the Rights Agent, shall be canceled by it,
and no Rights Certificates shall be issued in lieu thereof except as expressly
permitted by this Agreement. The Company shall deliver to the Rights Agent for
cancellation and retirement, and the Rights Agent shall so cancel and retire,
any Rights Certificates acquired by the Company otherwise than upon the exercise
thereof. The Rights Agent shall deliver all canceled Rights Certificates to the
Company, or, at the written request of the Company, shall destroy such canceled
Rights Certificates and, in such case, shall deliver a certificate of
destruction thereof to the Company.
Section 9. Reservation and Availability of Capital Stock.
(a) The Company shall (i) at all times prior to the Expiration Date cause
to be reserved and kept available out of its authorized and unissued shares of
Preferred Stock, or any authorized and issued shares of Preferred Stock held in
its treasury, the number of shares of Preferred Stock that, as provided in this
Agreement, including, without limitation, Section 11 (a)(iii) hereof, will be
sufficient to permit the exercise in full of all outstanding Rights; and (ii) at
all times following the occurrence of a Section 11 (a)(ii) Event, shall so
reserve and keep available a sufficient number of any other securities that may
be required to permit the exercise in full of the Rights pursuant to this
Agreement.
(b) The Company shall use its best efforts:
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(i) as soon as practicable following (A) the occurrence of a
Section 11(a)(ii) Event and a determination by the Company in accordance
with Section 11 (a)(iii) hereof of the consideration to be delivered by
the Company upon exercise of the Rights or (B) if so required by law, the
Exercisability Date, to file a registration statement (the "Registration
Statement") on an appropriate form under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the securities that may
be acquired upon exercise of the Rights;
(ii) to cause the Registration Statement to become effective as
soon as practicable after the date of such filing (such date being the
"Registration Date");
(iii) to cause the Registration Statement to remain effective (and
to include a prospectus complying with the requirements of the Securities
Act) until the earlier of (A) the date as of which the Rights are no
longer exercisable for the securities covered by the Registration
Statement, and (B) the Expiration Date; and
(iv) as soon as practicable following the Registration Date, to
take such action as may be required to ensure that any acquisition of
securities upon exercise of the Rights complies with any applicable state
securities or "blue sky" laws.
The Company may temporarily suspend the exercisability of the Rights, for a
period of time not to exceed ninety (90) days after the date set forth in
subclause (A) or (B), whichever applies, of clause (i) of the first sentence of
this Section 9(b) in order to prepare and file such Registration Statement and
permit it to become effective. Upon any such suspension of exercisability, the
Company shall issue a public announcement stating that the exercisability of the
Rights has been temporarily suspended and, upon termination of such suspension,
the Company shall issue a public announcement stating that the suspension is no
longer in effect. In addition, if the Company shall determine that a
Registration Statement is required following the Exercisability Date, the
Company may temporarily suspend the exercisability of the Rights until such time
as such Registration Statement has been declared effective. Notwithstanding any
provision of this Agreement to the contrary, the Rights shall not be exercisable
in any jurisdiction if the requisite qualification in such jurisdiction shall
not have been obtained, the exercise thereof shall not be permitted under
applicable law, or a Registration Statement, as described above, shall not have
been declared effective.
(c) The Company shall take such action as may be necessary to ensure that
all one hundredths of a share of Preferred Stock (and, following the occurrence
of a Triggering Event, any other securities) that may be delivered upon exercise
of Rights shall be, at the time of delivery of the certificates for such
securities, duly and validly authorized and issued, and fully paid and
nonassessable.
(d) So long as the shares of Preferred Stock (and, after the occurrence
of a Triggering Event, any other securities) issuable upon the exercise of the
Rights may be listed on any national
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securities exchange, the Company shall use its best efforts to cause, from and
after such time as the Rights become exercisable, all shares reserved for such
issuance to be listed on such exchange upon official notice of issuance upon
such exercise.
(e) The Company may pay or may require the Rights holder to pay any
documentary, stamp or transfer tax imposed in connection with the issuance or
delivery of the Rights Certificates or certificates for shares of Preferred
Stock (or, following the occurrence of a Triggering Event, any other securities
or other assets) upon the exercise of Rights. The Company shall not be required
to issue or deliver any certificates for shares of Preferred Stock (or any other
securities, cash or assets, as the case may be) to or in the name of the
registered holder upon the exercise of any Rights until any such tax shall have
been paid (any such tax being payable by the holder of such Rights Certificate
at the time of surrender) or until it has been established to the Company's
satisfaction that no such tax is due.
Section 10. Preferred Stock Record Date.
Each Person in whose name any certificate for a number of one hundredths
of a share of Preferred Stock (or, following the occurrence of a Triggering
Event, other securities) is issued upon the exercise of Rights shall for all
purposes be deemed to have become the holder of record of such fractional shares
of Preferred Stock or other securities represented thereby on, and such
certificate shall be dated, the date upon which the Rights Certificate
evidencing such Rights was duly surrendered and payment of the Exercise Price
(and any applicable transfer taxes) was made; provided, however, that if the
date of such surrender and payment is a date upon which the Preferred Stock (or
other securities) transfer books of the Company are closed, such Person shall be
deemed to have become the record holder of such securities fractional or
otherwise on, and such certificate shall be dated as of the next succeeding
Business Day on which the Preferred Stock (or other securities) transfer books
of the Company are open. Prior to the exercise of the Rights evidenced thereby,
the holder of a Rights Certificate shall not be entitled to any rights of a
stockholder of the Company with respect to securities for which the Rights shall
be exercisable, including, without limitation, the right to vote, to receive
dividends or other distributions, or to exercise any preemptive rights, and
shall not be entitled to receive any notice of any proceedings of the Company,
except as provided herein.
Section 11. Adjustment of Exercise Price. Number and Kind of Shares or
Number of Rights.
The Exercise Price, the number and kind of securities covered by each
Right, and the number of Rights outstanding are subject to adjustment from time
to time as provided in this Section 11.
(a) (i) In the event that the Company, at any time after the date of this
Agreement, shall (A) declare a dividend on the Preferred Stock payable in shares
of Preferred Stock, (B) subdivide the outstanding Preferred Stock, (C) combine
the outstanding Preferred Stock into
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a smaller number of shares, or (D) issue any shares of its capital stock in a
reclassification of the Preferred Stock (including any such reclassification in
connection with a consolidation or merger in which the Company is the continuing
or surviving corporation), except as otherwise provided in this Section 11 (a)
and Section 7(e) hereof, the Exercise Price in effect at the time of the record
date for such dividend or of the effective date of such subdivision, combination
or reclassification, and the number and kind of shares of Preferred Stock or
other capital stock, as the case may be, issuable on such date upon exercise of
the Rights, shall be proportionately adjusted so that the holder of any Right
exercised after such time shall be entitled to receive, upon payment of the
Exercise Price then in effect, the aggregate number and kind of shares of
Preferred Stock or other capital stock, as the case may be, which, if such Right
had been exercised immediately prior to such date, such holder would have owned
upon such exercise and been entitled to receive by virtue of such dividend,
subdivision, combination or reclassification; provided, however, that if the
record date for any such dividend, subdivision, combination or reclassification
shall occur prior to the Exercisability Date, the Company shall make an
appropriate adjustment to the Exercise Price in lieu of adjusting (as described
above) the number of shares of Preferred Stock (or other capital stock, as the
case may be) issuable upon exercise of the Rights. If an event occurs which
would require an adjustment under both this Section 11(a)(i) and Section 11
(a)(ii) hereof, the adjustment provided for in this Section 11 (a)(i) shall be
in addition to, and shall be made prior to, any adjustment required pursuant to
Section 11 (a)(ii) hereof.
(ii) In the event that any Person shall become an Acquiring Person, other
than pursuant to any transaction set forth in Section 13(a) hereof, then,
promptly following the occurrence of such event (a "Section 11 (a)(ii) Event"),
proper provision shall be made so that each holder of a Right (except as
provided below and in Section 7(e) hereof) shall thereafter have, and proper
provision shall be made so that each such holder shall have, the right to
receive, upon exercise thereof at a price equal to the then current Exercise
Price in accordance with the terms of this Agreement, in lieu of a number of one
hundredths of a share of Preferred Stock, such number of shares of Common Stock
as shall equal the result obtained by (x) multiplying the then current Exercise
Price by the number of one hundredths of a share of Preferred Stock for which a
Right was potentially exercisable immediately prior to the first occurrence of a
Section 11 (a)(ii) Event (such that if the Right was potentially exercisable for
one hundredth of one share of Preferred Stock immediately prior to such Section
11 (a)(ii) Event, the Exercise Price would be multiplied by one), and dividing
that product by (y) 50% of the current market price (as determined pursuant to
Section 11(d) hereof) per share of the Common Stock on the date of the first
occurrence of a Section 11 (a)(ii) Event (such number of shares, the "Adjustment
Shares").
(iii) In the event that the number of shares of Common Stock which are
authorized by the Company's Articles of Incorporation but are not outstanding
and are not reserved for issuance for purposes other than upon exercise of the
Rights are not sufficient
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to permit the exercise in frill of the Rights in accordance with the foregoing
subparagraph (ii) of this Section 11(a), the Company shall:
(A) determine the excess of(1) the value of the Adjustment Shares
issuable upon the exercise of a Right (the "Current Value") over (2) the
Exercise Price (such excess being the "Spread"); and
(B) with respect to each Right, make adequate provision to substitute for
the Adjustment Shares, upon payment of the applicable Exercise Price, (1) cash,
(2) a reduction in the Exercise Price, (3) other equity securities of the
Company, (such other equity securities being referred to as "capital stock
equivalents"), (4) debt securities of the Company, (5) other assets, or (6) any
combination of the foregoing, such substituted items having an aggregate value
equal to the Current Value, where such aggregate value has been determined by a
majority of the Board of Directors after receiving advice from a nationally
recognized investment banking firm;
provided, however, that if the Company shall not have made adequate
provision to deliver value pursuant to clause (B) above within thirty (30)
days following the later of (x) the first occurrence of a Section 11 (a)(ii)
Event and (y) the date on which the Company's right of redemption pursuant
to Section 23(a) expires (the later of (x) and (y) being referred to herein
as the "Section 11 (a)(ii) Trigger Date"), then the Company shall be
obligated to deliver, upon the surrender for exercise of a Right and without
requiring payment of the Exercise Price, shares of Common Stock (to the
extent available) and then, if necessary, cash, which shares and/or cash
shall have an aggregate value equal to the Spread. To the extent that the
Company determines that some action need be taken pursuant to the first
sentence of this Section 11 (a)(iii), the Company shall provide, subject to
Section 7(e) hereof, that such action shall apply uniformly to all
outstanding Rights. For purposes of this Section 11 (a)(iii), the value of
the Common Stock shall be the current market price (as determined pursuant
to Section 11(d) hereof) per share of Common Stock on the Section 11(a)(ii)
Trigger Date and the value of any "common stock equivalent" shall be deemed
to have the same value as the Common Stock on such date.
(b) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Stock entitling them to
subscribe for or purchase (for a period expiring within forty-five (45) calendar
days after such record date) Preferred Stock (or shares having the same rights,
privileges and preferences as shares of Preferred Stock ("equivalent preferred
stock")) or securities convertible into Preferred Stock or equivalent preferred
stock at a price per share of Preferred Stock or per share of equivalent
preferred stock (or having a conversion price per share, if a security
convertible into Preferred Stock or equivalent preferred stock) less than the
current market price (as determined pursuant to Section 11(d) hereof) per share
of Preferred Stock on such record date, then the Exercise Price to be in effect
after such record date shall be determined by multiplying the Exercise Price in
effect immediately prior to such record date by a fraction, the
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numerator of which shall be the sum of the number of shares of Preferred Stock
outstanding on such record date plus the number of shares of Preferred Stock
which the aggregate offering price of the total number of shares of Preferred
Stock and/or equivalent preferred stock so to be offered (and/or the aggregate
initial conversion price of the convertible securities so to be offered) would
purchase at such current market price, and the denominator of which shall be the
number of shares of Preferred Stock outstanding on such record date plus the
number of additional shares of Preferred Stock and/or equivalent preferred stock
to be offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible). In case such
subscription price may be paid by delivery of consideration part or all of which
may be in a form other than cash, the value of such consideration shall be as
determined in good faith by the Board, whose determination shall be described in
a statement filed with the Rights Agent and shall be binding on the Rights Agent
and the holders of the Rights. Shares of Preferred Stock owned by or held for
the account of the Company or any Subsidiary shall not be deemed outstanding for
the purpose of any such computation. Such adjustment shall be made successively
whenever such a record date is fixed, and in the event that such rights or
warrants are not so issued, the Exercise Price shall be adjusted to be the
Exercise Price which would then be in effect if such record date had not been
fixed.
(c) In case the Company shall fix a record date for a distribution to all
holders of shares of Preferred Stock (including any such distribution made in
connection with a share exchange or merger in which the Company is the
continuing corporation) of evidences of indebtedness, cash (other than a regular
quarterly cash dividend out of the earnings or retained earnings of the
Company), assets (other than a dividend payable in shares of Preferred Stock but
including any dividend payable in stock other than Preferred Stock) or
subscription rights or warrants (excluding those referred to in Section 11(b)
hereof), then the Exercise Price to be in effect after such record date shall be
determined by multiplying the Exercise Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the then current
market price (as determined pursuant to Section 11(d) hereof) per share of
Preferred Stock on such record date less the fair market value (as determined in
good faith by the Board, whose determination shall be described in a statement
filed with the Rights Agent and shall be binding on the Rights Agent and the
holders of the Rights) of the portion of the cash, assets or evidences of
indebtedness so to be distributed or of such subscription rights or warrants
applicable to a share of Preferred Stock and the denominator of which shall be
such current market price (as determined pursuant to Section 11(d) hereof) per
share of Preferred Stock. Such adjustments shall be made successively whenever
such a record date is fixed, and in the event that such distribution is not so
made, the Exercise Price shall be adjusted to be the Exercise Price which would
have been in effect if such record date had not been fixed.
(d) (i) For the purpose of any computation hereunder, the "current market
price" per share of Common Stock (or, after the occurrence of a Triggering
Event, any other securities) on any date shall be deemed to be the average of
the daily closing prices per share of such Common Stock or other securities for
the thirty (30) consecutive Trading Days (as such term is hereinafter defined)
immediately prior to such date; provided, however, that if, prior to the
expiration of such requisite thirty Trading Day period, the issuer announces
either (A) a dividend or distribution on such
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Common Stock (or other securities) payable in such Common Stock (or other
securities) or securities convertible into such Common Stock (or other
securities), other than the Rights, or (B) any subdivision, combination or
reclassification of such Common Stock (or other securities), then, following the
ex-dividend date for such dividend or the record date for such subdivision, as
the case may be, the "current market price" shall be properly adjusted to take
into account such event. The closing price for each day shall be, if the shares
of Common Stock (or other securities) are listed and admitted to trading on a
national securities exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the principal
national securities exchange on which such shares are listed or admitted to
trading or, if such shares of Common Stock (or other securities) are not listed
or admitted to trading on any national securities exchange, the last quoted
sales price or, if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported on The Nasdaq Stock Market's
National Market (the "Nasdaq National Market") or such other system then in use,
or, if on any such date such shares are not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the shares of Common Stock (or other securities)
selected by the Board. If on any such date no market maker is making a market in
such shares, the fair value of such shares on such date as determined in good
faith by the Board, shall be used. The term "Trading Day" shall mean a Business
Day or, if such shares are listed or admitted to trading on any national
securities exchange, a day on which the principal national securities exchange
on which such shares are listed or admitted to trading is open for the
transaction of business.
(ii) For the purpose of any computation of the current market price per
share of Preferred Stock, if the shares of Preferred Stock are not publicly held
or not so listed or traded, "current market price" per share of the Preferred
Stock shall be conclusively determined to be the current market price per share
of the Common Stock as determined pursuant to Section 11 (d)(i) (appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof), multiplied by one hundred. If neither the
Common Stock nor the Preferred Stock is publicly held or so listed or traded,
the "current market price" per share of Preferred Stock shall mean the fair
value per share as determined in good faith by the Board, whose determination
shall be described in a statement filed with the Rights Agent and shall be
conclusive for all purposes.
(e) Anything herein to the contrary notwithstanding, no adjustment in the
Exercise Price shall be required unless such adjustment would require an
increase or decrease of at least one percent (1%) in the Exercise Price;
provided, however, that any adjustments which by reason of this Section 11(e)
are not required to be made shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this Section 11 shall be made
to the nearest cent or to the nearest one ten-thousandth of a share of Common
Stock (or other securities) or one hundred-thousandth of a share of Preferred
Stock. Notwithstanding the first sentence of this Section 11(e), any adjustment
required by this Section 11 shall be made no later than the earlier of (i) three
years from the date of the transaction which mandates such adjustment or (ii)
the Expiration Date.
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(f) It as a result of an adjustment made pursuant to Sections 11 (a)(ii)
or 13(a) hereof the holder of any Right thereafter exercised shall become
entitled to receive any shares of capital stock other than Preferred Stock,
thereafter the number of such other shares so receivable upon exercise of any
Right and the Exercise Price thereof shall be subject to adjustment from time to
time in the manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Preferred Stock contained in Sections 11(a), (b),
(c), (e), (g), (h), (i), (j), (k), and (m), and the provisions of Sections
7.9, 10.13 and 14 hereof with respect to the Preferred Stock shall apply on like
terms to any such other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Exercise Price hereunder shall evidence the right to
purchase, at the adjusted Exercise Price, the number of shares of Preferred
Stock (or other securities or amount of cash or combination thereof) that may be
acquired from time to time hereunder upon exercise of the Rights, all subject to
further adjustment as provided herein.
(h) Unless the Company shall have exercised its election as provided in
Section 11(i) hereof, upon each adjustment of the Exercise Price as a result of
the calculations made in Sections 11(b) and (c) hereof each Right outstanding
immediately prior to the making of such adjustment shall thereafter evidence the
right to purchase, at the adjusted Exercise Price, that number of one hundredths
of a share of Preferred Stock or other securities (calculated to the nearest
one-millionth of a share) obtained by
(i) multiplying (x) the number of one hundredths of a share of
Preferred Stock or other securities covered by a Right immediately prior
to this adjustment by (y) the Exercise Price in effect immediately prior
to such adjustment of the Exercise Price; and
(ii) dividing the product so obtained by the Exercise Price in
effect immediately after such adjustment of the Exercise Price.
(i) The Company may elect on or after the date of any adjustment of the
Exercise Price to adjust the number of Rights, in lieu of any adjustment in the
number of one hundredths of a share of Preferred Stock (or other securities)
that may be acquired upon the exercise of a Right. Each of the Rights
outstanding after the adjustment in the number of Rights shall be exercisable
for the number of one hundredths of a share of Preferred Stock (or other
securities) for which a Right was exercisable immediately prior to such
adjustment. Each Right held of record prior to such adjustment of the number of
Rights shall become that number of Rights (calculated to the nearest
ten-thousandth) obtained by dividing the Exercise Price in effect immediately
prior to adjustment of the Exercise Price by the Exercise Price in effect
immediately after adjustment of the Exercise Price. The Company shall make a
public announcement of its election to adjust the number of Rights, indicating
the record date for the adjustment, and, if known at the time, the amount of the
adjustment to be made. This record date may be the date on which the Exercise
Price is adjusted or any day thereafter, but, if the Rights Certificates have
been issued, shall be at least ten (10) days later
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than the date of such public announcement, If Rights Certificates have been
issued, upon each adjustment of the number of Rights pursuant to this Section
11(j), the Company shall, as promptly as practicable, cause to be distributed to
holders of record of Rights Certificates on such record date Rights Certificates
evidencing, subject to Section 14 hereof the additional Rights to which such
holders shall be entitled as a result of such adjustment, or, at the option of
the Company, shall cause to be distributed to such holders of record in
substitution and replacement for the Rights Certificates held by such holders
prior to the date of adjustment, and upon surrender thereof, if required by the
Company, new Rights Certificates evidencing all the Rights to which such holders
shall be entitled after such adjustment. Rights Certificates to be so
distributed shall be issued, executed and countersigned in the manner provided
for herein (and may bear, at the option of the Company, the adjusted Exercise
Price) and shall be registered in the names of the holders of record of Rights
Certificates on the record date specified in the public announcement,
(j) Irrespective of any adjustment or change in the Exercise Price or the
number of one hundredths of a share of Preferred Stock (or other securities)
issuable upon the exercise of the Rights, the Rights Certificates theretofore
and thereafter issued may continue to express the Exercise Price per one
hundredth of a share and the number of one hundredths of a share of Preferred
Stock (or other securities) which were expressed in the initial Rights
Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing the
Exercise Price below the then par value, if any, of the number of one hundredths
of a share of Preferred Stock (or other securities) issuable upon exercise of
the Rights, the Company shall take any corporate action which may, in the
opinion of its counsel, be necessary in order that the Company may validly and
legally issue such fully paid and nonassessable number of one hundredths of a
share of Preferred Stock (or other securities) at such adjusted Exercise Price.
(l) In any case in which this Section 11 shall require that an adjustment
in the Exercise Price be made effective as of a record date for a specified
event, the Company may elect to defer until the occurrence of such event the
issuance to the holder of any Right exercised after such record date of that
number of one hundredths of a share of Preferred Stock and shares of other
capital stock or securities of the Company, if any, issuable upon such exercise
over and above the number of one hundredths of a share of Preferred Stock and
shares of other capital stock or securities of the Company, if any, issuable
upon such exercise on the basis of the Exercise Price in effect prior to such
adjustment; provided, however, that the Company shall deliver to such holder a
due xxxx or other appropriate instrument evidencing such holder's right to
receive such additional shares (fractional or otherwise) or securities upon the
occurrence of the event requiring such adjustment.
(m) Anything in this Section 11 to the contrary notwithstanding, the
Company shall be entitled to make such reductions in the Exercise Price, in
addition to those adjustments expressly required by this Section 11, as and to
the extent that in their good faith judgment the Board shall determine to be
advisable in order that any (i) consolidation or subdivision of the Preferred
Stock, (ii) issuance wholly for cash of any shares of Preferred Stock at less
than the current market price,
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(iii) issuance wholly for cash of shares of Preferred Stock or securities which
by their terms are convertible into or exchangeable for shares of Preferred
Stock, (iv) stock dividends or (v) issuance of rights, options or warrants
referred to in this Section 11, hereafter made by the Company to holders of its
Preferred Stock, shall not be taxable to such holders or shall reduce the taxes
payable by such holders.
(n) The Company shall not, at any time after the Exercisability Date:
(i) consolidate with any other Person (other than a Subsidiary of
the Company in a transaction which complies with Section 11(o) hereof);
(ii) merge with or into any other Person (other than a Subsidiary
of the Company in a transaction which complies with Section 11(o)
hereof); or
(iii) sell or transfer (or permit any Subsidiary to sell or
transfer), in one transaction, or a series of related transactions,
assets, cash flow or earning power aggregating more than 50% of the
assets, cash flow or earning power of the Company and its Subsidiaries
(taken as a whole) to any other Person or Persons (other than the Company
and/or any of its Subsidiaries in one or more transactions each of which
complies with Section 11(o) hereof);
if
(x) at the time of or immediately after such consolidation, merger
or sale, there are any rights, warrants or other instruments or
securities outstanding or agreements in effect which would substantially
diminish or otherwise eliminate the benefits intended to be afforded by
the Rights; or
(y) prior to, simultaneously with, or immediately after such share
exchange, merger or sale, the Person which constitutes, or would
constitute, the "Principal Party" for purposes of Section 13(a) hereof
shall have distributed or otherwise transferred to its stockholders (or
other persons holding an equity interest in such Person) Rights
previously owned by such Person or any of its Affiliates and Associates;
provided, however, that this Section 11(n) shall not affect the ability of any
Subsidiary of the Company to effect a share exchange with, merge with or into,
or sell or transfer assets or earning power to, the Company or any other
Subsidiary of the Company.
(o) After the Exercisability Date, the Company shall not, except as
permitted by Section 23 or Section 27 hereof, take (or permit any Subsidiary to
take) any action if at the time such action is taken it is reasonably
foreseeable that such action will materially diminish or otherwise eliminate the
benefits intended to be afforded by the Rights.
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Section 12. Certificate of Adjusted Exercise Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 and Section 13
hereof, the Company shall (a) promptly prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for such adjustment,
(b) promptly file with the Rights Agent, and with each transfer agent for the
Common Stock, a copy of such certificate, and (c) mail a brief summary thereof
to each holder of a Rights Certificate (or, if prior to the Exercisability Date,
to each holder of a certificate representing shares of Common Stock) in
accordance with Section 26 hereof. The Rights Agent shall be fully protected in
relying on any such certificate and on any adjustment therein contained and
shall not be deemed to have knowledge of any such adjustment unless and until it
shall have received such certificate.
Section 13. Consolidation. Merger or Sale or Transfer of Assets or
Earning Power.
(a) In the event that, following the Stock Acquisition Date, directly or
indirectly:
(x) the Company shall consolidate with, or merge with and into, any
other Person (other than a Subsidiary of the Company in a transaction
which complies with Section 11(o) hereof), and the Company shall not be
the continuing or surviving corporation of such share exchange or merger,
(y) any Person (other than a Subsidiary of the Company in a
transaction which complies with Section 11(o) hereof) shall effect a
consolidation with, or merge with or into, the Company, and the Company
shall be the continuing or surviving corporation of such share exchange
or merger and, in connection with such share exchange or merger, all or
part of the outstanding shares of Common Stock shall be converted into or
exchanged for stock or other securities of any other Person or cash or
any other property, or
(z) the Company shall sell or otherwise transfer (or one or more of
its Subsidiaries shall sell or otherwise transfer) to any Person or
Persons (other than the Company or any of its Subsidiaries in one or more
transactions each of which complies with Section 11(o) hereof), in one or
more transactions, assets, cash flow or earning power aggregating more
than 50% of the assets, cash flow or earning power of the Company and its
Subsidiaries (taken as a whole),
(any such event described in clause (x), (y) or (z) above being a "Section 13
Event"); then and in each such case, proper provision shall be made so that:
(i) each holder of a Right, except as provided in Section 7(e)
hereof, shall thereafter have the right to receive, upon the exercise
thereof at the then current Exercise Price (disregarding any adjustment
of the Exercise Price pursuant to Section 11 (a)(ii) hereof),
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such number of validly authorized and issued, fully paid, nonassessable and
freely tradeable shares of common stock of the Principal Party (as such term is
hereinafter defined), which shares shall not be subject to any liens,
encumbrances, rights of first refusal, transfer restrictions or other adverse
claims, as shall be equal to the result obtained by:
(A) multiplying the then current Exercise Price by the number of
one hundredths of a share of Preferred Stock for which a Right is
exercisable immediately prior to the first occurrence of a Section 13
Event (or, if a Section 11 (a)(ii) Event has occurred prior to the first
occurrence of a Section 13 Event, multiplying the number of one
hundredths of a share of Preferred Stock for which a Right was
exercisable immediately prior to the first occurrence of such Section 11
(a) (ii) Event by the Exercise Price in effect immediately prior to such
first occurrence), and
(B) dividing that product (which, following the first occurrence of
a Section 13 Event, shall be the "Exercise Price" for all purposes of
this Agreement) by 50% of the current market price (determined pursuant
to Section 11(d) hereof) per share of the common stock of such Principal
Party on the date of consummation of such Section 13 Event;
(ii) such Principal Party shall thereafter be liable for, and shall
assume, by virtue of such Section 13 Event, all the obligations and duties of
the Company pursuant to this Agreement;
(iii) the term "Company" shall thereafter be deemed to refer to such
Principal Party, it being specifically intended that the provisions of Section
11 hereof shall apply only to such Principal Party following the first
occurrence of a Section 13 Event;
(iv) such Principal Party shall take such steps (including, but not
limited to, the reservation of a sufficient number of shares of its common
stock) in connection with the consummation of any such transaction as may be
necessary to ensure that the provisions of this Agreement shall thereafter be
applicable to its shares of common stock thereafter deliverable upon the
exercise of the Rights; and
(v) the provisions of Section 11(a)(ii) hereof shall be of no further
effect following the first occurrence of any Section 13 Event.
(b) "Principal Party" shall mean:
(i) in the case of any transaction described in clause (x) or (y) of the
first sentence of Section 13(a) hereof, (A) the Person that is the issuer of any
securities into which shares of Common Stock are converted in such merger or
consolidation, or, if there is more
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than one such issuer, the issuer of common stock that has the highest aggregate
current market price (determined pursuant to Section 11(d) hereof) and (B) if no
securities are so issued, the Person that is the other party to such merger or
consolidation, or, if there is more than one such Person, the Person the common
stock of which has the highest aggregate current market price (determined
pursuant to Section 11(d) hereof); and
(ii) in the case of any transaction described in clause (z) of the
first sentence of Section 13(a) hereof, the Person that is the party receiving
the largest portion of the assets or earning power transferred pursuant to such
transaction or transactions, or, if each Person that is a party to such
transaction or transactions receives the same portion of the assets or earning
power transferred pursuant to such transaction or transactions or if the Person
receiving the largest portion of the assets or earning power cannot be
determined, whichever Person the common stock of which has the highest aggregate
current market price (determined pursuant to Section 11(d) hereof); provided,
however, that in any such case:
(A) if the common stock of such Person is not at such time, and has
not been continuously over the preceding twelve-month period, registered
under Section 12 of the Exchange Act ("Registered Common Stock"), or such
Person is not a corporation, and such Person is a direct or indirect
Subsidiary of another Person that has Registered Common Stock
outstanding, "Principal Party" shall refer to such other Person;
(B) if the common stock of such Person is not Registered Common
Stock or such Person is not a corporation, and such Person is a direct or
indirect Subsidiary of another Person but is not a direct or indirect
Subsidiary of another Person which has Registered Common Stock
outstanding, "Principal Party" shall refer to the ultimate parent entity
of such first-mentioned Person;
(C) if the common stock of such Person is not Registered Common
Stock or such Person is not a corporation, and such Person is directly or
indirectly controlled by more than one Person, and one or more of such
other Persons has Registered Common Stock outstanding, "Principal Party"
shall refer to whichever of such other Persons is the issuer of the
Registered Common Stock having the highest aggregate current market price
(determined pursuant to Section 11(d) hereof); and
(D) if the common stock of such Person is not Registered Common
Stock or such Person is not a corporation, and such Person is directly or
indirectly controlled by more than one Person, and none of such other
Persons have Registered Common Stock outstanding, "Principal Party" shall
refer to whichever ultimate parent entity is the corporation having the
greatest stockholders equity or, if no such ultimate parent entity is a
corporation, shall refer to whichever ultimate parent entity is the
entity having the greatest net assets.
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(c) The Company shall not consummate any such consolidation, merger,
sale or transfer unless the Principal Party shall have a sufficient number of
authorized shares of its common stock which have not been issued or reserved for
issuance to permit the exercise in full of the Rights in accordance with this
Section 13, and unless prior thereto the Company and such Principal Party shall
have executed and delivered to the Rights Agent a supplemental agreement
providing for the terms set forth in paragraphs (a) and (b) of this Section 13
and further providing that the Principal Party will:
(i) (A) file on an appropriate form, as soon as practicable
following the execution of such agreement, a registration statement under
the Securities Act with respect to the common stock that may be acquired
upon exercise of the Rights, (B) cause such registration statement to
remain effective (and to include a prospectus complying with the
requirement of the Securities Act) until the Expiration Date, and (C) as
soon as practicable following the execution of such agreement, take such
action as may be required to ensure that any acquisition of such common
stock upon the exercise of the Rights complies with any applicable state
securities or "blue sky" laws; and
(ii) deliver to holders of the Rights historical financial
statements for the Principal Party and each of its Affiliates which
comply in all respects with the requirements for registration on Form 10
under the Exchange Act.
(d) In case the Principal Party which is to be a party to a transaction
referred to in this Section 13 has a provision in any of its authorized
securities or in its certificate of incorporation or Bylaws or other instrument
governing its corporate affairs, which provision would have the effect of
(i) causing such Principal Party to issue, in connection with, or
as a consequence of, the consummation of a transaction referred to in
this Section 13, shares of common stock of such Principal Party at less
than the then current market price per share (determined pursuant to
Section 11(d) hereof) or securities exercisable for, or convertible into,
common stock of such Principal Party at less than such then current
market price (other than to holders of Rights pursuant to this Section
13); or
(ii) providing for any special payment, tax or similar provisions
in connection with the issuance of the common stock of such Principal
Party pursuant to the provisions of Section 13;
then in such event, the Company shall not consummate any such transaction unless
prior thereto the Company and such Principal Party shall have executed and
delivered to the Rights Agent a supplemental agreement providing that the
provision in question of such Principal Party shall have been canceled, waived
or amended, or that the authorized securities shall be redeemed, so that the
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applicable provision will have no effect in connection with, or as a consequence
of; the consummation of the proposed transaction.
(e) The provisions of this Section 13 shall similarly apply to successive
mergers or share exchanges or sales or other transfers. In the event that a
Section 13 Event shall occur at any time after the occurrence of a Section 11
(a)(ii) Event, the Rights which have not theretofore been exercised shall
thereafter become exercisable in the manner described in Section 13(a) hereof.
Section 14. Fractional Rights and Fractional Shares.
(a) The Company shall not be required to issue fractions of Rights or to
distribute Rights Certificates which evidence fractional Rights. In lieu of such
fractional Rights, there shall be paid to the Persons to which such fractional
Rights would otherwise be issuable an amount in cash equal to such fraction of
the market value of a whole Right. For purposes of this Section 14(a), the
market value of a whole Right shall be the closing price of the Rights for the
Trading Day immediately prior to the date on which such fractional Rights would
have been otherwise issuable. The closing price of the Rights for any day shall
be:
(i) if the Rights are listed or admitted to trading on a national
securities exchange, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the
principal national securities exchange on which the Rights are listed or
admitted to trading; or
(ii) if the Rights are not listed or admitted to trading on any
national securities exchange, the last quoted sales price; or
(iii) if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, as reported on the Nasdaq National
Market or such other system then in use; or
(iv) if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as
furnished by a professional market maker making a market in the Rights
selected by a majority of the Board of Directors; or
(v) if on any such date no such market maker is making a market in
the Rights, the fair value of the Rights on such date as determined in
good faith by a majority of the Board of Directors, which determination
shall be described in a statement filed with the Rights Agent and the
holders of the Rights.
(b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions which are integral multiples of one
hundredth of a share of Preferred Stock) (or other securities) upon exercise of
the Rights or to distribute certificates which evidence such
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fractional shares of Preferred Stock (other than fractions which are integral
multiples of one hundredth of a share of Preferred Stock) (or other securities).
In lieu of such fractional shares of Preferred Stock that are not integral
multiples of one hundredth of a share of Preferred Stock (or other securities),
the Company may pay to the registered holders of Rights Certificates at the time
such Rights are exercised as herein provided an amount in cash equal to the same
fraction of the then current market value of one hundredth of a share of
Preferred Stock (or other securities). For purposes of this Section 14(b), the
current market value of one hundredth of a share of Preferred Stock (or other
securities) shall be the closing price (as the term "closing price" is used in
Section 11(d) hereof) of one hundredth of a share of Preferred Stock (or other
securities) for the Trading Day immediately prior to the date of such exercise.
(c) The holder of a Right, by the acceptance of the Right, expressly
waives his or her right to receive any fractional Rights or any fractional
shares upon exercise of a Right, except as permitted by this Section 14.
Section 15. Rights of Action.
All rights of action in respect of this Agreement, other than rights of
action vested in the Rights Agent pursuant to Section 18 hereof, are vested in
the respective registered holders of the Rights Certificates (and, prior to the
Exercisability Date, the registered holders of certificates representing shares
of Common Stock); and any registered holder of a Rights Certificate (or, prior
to the Exercisability Date, of a certificate representing shares of Common
Stock), without the consent of the Rights Agent or of the holder of any other
Rights Certificate (or, prior to the Exercisability Date, of a certificate
representing shares of Common Stock), may, in his own behalf and for his own
benefit, enforce (and may institute and maintain any suit, action or proceeding
against the Company or any other Person to enforce, or otherwise act in respect
of) his right to exercise the Rights evidenced by such Rights Certificate in the
manner provided in such Rights Certificate and in this Agreement. Without
limiting the foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and shall be entitled to specific
performance of the obligations hereunder and injunctive relief against actual or
threatened violations of the obligations hereunder of any Person subject to this
Agreement.
Section 16. Agreement of Rights Holders.
Every holder of a Right, by accepting the same, consents and agrees with
the Company and the Rights Agent and with every other holder of a Right that:
(a) prior to the Exercisability Date, the Rights shall be
transferable only in connection with the transfer of Common Stock;
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(b) after the Exercisability Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if
surrendered at the office of the Rights Agent designated for such
purpose, duly endorsed or accompanied by a proper instrument of transfer
and with the appropriate forms and certificates duly executed;
(c) subject to Section 6(a) and Section 7(f) hereof, the Company
and the Rights Agent may deem and treat the person in whose name a Rights
Certificate (or, prior to the Exercisability Date, the associated Common
Stock certificate) is registered as the absolute owner thereof and of the
Rights evidenced thereby (notwithstanding any notations of ownership or
writing on the Rights Certificate or the associated Common Stock
Certificate made by anyone other than the Company or the Rights Agent)
for all purposes whatsoever, and neither the Company nor the Rights
Agent, subject to the last sentence of Section 7(e) hereof, shall be
affected by any notice to the contrary; and
(d) notwithstanding anything in this Agreement to the contrary,
neither the Company nor the Rights Agent shall have any liability to any
holder of a Right or any other Person as a result of its inability to
perform any of its obligations under this Agreement by reason of any
preliminary or permanent injunction or other order, decree or ruling
issued by a court of competent jurisdiction or by a governmental,
regulatory or administrative agency or commission, or any statute, rule,
regulation or executive order promulgated or enacted by any governmental
authority, prohibiting or otherwise restraining performance of such
obligation; provided, however, that the Company must use its best efforts
to have any such order, decree or ruling lifted or otherwise overturned
as promptly as practicable.
Section 17. Rights Certificate Holder Not Deemed a Stockholder.
No holder, as such, of any Rights Certificate shall be entitled to vote,
receive dividends or be deemed for any purpose the holder of the shares of
Preferred Stock or any other securities of the Company which may at any time be
issuable on the exercise of the Rights represented thereby; nor shall anything
contained herein or in any Rights Certificate be construed to confer upon the
holder of any Rights Certificate, as such, any of the rights of a stockholder of
the Company or any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or, except as provided in Section 25 hereof, to
receive notice of meetings or other actions affecting stockholders, or to
receive dividends or subscription rights, or otherwise, until the Right or
Rights evidenced by such Rights Certificate shall have been exercised in
accordance with the provisions hereof.
Section 18. Concerning the Rights Agent.
(a) The Company agrees to pay to the Rights Agent reasonable compensation
for all services rendered by it hereunder and, from time to time, on demand of
the Rights Agent, its reasonable expenses, including reasonable fees and
disbursements of its counsel, incurred in
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connection with the execution and administration of this Agreement and the
exercise and performance of its duties hereunder. The Company shall indemnify
the Rights Agent, its officers, employees, agents and directors for, and hold
each of them harmless against, any losses, expenses, claims, damages or
liabilities incurred without gross negligence, bad faith or willful misconduct
on the part of the Rights Agent, for anything done or omitted by the Rights
Agent or such other indemnified party in connection with the acceptance or
administration of this Agreement and performance hereunder, including without
limitation, the costs and expenses of defending against any claim of liability
therefrom, directly or indirectly, and will promptly reimburse the Rights Agent
for legal and other expenses reasonably incurred in defending any such loss,
expense, claim, damage or liability.
(b) The Rights Agent shall be protected by the indemnity provided by this
Section and shall incur no liability for or in respect of any action taken,
suffered or omitted by it in connection with its administration of this
Agreement or the performance of its duties hereunder in reliance upon any Rights
Certificate or certificate for Common Stock or for other securities of the
Company, instrument of assignment or transfer, power of attorney, endorsement,
affidavit, letter, notice, direction, consent, certificate, statement or other
paper or document believed by it to be genuine and to have been signed, executed
and, where necessary, verified or acknowledged by the proper Person or Persons.
Section 19. Merger or Consolidation or Change of Name of Rights Agent.
(a) Any corporation into which the Rights Agent or any successor Rights
Agent may be merged or with which it may be consolidated, or any corporation
resulting from any merger or consolidation to which the Rights Agent or any
successor Rights Agent shall be a party, or any corporation succeeding to the
corporate trust or stockholder services businesses of the Rights Agent or any
successor Rights Agent, shall be the successor to the Rights Agent under this
Agreement without the execution or filing of any document or any further act on
the part of any of the parties hereto; provided, however, that such corporation
would be eligible for appointment as a successor Rights Agent under the
provisions of Section 21 hereof. In case, at the time such successor Rights
Agent shall succeed to the agency created by this Agreement, any of the Rights
Certificates shall have been countersigned but not delivered, any such successor
Rights Agent may adopt the countersignature of a predecessor Rights Agent and
deliver such Rights Certificates so countersigned; and in case at that time any
of the Rights Certificates shall not have been countersigned, any successor
Rights Agent may countersign such Rights Certificates either in the name of the
predecessor or in the name of the successor Rights Agent; and in all such cases
such Rights Certificates shall have the full force provided in the Rights
Certificates and in this Agreement.
(b) In case at any time the name of the Rights Agent shall be changed and
at such time any of the Rights Certificates shall have been countersigned but
not delivered, the Rights Agent may adopt the countersignature under its prior
name and deliver Rights Certificates so countersigned; and in case at that time
any of the Rights Certificates shall not have been countersigned, the Rights
Agent
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may countersign such Rights Certificates either in its prior name or in its
changed name; and in all such cases such Rights Certificates shall have the full
force provided in the Rights Certificates and in this Agreement.
Section 20. Duties of Rights Agent.
The Rights Agent undertakes the duties and obligations expressly imposed
by this Agreement (and no implied duties or obligations shall be read into this
Agreement against the Rights Agent) upon the following terms and conditions, by
all of which the Company and the holders of Rights Certificates, by their
acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full and
complete authorization and protection to the Rights Agent as to any action taken
or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
(including, without limitation, the identity of any Acquiring Person, Affiliate
or Associate and the determination of "current market price") be proved or
established by the Company prior to taking or suffering any action hereunder,
such fact or matter (unless other evidence in respect thereof be specified
herein) may be deemed to be conclusively proved and established by a certificate
signed by any person reasonably believed by the Rights Agent to be the Chairman
of the Board, the Chief Executive Officer, the President, any Vice President,
the Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary
of the Company and delivered to the Rights Agent; provided, however, that such
certificate shall be full authorization to the Rights Agent for any action taken
or suffered in good faith by it under the provisions of this Agreement in
reliance upon such certificate.
(c) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Rights
Certificates or be required to verify the same (except as to its
countersignature on such Rights Certificates), but all such statements and
recitals are and shall be deemed to have been made by the Company only.
(d) The Rights Agent is serving as an administrative agent and,
accordingly, shall not have any responsibility for the validity or legality of
any provision of this Agreement or the execution and delivery hereof (except the
due execution hereof by the Rights Agent) or for the validity, legality or
execution of any Rights Certificate (except its countersignature thereof); nor
shall it be responsible for any breach by the Company of any covenant or failure
by the Company to satisfy conditions contained in this Agreement or in any
Rights Certificate; nor shall it be responsible for any adjustment required
under the provisions of Section 11 or Section 13 hereof or for the manner,
method or amount of any such adjustment or the ascertaining of the existence of
facts that would require any such adjustment (except with respect to the
exercise of Rights evidenced
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by Rights Certificates after receipt by the Rights Agent of the certificate
describing any such adjustment contemplated by Section 12 hereof); nor shall it
by any act hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any shares of Common Stock or any other
securities to be issued pursuant to this Agreement or any Rights Certificate or
as to whether any shares of Common Stock or any other securities will, when so
issued, be validly authorized and issued, fully paid and nonassessable.
(e) The Company shall perform, execute, acknowledge and deliver or cause
to be performed, executed, acknowledged and delivered all such further acts,
instruments and assurances as may reasonably be required by the Rights Agent for
the performance by the Rights Agent of its duties under this Agreement.
(f) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
person reasonably believed by the Rights Agent to be the Chairman of the Board,
the Chief Executive Officer, the President, any Vice President, the Secretary,
any Assistant Secretary, the Treasurer or any Assistant Treasurer of the
Company, and to apply to such officers for advice or instructions in connection
with its duties; and it shall not be liable to the Company, the holder of any
Rights Certificate or any stockholder of the Company for any action taken or
suffered to be taken by it in good faith in accordance with instructions of any
such officer or for any delay in acting while awaiting instructions. Any
application by the Rights Agent for written instructions from the Company may,
at the option of the Rights Agent, set forth in writing any action proposed to
be taken or omitted by the Rights Agent under this Rights Agreement and the date
on and/or after which such action shall be taken or such omission shall be
effective. The Rights Agent shall not be liable for any action taken by, or
omission of, the Rights Agent in accordance with a proposal included in any such
application on or after the date specified in such application (which date shall
not be less than five Business Days after the date any such officer of the
Company actually receives such application, unless any such officer shall have
consented in writing to an earlier date) unless, prior to taking any such action
(or the effective date in the case of an omission), the Rights Agent shall have
received written instructions in response to such application specifying the
action to be taken or omitted.
(g) The Rights Agent and any stockholder, director, officer or employee
of the Rights Agent may buy, sell or deal in any of the Rights or offer
securities of the Company or become pecuniarily interested in any transaction in
which the Company may be interested, or contract with or lend money to the
Company or otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights Agent from acting
in any other capacity for the Company or for any other legal entity.
(h) The Rights Agent may execute and exercise any of the rights or powers
hereby vested in it or perform any duty hereunder either itself or by or through
its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company resulting from any such act, default,
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neglect or misconduct if reasonable care was exercised in the selection and
continued employment thereof.
(i) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties or in the exercise of its rights hereunder if
the Rights Agent in its sole judgment shall have reasonable grounds for
believing that repayment of such funds or adequate indemnification against such
risk or liability is not reasonably assured to it.
(j) If, with respect to any Rights Certificate surrendered to the Rights
Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, either has not
been completed, has not been signed, or indicates an affirmative response to
clause 1 and/or 2 thereof, the Rights Agent shall not take any further action
with respect to such requested exercise or transfer without first consulting
with the Company. If such certificate has been completed and signed, the Rights
Agent may assume without further inquiry that the Rights Certificate is not
owned by a person described in Section 4(b) or Section 7(e) hereof and shall not
be charged with any knowledge to the contrary.
(k) The Rights Agent shall be liable hereunder to the Company and any
other Person only for its own gross negligence, bad faith or willful misconduct.
Section 21. Change of Rights Agent.
The Rights Agent or any successor Rights Agent may resign and be
discharged from its duties under this Agreement upon thirty (30) days' notice in
writing mailed to the Company and to each transfer agent of the Common Stock and
the Preferred Stock by registered or certified mall, and to the holders of
Rights Certificates by first-class mail. The Company may remove the Rights Agent
or any successor Rights Agent upon thirty (30) days' notice in writing mailed to
the Rights Agent or successor Rights Agent, as the case may be, and to each
transfer agent of the Common Stock and the Preferred Stock by registered or
certified mail, and to the holders of the Rights Certificates by first-class
mail. If the Rights Agent shall resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a successor to the Rights Agent.
If the Company shall fail to make such appointment within a period of thirty
(30) days after giving notice of such removal or after it has been notified in
writing of such resignation or incapacity by the resigning or incapacitated
Rights Agent or by the holder of a Rights Certificate (who shall, with such
notice, submit his Rights Certificate for inspection by the Company), then any
registered holder of any Rights Certificate may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Company or by such a court, shall be a
corporation organized and doing business under the laws of the United States or
any state of the United States, in good standing, and may be the Company or a
Subsidiary of the Company. After appointment, the successor Rights Agent shall
be vested with the same powers, rights, duties and responsibilities as if it had
been originally named as Rights Agent without further act or deed; but
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the predecessor Rights Agent shall deliver and transfer to the successor Rights
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Company shall file notice
thereof in writing with the predecessor Rights Agent and each transfer agent of
the Common Stock and the Preferred Stock, and mail a notice thereof in writing
to the registered holders of the Rights Certificates. Failure to give any notice
provided for in this Section 21 however, or any defect therein, shall not affect
the legality or validity of the resignation or removal of the Rights Agent or
the appointment of the successor Rights Agent.
Section 22. Issuance of New Rights Certificates.
Notwithstanding any of the provisions of this Agreement or the Rights to
the contrary, the Company may, at its option, issue new Rights Certificates
evidencing Rights in such form as may be approved by the Board to reflect any
adjustment or change made in accordance with the provisions of this Agreement in
the Exercise Price or the number or kind or class of shares or other securities
or property that may be acquired under the Rights Certificates. In addition, in
connection with the issuance or sale of shares of Common Stock following the
Exercisability Date and prior to the Expiration Date, the Company:
(i) shall, with respect to shares of Common Stock so issued or sold
pursuant to the exercise of stock options or under any employee plan or
arrangement, or upon the exercise, conversion or exchange of securities
hereinafter issued by the Company, and
(ii) may, in any other case, if deemed necessary or appropriate by
the Board, issue Rights Certificates representing the appropriate number
of Rights in connection with such issuance or sale; provided, however,
that no such Rights Certificate shall be issued if, and to the extent
that (x) the Company shall be advised by counsel that such issuance would
create a significant risk of material adverse tax consequences to the
Company or the person to whom such Rights Certificate would be issued, or
(y) appropriate adjustment shall otherwise have been made in lieu of the
issuance thereof
Section 23. Redemption.
(a) The Rights may be redeemed by action of the Board pursuant to
paragraph (b) of this Section 23 and shall not be redeemed in any other manner.
Notwithstanding anything contained or implied in this Agreement to the contrary,
the Rights shall not be exercisable after the occurrence of a Section 11 (a)(ii)
Event until such time as the Company's right of redemption hereunder have
expired.
(b) The Board may, at its option, at any time prior to the earlier of (i)
the Close of Business on the tenth Business Day after the Stock Acquisition Date
or, if the Stock Acquisition Date shall have occurred prior to the Record Date,
the Close of Business on the tenth day following
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the Record Date, or (ii) the Final Expiration Date, redeem all, but not less
than all, of the then outstanding Rights at a redemption price of $.001 per
Right, appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date hereof (such redemption price being
hereinafter referred to as the "Redemption Price"); provided, however, that with
respect to any redemption of Rights under either of the circumstances set forth
in clauses (i) and (ii) below, the Rights may be redeemed only if there are
Continuing Directors then in office and the Board of Directors of the Company,
with the concurrence of a majority of the Continuing Directors then in office,
approves such redemption: (i) such approval occurs at any time after any Person
becomes an Acquiring Person, or (ii) such approval occurs at any time after a
change (resulting from a proxy solicitation or from a vote of stockholders or in
any other manner) in a majority of the directors in office at the commencement
of such solicitation, or prior to such vote if any Person who is a participant
in such solicitation or vote has stated (or, if the majority of the directors in
office at the commencement of such solicitation or prior to such vote has
determined in good faith) that such Person (or any of its Affiliates or
Associates) intends to take or may consider taking, any action that would result
in such Person becoming an Acquiring Person or that would result in the
occurrence of a Section 11(a)(ii) Event. The Company may, at its option, pay the
Redemption Price in cash, shares of Common Stock (based on the current per share
market price of shares of Common Stock at the time of redemption determined
pursuant to Section 11(d) hereof) or any other form of consideration deemed
appropriate by the Board; provided that if the Company elects to pay the
Redemption Price in shares of Common Stock, the Company shall not be required to
issue fractional shares of Common Stock. In lieu of such fractional shares of
Common Stock, the Company shall pay to the registered holders of the Right
Certificates with regard to which such fractional shares of Common Stock would
otherwise be issuable an amount of cash equal to the same fraction of the
current per share market price of a whole share of Common Stock.
(c) Immediately upon the action of the Board ordering the redemption of
the Rights pursuant to paragraph (b) of this Section 23, and without any further
action and without any notice, the right to exercise the Rights will terminate
and the only right thereafter of the holders of Rights shall be to receive the
Redemption Price for each Right so held. The Company shall promptly give public
notice of any such redemption; provided, however, that the failure to give, or
any defect in, any such notice shall not affect the validity of such redemption.
Within 10 days after such action of the Board of Directors ordering the
redemption of the Rights pursuant to paragraph (b), the Company shall mall a
notice of redemption to all the holders of the then outstanding Rights at their
addresses as they appear upon the registry books of the Rights Agent or, prior
to the Exercisability Date, on the registry books of the transfer agent for the
Common Stock of the Company. Any notice which is mailed in the manner herein
provided shall be deemed given, whether or not the holder receives the notice.
Each such notice of redemption will state the method by which the payment of the
Redemption Price will be made. Neither the Company nor any of its Affiliates or
Associates may redeem, acquire or purchase for value any Rights at any time in
any manner other than that specifically set forth in this Section 23 or in
Section 24 hereof and other than in connection with the purchase of shares of
Common Stock prior to the Exercisability Date.
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Section 24. Exchange.
(a) The Board may, at its option, at any time after any Person becomes an
Acquiring Person, exchange all or any part of the then outstanding and
exercisable Rights (which shall not include Rights that have become void
pursuant to the provisions of Section 11 (a)(ii) hereof) for shares of Common
Stock at an exchange ratio of one share of Common Stock per Right, appropriately
adjusted to reflect any stock split, stock dividend or similar transaction
occurring after the date hereof (such exchange ratio being hereinafter referred
to as the "Exchange Ratio"); provided, however, that with respect to any such
action by the Board as to such an exchange, the Rights may be so exchanged only
if (i) there are Continuing Directors then in office and (ii) the Board approves
such exchange with the concurrence of a majority of the Continuing Directors
then in office.
(b) Immediately upon the action of the Board ordering the exchange of any
Rights pursuant to paragraph (a) of this Section 24, and without any further
action and without any notice, the right to exercise such Rights shall terminate
and the only right thereafter of a holder of such Rights shall be to receive
that number of shares of Common Stock equal to the number of such Rights held by
such holder multiplied by the Exchange Ratio. The Company shall promptly give
public notice of any such exchange; provided, however, that the failure to give,
or any defect in, such notice shall not affect the validity of such exchange.
The Company shall promptly mail a notice of any such exchange to all of the
holders of such Rights at their addresses as they appear upon the registry books
of the Rights Agent. Any notice which is mailed in the manner herein provided
shall be deemed given, whether or not the holder receives the notice. Each such
notice of exchange will state the method by which the exchange of the shares of
Common Stock for Rights will be effected and, in the event of any partial
exchange, the number of Rights which will be exchanged. Any partial exchange
shall be effected pro rata based on the number of Rights (other than Rights
which have become void pursuant to the provisions of Section 11(a)(ii) hereof)
held by each holder of Rights.
(c) In the event that there shall not be sufficient shares of Common
Stock issued but not outstanding or authorized but unissued to permit any
exchange of Rights as contemplated in accordance with this Section 24, the
Company shall take all such action as may be necessary to authorize additional
shares of Common Stock for issuance upon exchange of the Rights.
(d) The Company shall not be required to issue fractions of shares of
Common Stock or to distribute certificates which evidence fractional shares of
Common Stock. In lieu of such fractional shares of Common Stock, the Company
shall pay to the registered holders of the Right Certificates with regard to
which such fractional shares of Common Stock would otherwise be issuable an
amount in cash equal to the same fraction of the current per share market price
of a whole share of Common Stock. For the purposes of this paragraph (d), the
current market price of a whole share of Common Stock shall be the closing price
of a share of Common Stock (as determined pursuant to the second and third
sentences of Section 11(d) hereof) for the Trading Day immediately prior to the
date of exchange pursuant to this Section 24.
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Section 25. Notice of Certain Events.
(a) In case the Company shall propose, at any time after the
Exercisability Date,
(i) to pay any dividend payable in stock of any class to the
holders of Preferred Stock or to make any other distribution to the
holders of Preferred Stock (other than a regular quarterly cash dividend
out of earnings or retained earnings of the company);
(ii) to offer to the holders of Preferred Stock rights or warrants
to subscribe for or to purchase any additional shares of Preferred Stock
or shares of stock of any class or any other securities, rights or
options;
(iii) to effect any reclassification of its Preferred Stock (other
than a reclassification involving only the subdivision of outstanding
shares of Preferred Stock);
(iv) to effect any consolidation or merger into or with any other
Person (other than a Subsidiary of the Company in a transaction which
complies with Section 11(o) hereof), or to effect any sale or other
transfer (or to permit one or more of its Subsidiaries to effect any sale
or other transfer), in one or more transactions, of more than 50% of the
assets, cash flow or earning power of the Company and its Subsidiaries
(taken as a whole) to any other Person or Persons (other than the Company
and/or any of its Subsidiaries in one or more transactions each of which
complies with Section 11(o) hereof); or
(v) to effect the liquidation, dissolution or winding up of the
Company;
then, in each such case, the Company shall give to each holder of a Rights
Certificate, to the extent feasible and in accordance with Section 26 hereof, a
notice of such proposed action (which shall specify the record date for the
purposes of such stock dividend or distribution of rights or warrants, or the
date on which such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution, or winding up is to take place and the date of
participation therein by the holders of the shares of Preferred Stock, if any
such date is to be fixed), and such notice shall be so given in the case of any
action covered by clause (i) or (ii) above at least twenty (20) days prior to
the record date for determining holders of the shares of Preferred Stock for
purposes of such action, and in the case of any such other action, at least
twenty (20) days prior to the date of the taking of such proposed action or the
date of participation therein by the holders of the shares of Preferred Stock,
whichever shall be the earlier; provided, however, that no such notice shall be
required pursuant to this Section 25 if any Subsidiary of the Company effects a
consolidation or merger with or into, or effects a sale or other transfer of
assets or earning power to, any other Subsidiary of the Company.
(b) In case any of the events set forth in Section 11(a)(ii) hereof
shall occur, then, in any such case, (i) the Company shall as soon as
practicable thereafter give to each holder of a Rights Certificate, to the
extent feasible and in accordance with Section 26 hereof, a notice of the
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occurrence of such event, which shall specify the event and the consequences of
the event to holders of Rights under Section 11 (a)(ii) hereof, and (ii) all
references in the preceding paragraph to Preferred Stock shall be deemed
thereafter to refer to Common Stock and/or, if appropriate, other securities.
Section 26. Notices.
All notices and other communications provided for hereunder shall, unless
otherwise stated herein, be in writing (including by telex, telegram or cable)
and be mailed or sent or delivered, if to the Company, at the following address
(until another address is filed in writing by the Company):
Signature Inns, Inc.
000 Xxxx 00xx Xxxxxx
Xxxxx 000
Xxxxxxxxxxxx, Xxxxxxx 00000
Attention: Xx. Xxxx Xxxxxxxxx
and, if to the Rights Agent, at the following address (until another address is
filed in writing by the Rights Agent):
________________________________
________________________________
________________________________
Attention: _____________________
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Rights Certificate (or, if
prior to the Exercisability Date, to the holder of certificates representing
shares of Preferred Stock) shall be sufficiently given or made if sent by
first-class mail, postage prepaid, addressed to such holder at the address of
such holder as shown on the registry books of the Company.
Section 27. Supplements and Amendments.
Prior to the Exercisability Date and subject to the penultimate sentence
of this Section 27, the Company and the Rights Agent shall, if the Company so
directs, supplement or amend any provision of this Agreement without the
approval of any holders of certificates representing shares of Common Stock.
From and after the Exercisability Date and subject to the penultimate sentence
of this Section 27, the Company and the Rights Agent shall, if the Company by
action of a majority of the Continuing Directors so directs, supplement or amend
this Agreement without the approval of any holders of Rights Certificates in
order:
(i) to cure any ambiguity;
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(ii) to correct or supplement any provision contained herein which
may be defective or inconsistent with any other provisions herein;
(iii) to shorten or lengthen any time period hereunder; or
(iv) to change or supplement the provisions hereunder in any manner
which the Company may deem necessary or desirable and which shall be
consistent with, and for the purpose of fulfilling, the objectives of the
Board in adopting this Agreement, including any change in the number or
class of shares of capital stock of the Company for which the Rights are
potentially exercisable prior to a Triggering Event;
provided, however, that from and after such time as any Person becomes an
Acquiring Person, this Agreement shall not be amended in any manner which would
adversely affect the interests of the holders of Rights; and provided, further,
that this Agreement may not be supplemented or amended to lengthen, pursuant to
clause (iii) of this sentence (A) subject to Section 31 hereof, a time period
relating to when the Rights may be redeemed at such time as the Rights are not
then redeemable, or (B) any other time period unless such lengthening is for the
purpose of protecting, enhancing or clarifying the rights of, and/or the
benefits to, the holders of Rights. Without limiting the foregoing, the Company
may at any time prior to such time as any Person becomes an Acquiring Person
amend this Agreement to change the Exercise Price hereunder. Upon the delivery
of a certificate from an appropriate officer of the Company or, so long as any
Person is an Acquiring Person hereunder, from the majority of the Board of
Directors, which states that the proposed supplement or amendment is in
compliance with the terms of this Section 27, the Rights Agent shall execute
such supplement or amendment. Notwithstanding anything contained in this
Agreement to the contrary, no supplement or amendment which changes the rights
and duties of the Rights Agent under this Agreement shall be effective without
the consent of the Rights Agent, and no supplement or amendment shall be made
which changes the Redemption Price, the Exercise Price, the Expiration Date or
the number of shares of Common Stock (or other securities) for which a Right is
exercisable without the approval of a majority of the Board of Directors. Prior
to the Exercisability Date, the interests of the holders of Rights shall be
deemed coincident with the interests of the holders of Common Stock.
Section 28. Determinations and Actions by the Board of Directors, etc.
For all purposes of this Agreement, any calculation of the number of
shares of Common Stock or other securities outstanding at any particular time,
including for purposes of determining the particular percentage of outstanding
shares of Common Stock of which any Person is the Beneficial Owner, shall be
made in accordance with the last sentence of Rule 13d-3(d)(1)(i) of the Exchange
Act Regulations as in effect on the date hereof. Except as otherwise
specifically provided herein, the Board shall have the exclusive power and
authority to administer this Agreement and to exercise all rights and powers
specifically granted to the Board, or to the Company, or as may be necessary or
advisable in the administration of this Agreement, including, without
limitation, the right and power (i) to interpret the provisions of this
Agreement, and (ii) to make all determinations
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deemed necessary or advisable for the administration of this Agreement. All such
actions, calculations, interpretations and determinations (including, for
purposes of clause (y) below, all omissions with respect to the foregoing) which
are done or made by the Board or by a majority of the Board in good faith (x)
shall be final, conclusive and binding on the Company, the Rights Agent, the
holders of the Rights and all other parties, and (y) shall not subject the Board
or any member thereof to any liability to the holders of the Rights.
Section 29. Successors.
All the covenants and provisions of this Agreement by or for the benefit
of the Company or the Rights Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.
Section 30. Benefits of this Agreement.
Nothing in this Agreement shall be construed to give to any Person other
than the Company, the Rights Agent and the registered holders of the Rights
Certificates (and, prior to the Exercisability Date, registered holders of
shares of Common Stock) any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive benefit of the
Company, the Rights Agent and the registered holders of the Rights Certificates
(and, prior to the Exercisability Date, registered holders of shares of Common
Stock).
Section 31. Severability.
If any term, provision, covenant or restriction of this Agreement is held
by a court of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated; provided, however, that
notwithstanding anything in this Agreement to the contrary, if (i) any such
term, provision, covenant or restriction is held by such court or authority to
be invalid, void or unenforceable, and a majority of the Board determines in its
good faith judgment that severing the invalid language from this Agreement would
adversely affect the purpose or effect of this Agreement; and (ii) at the time
of such holding by such court or authority, the Rights are not redeemable, then
the right of redemption set forth in Section 23 hereof shall be reinstated and
shall not expire until the Close of Business on the tenth day following the date
of such determination by a majority of the Board as described above.
Section 32. Governing Law.
This Agreement, each Right and each Rights Certificate issued hereunder
shall be governed by, and construed in accordance with, the laws of the State of
Indiana.
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Section 33. Counterparts.
This Agreement may be executed in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
shall be deemed to be an original, but all of which taken together shall
constitute one and the same instrument.
Section 34. Descriptive Headings.
The headings contained in this Agreement are for descriptive purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement.
Section 35. Effective Date.
Notwithstanding anything contained or implied in this Agreement to the
contrary, this Agreement shall become effective only in the event that the
Company's Registration Statement on Form [ ] (File No. 333 ) is declared
effective by the SEC. In the event such Registration Statement is, for any
reason, not declared effective by the SEC or is withdrawn or otherwise
terminated by the Company, this Agreement shall be of no force or effect.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, all as of the date first above written.
SIGNATURE INNS, INC.
By:
-------------------------------------
Name:
Title:
[ ]
------------------------
By:
-------------------------------------
Name:
Title:
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EXHIBIT A
[Form of Rights Certificate]
Certificate No. ___________ Rights
NOT EXERCISABLE AFTER THE EXPIRATION DATE (AS DEFINED IN THE RIGHTS
AGREEMENT). THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE COMPANY,
ON THE TERMS SET FORTH IN THE AGREEMENT. UNDER CERTAIN CIRCUMSTANCES (SPECIFIED
IN THE RIGHTS AGREEMENT), RIGHTS BENEFICIALLY OWNED BY ACQUIRING PERSONS (AS
DEFINED IN THE RIGHTS AGREEMENT) OR ANY SUBSEQUENT HOLDER OF SUCH RIGHTS MAY
BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS RIGHTS CERTIFICATE ARE OR
WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN ACQUIRING PERSON OR AN
AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE
RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHTS CERTIFICATE AND THE RIGHTS
REPRESENTED HEREBY MAY BECOME NULL AND VOID IN THE CIRCUMSTANCES SPECIFIED IN
SECTION 7(e) OF SUCH AGREEMENT.]
Rights Certificate
SIGNATURE INNS, INC.
This certifies that [ ], or registered assigns, is the registered
holder of the number of Rights set forth above, each of which entitles the
registered holder thereof, subject to the terms and conditions of the Rights
Agreement dated ____________ 1996 (the "Rights Agreement") between Signature
Inns, Inc., an Indiana corporation (the "Company"), and
[_______________________________], as Rights Agent (the "Rights Agent", which
term shall
___________________
The portion of the legend in brackets shall be inserted only if
applicable and shall replace the preceding sentence.
44
include any successor Rights Agent under the Rights Agreement), to purchase from
the Company at any time after the Exercisability Date (as such term is defined
in the Rights Agreement) and prior to the Expiration Date (as such term is
defined in the Rights Agreement) at the office of the Rights Agent or its
successor designated for such purpose, one-hundredth of one fully paid
nonassessable share of Preferred Stock, without par value, of the Company (the
"Preferred Stock") at the Exercise Price initially of $[ ] per one hundredth
of one share of Preferred Stock, upon presentation and surrender of this Rights
Certificate with the Election to Purchase and related certificate duly executed.
The number of Rights evidenced by this Rights Certificate (and the number of
shares of Preferred Stock which may be purchased upon exercise thereof) set
forth above, and the Exercise Price per share set forth above shall be subject
to adjustment in certain events as provided in the Rights Agreement.
Upon the occurrence of a Section 11(a)(ii) Event (as such term is
defined in the Rights Agreement), if the Rights evidenced by this Rights
Certificate are beneficially owned by an Acquiring Person or an Affiliate or
Associate of any such Acquiring Person (as such terms are defined in the Rights
Agreement) or, under certain circumstances described in the Rights Agreement, a
transferee of any such Acquiring Person, Associate or Affiliate, such Rights
shall become null and void and no holder hereof shall have any right with
respect to such Rights from and after the occurrence of such Section 11 (a)(ii)
Event.
In certain circumstances described in the Rights Agreement, the Rights
evidenced hereby may entitle the registered holder thereof to purchase shares of
capital stock of an entity other than the Company or receive cash or other
assets, all as provided in the Rights Agreement.
45
This Rights Certificate is subject to all of the terms and conditions
of the Rights Agreement, which terms and conditions are hereby incorporated
herein by reference and made a part hereof and to which Rights Agreement
reference is hereby made for a full description of the rights, limitations of
rights, obligations, duties and immunities hereunder of the Rights Agent, the
Company and the holders of the Rights Certificates. Copies of the Rights
Agreement are on file at the principal office of the Rights Agent and are
available from the Company upon written request.
This Rights Certificate, with or without other Rights Certificates,
upon surrender at the office of the Rights Agent designated for such purpose,
may be exchanged for another Rights Certificate or Rights Certificates of like
tenor and date evidencing an aggregate number of Rights equal to the aggregate
number of Rights evidenced by the Rights Certificate or Rights Certificates
surrendered. If this Rights Certificate shall be exercised in part, the
registered holder shall be entitled to receive; upon surrender hereof, another
Rights Certificate or Rights Certificates for the number of whole Rights not
exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be redeemed by the Company under certain circumstances
at its option at a redemption price of $.01 per Right, payable at the Company's
option in cash or in Common Stock, subject to adjustment in certain events as
provided in the Rights Agreement.
No fractional shares of Preferred Stock (other than fractions which are
integral multiples of one hundredth of a share of Preferred Stock) will be
issued upon the exercise of any Right or Rights evidenced hereby, but in lieu
thereof a cash payment will be made, as provided in the Rights Agreement.
46
No holder of this Rights Certificate, as such, shall be entitled to
vote or receive dividends or be deemed for any purpose the holder of Preferred
Stock or of any other securities which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors or
upon any matter submitted to stockholders at any meeting thereof, or to give or
withhold consent to any corporate action, or to receive notice of meetings or
other actions affecting stockholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or otherwise, until
the Rights evidenced by this Rights Certificate shall have been exercised as
provided in the Rights Agreement.
This Rights Certificate shall not be valid or obligatory for any
purpose until it shall have been countersigned by the Rights Agent.
WITNESS the signature of the proper officers of the Company. Dated as
of__________ ______, 1996.
ATTEST: SIGNATURE INNS, INC.
_______________________ By:_________________________________
Title:____________ Title:____________________________
Countersigned:
_______________________
By ____________________
Authorized Signature
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[Form of Reverse Side of Rights Certificate]
FORM OF ASSIGNMENT
(To be executed by the registered holder if
such holder desires to transfer the
Rights Certificate)
FOR VALUE RECEIVED ___________________________________ hereby sells, assigns and
transfers unto _________________________________________________
(Please print name and address of transferee)
____________________________________________________________________ this Rights
Certificate , together with all right, title and interest therein, and does
hereby irrevocably constitute and appoint ______________ Attorney, to transfer
the within Rights Certificate on the books of the within-named Company, with
full power of substitution.
Dated:___________ , [___].
_________________________________
Signature
Signature Guaranteed:
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Certificate
The undersigned hereby certifies by checking the appropriate boxes
that:
(1) this Rights Certificate [ ] is [ ] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
pursuant to the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, it
[ ] did [ ] did not acquire the Rights evidenced by this Rights Certificate from
any person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Dated:_____________, [___] ______________________________
Signature
Signature Guaranteed:
________________________________________________________________________________
NOTICE
This signature to the foregoing Assignment and Certificate must
correspond to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
Signature must be guaranteed by a member xxxx of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
In the event the certification set forth above is not completed, the
Company will deem the beneficial owner of the Rights evidenced by this Rights
Certificate to be an Acquiring Person or an Affiliate or Associate thereof (as
defined in the Rights Agreement) and, in the case of an Assignment, will affix a
legend to that effect on any Rights Certificates issued in exchange for this
Rights Certificate.
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FORM OF ELECTION TO PURCHASE
(To be executed if the registered holder
desires to exercise Rights represented
by the Rights Certificate)
To: SIGNATURE INNS, INC.
The undersigned hereby irrevocably elects to exercise ________________
Rights represented by this Rights Certificate to purchase the number of
hundredths of a share of Preferred Stock issuable upon the exercise of the
Rights (or such other securities of the Company or of any other person which may
be issuable upon the exercise of the Rights) and requests that certificates for
such shares be issued in the name of and delivered to:
(Please print name and address)
________________________________________________________________________
________________________________________________________________________
Please insert social security
or other identifying number:____________________________________________
If such number of Rights shall not be all the Rights evidenced by this
Rights Certificate, a new Rights Certificate for the balance of such Rights
shall be registered in the name of and delivered to:
(Please print name and address)
_________________________________________________________________________
Please insert social security
or other identifying number:_____________________________________________
Dated:______________________,[ ].
____________________________
Signature
Signature Guaranteed:
________________________________________________________________________
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Certificate
The undersigned hereby certifies by checking the appropriate boxes tat:
(1) the Rights evidenced by this Rights Certificate [ ] are [ ] are not
beneficially owned by an Acquiring Person or an Affiliate or an Associate
thereof (as defined in the Rights Agreement); and
(2) after due inquiry and to the best knowledge of the undersigned, the
undersigned [ ] did [ ] did not acquire the Rights evidenced by this Rights
Certificate from any person who is, was or subsequently became an Acquiring
Person or an Affiliate or Associate thereof.
Dated: , [ ]
-------- --- -----------------------------
Signature
Signature Guaranteed:
--------------------------------------------------------------------------------
NOTICE
This signature to the foregoing Election to Purchase and Certificate
must conform to the name as written upon the face of this Rights Certificate in
every particular, without alteration or enlargement or any change whatsoever.
Signature must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities Dealers,
Inc., or a commercial bank or trust company having an office or correspondent in
the United States.
In the event the certification set fort above is not completed, the
Company will deem the beneficial owner of the Rights evidenced by this Rights
Certificate to be an Acquiring Person or an Affiliate or Associate thereof (as
defined in the Rights Agreement) and, in the case of an Assignment, will affix a
legend to that effect on any Rights Certificates issued in exchange for this
Rights Certificate.
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EXHIBIT B
SUMMARY OF RIGHTS AGREEMENT
Each holder of shares of Common Stock of SIGNATURE INNS, INC. (the
"Company") as of the Record Date will receive, a distribution of one Stock
Purchase Right (a "Right") per share of the Common Stock in accordance with and
pursuant to the Rights Agreement. A Right will also accompany each share of the
Common Stock issued following the Record Date. Each Right, when it first becomes
exercisable, entitles the holder to purchase from the Company one hundredth of
one share of Preferred Stock at an initial exercise price of $[ ] per
one-hundredth of one share (the "Exercise Price"), subject to adjustment.
Exercisability of Rights. Initially, the Rights will not be exercisable
or transferable apart from the shares of the Common Stock with respect to which
they are distributed, and will be evidenced only by the certificates
representing shares of Common Stock. The Rights will become exercisable and
transferable apart from the Common Stock on a date (the "Exercisability Date")
that is the earlier of (a) the close of business on the tenth day after the
Stock Acquisition Date, defined as the first date of a public announcement that
a person or group of affiliated or associated persons has become an Acquiring
Person (as defined below); or (b) the close of business on such date as a
majority of the Company's Board of Directors shall determine, which date may
occur only following the commencement of a tender or exchange offer that, if
consummated, would result in a person or group becoming an Acquiring Person. The
Rights will be exercisable from the Exercisability Date until the Expiration
Date (which is the earlier of (x) the close of business on the tenth anniversary
of the Record Date (the "Final Expiration Date") or (y) the date the Rights are
redeemed by the Company (the "Redemption Date")), at which time they will
expire.
With certain exceptions described in the Rights Agreement, a person or
group becomes an Acquiring Person when such person or group acquires or obtains
the rights to acquire beneficial ownership of [20%] or more of the then
outstanding shares of the Common Stock (other than as a result of a Permitted
Offer, as defined below), or [10%] or more of such shares if the Company's Board
of Directors, after reasonable inquiry and investigation, declares the acquiring
person an Adverse Person under guidelines set forth in the Rights Agreement. A
"Permitted Offer" is a tender or exchange offer for all outstanding shares of
the Common Stock upon terms that a majority of the members of the Board of
Directors and who qualify as Continuing Directors under the Rights Agreement
determines to be adequate and in the best interests of the Company and its
shareholders. The Board of Directors may declare any person to be an Adverse
Person after it determines that (i) such person, alone or together with its
affiliates and associates, has become the beneficial owner of [10%] or more of
the Company's Common Stock and (ii) after reasonable inquiry and investigation,
such Person's ownership in the Company is reasonably likely (x) to cause the
Company to take action that would provide such person with short-term gain to
the detriment of the long-term
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interests of the Company and its shareholders, or (y) to have a material adverse
impact on the business or prospects of the Company.
Transferability of Rights. Prior to the Exercisability Date, the Rights
will not be transferable apart from the shares of the Common Stock to which they
are attached. Thus, the surrender or transfer of any Common Stock certificate
prior to that date will also constitute the transfer of the Rights associated
with the shares represented by such certificate. As soon as practicable after
the Exercisability Date, separate certificates evidencing the Rights ("Rights
Certificates") will be mailed to each record holder of shares of the Common
Stock as of the close of business on the Exercisability Date and, in certain
circumstances, holders of certain shares issued after the Exercisability Date.
Flip-In Rights. Upon the occurrence of an Exercisability Date (a
"Flip-In Event"), each holder of a Right will thereafter have the right (the
"Flip-In Right") to receive, upon exercise, the number of shares of the
Preferred Stock (or, in certain circumstances, at the discretion of the
Company's Board of Directors, cash, property, other securities of the Company or
other consideration) having a market value immediately prior to the Flip-In
Event equal to two times the then current Exercise Price of the Right; provided,
however, that any Right that is (or, in certain circumstances specified in the
Rights Agreement, was) beneficially owned by an Acquiring Person (or any of its
affiliates or associates) will become null and void upon the occurrence of the
Flip-In Event. Cash will be paid in lieu of issuing fractional shares of
Preferred Stock pursuant to an exercise of the Rights.
Flip-Over Rights. It at any time following a Stock Acquisition Date,
either (i) the Company is acquired in a merger or other business combination
transaction, or (ii) the Company sells or otherwise transfers more than 50% of
its aggregate assets, cash flow, or earning power, each holder of a Right
(except Rights previously voided as described above) will thereafter have the
right (the "Flip-Over Right") to receive, upon exercise, shares of common stock
of the Acquiring Person having a value equal to two times the then current
Exercise Price of the Right. The Flip-Over Right shall be exercisable apart
from, and regardless of the exercise or surrender of the Flip-In Right.
Redemption of the Rights. At any time prior to the earlier of (i) the
close of business on the tenth day following the Stock Acquisition Date, or (b)
the close of business on the Final Expiration Date, and in certain other
circumstances, the Company's Board of Directors may redeem the Rights, in whole
but not in part, at a Redemption Price of $.01 per Right.
Exchange of the Rights. At any time after any person becomes an
Acquiring Person, the Board of Directors may exchange the Rights (other than
Rights owned by such Acquiring Person which have become void), in whole or in
part, at an exchange ratio of one share of Common Stock per right.
Notwithstanding the foregoing, the Board of Directors shall not be empowered to
effect such exchange at any time after such Acquiring Person becomes the
beneficial owner of 50% or more of the shares of Common Stock then outstanding.
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Amendment of the Rights Agreement. At any time prior to the
Exercisability Date, the Board of Directors may amend any provision of the
Rights Agreement in any manner. Thereafter, the Board may amend the Rights
Agreement in certain respects, including generally (a) to shorten or lengthen
any time period under the Rights Agreement or (b) in any manner that the
Company's Board of Directors deems necessary or desirable, so long as such
amendment is consistent with and for the purpose of fulfilling the objectives of
the Board in originally adopting the Rights Plan. Certain amendments (including
changes to the Redemption Price, Exercise Price, Expiration Date, or number of
shares for which a Right is exercisable), whether prior to the Exercisability
Date or thereafter, are permitted only upon approval by a majority of the Board
of Directors.
Series A Preferred Stock. Each one hundredth of a share of Series A
Preferred Stock, if issued, will have one vote per hundredth of a share and will
vote on all matters submitted to a vote of the Company's shareholders, except as
otherwise required by law. Subject to prior dividend rights and sinking fund or
redemption or purchase rights which may be applicable to any other series of
Preferred Stock, the holders of the Series A Preferred Stock will be entitled to
share ratably in such dividends, if any, as may be declared from time to time by
the Company's Board of Directors in its discretion out of funds legally
available therefor with respect to the Series A Preferred Stock and on a one
hundred-to-one basis with respect to the Common Stock. The holders of each
one-hundredth of a share of Series A Preferred stock are entitled to share in
any assets remaining after satisfaction of all prior claims upon liquidation of
the Company, including prior claims of any other series of Preferred Stock,
ratably with the holders of each share of the Company's Common Stock. Holders of
the Series A Preferred Stock will have no preemptive or other subscription
rights, and the Series A Preferred Stock is not subject to call.
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SIGNATURE INNS, INC.
RESOLUTIONS TO BE CONSIDERED BY THE BOARD OF DIRECTORS
ON SEPTEMBER 19, 1996
WHEREAS, the Board of Directors deems it desirable and in the best
interest of the Corporation's shareholders that steps be taken to preserve for
the Corporation's shareholders the long-term value of the Corporation in the
event of a takeover; and
WHEREAS, the Board of Directors believes that a dividend to the holders
of the Corporation's common stock, no par value per share ("Common Shares"), of
rights ("Rights") to purchase shares of a newly established and designated
series of the Corporation's preferred stock, no par value per share, having the
relative rights, preferences, and limitations set forth on Exhibit A hereto
("Preferred Shares"), on the terms and subject to the conditions hereinafter
provided, will contribute to the preservation of the Corporation's long-term
value for its shareholders;
Authorization of Rights Agreement and Rights to Purchase Preferred Shares
NOW, THEREFORE, BE IT RESOLVED, that the form of Rights Agreement which
has been presented to this meeting (the "Rights Agreement") with such additions,
deletions, or modifications from such form as have been approved at this meeting
be, and hereby is, approved and ordered placed in the minute book for the
Corporation.
RESOLVED, that each of the officers of the Corporation is authorized,
in the name and on behalf of the Corporation, to execute the Rights Agreement
with such additions, deletions, or modifications as have been approved at this
meeting, and with such other additions, deletions, or modifications to or from
such form as the officer or officers executing the same shall approve at the
recommendation O{ or after consulting with, the Corporation's legal and
financial advisors, and to deliver the same to the Rights Agent thereunder, such
execution and delivery conclusively to evidence the due authorization and
approval thereof by the Corporation.
RESOLVED, that the Corporation is authorized [and directed] to issue to
the holder of each Common Share outstanding on the Record Date (as hereinafter
defined) and thereafter as set forth in the Rights Agreement one Right initially
representing the right to purchase one one-hundredth of a Preferred Share, which
Right shall be issued pursuant to, and governed by, the terms of the Rights
Agreement.
RESOLVED, that each of the officers of the Corporation is authorized to
take any and all such action as they or any of them may deem necessary,
appropriate or desirable to make the Rights Agreement and the Rights binding and
legal obligations of the Corporation in accordance with their terms, and to
comply with each and all of the obligations imposed upon the Corporation by the
provisions of the Rights Agreement and the Rights which may at any time be
outstanding thereunder.
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Designation of Preferred Stock
RESOLVED, that pursuant to the authority granted to and vested in the
Board of Directors of the Corporation in accordance with the provisions of the
Corporation's Amended and Restated Articles of Incorporation (the "Articles of
Incorporation"), the Board of Directors hereby creates a Series A Preferred
Stock, no par value per share, of the Corporation and hereby states the
designation and number of shares and fixes the relative rights, preferences, and
limitations thereof (in addition to the provisions set forth in the Articles of
Incorporation, which are applicable to the Preferred Stock of all classes and
series), as set forth in the Certificate of Designations attached hereto as
Exhibit A and incorporated herein by reference.
Dividend and Issuance of Rights
RESOLVED, that the Board of Directors hereby declares that a dividend
of one Right be paid at the close of business on the date which is the same date
upon which the Securities and Exchange Commission (the "Commission") declares
the Registration Statement on Form SB-2 (File No.333- ) relating to
Corporations's currently proposed public offering of Common Stock effective (the
"Record Date") to the holders of record of the Common Shares issued and
outstanding at the close of business on such date.
RESOLVED, that the exercise price of the Rights shall be $_____ per
Right and that the redemption price therefor shall be $.001 per Right.
RESOLVED, that each Common Share (other than a Common Share issued upon
exercise of any Right) issued or delivered by the Corporation (whether
originally issued or delivered from the Corporation's treasury) after the Record
Date but prior to the earlier of the Exercisability Date and the Final
Expiration Date (as each of those terms is defined in the Rights Agreement)
shall be entitled to and accompanied by one Right and the certificate evidencing
such Common Share shall bear a legend to such effect.
RESOLVED, that the Corporation is authorized to issue such number of
Preferred Shares for which the Rights are initially exercisable and any such
additional shares of capital stock or other rights for which the Rights may
become exercisable upon the conditions set forth in the Rights Agreement; and
that the number of Preferred Shares for which the Rights are initially
exercisable (such number to be subject to adjustment from time to time in
accordance with the Rights Agreement) are reserved until such time as they are
issued pursuant to the exercise of the Rights or until the Final Expiration
Date.
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Right Certificates
RESOLVED, that the certificates evidencing the Rights (the "Right
Certificates") shall be substantially in the form attached as Exhibit A to the
Rights Agreement, with such additions, deletions, or modifications to or from
such form as the officer or officers of the Corporation executing the Rights
Agreement or any Right Certificate shall deem necessary, appropriate or
desirable, as conclusively evidenced by the execution thereof by such officer or
officers, and shall be issued and delivered as provided in the Rights Agreement.
RESOLVED, that each of the officers of the Corporation is authorized,
in the name and on behalf of the Corporation, to execute and deliver Right
Certificates as provided in the Rights Agreement in fully registered form.
RESOLVED, that the signatures of the officers of the Corporation so
authorized to execute the Right Certificates may be the facsimile signatures of
the present or any future such authorized officers and may be imprinted or
otherwise reproduced thereon, the Corporation for such purpose hereby adopting
each such facsimile signature as binding upon it, notwithstanding the fact that
at the time the Right Certificates shall be countersigned, delivered or disposed
of the officer so executing shall have ceased to be an officer of the
Corporation or the Secretary or an Assistant Secretary, as the case may be.
RESOLVED, that after the Exercisability Date, each of the officers of
the Corporation is authorized to deliver the Right Certificates to the Rights
Agent (appointed as described below) in such denominations as may be determined
by the officers delivering the Right Certificates (such determination to be
conclusively evidenced by the delivery of the Right Certificates), and to
request the Rights Agent to countersign the Right Certificates and to deliver
the same pursuant to the Rights Agreement.
Rights Agent
RESOLVED, that each of the officers of the Corporation is authorized to
appoint as Rights Agent under the Rights Agreement [_________________] or any
other bank selected by any of them in his or her discretion (the "Rights Agent")
and, after the Exercisability Date, upon presentation to it of Right
Certificates for the purpose of exercise in accordance with the Rights
Agreement, such Rights Agent so appointed is hereby authorized to act as
[TRANSFER AGENT AND REGISTRAR] for the Rights and the Preferred Shares issued
upon the exercise thereof.
RESOLVED, that for the purpose of the original issue of the Rights
Certificates, the Rights Agent be, and it hereby is, authorized and directed:
(a) to countersign when signed manually or by facsimile by the
proper officers of the Corporation, original certificates for up to the
aggregate number of the Rights to be issued;
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57
(b) to record and register the Right Certificates when so
countersigned in the books for registration and transfer thereof, showing
the names and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced on the face of each of the
Right Certificates and the date of each of the Right Certificates, as
provided in the Rights Agreement; and
(c) upon request of the Corporation, to send Right Certificates
when so countersigned, recorded and registered to the respective holders
of Common Shares, at the addresses of the holders shown on the records of
the Corporation.
Exchange Act Registration and Form 8-K
RESOLVED, that each of the officers of the Corporation is authorized to
file with the Commission all appropriate applications or registration statements
(and any amendments or supplements thereto) to effect the registration of the
Rights, Preferred Shares or other securities issuable upon the exercise of
Rights, or any or all thereof, under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and to appear before the Commission and to take
all such further actions and to execute all such additional documents as they or
any of them may deem necessary, appropriate, or desirable in connection
therewith.
RESOLVED, that each of the officers of the Corporation is authorized to
prepare, execute and file with the Commission a Current Report on Form 8-K
relating to the adoption of the Rights Agreement.
General
RESOLVED, that any actions taken by the officers of the Corporation
prior to the adoption of the foregoing resolutions that are within the authority
conferred thereby be, and each of them hereby is, ratified, confirmed and
approved as the act and deed of the Corporation.
RESOLVED, that the officers of the Corporation be, and each of them
hereby is, authorized and empowered to execute and deliver any and all other
documents, papers or instruments and to do or cause to be done any and all such
acts and things as they or any of them may deem necessary, appropriate or
desirable in order to enable the Corporation fully and promptly to carry out the
purposes and intent of the foregoing resolutions.
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DRAFT DESIGNATION OF
SERIES A PREFERRED STOCK OF
SIGNATURE INNS, INC.
1. Series A Preferred Stock.
(a) Designation. There shall be a series of Preferred Stock to be
known and designated as Series A Preferred Stock (the "Series A Preferred
Stock") and the number of shares constituting such series shall be .
(b) Dividends. Subject to the prior and superior rights of the
holders of any shares of any other series of Preferred Stock or any other
shares of Preferred Stock of the Corporation ranking prior and superior
to the shares of Series A Preferred Stock with respect to dividends, each
holder of one-hundredth (1/100) of a share (a "Unit") of Series A
Preferred Stock shall be entitled to receive, when, as and if declared by
the Board of Directors out of funds legally available for that purpose,
such dividends as may be declared from time to time by the Board of
Directors in its discretion, in the same kind and in an amount per Unit
equal to the aggregate per share amount of all dividends (whether payable
in cash or stock or other securities or property) declared, if any, on
shares of Common Stock of the Corporation. In the event the Corporation
shall at any time after the date of issuance of the Series A Preferred
Stock (i) increase by way of a stock split or similar transaction the
number of outstanding shares of Common Stock (except by way of a stock
dividend received by holders of Units and shares of Common Stock in
accordance with this Section 1(b)), (ii) subdivide the outstanding shares
of Common Stock or (iii) combine the outstanding shares of Common Stock
into a smaller number of shares, then in each such case the amount per
Unit of any dividend payable in accordance with the preceding sentence of
this Section 1(b) shall be adjusted proportionately so that the holders
of each Unit shall receive an amount per Unit equal to the amount that
would be received per share of Common Stock outstanding prior to such
stock split or similar transaction, subdivision or combination of the
shares (as if such stock split or similar transaction, subdivision or
combination had not occurred).
(c) Voting Rights. The holders of Units of Series A Preferred Stock
shall have the following voting rights.
(1) Each Unit of Series A Preferred Stock shall entitle the
holder thereof to one vote on all matters submitted to a vote of
the shareholders of the Corporation. In the event the Corporation
shall at any time after the date of issuance of the Series A
Preferred Stock (i)
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increase by way of a stock split or similar transaction the number
of outstanding shares of Common Stock (except by way a stock
dividend received by holders of Units and shares of Common Stock in
accordance with Section 1(b) above), (ii) subdivide the outstanding
shares of Common Stock or (iii) combine the outstanding shares of
Common Stock into a smaller number of shares, then in each such
case the number of votes per Unit to which holders of Units of
Series A Preferred Stock were entitled immediately prior to such
event shall be adjusted by multiplying such number by a fraction
the numerator of which shall be the number of shares of Common
Stock outstanding immediately after such event and the denominator
of which shall be the number of shares of Common Stock that were
outstanding immediately prior to such event.
(2) Except as otherwise provided herein or required by law,
the holders of Units of Series A Preferred Stock and the holders of
shares of Common Stock shall vote together as one class on all
matters submitted to a vote of shareholders of the Corporation.
(3) Except as set forth herein or required by law, holders of
Units of Series A Preferred Stock shall have no special voting
rights and their consent shall not be required (except to the
extent they are entitled to vote with holders of shares of Common
Stock as set forth herein or as otherwise required by law) for the
taking of any corporate action.
d. Reacquired Shares. Any Units of Series A Preferred Stock purchased
or otherwise acquired by the Corporation in any manner whatsoever shall be
retired and canceled promptly after the acquisition thereof. All such Units
shall, upon their cancellation, become authorized but unissued Units of
Preferred Stock and may be reissued as part of a new series of Preferred Stock
to be created by resolution or resolutions of the Board of Directors, subject to
the conditions and restrictions on issuance set forth herein.
e. Liquidation. Dissolution or Winding Up.
(1) In the event of any voluntary or involuntary dissolution,
liquidation or winding up of the affairs of the Corporation and
after payment or provision for payment of the debts and other
liabilities of the Corporation, including the prior claims of the
holders of any other series of Preferred Stock, the holders of each
Unit of Series A Preferred Stock shall be entitled to share in any
assets remaining, ratably with the holders of each share of Common
Stock. In the event the Corporation shall at any time after the
date of issuance of the Series A Preferred
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60
Stock (i) increase by way of a stock split or similar transaction
the number of outstanding shares of Common Stock (except by way of
a stock dividend received by holders of Units and shares of Common
Stock in accordance with Section 1(b)), (ii) subdivide the
outstanding shares of Common Stock or (iii) combine the outstanding
shares of Common Stock into a smaller number of shares, then in
each such case the amount per Unit of any distribution in
accordance with this Section 1(e)(i) shall be adjusted
proportionately so that the holders of each Unit shall receive an
amount per Unit equal to the amount that would be received per
share of Common Stock outstanding prior to such stock split or
similar transaction, subdivision or combination of the shares (as
if such stock split or similar transactions, subdivision or
combination had not occurred).
(2) If upon the merger or consolidation of the Corporation
into or with any other corporation, or the merger of any other
corporation into it, the capital stock of the Corporation is to be
converted into or exchanged for cash or other property or
securities of a corporation other than the Corporation, the
allocation of any such cash, securities or other property into
which shares of capital stock of the Corporation are to be
converted or for which it is to be exchanged shall be made in
accordance with the provisions of paragraph (i) of this Section
1(e) as if such merger or consolidation were a liquidation of the
Corporation. Nothing herein shall be construed as requiring or
permitting a merger or consolidation to be treated as a liquidation
for any purpose other than the allocation provided for in this
Section.
f. Redemption. The Units of Series A Preferred Stock shall not be
redeemable at the option of the Corporation or any holder thereof.
Notwithstanding the foregoing sentence of this Section, the Corporation may
acquire Units of Series A Preferred Stock in any other manner permitted by law
and the Amended and Restated Articles of Incorporation or by-laws of the
Corporation.
g. Conversion. The Series A Preferred Stock is not convertible into
shares of any other class or series of stock of the Corporation.
h. Amendment. The Amended and Restated Articles of Incorporation,
including without limitation the provisions hereof, shall not hereafter be
amended, either directly or indirectly, or through merger or share exchange with
another corporation, in any manner that would alter or change the powers,
preferences or special rights of the Series A Preferred Stock so as to affect
the holders thereof adversely without the affirmative vote of the
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61
holders of a majority or more of the outstanding Units of Series A Preferred
Stock, voting separately as a class.
i. Fractional Shares. The Series A Preferred Stock may be issued in
Units or other fractions of a share, which Units or fractions shall entitle the
holder, in proportion to such holder's fractional shares, to exercise voting
rights, receive dividends, participate in distributions and to have the benefit
of all other rights of holders of Series A Preferred Stock.
Dated: September ____, 1996 SIGNATURE INNS, INC.
By__________________________
Name:
Title:
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