AMENDED AND RESTATED RIGHTS AGREEMENT
DATED AS OF
MAY 4, 2001
BETWEEN
SUBURBAN LODGES OF AMERICA, INC.
AND
AMERICAN STOCK TRANSFER & TRUST COMPANY,
AS RIGHTS AGENT
TABLE OF CONTENTS (1)
Page
Section 1. Definitions............................................................................................1
Section 2. Appointment of Rights Agent............................................................................5
Section 3. Issue of Rights Certificates...........................................................................5
Section 4. Form of Rights Certificate.............................................................................7
Section 5. Countersignature and Registration......................................................................7
Section 6. Transfer and Exchange of Rights Certificates; Mutilated, Destroyed, Lost or
Stolen Rights Certificates......................................................................8
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights..........................................8
Section 8. Cancellation and Destruction of Right Certificates....................................................10
Section 9. Reservation and Availability of Capital Stock.........................................................10
Section 10. Preferred Stock Record Date..........................................................................11
Section 11. Adjustment of Purchase Price, Number and Kind of Shares or Number of
Rights............................................................................................12
Section 12. Certificate of Adjusted Purchase Price or Number of Shares...........................................20
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power.................................20
Section 14. Fractional Rights and Fractional Shares..............................................................23
Section 15. Rights of Action.....................................................................................24
Section 16. Agreement of Right Holders...........................................................................24
Section 17. Right Certificate Holder Not Deemed a Shareholder....................................................25
Section 18. Concerning the Rights Agent..........................................................................25
Section 19. Merger or Consolidation or Change of Name of Rights Agent............................................26
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(1) The Table of Contents is not a part of this Agreement.
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Section 20. Duties of Rights Agent...............................................................................26
Section 21. Change of Rights Agent...............................................................................28
Section 22. Issuance of New Right Certificates...................................................................29
Section 23. Redemption...........................................................................................29
Section 24. Exchange.............................................................................................30
Section 25. Notice of Proposed Actions...........................................................................31
Section 26. Notices..............................................................................................32
Section 27. Supplements and Amendments...........................................................................32
Section 28. Successors...........................................................................................33
Section 29. Determinations and Actions by the Board of Directors, etc............................................33
Section 30. Benefits of this Agreement...........................................................................33
Section 31. Severability.........................................................................................33
Section 32. Governing Law........................................................................................34
Section 33. Counterparts.........................................................................................34
Section 34. Descriptive Headings.................................................................................34
Exhibit A - Form of Board Resolution Establishing and Designating Preferred Stock
Exhibit B - Form of Rights Certificate
Exhibit C - Summary Description of the Shareholder Rights Plan
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AMENDED AND RESTATED RIGHTS AGREEMENT
THIS AMENDED AND RESTATED RIGHTS AGREEMENT (the "AGREEMENT") is made
and entered into as of May 4, 2001, by and between SUBURBAN LODGES OF AMERICA,
INC., a Georgia corporation (the "COMPANY"), and AMERICAN STOCK TRANSFER & TRUST
COMPANY, a New York corporation, as Rights Agent (the "RIGHTS AGENT").
W I T N E S S E T H:
WHEREAS, in May 1996 the Board of Directors of the Company approved the
execution and delivery of a Rights Agreement dated as of May 15, 1996 by and
between the Company and the Rights Agent (the "ORIGINAL RIGHTS AGREEMENT") and
authorized and declared a dividend distribution of one Right (as defined below)
for each outstanding share of Common Stock, par value $0.01 per share, of the
Company (the "COMMON STOCK") at the close of business on the effective date of
the Acquisitions (as defined below) and authorized the issuance of one Right for
each share of Common Stock issued in the Public Offering (as defined below) or
otherwise issued between the effective date of the Acquisitions and the earlier
of the Distribution Date (as defined below) and the Expiration Date (as defined
below), each Right representing the right to purchase, one one-hundredth of a
share of Series A Participating Cumulative Preferred Stock of the Company having
the rights, powers and preferences set forth in the Board Resolution
Establishing and Designating Series A Preferred Stock attached hereto as EXHIBIT
A, upon the terms and subject to the conditions contained therein (individually,
a "RIGHT," and collectively, the "RIGHTS"); and
WHEREAS, the Board of Directors of the Company has approved the
execution and delivery of this Amended and Restated Rights Agreement for the
purpose of incorporating into the Original Rights Agreement certain amendments
thereto, as further set forth herein, that the Board of Directors has determined
to be in the best interests of the shareholders of the Company;
NOW, THEREFORE, for and in consideration of the premises and the mutual
agreements contained herein, the parties hereto agree as follows:
SECTION 1. DEFINITIONS. The following terms, as used herein, have the
following meanings:
(a) "ACQUIRING PERSON" means any Person who or which, together
with all Affiliates and Associates of such Person, shall be the Beneficial Owner
of 15% or more of the shares of Common Stock then outstanding; provided,
however, that, an "ACQUIRING PERSON" shall not include the following Persons:
(i) any Excluded Person, (ii) any Person who, immediately following consummation
of the Acquisitions and the Public Offering is the Beneficial Owner of 25% or
more of the shares of Common Stock then outstanding, or (iii) any Person, who
alone or together with its Affiliates or Associates becomes the Beneficial Owner
of 15% or more of the shares of Common Stock then outstanding as a result of an
Approved Acquisition; provided, further, that in the event that a Person does
not become an ACQUIRING PERSON by reason of clause
(iii) above, such Person nonetheless shall become an ACQUIRING PERSON if such
Person thereafter becomes the Beneficial Owner of an additional 1% or more of
the Common Stock then outstanding, unless the acquisition of such Common Stock
is an Approved Acquisition. Notwithstanding the foregoing, if the Board of
Directors of the Company (the "BOARD OF DIRECTORS") determines in good faith
that a Person who would otherwise be an "ACQUIRING PERSON" as defined pursuant
to the foregoing provisions of this SECTION 1(A) has become such inadvertently,
and such Person divests as promptly as practicable a sufficient number of shares
of Common Stock so that such Person would no longer be an "ACQUIRING PERSON" as
defined pursuant to the foregoing provisions of this SECTION 1(A), then such
Person shall not be deemed an Acquiring Person for any purposes of this
Agreement.
(b) "ACQUISITIONS" means the acquisition by merger or purchase of
16 Suburban Lodge facilities to be effective immediately prior to or
simultaneously with the closing of the Public Offering, and pursuant to which
the Company will issue approximately 1,166,000 shares of Common Stock to the
owners of the acquired facilities.
(c) "AFFILIATE" and "ASSOCIATE" have the respective meanings
ascribed to such terms in Rule 12b-2 under the Exchange Act as in effect on the
date hereof.
(d) "APPROVED ACQUISITION" means any acquisition of Common Stock
that (i) causes a Person to become the Beneficial Owner of (A) 15% or more of
the shares of Common Stock then outstanding, or (B) if already a Beneficial
Owner of 15% or more of the shares of Common Stock then outstanding, an
additional 1% or more of the shares of Common Stock then outstanding, and (ii)
is approved in advance by the Board of Directors.
(e) A Person shall be deemed the "BENEFICIAL OWNER" of, and shall
be deemed to "BENEFICIALLY OWN," any securities:
(i) which such Person or any of its Affiliates or Associates
beneficially owns (as determined pursuant to Rule 13d-3 under the
Exchange Act as in effect on the date hereof), directly or indirectly;
(ii) which such Person or any of its Affiliates or Associates,
directly or indirectly, has
(A) the right to acquire (whether such right is
exercisable immediately or only upon the occurrence of certain
events or the passage of time or both) pursuant to any
agreement, arrangement or understanding (whether or not in
writing) or upon the exercise of conversion rights, exchange
rights, rights (other than pursuant to the Rights), warrants,
options or otherwise; provided, however, that a Person shall
not be deemed the "BENEFICIAL OWNER" of, or to "BENEFICIALLY
OWN," any securities tendered pursuant to a tender or exchange
offer made by or on behalf of such Person or any of its
Affiliates or Associates until such tendered securities are
accepted for purchase or exchange; or
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(B) the right to vote or dispose of (whether such
right is exercisable immediately or only upon the occurrence
of certain events or the passage of time or both) pursuant to
any agreement, arrangement or understanding (whether or not in
writing) or otherwise; provided, however, that a Person shall
not be deemed the "BENEFICIAL OWNER" of, or to "BENEFICIALLY
OWN," any security under this clause (B) as a result of an
agreement, arrangement or understanding to vote such security
if such agreement, arrangement or understanding (1) arises
solely from a revocable proxy or consent given to such Person
in response to a public proxy or consent solicitation made
pursuant to, and in accordance with, the applicable rules and
regulations promulgated under the Exchange Act, and (2) is not
also then reportable by such Person on Schedule 13D under the
Exchange Act (or any comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by
any other Person (or any Affiliate or Associate thereof) with which
such Person (or any of its 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 SUBSECTION (II)(B) above) or disposing of any
such securities; provided, however, that nothing in this SECTION 1(E)
shall cause any Person engaged in business as an underwriter of
securities who acquires any securities of the Company through such
Person's participation in good faith in a firm commitment underwriting
to be deemed the "BENEFICIAL OWNER" of, or to "BENEFICIALLY OWN," such
securities until the expiration of 40 days after the date of such
acquisition.
(f) "BUSINESS DAY" means any day other than a Saturday, Sunday or
a day on which banking institutions in the States of Georgia or New York are
authorized or obligated by law or executive order to close.
(g) "CLOSE OF BUSINESS" on any given date means 5:00 P.M.,
Atlanta, Georgia time, on such date; provided, however, that if such date is not
a Business Day, then it shall mean 5:00 P.M., Atlanta, Georgia time, on the next
succeeding Business Day.
(h) "COMMON STOCK" means the Common Stock, par value $0.01 per
share, of the Company, except that, when used with respect to any Person other
than the Company, "COMMON STOCK" means the capital stock (or other equity
interests) of such Person with the greatest voting power, or the equity
securities or other equity interests having the power to control or direct the
management of such Person.
(i) [INTENTIONALLY OMITTED]
(j) "DISTRIBUTION DATE" means the earlier of (i) the Close of
Business on the tenth day (or such later day as may be designated by action of
the Board of Directors after the Share Acquisition Date, and (ii) the Close of
Business on the tenth Business Day (or such later day as may be designated by
action of the Board of Directors) after the date of the commencement by any
Person (other than an Excluded Person) of, or of the first public announcement
of the
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intention by any Person (other than an Excluded Person) to commence, a tender or
exchange offer if, upon consummation thereof, such Person, together with all
Affiliates and Associates of such Person, would be the Beneficial Owner of 15%
or more of the shares of Common Stock then outstanding.
(k) "EMPLOYEE BENEFIT PLAN" means any employee benefit plan of the
Company or any of its Subsidiaries or any Person organized, appointed or
established by the Company or any of its Subsidiaries for or pursuant to the
terms of any such plan.
(l) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(m) "EXCLUDED PERSON" means the Company, any of its Subsidiaries
or any Employee Benefit Plan.
(n) "EXPIRATION DATE" means the earlier of (i) the Final
Expiration Date, and (ii) the time at which all Rights are redeemed as provided
in SECTION 23 or exchanged as provided in SECTION 24.
(o) "FINAL EXPIRATION DATE" means the Close of Business on May 15,
2006.
(p) "FLIP-IN EVENT" means any event described in SECTION
11(A)(II)(A), (B) OR (C), but excluding any event described in SECTION
11(A)(II)(D).
(q) "FLIP-OVER EVENT" means any event described in SECTION
13(A)(X), (Y), OR (Z).
(r) "PERSON" means an individual, corporation, partnership,
limited liability company, association, trust or any other entity or
organization.
(s) "PREFERRED STOCK" means the Series A Participating Cumulative
Preferred Stock, par value $0.01 per share, of the Company having the terms set
forth in the form of certificate of designation attached hereto as EXHIBIT A.
(t) "PUBLIC OFFERING" means the issuance and sale of a maximum of
3,450,000 shares of Common Stock pursuant to the Registration Statement on Form
S-1 No. 333-2876, as amended.
(u) "PURCHASE PRICE" means the price (subject to adjustment as
provided herein) at which a holder of a Right may purchase one one-hundredth of
a share of Preferred Stock (subject to adjustment as provided herein) upon
exercise of a Right, which price shall initially be $60.00.
(v) "QUALIFYING TENDER OFFER" means a tender or exchange offer for
all outstanding shares of Common Stock of the Company approved by the Board of
Directors then in office, after taking into account the potential long-term
value of the Company and all other factors that they consider relevant.
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(w) "SECURITIES ACT" means the Securities Act of 1933, as amended.
(x) "SHARE ACQUISITION DATE" means the date of the first public
announcement (including the filing of a report on Schedule 13D under the
Exchange Act (or any comparable or successor report)) by the Company or an
Acquiring Person indicating that an Acquiring Person has become such.
(y) "SUBSIDIARY" means, with respect to any Person, any other
Person of which securities or other ownership interests having ordinary voting
power, in the absence of contingencies, to elect a majority of the board of
directors or other Persons performing similar functions are at the time directly
or indirectly owned or controlled by such first Person.
(z) "TRADING DAY" means a day on which the principal national
securities exchange or inter-dealer quotation system on which the shares of
Common Stock are listed, admitted to trading or quoted is open for the
transaction of business or, if the shares of Common Stock are not listed,
admitted to trading or quoted on any national securities exchange or
inter-dealer quotation system, a Business Day.
(aa) "TRIGGERING EVENT" means any Flip-in Event or any Flip-over
Event.
SECTION 2. APPOINTMENT OF RIGHTS AGENT. The Company hereby appoints the
Rights Agent to act as agent for the Company and the holders of the Rights (who,
in accordance with SECTION 3, shall prior to the Distribution Date also be the
holders of the Common Stock) 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. If
the Company appoints one or more co-Rights Agents, then the respective duties of
the Rights Agent and any co-Rights Agents shall be as the Company shall
determine.
SECTION 3. ISSUE OF RIGHTS CERTIFICATES. (a) Prior to the Distribution
Date, (i) the Rights will be evidenced (subject to SECTION 3(B)) by the
certificates for the Common Stock and not by separate Rights Certificates (as
defined below), and the registered holders of the Common Stock shall be deemed
to be the registered holders of the associated Rights, and (ii) the Rights 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 Company has notified the Rights Agent of the occurrence of a Distribution
Date, the Rights Agent will, subject to SECTION 7(D), send, by first-class,
insured, postage prepaid mail, to each record holder of the Common Stock as of
the Close of Business on the Distribution Date, at the address of such holder
shown on the records of the Company, one or more Rights Certificates, in
substantially the form of EXHIBIT B attached hereto (the "RIGHTS CERTIFICATES"),
evidencing one Right (subject to adjustment as provided herein) for each share
of Common Stock so held. If an adjustment in the number of Rights per share of
Common Stock has been made pursuant to SECTION 11(P), then the Company shall, at
the time of distribution of the Rights Certificates to record holders of Common
Stock as of the Close of Business on the Distribution Date, make the necessary
and appropriate rounding adjustments (in accordance with SECTION 14(A)) so that
Rights Certificates representing
5
only whole numbers of Rights are distributed to such holders and cash is paid to
such holders in lieu of any fractional Rights. From and after the Distribution
Date, the Rights will be evidenced solely by such Right Certificates.
(b) As soon as practicable after the consummation of the
Acquisitions, the Company will send a summary of the Rights, by first-class,
postage prepaid mail, to each record holder of the Common Stock as of the Close
of Business at the effective time of the consummation of the Acquisitions at the
address of such holder shown on the records of the Company. A summary of the
Rights, as in effect on the date hereof, is set forth on EXHIBIT C attached
hereto. Until the Distribution Date, the Rights shall be evidenced by such
certificates evidencing the Common Stock, and the registered holders of such
Common Stock shall also be the registered holders of the associated Rights.
(c) Rights shall be issued in respect of all shares of Common
Stock that become outstanding (on original issuance or out of treasury) after
the consummation of the Acquisitions but prior to the earlier of the
Distribution Date or the Expiration Date. Certificates for the Common Stock that
become outstanding or shall be transferred or exchanged after the consummation
of the Acquisitions but prior to the earlier of the Distribution Date or the
Expiration Date shall also be deemed to be certificates for Rights and shall
have impressed on, printed on, written on or otherwise affixed to them the
following legend:
This certificate also evidences certain Rights as set
forth in that certain Amended and Restated Rights Agreement
between Suburban Lodges of America, Inc. and American Stock
Transfer & Trust Company, dated as of May 4, 2001 (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 Company. The Company will
mail to the holder of this certificate a copy of the Rights
Agreement without charge promptly after receipt of a written
request therefor. Under certain circumstances, as set forth in
the Rights Agreement, such Rights may be evidenced by separate
certificates and no longer be evidenced by this certificate,
may be redeemed or exchanged or may expire. As set forth in
the Rights Agreement, Rights issued to, or held by, any Person
who is, was or becomes an Acquiring Person or an 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 be null and void.
(d) With respect to the certificates containing the foregoing
legend, until the earlier of the Distribution Date or the Expiration Date, the
Rights associated with the Common Stock represented by such certificates shall
be evidenced by such certificates alone and registered holders of Common Stock
shall also be the registered holders of the associated Rights, and the transfer
of any of such certificates shall also constitute the transfer of the Rights
associated with the Common Stock represented thereby. If the Company purchases
or acquires any shares of Common Stock after the consummation of the
Acquisitions but prior to the Distribution Date, any
6
Rights associated with such Common Stock shall be deemed cancelled and retired
so that the Company shall not be entitled to exercise any Rights associated with
the Common Stock that are no longer outstanding.
SECTION 4. FORM OF RIGHTS CERTIFICATE. (a) The Rights Certificates (and
the forms of assignment, election to purchase and certificates to be printed on
the reverse thereof) shall be substantially in the form of EXHIBIT B 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, rule or regulation or
with any rule or regulation of any stock exchange or inter-dealer quotation
system of a registered national securities association on which the Rights may
from time to time be listed, traded or quoted or to conform to usage. Subject to
SECTIONS 11 AND 22, the Rights Certificates, whenever distributed, shall be
dated as of the Distribution Date, shall entitle the holders thereof to purchase
such number of one one-hundredths of a share of Preferred Stock as shall be set
forth therein at the price set forth therein, but the number of such one
one-hundredths and the Purchase Price thereof shall be subject to adjustment as
provided herein.
(b) Any Rights Certificate representing Rights beneficially owned
by any Person referred to in SECTION 7(D)(I), (II) OR (III) shall (to the extent
feasible) contain the following legend:
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). This Rights
Certificate and the Rights represented hereby may be or may
become null and void in the circumstances specified in Section
7(d) of the Rights Agreement.
SECTION 5. COUNTERSIGNATURE AND REGISTRATION. (a) The Rights
Certificates shall be executed on behalf of the Company by its Chairman of the
Board, its President or any Vice President, either manually or by facsimile
signature, and shall have affixed thereto the Company's seal or a facsimile
thereof which shall be attested by the Secretary or an Assistant Secretary of
the Company, either manually or by facsimile signature. The Rights Certificates
shall be manually countersigned by the Rights Agent and shall not be valid for
any purpose unless so countersigned. In case any officer of the Company whose
manual or facsimile signature is affixed to the Rights Certificates shall cease
to be such officer of the Company before countersignature by the Rights Agent
and issuance and delivery by the Company, such Rights Certificates may,
nevertheless, be countersigned by the Rights Agent and issued and delivered with
the same force and effect as though the individual who signed such Rights
Certificates had not ceased to be such officer of the Company. Any Rights
Certificate may be signed on behalf of the Company by any Person who, at the
actual date of the execution of such Rights Certificate, shall be a proper
officer of the Company to sign such Rights Certificate, although at the date of
the execution of this Agreement any such Person was not such an officer.
7
(b) Following the Distribution Date, the Rights Agent will keep or
cause to be kept, at its principal office or offices designated as the
appropriate place for surrender of Rights Certificates upon exercise, transfer
or exchange, books for registration and transfer of the Rights Certificates.
Such books shall show with respect to each Rights Certificate the name and
address of the registered holder thereof, the number of Rights indicated on the
certificate, and the certificate number.
SECTION 6. TRANSFER AND EXCHANGE OF RIGHTS CERTIFICATES; MUTILATED,
DESTROYED, LOST OR STOLEN RIGHTS CERTIFICATES. (a) Subject to SECTION 4(B),
7(D), AND 14, at any time after the Close of Business on the Distribution Date
and prior to the Close of Business on the Expiration Date, any Rights
Certificate(s) may, upon the terms and subject to the conditions set forth in
this SECTION 6(A), be transferred or exchanged for another Rights Certificate(s)
evidencing a like number of Rights as the Rights Certificate(s) surrendered. Any
registered holder desiring to transfer or exchange any Rights Certificate(s)
shall make such request in writing delivered to the Rights Agent, and shall
surrender such Rights Certificate(s) (with, in the case of a transfer, the form
of assignment and certificate on the reverse side thereof duly executed) to the
Rights Agent at the principal office or offices 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(s) until the registered holder of the Rights has complied
with the requirements of SECTION 7(E). Upon satisfaction of the foregoing
requirements, the Rights Agent shall, subject to SECTIONS 4(B), 7(D), 14 AND 24,
countersign and deliver to the Person entitled thereto a Rights Certificate(s)
as so requested. The Company may require payment of a sum sufficient to cover
any transfer tax or other governmental charge that may be imposed in connection
with any transfer or exchange of any Rights Certificate(s).
(b) Upon receipt by the Company and the Rights Agent of evidence
reasonably satisfactory to them of the loss, theft, destruction or mutilation of
a Rights Certificate, and, in case of loss, theft or destruction, of indemnity
or security reasonably satisfactory to them, and, at the Company's request,
reimbursement to the Company and the Rights Agent of all reasonable expenses
incidental thereto, and upon surrender to the Rights Agent and cancellation of
the Rights Certificate if mutilated, the Company will issue and deliver a new
Rights Certificate of like tenor to the Rights Agent for countersignature and
delivery to the registered holder in lieu of the Rights Certificate so lost,
stolen, destroyed or mutilated.
SECTION 7. EXERCISE OF RIGHTS; EXPIRATION DATE OF RIGHTS; RESTRICTIONS
ON TRANSFER. (a) Subject to SECTION 7(D), the registered holder of any Rights
Certificate may exercise the Rights evidenced thereby (except as otherwise
provided herein, including, without limitation, SECTIONS 7(E), 9(C), 11(A), 13,
23, AND 24), in whole or in part, at any time after the Distribution Date and
prior to the Expiration Date upon surrender of the Rights Certificate, with the
form of election to purchase and the certificate on the reverse side thereof
duly executed (with signatures guaranteed), to the Rights Agent at the principal
office or offices of the Rights Agent designated for such purpose, together with
payment of the aggregate Purchase Price (in lawful money of the United States of
America by certified check or bank draft payable to the order of the
8
Company) with respect to the Rights then to be exercised and an amount equal to
any applicable transfer tax or other governmental charge.
(b) Upon satisfaction of the requirements of SECTION 7(A) and
subject to SECTION 20(K), the Rights Agent shall thereupon promptly (i)(A)
requisition from any transfer agent of the Preferred Stock (or make available,
if the Rights Agent is the transfer agent therefor) certificates for the total
number of one one-hundredths of a share of Preferred Stock to be purchased (and
the Company hereby irrevocably authorizes its transfer agent to comply with all
such requests), or (B) if the Company shall have elected to deposit the shares
of Preferred Stock issuable upon exercise of the Rights with a depository agent,
requisition from the depository agent depository receipts representing such
number of one one-hundredths of a share of Preferred Stock as are to be
purchased (in which case certificates for the shares of Preferred Stock
represented by such receipts shall be deposited by the transfer agent with the
depository agent), and the Company will direct the depository agent to comply
with such request, (ii) requisition from the Company the amount of cash, if any,
to be paid in lieu of issuance of fractional shares in accordance with SECTION
14, and (iii) after receipt of such certificates or depository receipts and
cash, if any, cause the same to be delivered to or upon the order of the
registered holder of such Rights Certificate (with such certificates or receipts
registered in such name or names as may be designated by such holder). If the
Company is obligated to deliver Common Stock, other securities or assets
pursuant to this Agreement, the Company will make all arrangements necessary so
that such other securities and assets are available for distribution by the
Rights Agent, if and when appropriate.
(c) In case the registered holder of any Rights Certificate shall
exercise less than all the Rights evidenced thereby, a new Rights Certificate
evidencing the number of Rights remaining unexercised 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.
(d) Notwithstanding anything in this Agreement to the contrary,
from and after the first occurrence of a Flip-in Event, any Rights beneficially
owed by (i) an Acquiring Person or an Associate or Affiliate of an Acquiring
Person, (ii) a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee after the Acquiring Person becomes such, or
(iii) a transferee of an Acquiring Person (or of any such Associate or
Affiliate) who becomes a transferee prior to or concurrently with the Acquiring
Person becoming such and receives such Rights pursuant to either (A) a transfer
(whether or not for consideration) from the Acquiring Person (or any such
Associate or Affiliate) to holders of equity interests in such Acquiring Person
(or in any such Associate or Affiliate) or to any Person with whom the Acquiring
Person (or any such Associate or Affiliate) has any continuing agreement,
arrangement or understanding regarding the transferred Rights, or (B) a transfer
which the Board of Directors has determined is part of a plan, arrangement or
understanding which has as a primary purpose or effect the avoidance of this
SECTION 7(D) shall become 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; provided,
however, that the foregoing provisions of this SECTION 7(D) shall not apply to
Rights beneficially owned by an Acquiring Person (or an Associate or Affiliate)
of such Acquiring Person or a transferee thereof if such Person became an
9
Acquiring Person pursuant to a Qualifying Tender Offer. The Company shall use
all reasonable efforts to insure that the provisions of SECTION 4(B) AND THIS
SECTION 7(D) and are complied with, but shall have no liability to any holder of
Rights Certificates or other Person as a result of its failure to make any
determinations with respect to an Acquiring Person or its Affiliates and
Associates or any transferee of any of them hereunder.
(e) Notwithstanding anything in this Agreement to the contrary,
neither the Rights Agent nor the Company shall be obligated to undertake any
action with respect to a registered holder of Rights upon the occurrence of any
purported transfer pursuant to SECTION 6 or exercise pursuant to this SECTION 7
unless such registered holder (i) shall have completed and signed the
certificate contained in the form of assignment or election to purchase, as the
case may be, set forth on the reverse side of the Rights Certificate surrendered
for such transfer or exercise, as the case may be, (ii) shall not have indicated
an affirmative response to clause 1 or 2 thereof, and (iii) shall have provided
such additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Company shall
reasonably request.
SECTION 8. CANCELLATION AND DESTRUCTION OF RIGHT CERTIFICATES. All
Rights Certificates surrendered for exercise, transfer or exchange shall, if
surrendered to the Company or to any of its agents, be delivered to the Rights
Agent for cancellation or in cancelled form, or, if surrendered to the Rights
Agent, shall be cancelled 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 cancel and retire, any other Rights Certificate purchased or
acquired by the Company otherwise than upon the exercise thereof. The Rights
Agent shall deliver all cancelled Rights Certificates to the Company, or shall,
at the written request of the Company, destroy such cancelled Rights
Certificates, and in either such case shall deliver a certificate of
cancellation or destruction thereof, as appropriate, to the Company.
SECTION 9. RESERVATION AND AVAILABILITY OF CAPITAL STOCK. (a) The
Company covenants and agrees that it will use reasonable efforts to cause to be
reserved and kept available out of its authorized and unissued shares of
Preferred Stock (and, following the occurrence of Triggering Event, out of its
authorized and unissued shares of Common Stock) a number of shares of Preferred
Stock (and, following the occurrence of a Triggering Event, out of its
authorized but unissued shares of Common Stock) that will be, except as provided
in SECTION 11(A)(III), sufficient to permit the exercise in full of all
outstanding Rights as provided in this Agreement.
(b) So long as the Preferred Stock (and, following the occurrence
of Triggering Event, Common Stock and other securities) issuable and deliverable
upon the exercise of the Rights may be listed on any national securities
exchange or inter-dealer quotation system of a registered national securities
association, the Company shall use its best efforts to cause, from and after
such time as the Rights become exercisable, all securities reserved for such
issuance to be listed on any such exchange or quotation system upon official
notice of issuance upon such exercise.
10
(c) The Company shall use its best efforts (i) to file, as soon as
practicable following the earliest date after the occurrence of a Flip-in Event,
or as soon as is required by law following the Distribution Date, as the case
may be, a registration statement under the Securities Act with respect to the
securities issuable upon exercise of the Rights, (ii) to cause such registration
statement to become effective as soon as practicable after such filing, and
(iii) to cause such registration statement to remain effective (with a
prospectus at all times meeting the requirements of the Securities Act) until
the earlier of (A) the date as of which the Rights are no longer exercisable for
such securities, and (B) the Expiration Date. The Company will also take such
action as may be appropriate under, or to ensure compliance with, the securities
or blue sky laws of the various states in connection with the exercisability of
the Rights. The Company may temporarily suspend, for a period of time not to
exceed 90 days after the date set forth in this SECTION 9(C)(I), the
exercisability of the Rights in order to prepare and file such registration
statement and permit it to become effective. Upon any such suspension, the
Company shall notify the Rights Agent and issue a public announcement stating
that the exercisability of the Rights has been temporarily suspended, as well as
a public announcement at such time as the suspension is no longer in effect that
the rights are currently exercisable. Notwithstanding any such provision of this
Agreement to the contrary, the Rights shall not be exercisable for securities in
any jurisdiction if the requisite qualification in such jurisdiction shall not
have been obtained, such exercise therefor shall not be permitted under
applicable law or a registration statement in respect of such securities shall
not have been declared effective.
(d) The Company covenants and agrees that it will take all such
action as may be necessary to ensure that all one one-hundredths of a share of
Preferred Stock (and, following the occurrence of a Triggering Event, Common
Stock or other securities) issuable upon exercise of the Rights shall, at the
time of delivery of the certificates for such securities (subject to payment of
the Purchase Price), be duly authorized, validly issued, fully paid, and
nonassessable.
(e) The Company further covenants and agrees that it will pay when
due and payable any and all federal and state transfer taxes and other
governmental charges which may be payable in respect of the issuance or delivery
of the Rights Certificates and of any certificates for Preferred Stock (or
Common Stock or other securities, as the case may be) upon the exercise of
Rights. The Company shall not, however, be required to pay any transfer tax or
other governmental charge which may be payable in respect of any transfer
involved in the issuance or delivery of any Rights Certificates or of any
certificates for Preferred Stock (or Common Stock or other securities, as the
case may be) to a Person other than the registered holder of the applicable
Rights Certificate, and prior to any such transfer, issuance or delivery any
such tax or other governmental charge shall have been paid by the holder of such
Rights Certificate or it shall have been established to the Company's
satisfaction that no such tax or other governmental charge is due.
SECTION 10. PREFERRED STOCK RECORD DATE. Each Person (other than the
Company) in whose name any certificate for Preferred Stock (or Common Stock or
other securities, as the case may be) is issued upon the exercise of Rights
shall for all purposes be deemed to have become the holder of record of such
Preferred Stock (or Common Stock or other securities, as the case may be)
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 Purchase Price (and
11
any applicable transfer taxes or other governmental charges) was made; provided,
however, that if the date of such surrender and payment is a date upon which the
transfer books of the Company relating to the Preferred Stock (or Common Stock
or other securities, as the case may be) are closed, such Person shall be deemed
to have become the record holder of such shares on, and such certificate shall
be dated, the next succeeding Business Day on which the applicable transfer
books of the Company are open.
SECTION 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER AND KIND OF SHARES OR
NUMBER OF RIGHTS. The Purchase Price, the number and kind of shares 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) If the Company shall at any time after the date of this
Agreement (A) declare or pay a dividend on the Preferred Stock payable in shares
of Preferred Stock (or other capital stock), (B) subdivide the outstanding
Preferred Stock into a greater number of shares, (C) combine the outstanding
Preferred Stock into 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 involving the
Company in which the Company is the surviving or continuing corporation), except
as otherwise provided in SECTION 7(D) and this SECTION 11(A), then the Purchase
Price in effect immediately prior to 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 issuable on
such date shall be proportionately adjusted so that each holder of a Right shall
thereafter be entitled to receive, upon exercise thereof at the Purchase Price
in effect immediately prior to such date, 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 and at a time when
the applicable transfer books of the Company were open, such holder would have
been entitled to receive upon such exercise and by virtue of such dividend,
subdivision, combination or reclassification. If an event occurs which requires
an adjustment under both this SECTION 11(A)(I) and SECTION 11(A)(II), 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).
(ii) Subject to SECTIONS 23 AND 24, if:
(A) any Person, alone or together with its Affiliates
and Associates, shall, at any time after the date of this
Agreement become an Acquiring Person (other than pursuant to a
Qualifying Tender Offer), or
(B) during such time as there is an Acquiring Person,
there shall be a reclassification of securities (including any
reverse stock split), recapitalization of the Company, or any
merger or consolidation of the Company with any of its
Subsidiaries or any other transaction or series of
transactions involving the Company or any of its Subsidiaries
(whether or not with or into or otherwise involving an
Acquired Person), other than a Flip-over Event(s), which has
the effect, directly or indirectly, of increasing by more than
1% the proportionate share
12
of the outstanding shares of any class of equity or
convertible securities of the Company or any of its
Subsidiaries which is directly or indirectly beneficially
owned by any Acquiring Person or any Associate or Affiliate of
any Acquiring Person, or
(C) any Acquiring Person or any Associate or
Affiliate of any Acquiring Person, at any time after the date
of this Agreement, directly or indirectly, (1) shall merge
into the Company or otherwise combine or consolidate with the
Company and the Company shall be the continuing or surviving
corporation of such merger, combination or consolidation and,
in connection with such merger, combination or consolidation,
none of the outstanding shares of the Common Stock of the
Company shall be changed into or exchanged for stock or other
securities of the Company or of any other Person or cash or
any other property, (2) shall, in one transaction or a series
of transactions, other than in connection with the exercise of
a Right or Rights and other than in connection with the
exercise or conversion of securities exercisable for or
convertible into securities of the Company which securities
were outstanding prior to the time such Acquiring Person
became such, transfer any assets to the Company or to any of
its Subsidiaries in exchange (in whole or in part) for shares
of Common Stock, for other equity securities of the Company,
or for securities exercisable for or convertible into shares
of equity securities of the Company (Common Stock or
otherwise) or otherwise obtain from the Company, with or
without consideration, any additional shares of such equity
securities or securities exercisable for or convertible into
shares of such equity securities (other than pursuant to a pro
rata offer or distribution to all holders of Common Stock),
(3) shall sell, purchase, lease, exchange, mortgage, pledge,
transfer or otherwise dispose of assets (in one or more
transactions), to, from, with or of, as the case may be, the
Company or any of its Subsidiaries (including, in the case of
Subsidiaries, by way of a merger, combination or consolidation
of any Subsidiary), on terms and conditions less favorable to
the Company than the Company would be able to obtain in
arm's-length negotiations with an unaffiliated third party,
other than pursuant to a Flip-over Event, (4) shall sell,
purchase, lease, exchange, mortgage, pledge, transfer or
otherwise acquire or dispose of in one transaction or a series
of transactions, to, from or with (as the case may be) the
Company or any of its Subsidiaries (other than incidental to
the lines of business, if any, engaged in as of such date
between the Company and such Acquiring Person or Associates or
Affiliate) assets having an aggregate fair market value of
more than $1,000,000, other than pursuant to a transaction set
forth in SECTION 13(A), (5) shall receive any compensation
from the Company or any of its Subsidiaries other than
compensation for full-time employment as a regular employee,
or fees for serving as a director, at rates in accordance with
the Company's (or its Subsidiaries') past practices, or (6)
shall receive the benefit, directly or indirectly (except
proportionately as a shareholder and except if resulting from
a requirement of law or governmental regulation), of any
loans, assumptions of loans, advances, guarantees, pledges or
other financial assistance, or any tax credits or other tax
advantage, provided by the Company or any of its Subsidiaries,
13
(D) provided that the events described in SECTIONS
11(A)(II)(A), (B) AND (C) shall not include a repurchase by
the Company of Common Stock that is approved by the Board of
Directors, promptly following five days after the date of the
occurrence of the event described in SECTION 11(A)(II)(A)
hereof and promptly following the occurrence of any event
described in SECTION 11(A)(B) or (C) hereof,
then proper provision shall promptly be made so that each holder of a
Right shall (except as otherwise provided herein, including, without
limitation, SECTION 7(D)) thereafter be entitled to receive, upon
exercise of the Right, without payment of the Purchase Price and in
lieu of Preferred Stock, such number of duly authorized, validly
issued, fully paid and nonassessable shares of Common Stock of the
Company (such shares being referred to herein as the "ADJUSTMENT
SHARES") as shall be equal to the result obtained by (x) multiplying
the then current Purchase Price by the number of one one-hundredths of
a share of Preferred Stock for which a Right is then exercisable (such
product being thereafter referred to as the "PURCHASE PRICE" for each
Right and for all purposes of this Agreement), and dividing that
product by (y) the current market price (determined pursuant to SECTION
11(D)(I)) per share of Common Stock on the date of such first
occurrence; provided, however, that if the transaction that would
otherwise give rise to the foregoing adjustment is also subject to the
provisions of SECTION 13, then only the provisions of SECTION 13 shall
apply and no adjustment shall be made pursuant to this SECTION
11(A)(II).
(iii) If the number of shares of Common Stock which are
authorized by the Company's articles of incorporation but not
outstanding or reserved for issuance other than upon exercise of the
Rights is insufficient to permit the exercise in full of the Rights in
accordance with SECTION 11(A)(II), the Company shall (A) determine the
excess of (1) the value of the Adjustment Shares issuable upon the
exercise of a Right (computed using the "CURRENT MARKET PRICE" used to
determine the number of Adjustment Shares), over (2) the Purchase Price
(such excess being referred to herein as the "SPREAD"), and (B) with
respect to each Right, make adequate provision to substitute for the
Adjustment Shares, (1) (to the extent available) Common Stock and then,
(2) (to the extent available) other equity securities of the Company
which the Board of Directors has determined to be essentially
equivalent to shares of Common Stock in respect to dividend,
liquidation and voting rights (such securities being referred to herein
as "COMMON STOCK EQUIVALENTS"), and then, if necessary, (3) other
equity or debt securities of the Company, cash or other assets, a
reduction in the Purchase Price or any combination of the foregoing,
having an aggregate value (as determined by the Board of Directors
based upon the advice of a nationally recognized investment banking
firm selected by the Board of Directors) equal to the value of the
Adjustment Shares; provided, however, if the Company shall not have
made adequate provision to deliver value pursuant to clause (B) above
within thirty (30) days following the latter of (x) the first
occurrence of a Flip-in Event and (y) the date on which the Company's
right of redemption pursuant to SECTION 23 expires, then the Company
shall be obligated to deliver, upon the surrender for exercise of a
Right and
14
without requiring payment of the Purchase Price, shares of Common Stock
(to the extent available), shares of Preferred Stock of the Company,
and then, if necessary, cash, which shares and cash have an aggregate
value equal to the Spread. If the Board of Directors shall determine in
good faith that it is likely that sufficient additional shares of
Common Stock could be authorized for issuance upon exercise in full of
the Rights, the 30 day period set forth above (such period, as it may
be extended, being referred to herein as the "SUBSTITUTION PERIOD") may
be extended to the extent necessary, but not more than 90 days
following the first occurrence of a Flip-In Event, in order that the
Company may seek shareholder approval for the authorization of such
additional shares. If the Company determines that some action is to be
taken pursuant to the first or second sentence of this SECTION
11(A)(III), then the Company (x) shall provide, subject to SECTION
7(D), that such action shall apply uniformly to all outstanding Rights,
and (y) may suspend the exercisability of the Rights until the
expiration of the Substitution Period in order to seek any
authorization of additional shares or to decide the appropriate form
and value of any consideration to be delivered as referred to in such
first or second sentence. If any such suspension occurs, the Company
shall issue a public announcement stating that the exercisability of
the Rights has been temporarily suspended, as well as a public
announcement at such time as the suspension is no longer in effect. For
purposes of this SECTION 11(A)(III), the value of the Common Stock
shall be the current market price per share of Common Stock (as
determined pursuant to SECTION 11(D)) on the later of the date of the
first occurrence of a Flip-in Event and the first date that the right
to redeem the Rights pursuant to SECTION 23 shall expire; any common
stock equivalent shall be deemed to have the same value as the Common
Stock on such date; and the value of other securities or assets shall
be determined pursuant to SECTION 11(D)(III).
(b) If 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 45 calendar days after
such record date) Preferred Stock (or securities having the same rights,
privileges and preferences as the shares of Preferred Stock ("EQUIVALENT
PREFERRED STOCK")) or securities convertible into or exercisable for Preferred
Stock (or equivalent preferred stock) at a price per share of Preferred Stock
(or equivalent preferred stock) (in each case, taking account of any conversion
or exercise price) less than the current market price (as determined pursuant to
SECTION 11(D)) per share of Preferred Stock on such record date, the Purchase
Price to be in effect after such record date shall be determined by multiplying
the Purchase Price in effect immediately prior to such date by a fraction, the
numerator of which shall be the number of shares of Preferred Stock outstanding
on such record date, plus the number of shares of Preferred Stock which the
aggregate price (taking account of any conversion or exercise price) of the
total number of shares of Preferred Stock (and/or equivalent preferred stock) 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) so to be offered. In case such subscription price
may be paid by delivery of consideration part or all of which shall be in a form
other than cash, the value of such consideration shall be as determined in good
faith by the Board of Directors of the Company, whose determination shall be
described in a statement filed with the Rights Agent and shall be conclusive for
all purposes. Shares of Preferred Stock owned by or
15
held for the account of the Company 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 if such rights, options or warrants
are not so issued, the Purchase Price shall be adjusted to be the Purchase 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 the making of
a distribution to all holders of Preferred Stock (including any such
distribution made in connection with a consolidation or merger involving the
Company in which the Company is the surviving entity) of evidences of
indebtedness, equity securities other than Preferred Stock, cash or assets
(other than a regular periodic cash dividend out of the earnings or retained
earnings of the Company) or rights, options or warrants (excluding those
referred to in SECTION 11(B)), the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the current market price (as determined pursuant to SECTION 11(D)) per
share of Preferred Stock on such record date, less the value (as determined
pursuant to SECTION 11(D)(III)) of such evidences of indebtedness, equity
securities, assets, rights, options or warrants so to be distributed with
respect to one share of Preferred Stock, and the denominator of which shall be
such current market price per share of Preferred Stock (as determined by SECTION
11(D)). Such adjustment shall be made successively whenever such a record date
is fixed, and if such distribution is not so made, the Purchase Price shall be
adjusted to be the Purchase Price which would then be in effect if such record
date had not been fixed.
(d)(i) For the purpose of any computation hereunder other than
computations made pursuant to SECTION 11(A)(III) OR 14, the "CURRENT MARKET
PRICE" per share of Common Stock on any date shall be deemed to be the average
of the daily closing prices per share of such Common Stock for the 30
consecutive Trading Days immediately prior to such date; for purposes of
computations made pursuant to SECTION 11(A)(III), the "CURRENT MARKET PRICE" per
share of Common Stock on any date shall be deemed to be the average of the daily
closing prices per share of such Common Stock for the 10 consecutive Trading
Days immediately following such date; and for purposes of computations made
pursuant to SECTION 14, the "CURRENT MARKET PRICE" per share of Common Stock for
any Trading Day shall be deemed to be the closing price per share of Common
Stock for such Trading Day; provided, however, that if the current market price
per share of the Common Stock is determined during a period following the
announcement by the issuer of such Common Stock of (A) a dividend or
distribution on such Common Stock payable in shares of such Common Stock or
securities exercisable for or convertible into shares of such Common Stock
(other than the Rights), or (B) any subdivision, combination or reclassification
of such Common Stock, and prior to the expiration of the requisite 30 Trading
Day or 10 Trading Day period after the ex-dividend date for such dividend or
distribution, or the record date for such subdivision, combination or
reclassification, then, and in each such case, the "CURRENT MARKET PRICE" shall
be properly adjusted to take into account ex-dividend trading. The closing price
for each day shall be the last sale price, regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked prices,
regular way, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the shares of Common Stock are not
listed or admitted to trading on the New York Stock Exchange, on the principal
national
16
securities exchange on which the shares of Common Stock are listed or admitted
to trading or, if the shares of Common Stock are not listed or admitted to
trading on any national securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices in the over-the-counter
market, as reported by The Nasdaq Stock Market or such other system then in use
or, if on any such date the shares of Common Stock 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 Common Stock selected by the
Board of Directors of the Company. If on any such date no market maker is making
a market in the Common Stock, then the fair value of such shares on such date as
determined in good faith by the Board of Directors of the Company shall be used.
If the Common Stock is not publicly held or not so listed or traded, the
"CURRENT MARKET PRICE" per share means the fair value per share as determined in
good faith by the Board of Directors of the Company, which determination shall
be described in a statement filed with the Rights Agent and shall be conclusive
for all purposes.
(ii) For the purpose of any computation hereunder, the
"CURRENT MARKET PRICE" per share of Preferred Stock shall be determined
in the same manner set forth above for the Common Stock in SECTION
11(D)(I) (other than the last sentence thereof). If the current market
price per share of Preferred Stock cannot be determined in such manner,
or if the Preferred Stock is not publicly held or listed or traded in a
manner described in SECTION 11(d)(i), then the "CURRENT MARKET PRICE"
per share of Preferred Stock shall be conclusively deemed to be an
amount equal to 100 (as such number may be appropriately adjusted for
such events as stock splits, stock dividends and recapitalizations with
respect to the Common Stock occurring after the date of this Agreement)
multiplied by the current market price per share of Common Stock (as
determined pursuant to SECTION 11(D)(I) (other than the last sentence
thereof)). If neither the Common Stock nor the Preferred Stock is
publicly held or so listed or traded, the "CURRENT MARKET PRICE" per
share of the Preferred Stock shall be determined in the same manner as
set forth in the last sentence of SECTION 11(D)(I). For all purposes of
this Agreement, the "CURRENT MARKET PRICE" of one one-hundredth of a
share of Preferred Stock shall be equal to the "CURRENT MARKET PRICE"
of one share of Preferred Stock divided by 100.
(iii) For the purpose of any computation hereunder, the value
of any securities or assets other than Common Stock or Preferred Stock
shall be the fair value as determined in good faith by the Board of
Directors of the Company, which 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 Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least 1% in the Purchase 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 ten-thousandth of a share of Common Stock or other share
or one-millionth of a share of Preferred Stock, as the case may be.
17
(f) If at any time, as a result of an adjustment made pursuant to
SECTION 11(A)(II) or SECTION 13(A), the holder of any Right shall be entitled to
receive upon exercise of such Right 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 Purchase Price thereof shall be subject to
adjustment from time to time in a 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 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 hereunder shall evidence the right to purchase, at the Purchase
Price then in effect, the then applicable number of one one-hundredths of a
share of Preferred Stock and other capital stock of the Company issuable 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), upon each adjustment of the Purchase Price as a
result of the calculations made in SECTIONS 11(B) AND (C), each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the adjusted Purchase Price, that number of
one one-hundredths of a share of Preferred Stock (calculated to the nearest
one-millionth) obtained by (i) multiplying (x) the number of one one-hundredths
of a share for which a Right was exercisable immediately prior to this
adjustment by (y) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price, and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.
(i) The Company may elect on or after the date of any adjustment
of the Purchase Price to adjust the number of Rights, in lieu of any adjustment
in the number of one one-hundredths of a share of Preferred Stock issuable upon
the exercise of a Right. Each of the Rights outstanding after such adjustment of
the number of Rights shall be exercisable for the number of one one-hundredths
of a share of Preferred Stock for which such 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 Purchase Price in effect
immediately prior to adjustment of the Purchase Price by the Purchase Price in
effect immediately after adjustment of the Purchase 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 Purchase Price is adjusted or any day thereafter, but, if the Rights
Certificates have been issued, shall be at least 10 days later than the date of
the public announcement. If Rights Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this SECTION 11(I), the Company
shall, as promptly as practicable, cause to be distributed to holders of record
of Rights Certificates on such record date Right Certificates evidencing,
subject to SECTION 14, 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
18
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 so to be distributed shall be issued, executed and countersigned in
the manner provided for herein (and may bear, at the option of the Company, the
adjusted Purchase 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 Purchase Price
or the number of one one-hundredths of a share of Preferred Stock issuable upon
the exercise of the Rights, the Rights Certificates theretofore and thereafter
issued may continue to express the Purchase Price per one one-hundredth of a
share and the number of shares which were expressed in the initial Rights
Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the par value, if any, of the number of one
one-hundredths of a share of Preferred Stock 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 fully paid and nonassessable such number of one one-hundredths of a share
of Preferred Stock at such adjusted Purchase Price.
(l) In any case in which this SECTION 11 shall require that an
adjustment in the Purchase 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
the number of one one-hundredths of a share of Preferred Stock or other capital
stock of the Company, if any, issuable upon such exercise over and above the
number of one one-hundredths of a share of Preferred Stock or other capital
stock of the Company, if any, issuable upon such exercise on the basis of the
Purchase Price in effect prior to such adjustment; provided, however, that the
Company shall deliver to such holder a due bill or other appropriate instrument
evidencing such holder's right to receive such additional shares 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 Purchase Price, in
addition to those adjustments expressly required by this SECTION 11, as and to
the extent that it, in its sole discretion, shall determine to be advisable in
order that any (i) consolidation or subdivision of the Preferred Stock, (ii)
issuance wholly for cash of any Preferred Stock at less than the current market
price, (iii) issuance wholly for cash of Preferred Stock or securities which by
their terms are convertible into or exercisable for 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 the holders of its Preferred Stock,
shall not be taxable to such shareholders.
(n) The Company covenants and agrees that it will not at any time
after the Distribution Date, (i) consolidate with any other Person, (ii) merge
with or into any other Person, (iii) effect a statutory share exchange with any
Person, or (iv) sell, lease or otherwise transfer (and/or permit any of its
Subsidiaries to sell, lease or otherwise transfer), in one transaction or a
series of related transactions, assets aggregating more than 50% of the assets
(measured by either
19
book value or fair market value) or generating more than 50% of operating income
or cash flow of the Company and its Subsidiaries, taken as a whole, to any other
Person or Persons if (x) at the time of or immediately after such consolidation,
merger, statutory share exchange, sale, lease or transfer there are any rights,
warrants or other instruments or securities outstanding or any agreements or
arrangements 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 consolidation, merger, statutory
share exchange, sale, lease or transfer, the shareholders of a Person who
constitutes, or would constitute, the "PRINCIPAL PARTY" for the purposes of
SECTION 13 shall have received a distribution of Rights previously owned by such
Person or any of its Affiliates and Associates.
(o) The Company covenants and agrees that after the Distribution
Date, it will not, except as permitted by SECTIONS 23, 24 OR 27, 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 substantially diminish or otherwise
eliminate the benefits intended to be afforded by the Rights, unless such action
is approved by the Board of Directors.
(p) Notwithstanding anything in this Agreement to the contrary, if
at any time after the consummation of the Acquisitions and prior to the
Distribution Date the Company shall (i) pay a dividend on the outstanding shares
of Common Stock payable in shares of Common Stock, (ii) subdivide the
outstanding Common Stock into a larger number of shares, or (iii) combine the
outstanding Common Stock into a smaller number of shares, the number of Rights
associated with each share of Common Stock then outstanding, or issued or
delivered thereafter shall be proportionately adjusted so that the number of
Rights thereafter associated with each share of Common Stock following any such
event shall equal the result obtained by multiplying the number of Rights
associated with each share of Common Stock 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.
SECTION 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.
Whenever an adjustment is made as provided in SECTIONS 11 AND 13, 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 Preferred Stock and
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 Distribution
Date, to each holder of a certificate representing shares of Common Stock) in
the manner set forth in SECTION 26. The Rights Agent shall be fully protected in
relying on any such certificate and on any adjustment contained therein.
SECTION 13. CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR
EARNING POWER. (a) Except for any transaction with a Person who has consummated
a Qualifying Tender Offer which transaction is approved by the Board of
Directors, if following the Share Acquisition Date, directly or indirectly,
20
(w) the Company shall consolidate with, merge with or
into, or otherwise combine with, any other Person, and the
Company shall not be the continuing or surviving corporation
of such consolidation, merger or combination, or
(x) any Person shall consolidate with, merge with or
into, or otherwise combine with, the Company, and the Company
shall be the continuing or surviving corporation of such
consolidation, merger or combination and, in connection with
such consolidation, merger or combination, all or part of the
outstanding shares of Common Stock shall be changed into or
exchanged for other stock or securities of the Company or any
other Person or cash or any other property, or
(y) the Company shall be a party to any statutory
share exchange with any other Person after which the Company
is a subsidiary of any other Person, or
(z) the Company and/or one or more of its
Subsidiaries shall sell, lease or otherwise transfer, in one
transaction or a series of related transactions, assets
aggregating more than 50% of the assets (measured by either
book value or fair market value) or generating more than 50%
of the operating income or cash flow of the Company and its
Subsidiaries, taken as a whole, to any other Person or
Persons,
then, and in each such case, proper provision shall promptly be made so that (i)
each holder of a Right, except as provided in SECTION 7(D), shall thereafter be
entitled to receive, upon exercise thereof at the then current Purchase Price,
such number of duly authorized, validly issued, fully paid and nonassessable
shares of freely tradable Common Stock of the Principal Party (as defined
below), not subject to any rights of call or first refusal, liens, encumbrances
or other claims, as shall be equal to the result obtained by (A) multiplying the
then current Purchase Price by the number of one one-hundredths of a share of
Preferred Stock for which a Right was exercisable immediately prior to the first
occurrence of a Flip-over Event (or, if a Flip-in Event has previously occurred,
multiplying the number of such one one-hundredths of a share of Preferred Stock
for which a Right was exercisable immediately prior to the first occurrence of a
Flip-in Event by the Purchase Price in effect immediately prior to such first
occurrence) (such product being thereafter referred to as the "PURCHASE PRICE"
for each Right and for all purposes of this Agreement), and dividing that
product by (B) 50% of the current market price (determined pursuant to SECTION
11(D)(I)) per share of the Common Stock or other securities of such Principal
Party) on the date of consummation of such consolidation, merger, combination,
statutory share exchange, sale, lease or transfer;
(ii) the Principal Party shall thereafter be liable for, and
shall assume, by virtue of such consolidation, merger, combination,
statutory share exchange, sale, lease or transfer, all the obligations
and duties of the Company pursuant to this Agreement;
21
(iii) the term "COMPANY" shall thereafter be deemed to refer
to such Principal Party, it being specifically intended that the
provisions of SECTION 11 shall apply only to such Principal Party
following the first occurrence of a Flip-over Event;
(iv) such Principal Party shall take such steps (including,
without limitation, the authorization and reservation of a sufficient
number of shares of its Common Stock to permit exercise of all
outstanding Rights in accordance with this SECTION 13(A)) in connection
with the consummation of any such transaction as may be necessary to
assure that the provisions hereof shall thereafter be applicable, as
nearly as reasonably may be, in relation to the shares of its Common
Stock thereafter deliverable upon the exercise of the Rights; and
(v) the provisions of SECTION 11(A)(II) shall be of no effect
following the first occurrence of a Flip-over Event.
(b) "PRINCIPAL PARTY" means:
(i) in the case of any transaction described in SECTIONS 13(A)
(W), (X) OR (Y), (A) the Person that is the issuer of any securities
into which shares of Common Stock of the Company are converted in such
merger, consolidation, or combination or for which shares of Common
Stock of the Company are exchanged in such statutory share exchange,
or, if there is more than one such issuer, the issuer of the Common
Stock of which has the greatest aggregate market value, or (B) if no
securities are issued, (x) the person that survives such consolidation
or is the other party to the merger, combination or statutory share
exchange, or, if there is more than one such Person, the Person the
Common Stock of which has the greatest aggregate market value, or (y)
if the Person that is the other party to the merger does not survive
the merger, the Person that does survive the merger (including the
Company if it survives); and
(ii) in the case of any transactions described in SECTIONS
13(A)(Z), the Person that is the party receiving the greatest portion
of the assets, operating income or cash flow 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, operating income or cash flow so transferred, or, if the Person
receiving the greatest portion of the assets, operating income or cash
flow cannot be determined, the person the Common Stock of which has the
greatest aggregate market value;
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 12-month
period registered under Section 12 of the Exchange Act, and such Person is a
direct or indirect Subsidiary of another Person the Common Stock of which is and
has been so registered, "PRINCIPAL PARTY" shall refer to such other Person; and
(B) in case such Person is a Subsidiary, directly or indirectly, of more than
one Person, the Common Stock of two or more of which are and have been so
registered, "PRINCIPAL PARTY" shall refer to whichever of such Persons is the
issuer of the Common Stock having the greatest aggregate market value.
22
(c) The Company shall not consummate any such consolidation, merger,
combination, statutory share exchange, sale, lease or transfer unless the
Principal Party shall have a sufficient number of authorized shares of its
Common Stock which are not outstanding or otherwise 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 SECTIONS 13(A) AND (B) and further providing that, as soon as
practicable after the date of any consolidation, merger, combination, statutory
share exchange, sale, lease or transfer mentioned in SECTION 13(A), the
Principal Party will (i) prepare and file a registration statement under the
Securities Act with respect to the Rights and the securities issuable upon
exercise of the Rights on an appropriate form, and will use its best efforts to
cause such registration statement (A) to become effective as soon as practicable
after such filing, and (B) to remain effective (with a prospectus at all times
meeting the requirements of the Securities Act) until the Expiration Date; 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) The provisions of this SECTION 13 shall similarly apply to
successive mergers, consolidations, combinations, statutory share exchanges,
sales, leases or other transfers. If any Flip-over Event shall occur at any time
after the occurrence of a Flip-in Event, the Rights which have not theretofore
been exercised shall thereafter become exercisable in the manner described in
SECTION 13(A).
SECTION 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES. (a) The Company
shall not be required to issue fractions of Rights, except prior to the
Distribution Date as provided in SECTION 11(P), or to distribute Rights
Certificates which evidence fractional Rights. In lieu of any such fractional
Rights, the Company shall pay to the registered holders of the Rights
Certificates with regard to which such fractional Rights would otherwise be
issuable an amount in cash equal to the same fraction of the current market
price of a whole Right. For purposes of this SECTION 14(A), the current market
price of a whole Right shall be the closing price of a Right for the Trading Day
immediately prior to the date on which such fractional Rights would otherwise
have been issuable. The closing price of a Right for any day shall be the last
sale price, regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, in either case as
reported on the principal national securities exchange on which the Rights are
listed or admitted to trading or, if the Rights are not listed or admitted to
trading on any national securities exchange, the last quoted price, or, if not
so quoted, the average of the high bid and low asked prices in the
over-the-counter market, as reported by The Nasdaq Stock Market or such other
system then in use or, 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 the Board of
Directors of the Company. If on any such date no such market maker is making a
market in the Rights, the current market price of the Rights on such date shall
be as determined in good faith by the Board of Directors of the Company.
23
(b) The Company shall not be required to issue fractions of shares of
Preferred Stock (other than fractions which are multiples of one one-hundredth
of a share of Preferred Stock) upon exercise of the Rights or to distribute
certificates which evidence fractional shares of Preferred Stock (other than
fractions which are multiples of one one-hundredth of a share of Preferred
Stock). In lieu of any such fractional shares of Preferred Stock, the Company
shall 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 current market price of one one-hundredth of a share of
Preferred Stock. For purposes this SECTION 14(B), the current market price of
one one-hundredth of a share of Preferred Stock shall be one one-hundredth of
the closing price of a share of Preferred Stock (as determined pursuant to
SECTION 11(D)) for the Trading Day immediately prior to the date of such
exercise.
(c) Following the occurrence of any Triggering Event or upon any
exchange pursuant to SECTION 24, the Company shall not be required to issue
fractions of shares of Common Stock upon exercise of the Rights or to distribute
certificates which evidence fractional shares of Common Stock. In lieu of
fractional shares of Common Stock, the Company shall pay to the registered
holders of Rights Certificates at the time such Rights are exercised or
exchanged as provided herein an amount in cash equal to the same fraction of the
current market price of a share of Common Stock. For purposes of this SECTION
14(C), the current market price of a share of Common Stock shall be the closing
price of a share of Common Stock (as determined pursuant to SECTION 11(D)(I))
for the Trading Day immediately prior to the date of such exercise or exchange.
(d) The holder of a Right by the acceptance of the Right expressly
waives his 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 are vested in the respective registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of
Common Stock), and any registered holder of any Rights Certificate (or, prior to
the Distribution Date, of any Common Stock), without the consent of the Rights
Agent or of the holder of any other Rights Certificate (or, prior to the
Distribution Date, of any 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 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 will be entitled to specific performance of
the obligations under, and injunctive relief against actual or threatened
violations of the obligations of, any Person subject to this Agreement.
SECTION 16. AGREEMENT OF RIGHT 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:
24
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of Common Stock;
(b) after the Distribution Date, the Rights Certificates are
transferable only on the registry books of the Rights Agent if surrendered at
the principal office or offices of the Rights Agent designated for such
purposes, duly endorsed or accompanied by a proper instrument of transfer and
with the appropriate forms and certificates fully executed;
(c) subject to SECTIONS 6(A) AND 7(E), the Company and the Rights Agent
may deem and treat the Person in whose name a Rights Certificate (or, prior to
the Distribution Date, a certificate representing Common Stock) 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
certificate representing shares of Common Stock 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(D),
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 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 soon as possible.
SECTION 17. RIGHTS CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER. 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 capital stock
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 shareholder of the Company or any right to vote for the election
of directors or upon any matter submitted to shareholders at any meeting
thereof, or to give or withhold consent to any corporate action, or to receive
notice of meetings or other actions affecting shareholders (except as provided
in SECTION 25), 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 and counsel fees and other disbursements incurred in the execution or
administration of this Agreement and the exercise and performance of its duties
hereunder. The Company also agrees to indemnify the Rights Agent for, and to
hold it harmless against, any loss, liability, or expense, incurred without
negligence, bad
25
faith or willful misconduct on the part of the Rights Agent, for anything done
or omitted by the Rights Agent in connection with the acceptance and
administration of this Agreement or the exercise or performance of its duties
hereunder, including the costs and expenses of defending against any claim of
liability.
(b) The Rights Agent shall be protected and shall incur no liability
for or in respect of any action taken, suffered or omitted by it in connection
with the administration of this Agreement or the exercise or 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,
instruction, direction, consent, certificate, statement, or other paper or
document believed by it to be genuine and to be signed, executed and, where
necessary, verified or acknowledged, by the proper Person or Persons.
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 stock transfer business of the Rights Agent or any successor Rights
Agent, shall be the successor to the Rights Agent under this Agreement without
the execution or filing of any paper or any further act on the part of any of
the parties hereto; provided, however, that such corporation would be eligible
for appointment as a successor Rights Agent under the provisions of SECTION 21.
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
Rights Agent 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 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 imposed by this Agreement 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
26
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" and the
determination of "CURRENT MARKET PRICE") be proved or established by the Company
prior to taking, suffering or omitting to take any action hereunder, such fact
or matter (unless other evidence in respect thereof is specifically prescribed
herein) may be deemed to be conclusively proved and established by a certificate
signed by the Chairman of the Board, the President, any Vice President, the
Secretary or any Assistant Secretary of the Company and delivered to the Rights
Agent. Any such certificate shall be full authorization to the Rights Agent for
any action taken, suffered or omitted in good faith by it under the provisions
of this Agreement in reliance upon such certificate.
(c) The Rights Agent shall be liable hereunder only for its own
negligence, bad faith or willful misconduct.
(d) The Rights Agent shall not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Rights
Certificates (except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and shall be deemed to have been
made by the Company only.
(e) The Rights Agent shall not be under any responsibility in respect
of the validity of this Agreement or the execution and delivery hereof (except
the due execution hereof by the Rights Agent) or in respect of the validity 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
condition contained in this Agreement or in any Rights Certificate; nor shall it
be responsible for any change in the exercisability of the Rights (including the
Rights becoming void pursuant to SECTION 7(D)) or any adjustment in the terms of
the Rights (including the manner, method or amount thereof) provided for in
SECTIONS 3, 11, 13, 23 OR 24, or the ascertaining of the existence of facts that
would require any such adjustment (except with respect to the exercise of Rights
evidenced by Rights Certificates after actual notice of any such adjustment);
nor shall it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any shares of Common Stock or
Preferred Stock to be issued pursuant to this Agreement or any Rights
Certificate or as to whether any shares of Common Stock or Preferred Stock will,
when issued, be duly authorized, validly issued, fully paid and nonassessable.
(f) The Company agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman of the Board, the President any Vice President, the Secretary or any
Assistant Secretary of the Company, and to apply to
27
such officers for advice or instructions in connection with its duties, and it
shall not be liable for any action taken, suffered or omitted to be taken by it
in good faith in accordance with instructions of any such officer.
(h) The Rights Agent and any shareholder, director, officer or employee
of the Rights Agent may buy, sell or deal in any of the Rights or other
securities of the Company or 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 the 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 Person.
(i) The Rights Agent may execute and exercise any of the rights or
powers hereby vested in it or perform any duty hereunder either itself or by or
through its attorneys or agents, and the Rights Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorneys or
agents or for any loss to the Company or to any holders of Rights resulting from
any such act, default, neglect or misconduct; provided, however, that reasonable
care was exercised in the selection and continued employment thereof.
(j) No provision of this Agreement shall require the Rights Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of its rights if
there shall be reasonable grounds for believing that repayment of such funds or
adequate indemnification against such risk or liability is not reasonably
assured to it.
(k) 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, has either not
been completed or indicates an affirmative response to clause 1 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.
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 30 days' written notice mailed to the Company and to each transfer agent of
the Common Stock and Preferred Stock by registered or certified mail, and,
subsequent to the Distribution Date, to the holders of the Rights Certificates
by first-class mail. The Company may remove the Rights Agent or any successor
Rights Agent upon 30 days' written notice, mailed to the Rights Agent or
successor Rights Agent, as the case may be, and to each transfer agent of the
Common Stock and Preferred Stock by registered or certified mail, and subsequent
to the Distribution Date, 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 30 days of 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 the
registered holder of any Rights Certificate may apply to any court of competent
jurisdiction for the
28
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the Company or by such a court, shall be (a) a corporation organized and
doing business under the laws of the United States or of the States of Georgia
or New York (or any other state of the United States so long as such corporation
is authorized to do business as a banking institution in the States of Georgia
or New York), in good standing, having a principal office in the State of
Georgia, which is authorized under such laws to exercise stock transfer or
corporate trust powers and is subject to supervision or examination by federal
or state authority and which has at the time of its appointment as Rights Agent
a combined capital and surplus of at least $50,000,000 or (b) an Affiliate of a
corporation described in SECTION 21(A). After appointment, the successor Rights
Agent shall be vested with the same powers, rights, duties and responsibilities
as if it had been originally named as Rights Agent without further act or deed;
but the predecessor Rights Agent shall deliver and transfer to the successor
Rights Agent any property at the time held by it hereunder, and execute and
deliver any further assurance, conveyance, act or deed necessary for the
purpose. Not later than the effective date of any such appointment, the Company
shall file notice thereof in writing with the predecessor Rights Agent and each
transfer agent of the Common Stock and the Preferred Stock, and, subsequent to
the Distribution Date, 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, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Rights Agent or the appointment of
the successor Rights Agent, as the case may be.
SECTION 22. ISSUANCE OF NEW RIGHT CERTIFICATES. Notwithstanding any of
the provisions of this Agreement or of 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 its Board of Directors to reflect any adjustment or change
in the Purchase Price and the number or kind or class of shares or other
securities issuable or property purchasable upon exercise of the Rights made in
accordance with the provisions of this Agreement.
SECTION 23. REDEMPTION AND TERMINATION. (a) The Company may, at its
option, but only upon the vote of a majority of the Board of Directors then in
office, at any time prior to the earlier of (i) the Close of Business on the
tenth day after the Share Acquisition Date (or such later date as the Board of
Directors may designate prior to such time as the Rights are no longer
redeemable), or (ii) the Final Expiration Date, redeem all but not less than all
of the then outstanding Rights at a redemption price of $0.001 per Right, as
such amount may be appropriately adjusted to reflect any stock split, stock
dividend or similar transaction occurring after the date hereof (such redemption
price being referred to herein as the "REDEMPTION PRICE"), and the Company may,
at its option, pay the Redemption Price in shares of Common Stock (based on the
"CURRENT MARKET VALUE," as defined in SECTION 11(D), of the shares of Common
Stock at the time of redemption), cash or any other form of consideration deemed
appropriate by the Board of Directors; provided, however, that any redemption of
Rights shall be subject to any additional approval procedures required by the
articles of incorporation or bylaws of the Company. Notwithstanding anything in
this Agreement to the contrary, the Rights shall not be exercisable after the
first occurrence of a Flip-in Event until such time as the Company's right of
redemption hereunder has expired.
29
(b) If, following the occurrence of a Share Acquisition Date and
following the expiration of the right of redemption hereunder (i) a Person who
is an Acquiring Person shall have transferred or otherwise disposed of a number
of shares of Common Stock in one transaction or series of transactions, not
directly or indirectly involving the Company or any of its Subsidiaries, which
did not result in the occurrence of a Triggering Event such that such Person is
thereafter the Beneficial Owner of 10% or less of the outstanding Common Stock,
and (ii) there are no other Persons immediately following the occurrence of the
event described in clause (i) who are Acquiring Persons, then the right of
redemption shall be reinstated and thereafter be subject to the provisions of
this SECTION 23.
(c) Immediately upon the action of the Board of Directors of the
Company electing to redeem the Rights and without any further action and without
any notice, the right to exercise the Rights will terminate and thereafter the
only right of the holders of Rights shall be to receive the Redemption Price for
each Right so held. The Company shall promptly thereafter give notice of such
redemption to the Rights Agent and the holders of the Rights in the manner set
forth in SECTION 26; provided, however, that the failure to give, or any defect
in, such notice shall not affect the validity of such redemption. Any notice
which is mailed in the manner provided herein 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.
SECTION 24. EXCHANGE. (a) At any time after any Person becomes an
Acquiring Person, the Company may, upon the election of the Board of Directors,
at its option, exchange all or part of the then outstanding and exercisable
Rights (which shall not include Rights that have become void pursuant to SECTION
7(D)) 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").
(b) Immediately upon the action of the Board of Directors electing to
exchange any Rights pursuant to SECTION 24(A) and without any further action and
without any notice, the right to exercise such Rights will terminate and
thereafter the only right 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 thereafter
give notice of such exchange to the Rights Agent and the holders of the Rights
to be exchanged in the manner set forth in SECTION 26; provided, however, that
the failure to give, or any defect in, such notice shall not affect the validity
of such exchange. Any notice which is mailed in the manner provided herein 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 SECTION 7(D)) held by each holder of Rights.
(c) If there shall not be sufficient Common Stock issued but not
outstanding or authorized but unissued to permit any exchange of Rights as
contemplated by this SECTION 24, the Company shall take all such action as may
be necessary to authorize additional Common Stock
30
for issuance upon exchange of the Rights. In the event the Company shall, after
a good faith effort, be unable to take all such action as may be necessary to
authorize such additional Common Stock, the Company may substitute common stock
equivalents (as defined in SECTION 11(A)(III)) for shares of Common Stock
exchangeable for Rights, at the initial rate of one common stock equivalent for
each share of Common Stock, as appropriately adjusted to reflect adjustments in
dividend, liquidation and voting rights of common stock equivalents pursuant to
the terms thereof, so that each common stock equivalent delivered in lieu of
each share of Common Stock shall have essentially the same dividend, liquidation
and voting rights as one share of Common Stock.
(d) The Company shall not be required to issue fractional 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 Rights 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 market value of a whole share of
Common Stock. For purposes of this SECTION 24(D), the current market value of a
whole share of Common Stock shall be the closing price of a share of Common
Stock (as determined pursuant to SECTION 11(D)) for the Trading Day immediately
prior to the date of the exchange.
SECTION 25. NOTICE OF PROPOSED ACTIONS. (a) If the Company shall
propose, at any time after the Distribution 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 its 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 or combination of outstanding
shares of Preferred Stock), (iv) to effect any consolidation or merger with or
into any other Person, or to effect a statutory share exchange with any Person,
or to effect and/or to permit one or more of its Subsidiaries to effect any
sale, lease or other transfer, in one transaction or a series of related
transactions, of assets aggregating more than 50% of the assets (measured by
either book value or fair market value) or generating more than 50% of the
operating income or cash flow of the Company and its Subsidiaries, taken as a
whole, to any other Person or Persons, or (v) to effect the liquidation,
dissolution or winding up of the Company, then, in each such case, the Company
shall give to each holder of a Right, to the extent feasible and in accordance
with SECTION 26, a notice of such proposed action, which shall specify the
record date for the purposes of any such dividend, distribution or offering of
rights or warrants, or the date on which any such reclassification,
consolidation, merger, statutory share exchange, sale, lease, transfer,
liquidation, dissolution or winding up is to take place and the date of
participation therein by the holders 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 20 days prior to the record date for
determining holders of the Preferred Stock entitled to participate in such
dividend, distribution or offering, and in the case of any such other action, at
least 20 days prior to the date of the taking of such proposed action or the
date of participation therein by the holders of Preferred Stock, whichever shall
be the earlier. The failure to give notice required by this Section or any
defect therein shall
31
not affect the legality or validity of the action taken by the Company or the
vote upon any such action.
(b) Notwithstanding anything in this Agreement to the contrary, prior
to the Distribution Date a public filling by the Company with the Securities and
Exchange Commission shall constitute sufficient notice to the holders of
securities of the Company, including the Rights, for purposes of this Agreement
and no other notice need be given to such holders.
(c) If a Triggering Event shall occur, then, in any such case, (i) the
Company shall as soon as practicable thereafter give to each holder of a Right,
in accordance with SECTION 26, a notice of the occurrence of such event, which
shall specify the event and the consequences of the event to holders of Rights
under SECTION 11(A)(II) OR 13, as the case may be, and (ii) all references in
SECTION 25(A) to Preferred Stock shall be deemed thereafter to refer to Common
Stock or other capital stock, as the case may be.
SECTION 26. NOTICES. Notices or demands authorized by this Agreement to
be given or made by the Rights Agent or by the holder of any Right to or on the
Company shall be sufficiently given or made if sent by first-class, postage
prepaid mail to the address of the Company indicated on the signature page
hereof or such other address as the Company shall specify in writing to the
Rights Agent. Subject to the provisions of SECTION 21, any notice or demand
authorized by this Agreement to be given or made by the Company or by the holder
of any Right to or on the Rights Agent shall be sufficiently given or made if
sent by first-class, postage prepaid mail to the address of the Rights Agent
indicated on the signature page hereof or such other address as the Rights Agent
shall specify in writing to the Company. 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, prior to the Distribution Date, to the holder of
any certificate representing shares of Common Stock) shall be sufficiently given
or made if sent by first-class, postage prepaid mail to the address of such
holder shown on the registry books of the Company.
SECTION 27. SUPPLEMENTS AND AMENDMENTS. Prior to the Distribution 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 Distribution 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 this
Agreement without the approval of any holders of Right Certificates in order (a)
to cure any ambiguity, (b) to correct or supplement any provision contained
herein which may be defective or inconsistent with any other provisions herein,
(c) to shorten or lengthen any time period hereunder, or (d) to change or
supplement the provisions hereof in any manner which the Company may deem
necessary or desirable and which shall not adversely affect the interests of the
holders of Rights (other than an Acquiring Person or an Affiliate or Associate
of an Acquiring Person); provided, however, that this Agreement may not be
supplemented or amended pursuant to SECTION 27(C) to lengthen (i) a time period
relating to when the Rights may be redeemed at such time as the Rights are not
then redeemable, or (ii) any other time period, unless lengthening such other
time period is for the purpose of protecting, enhancing, or clarifying the
rights of, or benefits to the holders of, the
32
Rights. Upon the delivery of a certificate from an appropriate officer of the
Company which states that the proposed supplement or amendment is in compliance
with the terms of this Section, the Rights Agent shall execute such supplement
or amendment. Notwithstanding anything contained in this Agreement to the
contrary, no supplement or amendment shall be made which changes the Redemption
Price, the Final Expiration Date, the Purchase Price or the number of one
one-hundredths of a share of Preferred Stock for which a Right is exercisable.
Prior to the Distribution Date, the interests of the holders of Rights shall be
deemed coincident with the interests of the holders of Common Stock.
SECTION 28. 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 29. DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS. For
all purposes of this Agreement, any calculation of the number of shares of
Common Stock outstanding at any particular time, including for purposes of
determining the particular percentage of such 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) under the Exchange Act as in effect on
the date of this Agreement. The Board of Directors of the Company shall have the
exclusive power and authority to administer this Agreement and to exercise all
rights and powers specifically granted to the Board or to the Company, or as may
be necessary or advisable in the administration of this Agreement, including,
without limitation, the right and power to (a) interpret the provisions of this
Agreement, and (b) make all determinations deemed necessary or advisable for the
administration of this Agreement (including a determination to redeem or
exchange or not to redeem or exchange the Rights or to amend this Agreement);
provided, however, that any redemption of Rights shall also be subject to any
additional approval procedures required by the articles of incorporation or
bylaws of the Company. 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 in good faith,
shall (x) be final, conclusive and binding on the Company (subject to any
additional redemption approval procedures referred to in the proviso to the
immediately preceding sentence), the Rights Agent, the holders of the Rights and
all other parties, and (y) not subject the Board of Directors of the Company to
any liability to the holders of the Rights.
SECTION 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
Distribution Date, the certificates representing the 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
Distribution Date, the certificates representing the 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
33
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 any such term, provision, covenant or
restriction is held by such court or authority to be invalid, void or
unenforceable and the Board of Directors of the Company determines in its good
faith judgment that severing the invalid language from this Agreement would
adversely affect the purpose or effect of this Agreement, 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 the Board of Directors.
SECTION 32. GOVERNING LAW. This Agreement, each Right and each Rights
Certificate issued hereunder shall be deemed to be a contract made under the
laws of the State of Georgia and for all purposes shall be governed by and
construed in accordance with the laws of such State (other than its conflicts of
laws rules) applicable to contracts to be made and performed entirely within
such State, except that the rights and obligations of the Rights Agent shall be
governed by the laws of the State of New York.
SECTION 33. COUNTERPARTS. This Agreement may be executed in any number
of counterparts and each of such counterparts shall for all purposes be deemed
to be an original, and all such counterparts shall together constitute one and
the same instrument.
SECTION 34. DESCRIPTIVE HEADINGS. The captions herein are included for
convenience of reference only, do not constitute a part of this Agreement and
shall be ignored in the construction and interpretation hereof.
34
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
SUBURBAN LODGES OF AMERICA, INC.
By: /s/ David E. Krischer
---------------------------------------------
Name: David E. Krischer
Title: Chief Executive Officer and President
Suburban Lodges of America, Inc.
300 Galleria Parkway
Suite 1200
Atlanta, Georgia 30339
Attention: President
AMERICAN STOCK TRANSFER & TRUST COMPANY
By: /s/ Herbert J. Lemmer
----------------------------------------------
Herbert J. Lemmer
Title: Senior Vice President and General
Counsel
American Stock Transfer & Trust Company
6201 Fifteenth Avenue
Brooklyn, New York 11219
Attention: Herbert J. Lemmer
35
Exhibit A
FORM OF
BOARD RESOLUTION ESTABLISHING AND DESIGNATING
SERIES A PARTICIPATING CUMULATIVE
PREFERRED STOCK
OF
SUBURBAN LODGES OF AMERICA, INC.
PURSUANT TO SECTION 14-2-602 OF THE GEORGIA
BUSINESS CORPORATION CODE
SECTION 1. DESIGNATION AND NUMBER OF SHARES. The shares of
such series shall be designated as "Series A Participating Cumulative Preferred
Stock" (the "SERIES A PREFERRED STOCK"), and the number of shares constituting
such series shall be 500,000. Such number of shares of the Series A Preferred
Stock may be increased or decreased by resolution of the Board of Directors;
provided, however, that no decrease shall reduce the number of shares of Series
A Preferred Stock to a number less than the number of shares then outstanding
plus the number of shares issuable upon exercise or conversion of outstanding
rights, options or other securities issued by the Corporation.
SECTION 2. DIVIDENDS AND DISTRIBUTIONS.
(A) Subject to the prior and superior rights of the holders of
any shares of any series of Preferred Stock ranking prior and superior to the
shares of Series A Preferred Stock with respect to dividends, if any, the
holders of shares 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 the purpose, quarterly dividends payable on the last day of March,
June, September and December of each year (each such date being referred to
herein as a "QUARTERLY DIVIDEND PAYMENT DATE"), commencing on the first
Quarterly Dividend Payment Date after the first issuance of any share or
fraction of a share of Series A Preferred Stock, in an amount per share (rounded
to the nearest cent) equal to the greater of (a) $1.00 and (b) subject to the
provision for adjustment hereinafter set forth, 100 times the aggregate per
share amount (payable in kind) of all cash dividends or other distributions and
100 times the aggregate per share amount of all non-cash dividends or other
distributions (other than (i) a dividend payable in shares of Common Stock, par
value $.01 per share, of the Corporation (the "COMMON STOCK") or (ii) a
subdivision of the outstanding shares of Common Stock (by reclassification or
otherwise)), declared on the Common Stock since
A-1
the immediately preceding Quarterly Dividend Payment Date, or, with respect to
the first Quarterly Dividend Payment Date, since the first issuance of any share
or fraction of a share of Series A Preferred Stock. If the Corporation shall at
any time after May 5, 1996 (the "RIGHTS DECLARATION DATE") declare or pay any
dividend on Common Stock payable in shares of Common Stock or effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise) into a greater or lesser number of
shares of Common Stock (other than the stock split previously approved on March
26, 1996), then in each such case the amount to which holders of shares of
Series A Preferred Stock were entitled immediately prior to such event under
clause (b) of the preceding sentence shall be adjusted by multiplying such
amount by a fraction, the numerator of which is the number of shares of Common
Stock outstanding immediately after such event and the denominator of which is
the number of shares of Common Stock that were outstanding immediately prior to
such event.
(B) The Corporation shall declare a dividend or distribution
on the Series A Preferred Stock as provided in SECTION 2(A) immediately after it
declares a dividend or distribution on the Common Stock (other than as described
in clauses (i) and (ii) of the first sentence of SECTION 2(A)); provided,
however, that if no dividend or distribution shall have been declared on the
Common Stock during the period between any Quarterly Dividend Payment Date and
the next subsequent Quarterly Dividend Payment Date (or, with respect to the
first Quarterly Dividend Payment Date, the period between the first issuance of
any share or fraction of a share of Series A Preferred Stock and such first
Quarterly Dividend Payment Date), a dividend of $1.00 per share on the Series A
Preferred Stock shall nevertheless be payable on such subsequent Quarterly
Dividend Payment Date.
(C) Dividends shall begin to accrue and be cumulative on
outstanding shares of Series A Preferred Stock from the Quarterly Dividend
Payment Date next preceding the date of issue of such shares of Series A
Preferred Stock, unless the date of issue of such shares is on or before the
record date for the first Quarterly Dividend Payment Date, in which case
dividends on such shares shall begin to accrue and be cumulative from the date
of issue of such shares, or unless the date of issue is a date after the record
date for the determination of holders of shares of Series A Preferred Stock
entitled to receive a quarterly dividend and on or before such Quarterly
Dividend Payment Date, in which case dividends shall begin to accrue and be
cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid
dividends shall not bear interest. Dividends paid on shares of Series A
Preferred Stock in an amount less than the total amount of such dividends at the
time accrued and payable on such shares shall be allocated pro rata on a
share-by-share basis among all such shares at the time outstanding. The Board of
Directors may fix a record date for the determination of holders of shares of
Series A Preferred Stock entitled to receive payment of a dividend or
distribution declared thereon, which record date shall not be more than 60 days
prior to the date fixed for the payment thereof.
SECTION 3. VOTING RIGHTS. In addition to any other voting
rights required by law, the holders of shares of Series A Preferred Stock shall
have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set
forth, each share of Series A Preferred Stock shall entitle the holder thereof
to 100 votes on all matters submitted to a
A-2
vote of shareholders of the Corporation. If the Corporation shall at any time
after the Rights Declaration Date declare or pay any dividend on Common Stock
payable in shares of Common Stock or effect a subdivision or combination or
consolidation of the outstanding shares of Common Stock (by reclassification or
otherwise) into a greater or lesser number of shares of Common Stock, then in
each such case the number of votes per share to which holders of shares 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 is the
number of shares of Common Stock outstanding immediately after such event and
the denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(B) Except as otherwise provided herein or by law, the holders
of shares of Series A Preferred Stock and the holders of shares of Common Stock
shall vote together as a single class on all matters submitted to a vote of
shareholders of the Corporation.
(C) (i) If at any time dividends on any Series A Preferred
Stock shall be in arrears in an amount equal to six quarterly dividends thereon
(whether or not consecutive), the occurrence of such contingency shall mark the
beginning of a period (herein called a "DEFAULT PERIOD") which shall extend
until such time when all accrued and unpaid dividends for all previous quarterly
dividend periods and for the current quarterly dividend period on all shares of
Series A Preferred Stock then outstanding shall have been declared and paid or
set apart for payment. During each default period, all holders of Series A
Preferred Stock and any other series of Preferred Stock then entitled as a class
to elect directors, voting together as a single class, irrespective of series,
shall have the right to elect one Director.
(ii) During any default period, such voting right of the
holders of Series A Preferred Stock may be exercised initially at a special
meeting called pursuant to SECTION 3(C)(III) or at any annual meeting of
shareholders, and thereafter at annual meetings of shareholders; provided,
however, that neither such voting right nor the right of the holders of any
other series of Preferred Stock, if any, to increase, in certain cases, the
authorized number of Directors shall be exercised unless the holders of 10% in
number of shares of Preferred Stock outstanding shall be present in person or by
proxy. The absence of a quorum of holders of Common Stock shall not affect the
exercise by holders of Preferred Stock of such voting right. At any meeting at
which holders of Preferred Stock shall exercise such voting right initially
during an existing default period, they shall have the right, voting as a class,
to elect Directors to fill such vacancy, if any, in the Board of Directors as
may then exist up to one Director or, if such right is exercised at an annual
meeting, to elect one Director. If the number which may be so elected at any
special meeting does not amount to the required number, the holders of the
Preferred Stock shall have the right to make such increase in the number of
Directors as shall be necessary to permit the election by them of the required
number. After the holders of the Preferred Stock shall have exercised their
right to elect Directors in any default period and during the continuance of
such period, the number of Directors shall not be increased or decreased except
by vote of the holders of Preferred Stock as herein provided or pursuant to the
rights of any equity securities ranking senior to or pari passu with the Series
A Preferred Stock.
A-3
(iii) Notwithstanding anything to the contrary contained in
the Corporation's Articles of Incorporation or Bylaws, unless the holders of
Preferred Stock shall, during an existing default period, have previously
exercised their right to elect Directors, the Board of Directors may order, or
any shareholder(s) owning in the aggregate not less than ten percent (10%) of
the total number of shares of Preferred Stock outstanding, irrespective of
series, may request, the calling of a special meeting of holders of Preferred
Stock, which meeting shall thereupon be called by the President, a Vice
President or the Secretary of the Corporation. Notice of such meeting and of any
annual meeting at which holders of Preferred Stock are entitled to vote pursuant
to this SECTION 3(C)(III) shall be given to each holder of record of Preferred
Stock by mailing a copy of such notice to him at his last address as the same
appears on the books of the Corporation. Such meeting shall be called for a time
not earlier than 20 days and not later than 60 days after such order or request
or in default of the calling of such meeting within 60 days after such order or
request, such meeting may be called on similar notice by any shareholder(s)
owning in the aggregate not less than ten percent (10%) of the total number of
shares of Preferred Stock outstanding, irrespective of series. Notwithstanding
the provisions of this SECTION 3(C)(III), no such special meeting shall be
called during the period within 60 days immediately preceding the date fixed for
the next annual meeting of shareholders.
(iv) In any default period, the holders of Common Stock, and
other classes of stock of the Corporation if applicable, shall continue to be
entitled to elect the whole number of Directors until the holders of Preferred
Stock shall have exercised their right to elect one Director voting as a class,
after the exercise of which right (x) the Directors so elected by the holders of
Preferred Stock shall continue in office until their successors shall have been
elected by such holders or until the expiration of the default period, and (y)
any vacancy in the Board of Directors may (except as provided in SECTION
3(C)(II) be filled by vote of a majority of the remaining Directors theretofore
elected by the holders of the class of stock which elected the Director whose
office shall have become vacant. References in this SECTION 3(C) to Directors
elected by the holders of a particular class of stock shall include Directors
elected by such Directors to fill vacancies as provided in clause (y) of the
foregoing sentence.
(v) Immediately upon the expiration of a default period, (x)
the right of the holders of Preferred Stock as a class to elect Directors shall
cease, (y) the term of any Directors elected by the holders of Preferred Stock
as a class shall terminate, and (z) the number of Directors shall be such number
as may be provided for in the Articles of Incorporation or Bylaws irrespective
of any increase made pursuant to the provisions of SECTION 3(C)(II) (such number
being subject, however, to change thereafter in any manner provided by law or in
the Articles of Incorporation or Bylaws). Any vacancies in the Board of
Directors effected by the provisions of clauses (y) and (z) in the preceding
sentence may be filled by a majority of the remaining Directors.
(D) Except as otherwise provided herein, holders 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
Common Stock as set forth herein) for taking any corporate action.
A-4
SECTION 4. CERTAIN RESTRICTIONS.
(A) Whenever quarterly dividends or other dividends or
distributions payable on the Series A Preferred Stock as provided in SECTION 2
are in arrears, thereafter and until all accrued and unpaid dividends and
distributions, whether or not declared, on outstanding shares of Series A
Preferred Stock shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends on, or make any other
distributions on, any shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series
A Preferred Stock;
(ii) declare or pay dividends on, or make any other
distributions on, any shares of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the
Series A Preferred Stock, except dividends paid ratably on the Series A
Preferred Stock and all such other parity stock on which dividends are
payable or in arrears in proportion to the total amounts to which the
holders of all such shares are then entitled;
(iii) redeem, purchase or otherwise acquire for value any
shares of stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred
Stock; provided, however, that the Corporation may at any time redeem,
purchase or otherwise acquire shares of any such junior stock in
exchange for shares of stock of the Corporation ranking junior (as to
dividends and upon dissolution, liquidation or winding up) to the
Series A Preferred Stock; or
(iv) redeem, purchase or otherwise acquire for value any
shares of Series A Preferred Stock, or any shares of stock ranking on a
parity (either as to dividends or upon liquidation, dissolution or
winding up) with the Series A Preferred Stock, except in accordance
with a purchase offer made in writing or by publication (as determined
by the Board of Directors) to all holders of Series A Preferred Stock
and all such other parity stock upon such terms as the Board of
Directors, after consideration of the respective annual dividend rates
and other relative rights and preferences of the respective series and
classes, shall determine in good faith will result in fair and
equitable treatment among the respective series or classes.
(B) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for value any shares of stock of
the Corporation unless the Corporation could, under SECTION 4(A), purchase or
otherwise acquire such shares at such time and in such manner.
SECTION 5. REACQUIRED SHARES. Any shares of Series A Preferred
Stock redeemed, purchased or otherwise acquired by the Corporation in any manner
whatsoever shall be retired and cancelled promptly after the acquisition
thereof. All such shares shall upon their cancellation become authorized but
unissued shares of Preferred Stock without designation as to series and may be
reissued as part of a new series of Preferred Stock to be created by resolution
A-5
or resolutions of the Board of Directors as permitted by the Articles of
Incorporation or as otherwise permitted under Georgia law.
SECTION 6. LIQUIDATION, DISSOLUTION OR WINDING UP. Upon any
liquidation, dissolution or winding up of the Corporation, no distribution shall
be made (1) to the holders of shares of stock ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Stock unless, prior thereto, the holders of shares of Series A
Preferred Stock shall have received $1.00 per share, plus an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not declared,
to the date of such payment; provided, however, that the holders of shares of
Series A Preferred Stock shall be entitled to receive an aggregate amount per
share, subject to the provision for adjustment hereinafter set forth, equal to
100 times the aggregate amount to be distributed per share to holders of Common
Stock, or (2) to the holders of stock ranking on a parity (either as to
dividends or upon liquidation, dissolution or winding up) with the Series A
Preferred Stock, except distributions made ratably on the Series A Preferred
Stock and all such other parity stock in proportion to the total amounts to
which the holders of all such shares are entitled upon such liquidation,
dissolution or winding up. If the Corporation shall at any time after the Rights
Declaration Date pay any dividend on Common Stock payable in shares of Common
Stock or effect a subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise) into a greater or
lesser number of shares of Common Stock, then in each such case the aggregate
amount to which holders of shares of Series A Preferred Stock were entitled
immediately prior to such event under the proviso in clause (1) of the preceding
sentence shall be adjusted by multiplying such amount by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
SECTION 7. CONSOLIDATION OR MERGER. If the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash or any other property, then in any such case the shares of
Series A Preferred Stock shall at the same time be similarly exchanged for or
changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 100 times the aggregate amount of stock,
securities, cash or any other property, as the case may be, into which or for
which each share of Common Stock is exchanged or changed. If the Corporation
shall at any time after the Rights Declaration Date pay any dividend on Common
Stock payable in shares of Common Stock or effect a subdivision or combination
or consolidation of the outstanding shares of Common Stock (by reclassification
or otherwise) into a greater or lesser number of shares of Common Stock, then in
each such case the amount set forth in the preceding sentence with respect to
the exchange or change of shares of Series A Preferred Stock shall be adjusted
by multiplying such amount by a fraction the numerator of which is the number of
shares of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
SECTION 8. NO REDEMPTION. The Series A Preferred Stock shall not be
redeemable.
A-6
SECTION 9. RANK. The Series A Preferred Stock shall rank
junior (as to dividends and upon liquidation, dissolution and winding up) to all
other series of the Corporation's preferred stock, except any series that
specifically provides that such series shall rank junior to the Series A
Preferred Stock.
SECTION 10. FRACTIONAL SHARES. Series A Preferred Stock may be
issued in fractions of a share which 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.
SECTION 11. AMENDMENT. The Articles of Incorporation of the
Corporation shall not be further amended in any manner which would materially
alter or change the powers, preferences or special rights of the Series A
Preferred Stock so as to affect them adversely without the affirmative vote of
the holders of a majority or more of the outstanding shares of Series A
Preferred Stock, voting separately as a class.
A-7
EXHIBIT B
Form of Rights Certificate
Certificate No. R- _______________Rights
NOT EXERCISABLE AFTER THE EARLIER OF MAY 15, 2006 AND THE DATE ON WHICH THE
RIGHTS EVIDENCED HEREBY ARE REDEEMED OR EXCHANGED BY THE COMPANY AS SET FORTH IN
THE RIGHTS AGREEMENT. THE RIGHTS ARE SUBJECT TO REDEMPTION AT $0.001 PER RIGHT
AND TO EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. AS SET FORTH IN
THE RIGHTS AGREEMENT, RIGHTS ISSUED TO, OR HELD BY, ANY PERSON WHO IS, WAS OR
BECOMES AN ACQUIRING PERSON OR AN 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 BE 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 AN ASSOCIATE OF
AN ACQUIRING PERSON (AS SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). THIS
RIGHTS CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BE OR MAY BECOME NULL
AND VOID IN THE CIRCUMSTANCES SPECIFIED IN SECTION 7(d) OF THE RIGHTS
AGREEMENT.)]1
RIGHTS CERTIFICATE
SUBURBAN LODGES OF AMERICA, INC.
This Rights Certificate certifies that , or registered
assigns, is the registered holder of the number of Rights set forth above, each
of which entitles the holder (upon the terms and subject to the conditions set
forth in the Amended and Restated Rights Agreement, dated as of May __, 2001
(the "Rights Agreement"), between Suburban Lodges of America, Inc., a Georgia
corporation (the "Company"), and American Stock Transfer & Trust Company (the
"Rights Agent")), to purchase from the Company, at any time after the
Distribution 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), one
one-hundredth{s} of a fully paid, non-assessable share of Series A Participating
Cumulative Preferred Stock (the "Preferred Stock") of the Company, at a purchase
price of $60.00 per one one-hundredth of a share (the "Purchase Price"), payable
in lawful money of the United States of America, upon surrender of this Rights
Certificate, with the form of election to purchase and related certificate duly
executed, and payment of the Purchase Price at an office of the Rights Agent
designated for such purpose.
- ----------
1 If applicable, insert this portion of the legend and delete the
preceding sentence.
B-1
Terms used herein and not otherwise defined herein have the
meanings assigned to them in the Rights Agreement.
The number of Rights evidenced by this Rights Certificate (and
the number and kind of shares issuable upon exercise of each Right) and the
Purchase Price set forth above are as of May 15, 1996, and may have been or in
the future may be adjusted as a result of the occurrence of certain events, as
more fully provided in the Rights Agreement.
Upon the occurrence of a Flip-in Event, if the Rights
evidenced by this Rights Certificate are beneficially owned by (a) an Acquiring
Person or an Associate or Affiliate of an Acquiring Person, (b) a transferee of
an Acquiring Person (or any such Associate or Affiliate) who becomes a
transferee after the Acquiring Person becomes such, or (c) under certain
circumstances specified in the Rights Agreement, a transferee of an Acquiring
Person (or any such Associate or Affiliate) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such, 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 Flip-in Event.
This Right Certificate is subject to all of the terms,
provisions and conditions of the Rights Agreement, which terms, provisions 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,
which limitations of rights include the temporary suspension of the
exercisability of such Rights under the specific circumstances set forth in the
Rights Agreement. Copies of the Rights Agreement are on file at the office of
the Company and are also available upon written request to the Company.
Upon surrender at the principal office or offices of the
Rights Agent designated for such purpose and subject to the terms and conditions
set forth in the Rights Agreement, any Rights Certificate(s) may be transferred
or exchanged for another Rights Certificate(s) evidencing a like number of
Rights as the Rights Certificate(s) surrendered. If this Rights Certificate
shall be exercised in part, the holder shall be entitled to receive upon
surrender hereof another Rights Certificate(s) for the number of whole Rights
not exercised.
Subject to the provisions of the Rights Agreement, the Board
of Directors of the Company may, at its option,
(a) at any time prior to the earlier of (i) the Close
of Business on the tenth day after the Share Acquisition Date
(or such later date as the Board of Directors of the Company
may designate prior to such time as the Rights are no longer
redeemable), and (ii) the Final Expiration Date, redeem all
but not less than all the then outstanding Rights at a
redemption price of $0.001 per Right; or
(b) at any time after any Person becomes an Acquiring
Person, exchange all or part of the then outstanding Rights
(other than Rights held by the Acquiring Person and certain
related Persons) for shares of Common Stock at an exchange
ratio of one share of Common Stock per Right. If the Rights
shall be
B-2
exchanged in part, the holder of this Rights Certificate shall
be entitled to receive upon surrender hereof another Rights
Certificate(s) for the number of whole Rights not exchanged.
After the expiration of the redemption period, the Companies
right of redemption may be reinstated if an Acquiring Person reduces his
beneficial ownership to ten percent or less of the outstanding shares of Common
Stock in a transaction or series of transactions not involving the Company and
there is no other Acquiring Person.
No fractional shares of Preferred Stock are required to be
issued upon the exercise of any Right(s) evidenced hereby (other than fractions
which are multiples of one one-hundredth of a share of Preferred Stock, which
may, at the election of the Company, be evidenced by depository receipts), but
in lieu thereof a cash payment will be made, as provided in the Rights
Agreement.
No holder of this Rights Certificate shall be entitled to
vote, receive dividends or be deemed for any purpose the holder of the shares of
capital stock 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 shareholder of
the Company or any right to vote for the election of directors or upon any
matter submitted to shareholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting shareholders (except as provided in the Rights Agreement), or
to receive dividends or subscription rights, or otherwise, until the Right(s)
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.
B-3
IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed under its corporate seal by its authorized officers.
Dated as of ____________________,_______
SUBURBAN LODGES OF AMERICA, INC.
By:_________________________________
Title:
(SEAL)
Attest:
___________________________________
Secretary
Countersigned:
AMERICAN STOCK TRANSFER & TRUST
COMPANY, as Rights Agent
By:___________________________________
Authorized Signature
B-4
Form of Reverse Side of Rights Certificate
FORM OF ASSIGNMENT
(To be executed if the registered 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:
B-5
Certificate
The undersigned hereby certifies by checking the appropriate
boxes that:
(1) the Rights evidenced by this Rights Certificate ___ are
___ are not being assigned 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 in the Rights Agreement);
(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 became an Acquiring Person or an
Affiliate or Associate of an Acquiring person.
Dated:_________________________________ ____________________________________
NOTICE
The signatures 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.
B-6
-------------------
FORM OF ELECTION TO PURCHASE
(To be executed if the registered holder desires to exercise Rights represented
by the Rights Certificate.)
To: Suburban Lodges of America, Inc.
The undersigned hereby irrevocably elects to exercise
______________ Rights represented by this Rights Certificate to purchase shares
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 securities be
issued in the name of and delivered to:
Please insert social security
or other identifying number
- --------------------------------------------------------------------------------
(Please print name and address)
- --------------------------------------------------------------------------------
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 insert social security
or other identifying number
- ---------------------------------------------
(Please print name and address)
- ---------------------------------------------
Dated: ____________________, _______
------------------------------
Signature
Signature Guaranteed:
B-7
------------
EXHIBIT C
SUBURBAN LODGES OF AMERICA, INC.
SHAREHOLDER RIGHTS PLAN
Summary of Terms
Form of Security: The Board of Directors has declared a dividend of one
preferred stock purchase right for each outstanding
share of the Company's Common Stock, payable to
holders of record as of the close of business on the
effective date of the consummation of the Company's
proposed acquisition of 16 Suburban Lodge facilities
(each a "Right," and collectively, the "Rights").
Distribution Date: The earlier of:
(1) the 10th day after public announcement
that any person or group has become the
beneficial owner of 15% or more of the
Company's Common Stock (other than pursuant
to an Approved Acquisition (as defined
below)); and (2) the 10th business day after
the date of the commencement of a tender or
exchange offer by any person which would, if
consummated, result in such person becoming
the beneficial owner of 15% or more of the
Company's Common Stock, in each case,
subject to extension by the Board of
Directors.
Approved Acquisition: An acquisition of 15% or more of the Common Stock
then outstanding by any person if such acquisition is
approved in advance by the Board of Directors or if
any person has acquired such an interest, the
acquisition of an additional 1% or more of the Common
Stock then outstanding if such acquisition is
approved in advance by the Board of Directors.
Qualifying Tender Offer: A tender or exchange offer for all the Common Stock
which is approved by the Board of Directors.
C-1
Transfer: Prior to the Distribution Date, the Rights will be
evidenced by the certificates for and will be
transferred with the Common Stock, and the registered
holders of the Common Stock will be deemed to be the
registered holders of the Rights.
After the Distribution Date, the Rights Agent will
mail separate certificates evidencing the Rights to
each record holder of the Common Stock as of the
close of business of the Distribution Date, and
thereafter the Rights will be transferable separately
from the Common Stock.
Exercise: Prior to the Distribution Date, the Rights will not
be exercisable.
After the Distribution Date, each Right will be
exercisable to purchase, for $60.00 (the "Purchase
Price"), one one-hundredth of a share of Series A
Participating Cumulative Preferred Stock, par value
$0.01 per share, of the Company.
Flip-In: If (1) any person or group (an "Acquiring Person")
becomes the beneficial owner of 15% or more of the
Company's Common Stock (other than pursuant to a
Qualifying Tender Offer), (2) during such time as
there is an Acquiring Person, an event occurs which
results in such Acquiring Person's ownership interest
in the Company being increased by more than 1%, (3)
the Company is the surviving corporation in a merger
with an Acquiring Person and its Common Stock is not
changed or exchanged, or (4) an Acquiring Person
engages in one or more "self-dealing" transactions as
set forth in the Rights Agreement, then each Right
(other than Rights beneficially owned by the
Acquiring Person and certain affiliated persons) will
entitle the holder to elect to receive a number of
shares of the Company's Common Stock (or in certain
circumstances, cash, property or other securities of
the Company) having a market value equal to the
Purchase Price. Notwithstanding the foregoing, in
most instances following the occurrence of the events
set forth in this paragraph, all Rights that are, or
(under certain circumstances specified in the Rights
Agreement) were, beneficially owned by any Acquiring
Person will be null and void. However, Rights are not
exercisable following the occurrence of the events
set forth above until such time as the Rights are no
longer redeemable by the Company as set forth below.
C-2
Flip-Over: If, after any person has become an Acquiring Person
(other than pursuant to a Qualifying Tender Offer),
(1) the Company is involved in a merger or other
business combination in which the Company is not the
surviving corporation or its Common Stock is
exchanged for other securities or assets, or (2) the
Company and/or one or more of its subsidiaries sell
or otherwise transfer assets aggregating more than
50% of the assets or generating more than 50% of the
operating income or cash flow of the Company and its
subsidiaries, taken as a whole, then each Right will
entitle the holder to purchase, for the Purchase
Price, a number of shares of common stock of the
other party to such business combination or sale (or
in certain circumstances, an affiliate) having a
market value of twice the Purchase Price.
Exchange: At any time after any person has become an Acquiring
Person the Company may, upon the election of the
Board of Directors, exchange all or part of the
Rights (other than the Rights beneficially owned by
the Acquiring Person and certain affiliated persons)
for shares of Common Stock at an exchange ratio of
one share of Common Stock per Right.
Redemption: Subject to the applicable provisions in the Company's
articles of incorporation and bylaws, the Board of
Directors may redeem all of the Rights at a price of
$0.001 per Right at any time prior to the close of
business on the tenth day after the public
announcement that any person has become an Acquiring
Person (subject to extension by the Board of
Directors). After any person has become an Acquiring
Person, the Rights may be redeemed only with the
approval of the Board of Directors. After the
redemption period has expired, the Company's right of
redemption may be reinstated if an Acquiring Person
reduces his beneficial ownership to 10% or less of
the outstanding shares of Common Stock in a
transaction or series of transactions not involving
the Company. Immediately upon the action of the Board
of Directors ordering redemption of the Rights, the
Rights will terminate and the only right of the
holders of the Rights will be to receive the
redemption price thereof.
Expiration: The Rights will expire on May 15, 2006, unless
earlier exchanged or redeemed.
Amendments:
Prior to the Distribution Date, the Rights Agreement
may be amended in any respect, other than to change
the Redemption Price, the Expiration Date, the
Purchase Price or the number of shares of Preferred
Stock for which a Right is exercisable.
C-3
After the Distribution Date, the Rights Agreement may
be amended in any respect that does not adversely
affect the Rights holders (other than any Acquiring
Person and certain affiliated persons).
Voting Rights: Rights holders have no rights as a shareholder of the
Company, including the right to vote and to receive
dividends.
Antidilution Provisions: The Purchase Price payable, and the number of shares
of Preferred Stock or other securities or property
issuable upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (1)
in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the
Preferred Stock, (2) upon the grant to holders of the
Preferred Stock of certain rights or warrants to
subscribe for or purchase Preferred Stock at a price,
or securities convertible into Preferred Stock with a
conversion price, less than the then-current market
price of the Preferred Stock, or (3) upon the
distribution to holders of the Preferred Stock of
evidences of indebtedness or assets (excluding
regular periodic cash dividends paid out of earnings
or retained earnings) or of subscription rights or
warrants.
The number of outstanding Rights and the number of
1/100ths of a share of Preferred Stock issuable upon
exercise of each Right are also subject to adjustment
in the event of a stock split of the Common Stock or
a stock dividend on the Common Stock payable in
Common Stock or subdivisions, consolidations or
combinations of the Common Stock occurring prior to
the Distribution Date.
With certain exceptions, no adjustment in the
Purchase Price will be required until cumulative
adjustments amount to at least 1% of the Purchase
Price. No fractional shares of Preferred Stock will
be issued (other than fractions which are integral
multiples of 1/100th of a share of a Preferred
Stock), and in lieu thereof, an adjustment in cash
will be made based on the market price of the
Preferred Stock on the last trading date prior to the
date of exercise.
Preferred Stock:
The dividend and liquidation rights of the Preferred
Stock are designed so that the value of one
one-hundredth of a share of Preferred Stock issuable
upon exercise of each Right will approximate the same
economic value of one share of
C-4
Common Stock, including voting rights. Shares of
Preferred Stock issuable upon exercise of the Rights
will not be redeemable. Each share of Preferred Stock
will entitle the holder to a minimum preferential
dividend of $1.00 per share, but will entitle the
holder to an aggregate dividend payment of 100 times
the dividend declared on each share of Common Stock.
In the event of liquidation, each share of Preferred
Stock will be entitled to a minimum preferential
liquidation payment of $1.00, plus accrued and unpaid
dividends and distributions thereon, but will be
entitled to an aggregate payment of 100 times the
payment made per share of Common Stock. In the event
of any merger, consolidation or other transaction in
which Common Stock is exchanged for or changed into
other stock or securities, cash or other property,
each share of Preferred Stock will be entitled to
receive 100 times the amount received per share of
Common Stock.
Each share of Preferred Stock will be entitled to 100
votes on all matters submitted to a vote of the
shareholders of the Company, and shares of Preferred
Stock will generally vote together as one class with
the Common Stock and any other voting capital stock
of the Company on all matters submitted to a vote of
the Company's shareholders. Further, whenever
dividends on the Preferred Stock are in arrears in an
amount equal to six quarterly payments, the Preferred
Stock, together with any other shares of preferred
stock then entitled to elect directors, shall have
the right, as a single class, to elect one director
until the default has been cured.
Taxes: While the dividend of the Rights will not be taxable
to shareholders or to the Company, shareholders or
the Company may, depending upon the circumstances,
recognize taxable income in the event that the Rights
become exercisable as set forth above.
----------
A copy of the Rights Agreement has been filed with the Securities and Exchange
Commission as an Exhibit to a Report on Form 8-K. A copy of the Rights Agreement
is available free of charge from the Company. This summary description of the
Rights does not purport to be complete and is qualified in its entirety by
reference to the Rights Agreement.
C-5