<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 1, 1997
REGISTRATION NO. 33-25223
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1 TO
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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CRESCENT OPERATING, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 6531/9999 PENDING
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (IRS EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
777 MAIN STREET GERALD W. HADDOCK, ESQ.
SUITE 2100 777 MAIN STREET, SUITE 2100
FORT WORTH, TEXAS 76102 FORT WORTH, TEXAS 76102
TELEPHONE: (817) 877-0477 TELEPHONE: (817) 877-0477
(ADDRESS AND TELEPHONE NUMBER (NAME, ADDRESS AND TELEPHONE NUMBER
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) OF AGENT FOR SERVICE)
</TABLE>
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Copies to:
ROBERT B. ROBBINS, ESQ.
SYLVIA M. MAHAFFEY, ESQ.
SHAW, PITTMAN, POTTS & TROWBRIDGE
2300 N STREET, N.W.
WASHINGTON, D.C. 20037
(202)663-8000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
possible after the effective date of this registration statement
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE AS SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the expenses expected to be incurred in
connection with the issuance and distribution of the Common Stock registered
hereby, all of which expenses, except for the SEC registration fee, are
estimates:
<TABLE>
<CAPTION>
DESCRIPTION AMOUNT
----------- ---------
<S> <C>
SEC Registration Fee........................................ $3,685.00
Listing Fee................................................. $
Transfer Agent's and Registrar's Fee........................ $ *
Printing and Engraving Fees................................. $ *
Legal Fees and Expenses..................................... $ *
Accounting Fees and Expenses................................ $ *
Miscellaneous............................................... $ *
---------
Total............................................. $ *
=========
</TABLE>
- ---------------
* To be furnished by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law (the "DGCL") provides
that a corporation may indemnify directors and officers as well as other
employees and individuals against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement in connection with specified
actions, suits or proceedings, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation, a
"derivative action") if they acted in good faith and in a manner they reasonably
believed to be in or not opposed to the best interests of the corporation, and,
with respect to any criminal action or proceeding, if they had no reasonable
cause to believe their conduct was unlawful. A similar standard is applicable in
the case of derivative actions, except that indemnification only extends to
expenses (including attorneys' fees) incurred in connection with the defense or
settlement of such actions, and the statute requires court approval before there
can be any indemnification where the person seeking indemnification has been
found liable to the corporation. The statute provides that it is not exclusive
of other indemnification that may be granted by a corporation's bylaws,
disinterested director vote, stockholder vote, agreement or otherwise.
The Amended and Restated Certificate of Incorporation of the Company (the
"Certificate") provides that each person who was or is made a party or is
threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative, by reason
of the fact that such person, or a person of whom such person is the legal
representative, is or was a director or officer of the Company or is or was
serving at the request of the Company as a director, officer, employee or agent
of another corporation or of a partnership, joint venture, trust or other
enterprise, including service with respect to employee benefit plans, whether
the basis of such proceeding is alleged action in an official capacity as a
director, officer, employee or agent or in any other capacity while serving as a
director, officer, employee or agent, will be indemnified and held harmless by
the Company to the fullest extent authorized by the DGCL, as the same exists or
may hereafter be amended (but, in the case of any such amendment, only to the
extent that such amendment permits the Company to provide broader
indemnification rights than said law permitted the Company to provide prior to
such amendment), against all expense, liability and loss reasonably incurred or
suffered by such person in connection therewith. Such right to indemnification
includes the right to have the Company pay the expenses incurred in defending
any such proceeding in advance of its final disposition, subject to the
provisions of the DGCL. Such rights are not exclusive of any other right which
any person may have or thereafter acquire under any statute, provision of the
Certificate, By-Law, agreement, vote of stockholders or disinterested directors
or otherwise. No repeal or modification of such provision will in any way
diminish or adversely affect the rights of any director, officer, employee or
agent of the Company thereunder in respect of any occurrence or matter arising
prior to any such repeal or modification. The Certificate also
II-1
<PAGE> 3
specifically authorizes the Company to maintain insurance and to grant similar
indemnification rights to employees or agents of the Company.
The DGCL permits a corporation to provide in its certificate of
incorporation that a director of the corporation shall not be personally liable
to the corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability for (i) any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) payments of unlawful dividends or unlawful stock
repurchases or redemptions, or (iv) any transaction from which the director
derived an improper personal benefit.
The Certificate provides that a director of the Company will not be
personally liable to the Company or its stockholders for monetary damages for
breach of fiduciary duty as a director, except, if required by the DGCL as
amended from time to time, for liability (i) for any breach of the director's
duty of loyalty to the Company or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) under Section 174 of the DGCL, which concerns unlawful payments of
dividends, stock purchases or redemptions, or (iv) for any transaction from
which the director derived an improper personal benefit. Neither the amendment
nor repeal of such provision will eliminate or reduce the effect of such
provision in respect of any matter occurring, or any cause of action, suit or
claim that, but for such provision, would accrue or arise prior to such
amendment or repeal.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
<TABLE>
<C> <S>
3.1 -- Form of Restated Certificate of Incorporation (filed
herewith)
3.2 -- Form of Amended and Restated Bylaws (filed herewith)
4.1** -- Specimen stock certificate
4.2 -- Form of Preferred Share Purchase Rights Plan (filed
herewith)
5** -- Opinion of Shaw, Pittman, Potts and Trowbridge as to the
legality of the Common Stock being registered
10.1 -- Stock Incentive Plan (filed herewith)
10.2 -- Intercompany Agreement, dated as of , 1997,
between Crescent Operating Partnership and Crescent
Operating (filed herewith)
10.3** -- Form of Operating Agreement of Charter Behavioral Health
Systems, LLC
10.4** -- Form of Warrant Purchase Agreement between Crescent
Operating and Magellan with respect to Crescent Operating
securities
23.1** -- Consent of Shaw, Pittman, Potts & Trowbridge (included as
part of Exhibit 5)
23.2* -- Consent of Arthur Andersen LLP
99.1* -- Consents of Certain Persons Named as Directors
</TABLE>
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* Filed previously.
** To be filed by amendment.
(b) Financial Statement Schedules.
Not applicable.
II-2
<PAGE> 4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Fort Worth, State of
Texas, on May 1, 1997.
CRESCENT OPERATING, INC.
(Registrant)
By: /s/ GERALD W. HADDOCK
-------------------------------------
GERALD W. HADDOCK
PRESIDENT AND CHIEF EXECUTIVE OFFICER
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<C> <S> <C>
/s/ GERALD W. HADDOCK Director, President and Chief May 1, 1997
- ------------------------------------------------ Executive Officer (Principal
GERALD W. HADDOCK Executive Officer and Principal
Financial Officer)
</TABLE>
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<PAGE> 5
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
3.1 -- Form of Restated Certificate of Incorporation (filed
herewith)
3.2 -- Form of Amended and Restated Bylaws (filed herewith)
4.1** -- Specimen stock certificate
4.2 -- Form of Preferred Share Purchase Rights Plan (filed
herewith)
5** -- Opinion of Shaw, Pittman, Potts and Trowbridge as to the
legality of the Common Stock being registered
10.1 -- Stock Incentive Plan (filed herewith)
10.2 -- Intercompany Agreement, dated as of , 1997,
between Crescent Operating Partnership and Crescent
Operating (filed herewith)
10.3** -- Form of Operating Agreement of Charter Behavioral Health
Systems, LLC
10.4** -- Form of Warrant Purchase Agreement between Crescent
Operating and Magellan with respect to Crescent Operating
securities
23.1** -- Consent of Shaw, Pittman, Potts & Trowbridge (included as
part of Exhibit 5)
23.2* -- Consent of Arthur Andersen LLP
99.1* -- Consents of Certain Persons Named as Directors
</TABLE>
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* Filed previously.
** To be filed by amendment.
<PAGE> 1
EXHIBIT 3.1
FORM OF FIRST RESTATED CERTIFICATE OF INCORPORATION
OF
CRESCENT OPERATING, INC.
It is hereby certified that:
1. The present name of the corporation (hereinafter called the
"Corporation") is Crescent Operating, Inc., which is the name under
which the Corporation was originally incorporated; and the date of
filing the original certificate of incorporation of the Corporation
with the Secretary of State of Delaware is April 1, 1997.
2. The certificate of incorporation is hereby amended and restated in its
entirety as set forth in the First Restated Certificate of
Incorporation hereinafter provided for.
3. The provisions of the certificate of incorporation of the Corporation
as herein amended are hereby restated and integrated into the single
instrument which is hereinafter set forth, and which is entitled First
Restated Certificate of Incorporation of Crescent Operating, Inc.,
without any further amendments other than the amendments herein
certified.
4. As of the date this restatement of the certificate of incorporation is
filed with the Secretary of State of the State of Delaware, the
Corporation has received payment for its outstanding capital stock.
5. This Restated Certificate of Incorporation has been duly adopted in
accordance with the provisions of Sections 103, 242 and 245 of the
General Corporation Law of the State of Delaware.
6. The certificate of incorporation of the Corporation, as amended and
restated herein, shall at the effective time of this First Restated
Certificate of Incorporation, read as follows:
<PAGE> 2
ARTICLE I
NAME
The name of the corporation is: Crescent Operating, Inc. (the
"Corporation").
ARTICLE II
REGISTERED OFFICE AND REGISTERED AGENT
The address of the Corporation's registered office in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, in the City of
Wilmington, County of New Castle. The name of its registered agent at such
address is The Corporation Trust Company.
ARTICLE III
PURPOSE
The purposes for which the Corporation is organized are (a) to become
a lessee and operator of various types of assets, including certain real estate
owned or to be owned directly or indirectly by (i) Crescent Real Estate
Equities Company, a Texas real estate investment trust ("Crescent Equities"),
its successor, or Crescent Real Estate Equities Limited Partnership, a Delaware
limited partnership ("CREELP", and collectively with Crescent Equities or its
successors, "Crescent") or (ii) other persons or entities whether or not
affiliated with Crescent; (b) to perform an agreement to be entered into by and
between the Corporation and CREELP (the "Intercompany Agreement"), pursuant to
which the Corporation and CREELP agree to provide each other with rights of
first opportunity and notification with respect to certain transactions and
investments; (c) to be prohibited, in accordance with the Intercompany
Agreement, from developing, pursuing or taking advantage of opportunities to
acquire or otherwise make an
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investment in real estate (including, but not limited to, investments in real
estate mortgages, real estate derivatives, or entities that invest primarily in
or have a substantial portion of their assets in the aforementioned types of
real estate assets, or any other investment which may be structured in a manner
so as to be a REIT-qualified investment, as well as opportunities to provide
real estate-related services,), for so long as the Intercompany Agreement
remains effective, unless and until the Corporation, in accordance with the
terms of the Intercompany Agreement, has offered any such opportunity to CREELP
and CREELP has rejected that opportunity; and (d) to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware as from time to time amended (the
"DGCL").
ARTICLE IV
CAPITAL STOCK
The Corporation shall have the authority to issue a total of [ ]
shares of capital stock, each with a par value of $.01, consisting of [
] shares of Common Stock and [ ] shares of Preferred Stock.
ARTICLE V
COMMON STOCK
Section A. Common Stock Subject to Terms of Preferred Shares.
Common Stock shall be subject to the express terms of any series of Preferred
Stock.
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Section B. Dividend Rights. The holders of Common Stock shall
be entitled to receive such dividends as may be declared by the board of
directors out of funds legally available therefor.
Section C. Rights Upon Liquidation. In the event of any
voluntary or involuntary liquidation, dissolution or winding up, or any
distribution of the assets, of the Corporation, the aggregate assets available
for distribution to holders of Common Stock shall be determined in accordance
with applicable law. Each holder of Common Stock shall be entitled to receive,
ratably with each other holder of Common Stock, that portion of such aggregate
assets available for distribution as the number of outstanding Common Stock
held by such holder bears to the total number of outstanding Common Stock.
Section D. Voting Rights. Except as may be provided in this
First Restated Certificate of Incorporation, and subject to the express terms
of any series of Preferred Stock, the holders of Common Stock shall have the
exclusive right to vote on all matters (as to which a common stockholder shall
be entitled to vote pursuant to applicable law) at all meetings of the
stockholders of the Corporation, and shall be entitled to one (1) vote for each
share of Common Stock entitled to vote at such meeting.
ARTICLE VI
PREFERRED STOCK
Preferred Stock may be issued from time to time in one or more series
as authorized by the board of directors. The board of directors is hereby
authorized, by filing a certificate
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pursuant to the DGCL (hereinafter, the "Preferred Stock Designation"), to
establish from time to time the number of shares to be included in each series,
and to fix the designations, powers, privileges, preferences, terms, rights,
restrictions and qualifications of the shares of each series. The authority of
the board of directors with respect to each series shall include, but not be
limited to, determination of the following:
(a) the designation of the series, which may be by distinguishing
number, letter or title;
(b) the number of shares of the series, which number the board of
directors may thereafter (except where otherwise provided in
the Preferred Stock Designation) increase or decrease (but not
below the number of shares thereof then outstanding);
(c) whether dividends, if any, shall be cumulative or
noncumulative, and, in the case of shares of any series having
cumulative dividend rights, the date or dates or method of
determining the date or dates from which dividends on the
shares of such series shall be cumulative;
(d) the rate of any dividends (or method of determining such
dividends) payable to the holders of the shares of such
series, any conditions upon which such dividends shall be paid
and the date or dates or the method for determining the date
or dates upon which such dividends shall be payable;
(e) the price or prices (or method of determining such price or
prices) at which, the form of payment of such price or prices
(which may be cash, property or rights, including securities
of the same or another corporation or other entity) for which,
the period or periods within which and the terms and
conditions upon which the shares of such series may be
redeemed, in whole or in part, at the option of the
Corporation or at the option of the holder or holders thereof
or upon the happening of a specified event or events, if any;
(f) the obligation, if any, of the Corporation to purchase or
redeem shares of such series pursuant to a sinking fund or
otherwise and the price or prices at which, the form of
payment of such price or prices (which may be cash, property
or rights, including securities of the same or another
corporation or other entity) for which, the period or periods
within which and the terms and conditions upon which the
shares of such series shall be redeemed or purchased, in whole
or in part, pursuant to such obligation;
(g) the amount payable out of the assets of the Corporation to the
holders of shares of the series in the event of any voluntary
or involuntary liquidation, dissolution or winding up of the
affairs of the Corporation;
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(h) provisions, if any, for the conversion or exchange of the
shares of such series, at any time or times at the option of
the holder or holders thereof or at the option of the
Corporation or upon the happening of a specified event or
events, into shares of any other class or classes or any other
series of the same or any other class or classes of stock, or
any other security, of the Corporation, or any other
corporation or other entity, and the price or prices or rate
or rates of conversion or exchange and any adjustments
applicable thereto, and all other terms and conditions upon
which such conversion or exchange may be made;
(i) restrictions on the issuance of shares of the same series or
of any other class or series, if any;
(j) the voting rights, if any, of the holders of shares of the
series; and
(k) any other relative rights, preferences and limitations on
that series.
Subject to the express provisions of any other series of Preferred
Stock then outstanding, and notwithstanding any other provision of this First
Restated Certificate of Incorporation, the board of directors may increase or
decrease (but not below the number of shares of such series then outstanding)
the number of shares, or alter the designation or classify or reclassify any
unissued shares of a particular series of Preferred Stock, by fixing or
altering, in one or more respects, from time to time before issuing the shares,
the terms, rights, restrictions and qualifications of the shares of any such
series of Preferred Stock.
ARTICLE VII
SOLE INCORPORATOR
The name and mailing address of the incorporator is as follows:
Name Mailing Address
---- ---------------
Donna Guihon 2300 N Street, N.W.
Washington, D.C. 20037
The powers of the incorporator are to terminate upon the filing of the
Certificate of Incorporation.
6
<PAGE> 7
ARTICLE VIII
BOARD OF DIRECTORS
Section A. Initial Director. The name and mailing address of
the person who is to serve as the initial director until the first annual
meeting of stockholders or until his successor is selected and qualifies is as
follows:
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<PAGE> 8
Name Mailing Address
---- ---------------
Gerald W. Haddock 777 Main Street
Suite 2100
Fort Worth, Texas
Section B. Powers of the Board of Directors. The business of
the Corporation shall be managed by the board of directors.
Section C. Number of Directors Constituting the Board. Subject
to any rights of holders of any class or series of stock having a preference
over the Common Stock as to dividends or liquidation to elect additional
directors under specified circumstances (herein referred to as "Preferred
Holders' Rights"), the number of directors that shall constitute the full board
of directors shall be fixed by the Bylaws of the Corporation.
Section D. Election and Terms of Directors. The directors,
other than any directors elected by the holders of any series of stock having a
preference over the Common Stock as to dividends or upon liquidation, shall be
classified, with respect to the time for which they severally hold office, into
three classes, as nearly equal in number as possible. One class will be
originally elected for a term expiring at the annual meeting of stockholders to
be held in 1998, another class will be originally elected for a term expiring
at the annual meeting of stockholders to be held in 1999, and another class
will be originally elected for a term expiring at the annual meeting of
stockholders to be held in 2000, with each class to hold office until its
successor is duly elected and qualified. At each succeeding annual meeting of
stockholders, directors elected to succeed those directors whose terms then
expire shall be elected for a term of office to expire
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<PAGE> 9
at the third succeeding annual meeting of stockholders after their election,
with each director to hold office until such person's successor shall have been
duly elected and qualified.
Section E. Vacancies. Except as otherwise provided for or fixed
pursuant to the provisions of Article VI hereof relating to the rights of the
holders of any class or series of stock having a preference over the Common
Stock as to dividends or upon liquidation to elect additional directors under
specified circumstances, newly created directorships resulting from any
increase in the authorized number of directors and any vacancies on the board
of directors resulting from death, resignation, disqualification, removal or
other cause shall be filled as set forth in the Bylaws of the Corporation.
Section F. Election of Directors. The directors of the
Corporation shall not be required to be elected by written ballots unless the
Bylaws of the Corporation so provide.
Section G. Removal of Directors. Subject to any Preferred
Holders' Rights, directors may be removed only for cause upon the affirmative
vote of holders of at least 80% of the entire voting power of all the
then-outstanding shares of stock entitled to vote generally in the election of
directors (the "Voting Stock"), voting together as a single class.
Section H. Relevant Factors to be Considered by the Board of
Directors. In determining what is in the best interest of the Corporation, a
director of the Corporation shall consider all of the relevant factors, which
may include (i) the immediate and long-term effects of the transaction on the
Corporation's stockholders, including stockholders, if any, who do not
participate in the transaction; (ii) the social and economic effects of the
transaction on the
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Corporation's employees, suppliers, creditors and customers and others dealing
with the Corporation and on the communities in which the Corporation operates
and is located; (iii) whether the transaction is acceptable, based on the
historical and current operating results and financial condition of the
Corporation; (iv) whether a more favorable price would be obtained for the
Corporation's stock or other securities in the future; (v) the reputation and
business practices of the other party or parties to the proposed transaction,
including its or their management and affiliates, as they would affect
employees of the Corporation; (vi) the future value of the Corporation's
securities; (vii) any legal or regulatory issues raised by the transactions;
(viii) the effect on the Intercompany Agreement; and (ix) the business and
financial condition and earnings prospects of the other party or parties to the
proposed transactions including, without limitation, debt service and other
existing financial obligations, financial obligations to be incurred in
connection with the transaction, and other foreseeable financial obligations of
such other party or parties.
Section I. Amendment of Certain Provisions of Article VIII.
Notwithstanding anything contained in this First Restated Certificate of
Incorporation to the contrary, the affirmative vote of the holders of at least
80% of the Voting Stock then outstanding, voting together as a single class,
shall be required to alter, amend or adopt any provision inconsistent with or
repeal this Article VIII.
10
<PAGE> 11
ARTICLE IX
STOCKHOLDER ACTION
Any action required or permitted to be taken by the stockholders of the
Corporation must be effected at a duly called annual or special meeting of such
holders and may not be effected by any consent in writing by such holders.
Except as otherwise required by law and subject to the rights of any class or
series of stock having a preference over the Common Stock as to dividends or
upon liquidation, special meetings of stockholders of the Corporation for any
purpose or purposes may be called only by the Chairman of the Board, the Vice
Chairman of the Board, the President or the board of directors pursuant to a
resolution stating the purpose or purposes thereof approved by a majority of
the total number of directors which the Corporation would have if there were no
vacancies (the "Whole Board"). Any power of stockholders to call a special
meeting is specifically denied. No business other than that stated in the
notice shall be transacted at any special meeting. Notwithstanding anything
contained in this First Restated Certificate of Incorporation to the contrary,
the affirmative vote of the holders of at least 80% of the Voting Stock then
outstanding, voting together as a single class, shall be required to alter,
amend, or adopt any provision inconsistent with or repeal this Article IX.
ARTICLE X
RESTRICTION ON BUSINESS COMBINATIONS
The Corporation will be governed by Del. Code Ann. tit. 8, Section 203
(1991); provided, however, that Crescent and any Crescent affiliate shall be
excluded from the definition of "interested stockholder" pursuant to the terms
of Del. Code Ann. tit. 8, Section 203 (1991). For
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<PAGE> 12
purposes of this First Restated Certificate of Incorporation, "affiliate" shall
have the meaning set forth in Rule 405 of Regulation C promulgated under the
Securities Act of 1933, as amended.
ARTICLE XI
DURATION OF CORPORATE EXISTENCE
The Corporation is to have perpetual existence.
ARTICLE XII
BY-LAWS
The Bylaws may be altered or repealed and new Bylaws may be adopted (i)
at any annual or special meeting of stockholders, by the affirmative vote of
the holders of a majority of the voting power of the stock issued and
outstanding and entitled to vote thereat, provided, however, that any proposed
alteration or repeal of, or the adoption of any Bylaw inconsistent with,
Sections 5 and 11 of Article II of the Bylaws; Sections 1, 2, 10 and 12 of
Article V of the Bylaws; or this sentence, by the stockholders shall require
the affirmative vote of the holders of at least 80% of the voting power of all
Voting Stock then outstanding, voting together as a single class; and provided,
further, however, that in the case of any such stockholder action at a special
meeting of stockholders, notice of the proposed alteration, repeal or adoption
of the new Bylaw or Bylaws must be contained in the notice of such special
meeting, or (ii) by the affirmative vote of a majority of the Whole Board.
Notwithstanding anything contained in this First Restated Certificate
of Incorporation to the contrary, the affirmative vote of the holders of at
least 80% of the voting power of all Voting Stock then outstanding, voting
together as a single class, shall be required to alter, amend, adopt any
provision inconsistent with or repeal this Article XII.
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<PAGE> 13
ARTICLE XIII
DIRECTOR LIABILITY
Section A. LIMITED LIABILITY OF DIRECTORS. A director of the
Corporation shall not be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except, if required by the DGCL, as amended from time to time, for liability
(i) for any breach of the director's duty of loyalty to the Corporation or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174
of the DGCL, or (iv) for any transaction from which the director derived an
improper personal benefit. Neither the amendment nor repeal of Section A of
this Article XIII shall eliminate or reduce the effect of Section A of this
Article XIII in respect of any matter occurring, or any cause of action, suit
or claim that, but for Section A of this Article XIII would accrue or arise,
prior to such amendment or repeal.
Section B. INDEMNIFICATION AND INSURANCE.
(1) Right to Indemnification. Each person who was or is made a party
or is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that such person, or a
person of whom such person is the legal representative, is or was a director or
officer of the Corporation or is or was serving at the request of the
Corporation as a director, officer, employee or agent of another corporation or
of a partnership, joint venture, trust or other
13
<PAGE> 14
enterprise, including service with respect to employee benefit plans, whether
the basis of such proceeding is alleged action in an official capacity as a
director, officer, employee or agent or in any other capacity while serving as
a director, officer, employee or agent, shall be indemnified and held harmless
by the Corporation to the fullest extent authorized by the DGCL, as the same
exists or may hereafter be amended (but, in the case of any such amendment,
only to the extent that such amendment permits the Corporation to provide
broader indemnification rights than said law permitted the Corporation to
provide prior to such amendment), against all expense, liability and loss
(including attorneys' fees, judgments, fines, amounts paid or to be paid in
settlement, and excise taxes or penalties arising under the Employee Retirement
Income Security Act of 1974, as in effect from time to time) reasonably
incurred or suffered by such person in connection therewith and such
indemnification shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of such person's
heirs, executors and administrators; provided, however, that, except as
provided in paragraph (2) hereof, the Corporation shall indemnify any such
person seeking indemnification in connection with a proceeding (or part
thereof) initiated by such person only if such proceeding (or part thereof) was
authorized by the board of directors. The right to indemnification conferred
in this Section shall be a contract right and shall include the right to have
the Corporation pay the expenses incurred in defending any such proceeding in
advance of its final disposition; any advance payments to be paid by the
Corporation within 20 calendar days after the receipt by the Corporation of a
statement or statements from the claimant requesting such advance or advances
from time to time; provided, however, that, if and to the extent the DGCL
requires, the payment of such expenses incurred by a director or officer in
such person's capacity as a director or officer
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(and not in any other capacity in which service was or is rendered by such
person while a director or officer, including, without limitation, service to
an employee benefit plan) in advance of the final disposition of a proceeding,
shall be made only upon delivery to the Corporation of an undertaking, by or on
behalf of such director or officer, to repay all amounts so advanced if it
shall ultimately be determined that such director or officer is not entitled to
be indemnified under this Section or otherwise. The Corporation may, to the
extent authorized from time to time by the board of directors, grant rights to
indemnification, and rights to have the Corporation pay the expenses incurred
in defending any proceeding in advance of its final disposition, to any
employee or agent of the Corporation to the fullest extent of the provisions of
this Article with respect to the indemnification and advancement of expenses of
directors and officers of the Corporation.
(2) Right of Claimant to Bring Suit. If a claim under paragraph (a)
of this Section is not paid in full by the Corporation within 30 calendar days
after a written claim has been received by the Corporation, the claimant may at
any time thereafter bring suit against the Corporation to recover the unpaid
amount of the claim and, if successful in whole or in part, the claimant shall
be entitled to be paid also the expense of prosecuting such claim. It shall be
a defense to any such action (other than an action brought to enforce a claim
for expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any is required, has been
tendered to the Corporation) that the claimant has not met the standard of
conduct which makes it permissible under the DGCL for the Corporation to
indemnify the claimant for the amount, but the burden of proving such defense
shall be on the Corporation. Neither the failure of the Corporation (including
its board of directors, independent legal counsel,
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or its stockholders) to have made a determination prior to the commencement of
such action that indemnification of the claimant is proper in the circumstances
because the claimant has met the applicable standard of conduct set forth in
the DGCL, nor an actual determination by the Corporation (including its board
of directors, independent legal counsel, or its stockholders) that the claimant
has not met such applicable standard of conduct, shall be a defense to the
action or create a presumption that the claimant has not met the applicable
standard of conduct.
(3) Non-Exclusivity of Rights. The right to indemnification and the
payment of expenses incurred in defending a proceeding in advance of its final
disposition conferred in this Section shall not be exclusive of any other right
which any person may have or hereafter acquire under any statute, provision of
the Certificate of Incorporation, Bylaw, agreement, vote of stockholders or
disinterested directors or otherwise. No repeal or modification of this
Article shall in any way diminish or adversely affect the rights of any
director, officer, employee or agent of the Corporation hereunder in respect of
any occurrence or matter arising prior to any such repeal or modification.
(4) Insurance. The Corporation may maintain insurance, at its
expense, to protect itself and any director, officer, employee or agent of the
Corporation or another corporation, partnership, joint venture, trust or other
enterprise against any such expense, liability or loss, whether or not the
Corporation would have the power to indemnify such person against such expense,
liability or loss under the DGCL.
(5) Severability. If any provision or provisions of this Article XIII
shall be held to be invalid, illegal or unenforceable for any reason
whatsoever, (i) the validity, legality and
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enforceability of the remaining provisions of this Article XIII (including,
without limitation, each portion of any paragraph of this Article XIII
containing any such provision held to be invalid, illegal or unenforceable,
that is not itself held to be invalid, illegal or unenforceable) shall not in
any way be affected or impaired thereby; and (ii) to the fullest extent
possible, the provisions of this Article XIII (including, without limitation,
each such portion of any paragraph of this Article XIII containing any such
provision held to be invalid, illegal or unenforceable) shall be construed so
as to give effect to the intent manifested by the provision held invalid,
illegal or unenforceable.
ARTICLE XIV
AMENDMENT OF FIRST RESTATED CERTIFICATE OF INCORPORATION
The Corporation reserves the right at any time from time to time to
amend, alter, change or repeal any provision contained in this First Restated
Certificate of Incorporation, and any other provisions authorized by the law of
the State of Delaware at the time in force may be added or inserted, in the
manner now or hereafter prescribed by law; and, except as set forth in Article
XIII, all rights, preferences and privileges of whatsoever nature conferred
upon stockholders, directors or any other persons whomsoever by and pursuant to
this First Restated Certificate of Incorporation in its present form or as
hereafter amended are granted subject to the rights reserved in this Article.
Notwithstanding anything contained in this Certificate of Incorporation to the
contrary, the affirmative vote of the holders of at least 80% of the Voting
Stock then outstanding, voting together as a single class, shall be required to
alter, amend, or adopt any provision inconsistent with or repeal Article VIII,
IX, XII or this sentence.
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ARTICLE XV
VOTING RIGHTS OF CERTAIN CONTROL SHARES
Section A. Definitions. In this Article XV, the following
words have the meanings indicated:
1. "Acquiring person" means a person who makes or proposes to
make a control share acquisition.
2. "Associate," when used to indicate a relationship with any
person, means:
(a) Any corporation or organization (other than
the Corporation or a subsidiary of the
Corporation) of which such person is an
officer, director, or partner or is, directly
or indirectly, the beneficial owner of 10
percent or more of any class of equity
securities;
(b) Any trust or other estate in which such
person has a substantial beneficial interest
or as to which such person serves as trustee
or in a similar fiduciary capacity; and
(c) Any relative or spouse of such person, or any
relative of such spouse, who has the same
home as such person or who is a director or
officer of the corporation or any of its
affiliates; or
(d) A person that:
(i) Directly or indirectly controls, or
is controlled by, or is under common
control with, the person specified;
or
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(ii) Is acting or intends to act jointly
or in concert with the person
specified.
3. "Control shares"
(a) means shares of beneficial interest that,
except for this Article, would, if aggregated
with all other shares of beneficial interest
of the Corporation (including shares the
acquisition of which is excluded from the
definition of "control share acquisition" in
subsection (A)(4) of this section) owned by a
person or in respect of which that person is
entitled to exercise or direct the exercise
of voting power, except solely by virtue of a
revocable proxy, entitle that person,
directly or indirectly, to exercise or direct
the exercise of the voting power of shares of
beneficial interest of the Corporation in the
election of directors within any of the
following ranges of voting power:
(i) One-fifth or more, but less than
one-third of all voting power,
(ii) One-third or more, but less than a
majority of all voting power, or
(iii) A majority or more of all voting
power;
(b) includes shares of beneficial interest of the
Corporation only to the extent that the
acquiring person, following the acquisition
of the shares, is entitled, directly or
indirectly, to exercise or direct the
exercise of voting
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power within any level of voting power set
forth in this section for which approval has
not been obtained previously under Section B
of this Article;
(c) does not include shares of beneficial
interest of the Corporation owned by Crescent
or any Crescent affiliate, or in respect of
which Crescent or any Crescent affiliate is
entitled to exercise or direct the exercise
of the voting power of such shares of the
Corporation in the election of directors.
4. "Control share acquisition"
(a) means the acquisition, directly or
indirectly, by any person, of ownership of,
or the power to direct the exercise of voting
power with respect to, issued and outstanding
control shares.
(b) does not include the acquisition of shares:
(i) Under the laws of descent and
distribution;
(ii) Under the satisfaction of a pledge or
other security interest charged in
good faith and not for the purpose of
circumventing this Article; or
(iii) Under a merger, consolidation, or
share exchange if the Corporation is
a party to the merger, consolidation,
or share exchange.
(c) Unless the acquisition entitles any person,
directly or indirectly, to exercise or direct
the exercise of voting power in the election
of directors in excess of the range of voting
power previously authorized or attained
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under an acquisition that is exempt under
paragraph (b) of this subsection, "control
share acquisition" does not include the
acquisition of shares of the Corporation in
good faith and not for the purpose of
circumventing this Article by or from:
(i) Any person whose voting rights have
previously been authorized by
stockholders in compliance with this
Article; or
(ii) Any person whose previous acquisition
of shares of beneficial interest of
the Corporation would have
constituted a control share
acquisition but for paragraph (b) of
this subsection.
5. "Interested shares" means shares of beneficial interest of the
Corporation in respect of which any of the following persons
is entitled to exercise or direct the exercise of the voting
power of shares of beneficial interest of the Corporation in
the election of directors:
(a) An acquiring person;
(b) An officer of the Corporation; or
(c) An employee of the Corporation who is also a
Director of the Corporation.
6. "Person" includes an associate of the person.
Section B. Voting Rights
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1. Approval by Stockholders. Control shares of the Corporation acquired
in a control share acquisition have no voting rights except to the extent
approved by the stockholders at a meeting held under Section D of this Article
by the affirmative vote of two-thirds of all the votes entitled to be cast on
the matter, excluding all interested shares.
2. Acquisition of Shares; Voting Power. For the purposes of Section
A(3) of this Article:
(a) Shares acquired within 90 days of shares
acquired under a plan to make a control share
acquisition are considered to have been
acquired in the same acquisition; and
(b) A person may not be deemed to be entitled to
exercise or direct the exercise of voting
power with respect to shares held for the
benefit of others if the person:
(i) Is acting in the ordinary course of
business, in good faith and not for
the purpose of circumventing the
provisions of this section; and
(ii) Is not entitled to exercise or to
direct the exercise of the voting
power of the shares unless the person
first seeks to obtain the instruction
of another person.
Section C. Acquiring Person Statement. Any person who proposes
to make or who has made a control share acquisition may deliver an acquiring
person statement to the Corporation at
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the Corporation's principal office. The acquiring person statement shall set
forth all of the following:
1. The identity of the acquiring person and each other member of
any group of which the person is a part for purposes of determining control
shares;
2. A statement that the acquiring person statement is given under
this Article;
3. The number of shares of the Corporation owned (directly or
indirectly) by the acquiring person and each other member of any group;
4. The applicable range of voting power as set forth in Section
A(3) of this Article; and
5. If the control share acquisition has not occurred:
(a) A description in reasonable detail of the
terms of the proposed control share
acquisition; and
(b) Representations of the acquiring person,
together with a statement in reasonable
detail of the facts on which they are based,
that:
(i) The proposed control share
acquisition, if consummated, will not
be contrary to law; and
(ii) The acquiring person has the
financial capacity, through financing
to be provided by the acquiring
person and any additional specified
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sources of financing required under
Section E of this Article, to make
the proposed control share
acquisition.
Section D. Special Meeting
1. Request by Acquiring Person. Except as provided in Section E of this
Article, if the acquiring person requests, at the time of delivery of an
acquiring person statement, and gives a written undertaking to pay the
Corporation's expenses of a special meeting, except the expenses of opposing
approval of the voting rights, within 10 days after the day on which the
Corporation receives both the request and undertaking, the directors of the
Corporation shall call a special meeting of stockholders of the Corporation for
the purpose of considering the voting rights to be accorded the shares acquired
or to be acquired in the control share acquisition.
2. Bond. The Corporation may require the acquiring person to give bond,
with sufficient surety, to reasonably assure the Corporation that this
undertaking will be satisfied.
3. Time for Meeting. Unless the acquiring person agrees in writing to
another date, the special meeting of stockholders shall be held within 50 days
after the day on which the Corporation has received both the request and the
undertaking.
4. Delay at Request of Acquiring Person. If the acquiring person makes
a request in writing at the time of delivery of the acquiring person statement,
the special meeting may not be held sooner than 30 days after the day on which
the Corporation receives the acquiring person statement.
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<PAGE> 25
5. In Absence of Request.
(a) If no request is made under subsection 1 of
this Section, the issue of the voting rights
to be accorded the shares acquired in the
control shares acquisition may, at the option
of the Corporation, be presented for
consideration at any meeting of stockholders.
(b) If no request is made under subsection 1 of
this Section and the Corporation proposes to
present the issue of the voting rights to be
accorded the shares acquired in a control
share acquisition for consideration at any
meeting of stockholders, the Corporation
shall provide the acquiring person with
written notice of the proposal not less than
20 days before the date on which notice of
the meeting is given.
Section E. Calls. A call of a special meeting of stockholders
of the Corporation is not required to be made under Section D(1) of this
Article unless, at the time of delivery of an acquiring person statement under
Section C of this Article, the acquiring person has:
1. Entered into a definitive financing agreement or agreements
with one or more responsible financial institutions or other
entities that have the necessary financial capacity, providing
for any amount of financing of the control share acquisition
not to be provided by the acquiring person; and
2. Delivered a copy of the agreements to the Corporation.
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<PAGE> 26
Section F. Notice of Meeting.
1. In General. If a special meeting of stockholders is requested,
notice of the special meeting shall be given as promptly as reasonably
practicable by the Corporation to all stockholders of record as of the record
date set for the meeting, whether or not the stockholder is entitled to vote at
the meeting.
2. Contents. Notice of the special or annual meeting of stockholders at
which the voting rights are to be considered shall include or be accompanied by
the following:
(a) A copy of the acquiring person statement delivered to
the Corporation under Section C of this Article; and
(b) A statement by the board of directors of the
Corporation setting forth the position or
recommendation of the board, or stating that the
board is taking no position or making no
recommendation, with respect to the issue of voting
rights to be accorded the control shares.
Section G. Redemption Rights.
1. Upon delivery of acquiring person statement. If an acquiring
person statement has been delivered on or before the 10th day
after the control share acquisition, the Corporation at its
option, shall have the right to redeem any or all control
shares, except control shares for which voting rights have
been previously approved under Section B of this Article, at
any time during a 60-day period commencing on the day
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<PAGE> 27
of a meeting at which voting rights are considered under
Section D of this Article and are not approved.
2. In absence of delivery of acquiring person statement. In
addition to the redemption rights authorized under subsection
1 of this Section, if an acquiring person statement has not
been delivered on or before the 10th day after the control
share acquisition, the Corporation, at its option, shall have
the right to redeem any or all control shares, except control
shares for which voting rights have been previously approved
under Section B of this Article, at any time during a period
commencing on the 11th day after the control share acquisition
and ending 60 days after a statement has been delivered.
3. Fair value. Any redemption of control shares under this
section shall be at the fair value of the shares. For
purposes of this section, "fair value" shall be determined:
(a) As of the date of the last acquisition of
control shares by the acquiring person in a
control share acquisition or, if a meeting is
held under Section D of this Article, as of
the date of the meeting; and
(b) Without regard to the absence of voting
rights for the control shares.
Section H. Status as Dissenting Stockholders.
1. In General. Before a control share acquisition has occurred,
if voting rights for control shares are approved at a meeting
held under Section D of this Article and the
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acquiring person is entitled to exercise or direct the
exercise of a majority or more of all voting power, all
stockholders of the Corporation (other than the acquiring
person) have the rights of dissenting stockholders under the
DGCL.
2. Corporation Deemed Successor. For purposes of applying the
provisions of the DGCL to stockholders under this Section H,
the Corporation shall be deemed to be a successor in a merger
and the date of the most recent approval of voting rights
referred to in subsection 1 of this Section shall be deemed to
be the date of filing of articles of merger for record as
therein provided.
3. Status To Be Contained In Notice. The notice required by
Section F of this Article shall also state that stockholders
(other than the acquiring person) are entitled to the rights
of dissenting shareholders under the DGCL and shall include a
copy the applicable provisions thereof.
4. Application of DGCL. For purposes of applying the provisions
of Section 262 of the DGCL to this Section:
(a) "Fair value" may not be less than the highest
price per share paid by the acquiring person
in the control share acquisition;
(b) Section 262(b)(1) and the second, third,
fourth and fifth sentences of Section
262(d)(1) of the DGCL do not apply; and
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(c) There shall be no requirement that the
dissenting stockholder shall not have voted
in favor of the action.
IN WITNESS WHEREOF, Crescent Operating, Inc. has caused this First
Restated Certificate of Incorporation to be signed in its name and on its
behalf on this ____ day of ____, 1997, by its President and Chief Executive
Officer, who acknowledges that this First Restated Certificate of Incorporation
is the act of the Corporation and that, to the best of his knowledge,
information and belief, and under penalties of perjury, all matters and facts
contained in this First Restated Certificate of Incorporation are true in all
material respects.
-----------------------------------------
Gerald W. Haddock
President and Chief Executive Officer
29
<PAGE> 1
Exhibit 3.2
FORM OF AMENDED AND RESTATED B Y L A W S
OF
CRESCENT OPERATING, INC.
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the corporation
(the "Corporation") shall be at Corporation Trust Center, 1209 Orange Street,
in the City of Wilmington, County of New Castle, State of Delaware. The name of
its registered agent at such address is The Corporation Trust Company.
Section 2. Other Offices. The Corporation may also have offices,
including its principal office, at such other places both within and without
the State of Delaware as the Board of Directors may from time to time determine
or the business of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place of Meetings. All meetings of the stockholders shall
be held at such places either within or without the State of Delaware as shall
be designated from time to
<PAGE> 2
time by the Board of Directors and stated in the notice of the meeting or in a
duly executed waiver of notice thereof.
Section 2. Annual Meetings. The annual meeting of stockholders for the
election of directors and the transaction of other business shall be held in
May of each year at the Corporation's principal office, commencing with the
year 1997, or on such other date and time as may be fixed by resolution of the
Board of Directors and stated in the notice of the meeting.
Section 3. Notice of Annual Meetings. Written notice of the annual
meeting stating the place, date and hour of the meeting shall be given to each
stockholder entitled to vote at such meeting, either personally or by mail, not
less than ten nor more than sixty days before the date of the meeting. If
mailed, such notice shall be deemed to have been given when deposited in the
United States mail, postage prepaid, directed to the stockholder at his address
as it appears on the records of the Corporation.
Section 4. List of Stockholders. The officer who has charge of the
stock ledger of the Corporation shall prepare and make, at least ten days
before every meeting of stockholders, a complete list of the stockholders
entitled to vote at the meeting, arranged in alphabetical order, and showing
the address of each stockholder and the number of shares registered in the name
of each stockholder. The list shall be arranged by voting group and within each
voting group by class or series of shares. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten days prior to the
meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the
2
<PAGE> 3
meeting is to be held. The list shall also be produced and kept at the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present at such meeting.
Section 5. Special Meetings. Except otherwise required by law and
subject to the rights of the holders of any class or series of preferred shares
of the Corporation to elect additional directors under specified circumstances
("Preferred Holders' Rights") special meetings of the stockholders for any
purpose or purposes may be called only by the Chairman of the Board, the Vice
Chairman of the Board, the President or the Board of Directors pursuant to a
resolution stating the purpose or purposes thereof, approved by a majority of
the total number of directors which the Corporation would have if there were no
vacancies (the "Whole Board"). Any power of stockholders to call a special
meeting is specifically denied.
Section 6. Notice of Special Meetings. Written notice of a special
meeting stating the place, date and hour of the meeting, and the purpose or
purposes for which the meeting is called, shall be given not less than ten nor
more than sixty days before the date of the meeting to each stockholder
entitled to vote at such meeting.
Section 7. Business of Special Meetings. Business transacted at any
special meeting of stockholders shall be limited to the purposes stated in the
notice.
Section 8. Quorum. The holders of at least a majority of the stock
issued and outstanding and entitled to vote at any meeting of the stockholders,
present in person or represented by proxy, shall constitute a quorum at all
meetings of the stockholders for the transaction of business except as
otherwise provided by statute or by the Certificate of
3
<PAGE> 4
Incorporation. If, however, such quorum shall not be present or represented at
any meeting of the stockholders, the stockholders entitled to vote thereat,
present in person or represented by proxy, shall have the power to adjourn the
meeting from time to time, without notice other than announcement at the
meeting of the time and place of the adjourned meeting, until a quorum shall be
present or represented. At such adjourned meeting, at which a quorum shall be
present or represented, any business may be transacted which might have been
transacted at the original meeting. If the adjournment is for more than thirty
days, or if after the adjournment a new record date is fixed for the adjourned
meeting, a notice of the adjourned meeting shall be given to each stockholder
of record entitled to vote at the meeting.
Section 9. Notice of Stockholder Business and Nominations.
(a) Annual Meeting of Stockholders
(1) Nominations of candidates for directors of the Corporation and the
proposal of business to be considered by the stockholders may be made at an
annual meeting of stockholders (i) pursuant to the Corporation's notice of
meeting delivered pursuant to Article II, Section 3 of these Bylaws; (ii) by or
at the direction of the Chairman of the Board; or (iii) by any stockholder of
the Corporation who is entitled to vote at the meeting, who has complied with
the notice procedures set forth in clauses (2) and (3) of this Paragraph (a)
and who was a stockholder of record at the time such notice is delivered to the
Secretary of the Corporation.
(2) For nominations or other business to be properly brought before an
annual meeting by a stockholder pursuant to clause (iii) of Paragraph (a)(1) of
this Section 9, the
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<PAGE> 5
stockholder must have given timely notice thereof in writing to the Secretary
of the Corporation. To be timely, a stockholder's notice shall be delivered to
the Secretary at the principal office of the Corporation not less than seventy
(70) days nor more than ninety (90) days prior to the anniversary of the
preceding year's annual meeting; provided, however, that in the event that the
date of an annual meeting is advanced by more than thirty (30) days or delayed
by more than sixty (60) days from such anniversary date, to be timely notice by
the stockholder must be so delivered not earlier than the ninetieth (90th) day
prior to such annual meeting or the tenth (10th) day following the day on which
public announcement of the date of such meeting is first made. Such
stockholder's notice shall set forth (i) as to each person whom the stockholder
proposes to nominate for election or reelection as a director, all information
relating to such person that is required to be disclosed in solicitations of
proxies for election of directors, or is otherwise required, pursuant to
Regulation 14A under the Securities Exchange Act of 1934, as amended, or any
successor statute thereto (the "Exchange Act"), including such person's written
consent to being named in the proxy statement as a nominee and to serving as a
director if elected; (ii) as to any other business that the stockholder
proposes to bring before the meeting, the reasons for conducting such business
at the meeting and any material interest in such business of such stockholder
and the beneficial owner, if any, on whose behalf the proposal is made; and
(iii) as to the stockholder giving the notice and the beneficial owner, if any,
on whose behalf the nomination or proposal is made (a) the name and address of
such stockholder, as they appear on the Corporation's share transfer books, and
the name and address of such beneficial owner; (b) the class or series and
number of shares of beneficial interest of the Corporation which are owned
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<PAGE> 6
beneficially and of record by such stockholder and such beneficial owner; and
(c) the date or dates upon which the stockholder acquired ownership of such
shares.
(3) Notwithstanding anything in the second sentence of Paragraph (a)
(2) of this Section 9 to the contrary, in the event that the number of
directors to be elected to the Board of Directors of the Corporation is
increased and there is no public announcement naming all of the nominees for
director or specifying the size of the increased Board of Directors made by the
Corporation at least seventy (70) days prior to the first anniversary of the
preceding year's annual meeting, a stockholder's notice required by Paragraph
(a) of this Section 9 shall also be considered timely, but only with respect to
nominees for any new positions created by such increase, if it shall be
delivered to the Secretary at the principal executive offices of the
Corporation not later than the close of business on the tenth (10th) day
following the day on which such public announcement is first made by the
Corporation.
(4) The provisions of this Section 9(a) shall apply beginning
January 1, 1998.
(b) Special Meeting of Shareholders. Only such business shall be conducted
at a special meeting of stockholders as shall have been brought before the
meeting subject to the Corporation's notice of meeting pursuant to Article II,
Section 6 of these Bylaws. Nominations of persons for election to the Board of
Directors may be made at a special meeting of stockholders at which directors
are to be elected pursuant to the Corporation's notice of meeting (i) by or at
the direction of the Board of Directors or (ii) by any stockholder of the
Corporation who is entitled to vote at the meeting, who complies with the
notice procedures set forth in this Section 9 and who is a stockholder of
record at the time such notice is delivered to the Secretary
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<PAGE> 7
of the Corporation. Nominations by stockholders of persons for election to the
Board of Directors may be made at such special meeting of stockholders if the
stockholder's notice as required by Paragraph (a)(2) of this Section 9 shall be
delivered to the Secretary at the principal office of the Corporation not
earlier than the ninetieth (90th) day prior to such special meeting and not
later than the close of business on the later of the seventieth (70th) day
prior to such special meeting or the tenth (10th) day following the day on
which public announcement is first made of the date of the special meeting and
of the nominees proposed by the Board of Directors to be elected at such
meeting.
(c) General
(1) Only persons who are nominated in accordance with the procedures
set forth in this Section 9 shall be eligible to serve as directors, and only
such business shall be conducted at a meeting of shareholders as shall have been
brought before the meeting in accordance with the procedures set forth in this
Section. Except as otherwise provided by law, the Certificate of Incorporation
or these Bylaws, the chairman of the meeting shall have the power and duty to
determine whether a nomination or any business proposed to be brought before
the meeting was made or brought in accordance with the procedures set forth in
this Section 9 and, if any proposed nomination or business is determined not to
be in compliance herewith, to declare that such defective nomination or
proposal shall be disregarded.
(2) For purposes of this Section 9, "public announcement" shall mean
disclosure in a press release reported by the Dow Jones News Service,
Associated Press or
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comparable national news service or in a document publicly filed by the
Corporation with the Securities and Exchange Commission pursuant to Section 13,
14 or 15(d) of the Exchange Act.
(3) Notwithstanding the foregoing provisions of this Section 9, a
stockholder shall also comply with all applicable requirements of the Exchange
Act and the rules and regulations thereunder with respect to the matters set
forth herein. Nothing in these Bylaws shall be deemed to affect any rights of
stockholders to request inclusion of proposals in the Corporation's proxy
statement pursuant to Rule 14a-8 under the Exchange Act or to create any
additional rights with respect to any such inclusion.
Section 10. Vote Required for Action.
(1) Subject to the Preferred Holders' Rights and applicable law, each
stockholder having the right to vote shall be entitled at every meeting of
stockholders to one (1) vote for every share owned in his or her name on the
record date fixed by the Board of Directors pursuant to these Bylaws. Except as
otherwise provided by law, the Certificate of Incorporation, these Bylaws, any
resolution adopted by the Board of Directors authorizing a series of preferred
shares, or any resolution adopted by a majority of the Whole Board, all matters
submitted to the stockholders at any meeting (other than the election of
directors) shall be decided by a majority of the votes cast with respect
thereto.
(2) Election of directors requires the affirmative vote of a majority
of the votes cast at the meeting for the election of directors.
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<PAGE> 9
(3) Where a separate vote by a class or classes is required by law or
the Certificate of Incorporation, a majority of the outstanding shares of such
class or classes, present in person or represented by proxy, shall constitute a
quorum entitled to take action with respect to that vote on that matter and the
affirmative vote of the majority of shares of such class or classes present in
person or represented by proxy at the meeting shall be the act of such class.
Section 11. No Action Without Meeting.
Any action required or permitted to be taken at any meeting of the
stockholders must be effected at a duly called annual or special meeting of
such stockholders and may not be effected by any consent in writing by such
stockholders.
ARTICLE III
DIRECTORS
Section 1. Number Constituting Entire Board; Election. Subject to
Preferred Holders' Rights, the number of directors which shall constitute the
Whole Board shall be not less than three (3) nor more than twenty-five (25).
Within such limits, the actual number directors which shall constitute the
Whole Board shall be as fixed from time to time by the Board of Directors.
Except for the initial director of the Corporation who was appointed by the
Incorporator of the Corporation and those directors who may be elected pursuant
to Preferred Holders' Rights, the Board of Directors shall be classified with
respect to the time for which they severally hold office into three classes, as
nearly equal in number as possible, one class to be originally elected for a
term expiring at the annual meeting of stockholders to be held in 1998,
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<PAGE> 10
another class to be originally elected for a term expiring at the annual
meeting of stockholders to be held in 1999, and another class to be originally
elected for a term expiring at the annual meeting of stockholders to be held in
2000, with each class to hold office until its successor is duly elected and
qualified. At each succeeding annual meeting of stockholders, directors elected
to succeed those directors whose terms then expire shall be elected for a term
of office to expire at the third succeeding annual meeting of stockholders after
their election, with each director to hold office until such person's successor
shall have been duly elected and qualified. Directors need not be stockholders.
Section 2. Resignation and Removal. Any director may resign at any
time upon written notice to the Corporation. Subject to any Preferred Holders'
Rights, any director may be removed only for cause by the affirmative vote of
holders of at least 80% of the entire voting power of all the then-outstanding
shares of stock entitled to vote at an election of directors, voting together
as a single class.
Section 3. Filling of Vacancies. Subject to any Preferred Holders'
Rights, and unless the Board of Directors otherwise determines, any vacancies
(other than vacancies resulting from any increases in the authorized number of
directors) may be filled by the affirmative vote of a majority of the directors
then in office, though less than a quorum, or by a sole remaining director. Any
vacancies created by an increase in the total number of directors may be filled
by a majority of the entire board. The directors so chosen shall hold office
until the next annual election and until their successors are duly elected and
shall qualify, or until their earlier
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resignation or removal. If there are no directors in office, then an election
of directors may be held in the manner provided by statute.
Section 4. Management by Directors. The business and affairs of the
Corporation shall be managed by its Board of Directors, which may exercise all
such powers of the Corporation and do all such lawful acts and things as are
not by statute or by the Certificate of Incorporation or by these Bylaws
directed or required to be exercised or done by the stockholders.
Section 5. Place of Meetings. The Board of Directors of the
Corporation may hold meetings, both regular and special, either within or
outside the State of Delaware.
Section 6. Annual Meeting. The first meeting of each newly elected
Board of Directors shall be held immediately after the annual meeting of
stockholders and at the same place, and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting, provided a quorum shall be present. In the event such meeting is not
held at that time and place, the meeting may be held at such time and place as
shall be specified in a notice given as hereinafter provided for special
meetings of the Board of Directors, or as shall be specified in a written
waiver signed by all of the directors.
Section 7. Regular Meetings. Regular meetings of the Board of
Directors may be held without other notice at such time and at such place as
shall from time to time be determined by the board.
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Section 8. Special Meetings. Special meetings of the board may be
called at the request of the Chairman of the Board, the Vice Chairman, the
Chief Executive Officer, the President or a majority of the Board of Directors.
The person or persons authorized to call a special meeting of the board may fix
the place and time of the meeting.
Section 9. Quorum; Vote Required for Action. At all meetings of the
board, a majority of the total number of directors shall constitute a quorum
for the transaction of business and the act of a majority of the directors
present at any meeting at which there is a quorum shall be the act of the Board
of Directors, except as may be otherwise specifically provided by statute, the
Certificate of Incorporation or these Bylaws. If a quorum shall not be present
at any meeting of the Board of Directors, the directors present thereat may
adjourn the meeting from time to time, without notice other than announcement
at the meeting of the time and place of the adjourned meeting, until a quorum
shall be present.
Section 10. Participation By Conference Telephone. Members of the
Board of Directors, or any committee thereof, may participate in a meeting of
such board or committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and participation in a meeting pursuant to this
subsection shall constitute presence in person at such meeting.
Section 11. Action Without Meeting. Unless otherwise restricted by
the Certificate of Incorporation or these Bylaws, any action required or
permitted to be taken at any meeting of the Board of Directors or of any
committee thereof may be taken without a meeting, if all
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members of the board or such committee consent thereto in writing, and the
writing or writings are filed with the minutes of proceedings of the board or
such committee.
Section 12. Compensation. The directors may be paid their expenses, if
any, of attendance at each meeting of the Board of Directors and may be paid a
fixed sum for attendance at each meeting of the Board of Directors or a stated
salary as director. No such payment shall preclude any director from serving
the Corporation in any other capacity and receiving compensation therefor.
Members of standing or special committees may be allowed like compensation for
attending committee meetings.
Section 13. Committees. The Board of Directors may, by resolution
passed by a majority of the Whole Board, designate one or more committees, each
committee to consist of one or more of the directors of the Corporation. The
board may designate one or more directors as alternate members of any
committee, who may replace any absent or disqualified member at any meeting of
the committee. Any such committee, to the extent provided in the resolution, and
subject to any restrictions imposed by statute, shall have and may exercise the
powers of the Board of Directors in the management of the business and affairs
of the Corporation, and may authorize the seal of the Corporation to be affixed
to all papers which may require it; provided, however, that in the absence or
disqualification of any member of such committee or committees, the member or
members thereof present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint another
member of the Board of Directors to act at the meeting in the place of any such
absent or disqualified member. Such
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committee or committees shall have such name or names as may be determined from
time to time by resolution adopted by the Board of Directors.
Section 14. Minutes of Committee Meetings. Each committee shall keep
regular minutes of its meetings and report the same to the Board of Directors
when required.
ARTICLE IV
NOTICES
Section 1. Manner of Giving Notice. Whenever, under the provisions of
applicable law, the Certificate of Incorporation or these Bylaws, notice is
required to be given to any director or stockholder, it shall not be construed
to require personal notice, but such notice may be given in writing, by mail,
addressed to such director or stockholder, at his address as it appears on the
records of the Corporation, with postage thereon prepaid, and such notice shall
be deemed to be given at the time when the same shall be deposited in the
United States mail. Notice may also be given by telegram or by express courier.
Section 2. Waiver of Notice. Whenever any notice is required to be
given under the provisions of the statutes or of the Certificate of
Incorporation or of these Bylaws, a waiver thereof in writing, signed by the
person or persons entitled to said notice, whether before or after the time
stated therein, shall be deemed equivalent to notice. Attendance of a person at
a meeting of stockholders, directors, or members of a committee of directors,
shall constitute a waiver of notice of such meeting, except when the
stockholder, director or committee member attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the
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transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the stockholders, directors, or members of a
committee of directors need be specified in any written waiver of notice unless
so required by the Certificate of Incorporation or these Bylaws.
ARTICLE V
OFFICERS
Section 1. Categories of Officers. The elected officers of the
Corporation shall consist of a Chairman of the Board, a Vice Chairman of the
Board, a Chief Executive Officer, a President, one or more Executive Vice
Presidents or Vice Presidents, a Secretary and a Treasurer. Such other
officers, assistant officers, agents and employees as the Board of Directors
may from time to time deem necessary may be elected by the Board of Directors
or appointed by the Chairman of the Board. The Chairman of the Board and the
Vice Chairman of the Board shall be chosen from among the directors. Two or
more offices may be held by the same person, except that a person may not
concurrently serve as the President and a Vice President or Executive Vice
President. Each officer chosen or appointed in the manner prescribed by the
Board of Directors shall have such powers and duties as generally pertain to
his or her office or offices, subject to the specific provisions of this
Article V. Such officers also shall have such powers and duties as from time to
time may be conferred by the Board of Directors or by any committee thereof
authorized to do so.
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Section 2. Election and Term of Office. The elected officers of the
Company shall be elected annually by the Board of Directors at the regular
meeting of the Board of Directors held after each annual meeting of the
stockholders. If the election of officers shall not be held at such meeting,
such election shall be held as soon thereafter as is convenient. Each officer
shall hold office until his or her successor shall have been duly elected and
shall have qualified, or until his or her death or until he or she shall resign
or be removed from office.
Section 3. Chairman of the Board. The Chairman of the Board shall
preside at all meetings of the stockholders and of the Board of Directors. The
Chairman of the Board shall be responsible for general management of the
affairs of the Corporation and shall perform all duties incidental to the
office which may be required by law, and all such other duties as may properly
be required by the Board of Directors. Except where by law the signature of the
Chief Executive Officer or the President is required, the Chairman of the Board
shall possess the same power as the Chief Executive Officer and the President
to sign all certificates, contracts, and other instruments of the Company which
may be authorized by the Board of Directors. The Chairman of the Board shall
make such reports to the Board of Directors and the stockholders as are
properly required by the Board of Directors. The Chairman of the Board shall
see that all orders and resolutions of the Board of Directors and of any
committee thereof are carried into effect.
Section 4. Vice Chairman of the Board. The Vice Chairman of the Board
shall, in the absence of the Chairman, preside at all meetings of the
stockholders and of the Board of Directors. The Vice Chairman of the Board
shall, together with the Chairman of the Board and
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the Chief Executive Officer, act in a general executive capacity and shall have
such powers and duties as from time to time may be established by the Board of
Directors.
Section 5. Chief Executive Officer. The Chief Executive Officer shall
act in a general executive capacity and shall assist the Chairman of the Board
in the administration and operation of the Corporation's business and general
supervision of its policies and affairs. The Chief Executive Officer may, in
the absence of or because of the inability to act of the Chairman of the Board,
perform all duties of the Chairman of the Board and, in the absence of or
because of the inability to act of the Chairman of the Board and the Vice
Chairman of the Board, preside at all meetings of stockholders and of the Board
of Directors. The Chief Executive Officer may sign, alone or with the Secretary
or any assistant secretary or any other officer of the Corporation properly
authorized by the Board of Directors, certificates, contracts and other
instruments of the Company as authorized by the Board of Directors.
Section 6. President. The President shall be the chief operating
officer of the Corporation, shall act in a general executive capacity and shall
assist the Chairman of the Board and the Chief Executive Officer in the
administration and operation of the Corporation's business and general
supervision of its policies and affairs. The President may, in the absence of
or because of the inability to act of the Chairman of the Board and the Chief
Executive Officer, perform all duties of the Chairman of the Board and, in the
absence of or because of the inability to act of the Chairman of the Board, the
Vice Chairman of the Board and the Chief Executive Officer, preside at all
meetings of stockholders and of the Board of Directors. The President may sign,
alone or with the Secretary or any assistant secretary or any other officer of
the Corporation
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properly authorized by the Board of Directors, certificates, contracts and
other instruments of the Company as authorized by the Board of Directors.
Section 7. Vice Presidents. The Vice President or Vice Presidents, if
any, including any Executive Vice Presidents, shall perform the duties of the
Chief Executive Officer and the President in the absence or disability of both
the Chief Executive Officer and the President, and shall have such powers and
perform such other duties as the Board of Directors or the Chairman of the
Board from time to time may prescribe.
Section 8. Secretary. The Secretary shall give, or cause to be given,
notice of all meetings of shareholders and directors and all other notices
required by law, by the Articles of Incorporation or by these Bylaws, and in
case of his or her absence or refusal or neglect so to do, any such notice may
be given by any person thereunto directed by the Chairman of the Board, the Vice
Chairman of the Board, the Chief Executive Officer, the President or the Board
of Directors, upon whose request the meeting is called, as provided in these
Bylaws. The Secretary shall record all the proceedings of the meetings of the
Board of Directors, any committees thereof and the stockholders of the
Corporation in a book or books to be kept for that purpose, and shall perform
such other duties as from time to time may be prescribed by the Board of
Directors, the Chairman of the Board, the Chief Executive Officer or the
President. The Secretary shall have custody of the seal, if any, of the
Corporation and shall affix the same to all instruments requiring it, when
authorized by the Board of Directors, the Chairman of the Board, the Chief
Executive Officer or the President, and shall attest to the same.
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Section 9. Treasurer. The Treasurer shall have custody of all
Corporation funds and securities and shall keep full and accurate account of
receipts and disbursements in books belonging to the Corporation. The Treasurer
shall deposit all moneys and other valuable effects in the name and to the
credit of the Corporation in such depositories as may be designated by the
Board of Directors. The Treasurer shall disburse the funds of the Corporation
in such manner as may be ordered by the Board of Directors, the Chairman of the
Board, the Chief Executive Officer or the President, taking proper vouchers for
such disbursements. The Treasurer shall render to the Chairman of the Board,
the Chief Executive Officer, the President and the Board of Directors, whenever
requested, an account of all his or her transactions as Treasurer and of the
financial condition of the Corporation. If required by the Board of Directors,
the Treasurer shall give the Corporation a bond for the faithful discharge of
his or her other duties in such amount and with such surety as the Board of
Directors shall prescribe. The Treasurer also shall perform such duties and
have such powers as the Board of Directors from time to time may prescribe.
Section 10. Removal. Any officer elected by the Board of Directors or
appointed in the manner prescribed hereby may be removed by a majority of the
members of the Whole Board whenever, in their judgment, the best interests of
the Company would be served thereby. No elected or appointed officer shall have
any contractual rights against the Corporation for compensation by virtue of
such election or appointment beyond the date of the election or appointment of
his or her successor, his or her death, resignation or removal, whichever event
shall first occur, except as otherwise provided in an employment or similar
contract or under an employee deferred compensation plan.
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Section 11. Salaries. The Board of Directors shall fix the salaries of
the Chairman of the Board, the Vice Chairman of the Board, the Chief Executive
Officer and the President of the Corporation, or may delegate the authority to
do so to a duly constituted committee of the Board of Directors. The salaries
of other officers, agents and employees of the Corporation may be fixed by the
Board of Directors, by a committee of the Board, by the Chairman of the Board
or by another officer or committee to whom that function has been delegated by
the Board of Directors or the Chairman of the Board.
Section 12. Vacancies. Any newly created office or vacancy in any
office because of death, resignation or removal shall be filled by the Board of
Directors or, in the case of an office not specifically provided for in Section
1 hereof, by or in the manner prescribed by the Board of Directors. The officer
so selected shall hold office until his or her successor is duly selected and
shall have qualified, unless he or she sooner resigns or is removed from office
in the manner provided in these Bylaws.
Section 13. Resignations. Any director or officer, whether elected or
appointed, may resign at any time by serving written notice of such resignation
on the Chairman of the Board, the Chief Executive Officer, the President or the
Secretary, and such resignation shall be deemed to be effective as of the close
of business on the date said notice is received by the Chairman of the Board,
the Chief Executive Officer, the President or the Secretary. No action shall be
required of the Board of Directors or the stockholders to make any such
resignation effective.
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ARTICLE VI
CERTIFICATES OF STOCK; STOCK TRANSFERS; RECORD DATE
Section 1. Certificates. Every holder of stock in the Corporation
shall be entitled to have a certificate signed by, or in the name of, the
Corporation by the Chief Executive Officer, President or a Vice President and
by the Treasurer or the Secretary certifying the number of shares owned by him
in the Corporation. If the corporation is authorized to issue different classes
of shares or different series within a class, the designations, relative
rights, preferences, and limitations applicable to each class and the
variations in rights, preferences, and limitations determined for each series
(and by the authority of the Board of Directors to determine variations for
future series) shall be summarized on the front or back of each certificate of
shares of such class or series. Alternatively, each certificate may state
conspicuously on its front or back that the corporation will furnish the
stockholder this information on request in writing and without charge. All
certificates for shares shall be consecutively numbered or otherwise
identified. The name and address of the person to whom the shares represented
thereby are issued, with the number of shares and date of issue, shall be
entered on the stock transfer books of the corporation. Any or all of the
signatures on the certificate may be a facsimile. In case any officer, transfer
agent or registrar who has signed or whose facsimile signature has been placed
upon a certificate shall have ceased to be such officer, transfer agent or
registrar before such certificate is issued, it may be issued by the
Corporation as if he were such officer, transfer agent or registrar at the date
of issue. No fractional shares of the Corporation's stock will be issued.
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Section 2. Lost Certificates. The Board of Directors may direct a new
stock certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Corporation alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the owner
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate, the Board of Directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or certificates, or his
legal representative, to give the Corporation a bond in such sum as it may
direct as indemnity against any claim that may be made against the Corporation
with respect to the certificate alleged to have been lost, stolen or destroyed.
Section 3. Transfers of Stock. Upon surrender to the Corporation or
the transfer agent of the Corporation of a certificate for shares accompanied
by proper evidence of authority to transfer, the Corporation shall issue a new
certificate to the person entitled thereto, cancel the old certificate and
record the transaction upon its books.
Section 4. Fixing Record Date.
(a) In order that the Corporation may determine the stockholders entitled
to notice of or to vote at any meeting of stockholders or any adjournment
thereof, the Board of Directors may fix a record date, which record date shall
not precede the date upon which the resolution fixing the record date is
adopted by the Board of Directors, and which record date shall not be more than
sixty nor less than ten days before the date of such meeting. If no record date
is fixed by the Board of Directors, the record date for determining
stockholders entitled to notice of or to vote at a meeting of stockholders
shall be at the close of business on the day next preceding the day on which
notice is given, or, if notice is waived, at the close of business on the day
next preceding the day on
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which the meeting is held. A determination of stockholders of record entitled
to notice of or to vote at a meeting of stockholders shall apply to any
adjournment of the meeting; provided, however, that the Board of Directors may
fix a new record date for the adjourned meeting.
(b) In order that the Corporation may determine the stockholders entitled
to receive payment of any dividend or other distribution or allotment of any
rights or the stockholders entitled to exercise any rights in respect of any
change, conversion or exchange of stock, or for the purpose of any other lawful
action, the Board of Directors may fix a record date, which record date shall
not precede the date upon which the resolution fixing the record date is
adopted, and which record date shall be not more than sixty days prior to such
action. If no record date is fixed, the record date for determining
stockholders for any such purpose shall be at the close of business on the day
on which the Board of Directors adopts the resolution relating thereto.
Section 5. Registered Stockholders. The Corporation shall be entitled
to treat the record holder of any shares of stock of the Corporation as the
owner thereof for all purposes, including all rights deriving from such shares,
and except as required by law shall not be bound to recognize any equitable or
other claim to, or interest in, such shares or rights deriving from such
shares, on the part of any other person, including, but without limiting the
generality thereof, a purchaser, assignee or transferee of such shares or
rights deriving from such shares, unless and until such purchaser, assignee,
transferee or other person becomes the record holder of such shares, whether or
not the Corporation shall have either actual or constructive notice of the
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interest of such purchaser, assignee, transferee or other person. Any such
purchaser, assignee, transferee or other person shall not be entitled to
receive notice of the meetings of stockholders, to vote at such meetings, to
examine a complete list of the stockholders entitled to vote at meetings, or to
own, enjoy, and exercise any other property or rights deriving from such shares
against the Corporation, until such purchaser, assignee, transferee or other
person has become the record holder of such shares.
ARTICLE VII
GENERAL PROVISIONS
Section 1. Fiscal Year. The fiscal year of the Corporation shall be
January 1 to December 31. The Board of Directors shall have the power to change
the fiscal year of the Corporation from time to time.
Section 2. Execution of Instruments. Contracts, deeds, documents and
instruments shall be executed by the officers of the Corporation as set forth
in Article V of these Bylaws, unless the Board of Directors shall, in a
particular situation or as a general direction, designate another procedure for
their execution.
Section 3. Checks and Drafts. The Corporation shall establish a bank
account for deposit of the funds of the Corporation and the drawing of checks
or drafts thereon. All checks or drafts drawn on such account shall require the
signature of one officer of the Corporation. The appointment of additional
signatories of the bank account and the opening of additional bank accounts
shall require the approval of the Board of Directors.
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Section 4. Corporate Seal. The corporate seal, if the directors shall
adopt one, shall have inscribed thereon the name of the Corporation, the year
of its organization and the words "Corporate Seal, Delaware." The seal may be
used by causing it or a facsimile thereof to be impressed, affixed, or
reproduced in any other manner.
Section 5. Indemnification. The Corporation shall indemnify its
officers and directors to the full extent permitted by the General Corporation
Law of the State of Delaware as such may be amended from time to time.
Section 6. Voting Shares in Other Corporations. In the absence of
other arrangements by the Board of Directors, shares of stock issued by any
other corporation and owned or controlled by this Corporation may be voted at
any shareholders' meeting of the other corporation by the Chairman of the Board
of this Corporation or, if he or she is not present at the meeting, by the Vice
Chairman, the Chief Executive Officer, the President or any Vice President of
this Corporation, and in the event none of the Chairman of the Board, the Vice
Chairman of the Board, the Chief Executive Officer, the President or any Vice
President is to be present at a meeting, the shares may be voted by such person
as the Chairman of the Board and the Secretary of this Corporation shall by
duly executed proxy designate to represent this Corporation.
ARTICLE VIII
AMENDMENTS
These Bylaws may be amended, added to, rescinded or repealed (i) by the
affirmative vote of a majority of the Whole Board, or (ii) at any annual or
special meeting of the
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stockholders, provided that notice of the proposed change was given to the
stockholders in accordance with Article II of these Bylaws, by the affirmative
vote of the holders of a majority of the stock issued and outstanding and
entitled to vote at the meeting of stockholders; provided, however, that any
proposed alteration or repeal of, or adoption of any Bylaw inconsistent with,
Sections 5 and 11 of Article II of or Sections 1, 2, 10 and 12 of Article V of
these Bylaws shall require the affirmative vote of the holders of at least 80%
of the issued and outstanding stock entitled to vote at the meeting of
stockholders, voting together as a single class.
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Exhibit 4.2
FORM OF PREFERRED SHARE PURCHASE RIGHTS AGREEMENT
Dated as of _____ __, 1997
Between
CRESCENT OPERATING, INC.
and
THE FIRST NATIONAL BANK OF BOSTON
Rights Agent
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 1. Certain Definitions 1
Section 2. Appointment of Rights Agent 4
Section 3. Issue of Right Certificates 5
Section 4. Form of Right Certificates 6
Section 5. Countersignature and Registration 6
Section 6. Transfer, Split Up, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right
Certificates 7
Section 7. Exercise of Rights; Purchase Price; Expiration
Date of Rights 8
Section 8. Cancellation and Destruction of Right Certificates 9
Section 9. Availability of Preferred Shares 9
Section 10. Preferred Shares Record Date 9
Section 11. Adjustment of Purchase Price, Number of Shares or
Number of Rights 10
Section 12. Certificate of Adjusted Purchase Price or Number
of Shares 16
Section 13. Consolidation, Merger or Sale or Transfer of Assets
or Earning Power 16
</TABLE>
i
<PAGE> 2
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 14. Fractional Rights and Fractional Shares 17
Section 15. Rights of Action 18
Section 16. Agreement of Right Holders 18
Section 17. Right Certificate Holder Not Deemed a Stockholder 19
Section 18. Concerning the Rights Agent 19
Section 19. Merger or Consolidation or Change of
Name of Rights Agent 19
Section 20. Duties of Rights Agent 20
Section 21. Change of Rights Agent 22
Section 22. Issuance of New Right Certificates 22
Section 23. Redemption 22
Section 24. Exchange 23
Section 25. Notice of Events 24
Section 26. Notices 25
Section 27. Supplements and Amendments 25
Section 28. Successors 26
Section 29. Benefits of this Agreement 26
Section 30. Severability 26
Section 31. Governing Law 26
Section 32. Counterparts 26
Section 33. Descriptive Headings 26
Signatures. 27
Exhibit A Form of Certificate of Designations 28
Exhibit B Form of Right Certificate 35
Exhibit C Summary of Rights to Purchase Preferred Shares 41
</TABLE>
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This Rights Agreement (the "Agreement"), dated as of _____ __, 1997, between
Crescent Operating, Inc., a Delaware corporation (the "Company"), and The First
National Bank of Boston as Rights Agent (the "Rights Agent").
The board of directors of the Company (the "Board of Directors") has authorized
and declared a dividend of one preferred share purchase right (a "Right") for
each Common Share (as hereinafter defined) of the Company outstanding on _____
__, 1997 (the "Record Date"), each Right representing the right to purchase one
one-hundredth of a Preferred Share (as hereinafter defined), upon the terms and
subject to the conditions herein set forth, and has further authorized and
directed the issuance of one Right with respect to each Common Share that shall
become outstanding between the Record Date and the earliest of the Distribution
Date, the Redemption Date and the Final Expiration Date (as such terms are
hereinafter defined).
Accordingly, in consideration of the premises and the mutual agreements herein
set forth, the parties hereby agree as follows:
Section 1. Certain Definitions. For purposes of this Agreement, the
following terms have the meanings indicated:
(a) "Acquiring Person" shall mean any Person who or which, together with
all Affiliates and Associates of such Person, shall be the Beneficial
Owner of 10% or more of the Common Shares of the Company then outstanding
but shall not include (i) the Company, (ii) any Subsidiary of the Company,
(iii) any employee benefit plan of the Company or of any Subsidiary of the
Company, or any entity holding Common Shares for or pursuant to the terms
of any such plan, or (iv) Crescent and its affiliates. Notwithstanding
anything in this definition of Acquiring Person to the contrary, no Person
shall become an "Acquiring Person" as the result of an acquisition of
Common Shares by the Company which, by reducing the number of shares
outstanding, increases the proportionate number of shares beneficially
owned by such Person to 10% or more of the Common Shares of the Company
then outstanding; provided, however, that if a Person shall become the
Beneficial Owner of 10% or more of the Common Shares of the Company then
outstanding by reason of share purchases by the Company and shall, after
such share purchases by the Company, become the Beneficial Owner of any
additional Common Shares of the Company, then such Person shall be deemed
to be an "Acquiring Person." Notwithstanding anything in this definition
of Acquiring Person to the contrary, if 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 paragraph (a), has
become such inadvertently, and such Person divests as promptly as
practicable a sufficient number of Common Shares so that such Person would
no longer be an "Acquiring Person," as defined pursuant to the foregoing
provisions of this paragraph (a), then such Person shall not be deemed to
be an "Acquiring Person" for any purposes of this Agreement.
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(b) "Affiliate" shall have the meaning ascribed to such term in Rule 12b-2
of the General Rules and Regulations under the Exchange Act as in effect
on the date of this Agreement .
(c) "Associate" shall have the meaning ascribed to such term in Rule 12b-2
of the General Rules and Regulations under the Exchange Act as in effect
on the date of this Agreement.
(d) A Person shall be deemed the "Beneficial Owner" of and shall be deemed
to "beneficially own" any securities:
(i) which such Person or any of such Person's Affiliates or
Associates beneficially owns, directly or indirectly:
(ii) which such Person or any of such Person's Affiliates or
Associates has (A) the right to acquire (whether such right is
exercisable immediately or only after the passage of time) pursuant
to any agreement, arrangement or understanding (other than customary
agreements with and between underwriters and selling group members
with respect to a bona fide public offering of securities), or upon
the exercise of conversion rights, exchange rights, rights (other
than these Rights), warrants or options, or otherwise; provided,
however, that a Person shall not be deemed the Beneficial Owner of,
or to beneficially own, securities tendered pursuant to a tender or
exchange offer made by or on behalf of such Person or any of such
Person's Affiliates or Associates until such tendered securities are
accepted for purchase or exchange; or (B) the right to vote, or the
right to direct the vote, pursuant to any agreement, arrangement or
understanding; provided, however, that a Person shall not be deemed
the Beneficial Owner of, or to beneficially own, any security, if the
agreement, arrangement or understanding to vote, or direct the vote
of, such security (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 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 with which such Person or any of such Person's
Affiliates or Associates has any agreement, arrangement or
understanding (other than customary agreements with and between
underwriters and selling group members with respect to a bona fide
public offering of securities) for the purpose of acquiring, holding,
voting (except to the extent contemplated by the proviso to Section
1(d)(ii)(B)) or disposing of any securities of the Company.
Notwithstanding anything in this definition of Beneficial Ownership to the
contrary, no Person (and no Affiliate or Associate of any Person) shall at any
time be deemed to be the "Beneficial
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<PAGE> 5
Owner" of or to "beneficially own" any securities if such Person is the
Beneficial Owner of or "beneficially owns" such securities as a result of one
or more agreements, arrangements or understandings with any Crescent Entity
(whether or not the Company or any other Person is a party thereto) and if such
Person would not be the Beneficial Owner of or "beneficially own" such
securities if such agreements, arrangements or understandings were not then in
effect. Notwithstanding anything in this definition of Beneficial Ownership to
the contrary, the phrase "then outstanding," when used with reference to a
Person's Beneficial Ownership of securities of the Company, shall mean the
number of such securities then issued and outstanding together with the number
of such securities not then actually issued and outstanding which such Person
would be deemed to own beneficially hereunder.
(e) "Board of Directors" shall have the meaning set forth in the preamble
hereof.
(f) "Business Day" shall mean any day other than a Saturday, a Sunday, or
a day on which banking institutions in [NEW YORK] are authorized or
obligated by law or executive order to close.
(g) "Close of Business" on any given date shall mean 5:00 P.M., [NEW YORK
TIME], on such date; provided, however, that, if such date is not a
Business Day, it shall mean 5:00 P.M., [NEW YORK TIME], on the next
succeeding Business Day.
(h) "Common Shares" when used with reference to the Company shall mean the
shares of common stock, par value $.01 per share, of the Company. "Common
Shares" when used with reference to any Person other than the Company
shall mean the capital stock (or equity interest) with the greatest voting
power of such other Person or, if such other Person is a Subsidiary of
another Person, the Person or Persons which ultimately control such
first-mentioned Person.
(i) "Company" shall have the meaning set forth in the preamble hereof.
(j) "Current Per Share Market Price" shall have the meaning set forth in
Section 11(d)(i) hereof.
(k) "Rights Distribution Date" shall have the meaning set forth in Section
3 hereof.
(l) "Equivalent Preferred Shares" shall have the meaning set forth in
Section 11(b) hereof.
(m) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(n) "Exchange Ratio" shall have the meaning set forth in Section 24(a)
hereof.
(o) "Final Expiration Date" shall have the meaning set forth in Section
7(a) hereof.
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<PAGE> 6
(p) "Person" shall mean any individual, firm, corporation or other entity,
and shall include any successor (by merger or otherwise) of such entity.
(q) "Preferred Shares" shall mean shares of Series A Junior Participating
Preferred Stock, par value $.01 per share, of the Company having the
rights and preferences set forth in the Form of Certificate of
Designations attached to this Agreement as Exhibit A.
(r) "Purchase Price" shall have the meaning set forth in Section 4 hereof.
(s) "Record Date" shall have the meaning set forth in the preamble hereof.
(t) "Redemption Date" shall have the meaning set forth in Section 7(a)
hereof.
(u) "Redemption Price" shall have the meaning set forth in Section 23(a)
hereof.
(v) "Right" shall have the meaning set forth in the preamble hereof.
(w) "Right Certificate" shall have the meaning set forth in Section 3(a)
hereof.
(x) "Rights Agent" shall have the meaning set forth in the preamble
hereof.
(y) "Security" shall have the meaning set forth in Section 11(d) hereof.
(z) "Shares Acquisition Date" shall mean the first date of public
announcement by the Company or an Acquiring Person that an Acquiring
Person has become such.
(aa) "Subsidiary" of any Person shall mean any corporation or other entity
of which a majority of the voting power of the voting equity securities or
equity interest is owned, directly or indirectly, by such Person.
(bb) "Summary of Rights" shall have the meaning set forth in Section 3(b)
hereof.
(cc) "Trading Day" shall have the meaning set forth in Section 11(d)
hereof.
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 hereof, shall, prior to the Rights Distribution Date
also be the holders of the Common Shares) 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.
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<PAGE> 7
Section 3. Issue of Right Certificates.
(a) Until the earlier of (i) the tenth day after the Shares Acquisition
Date or (ii) the tenth Business Day (or such later date as may be
determined by action of the Board of Directors prior to such time as any
Person becomes an Acquiring Person) after the date of the commencement by
any Person (other than the Company, any Subsidiary of the Company, any
employee benefit plan of the Company or of any Subsidiary of the Company,
any entity holding Common Shares for or pursuant to the terms of any such
plan, or, any Crescent Entity) of, or of the first public announcement of
the intention of any Person (other than the Company, any Subsidiary of the
Company, any employee benefit plan of the Company or of any Subsidiary of
the Company, any entity holding Common Shares for or pursuant to the terms
of any such plan or, any Crescent Entity) to commence, a tender or
exchange offer the consummation of which would result in any Person
becoming the Beneficial Owner of Common Shares aggregating 10% or more of
the then outstanding Common Shares (the earlier of such dates being herein
referred to as the "Rights Distribution Date"), (x) the Rights will be
evidenced (subject to the provisions of Section 3(b) hereof) by the
certificates for Common Shares registered in the names of the holders
thereof (which certificates shall also be deemed to be Right Certificates)
and not by separate Right Certificates, and (y) the right to receive Right
Certificates will be transferable only in connection with the transfer of
Common Shares. As soon as practicable after the Rights Distribution Date,
the Company will prepare and execute, the Rights Agent will countersign,
and the Company will send or cause to be sent (and the Rights Agent will,
if requested, send) by first-class, postage-prepaid mail, to each record
holder of Common Shares as of the Close of Business on the Rights
Distribution Date, at the address of such holder shown on the records of
the Company, a Right Certificate, in substantially the form of Exhibit B
hereto (a "Right Certificate"), evidencing one Right for each Common Share
so held. From and after the Rights Distribution Date, the Rights will be
evidenced solely by such Right Certificates.
(b) On the Record Date, or as soon as practicable thereafter, the Company
will send a copy of a Summary of Rights to Purchase Preferred Shares, in
substantially the form of Exhibit C hereto (the "Summary of Rights"), by
first-class, postage-prepaid mail, to each record holder of Common Shares
as of the Close of Business on the Record Date, at the address of such
holder shown on the records of the Company. With respect to certificates
for Common Shares outstanding as of the Record Date, until the Rights
Distribution Date, the Rights will be evidenced by such certificates
registered in the names of the holders thereof together with a copy of the
Summary of Rights attached thereto. Until the Rights Distribution Date (or
the earlier of the Redemption Date or the Final Expiration Date), the
surrender for transfer of any certificate for Common Shares outstanding on
the Record Date, with or without a copy of the Summary of Rights attached
thereto, shall also constitute the transfer of the Rights associated with
the Common Shares represented thereby.
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<PAGE> 8
(c) Certificates for Common Shares which become outstanding (including,
without limitation, reacquired Common Shares referred to in the last
sentence of this paragraph (c)) after the Record Date but prior to the
earliest of the Rights Distribution Date, the Redemption Date or the Final
Expiration Date, shall have impressed on, printed on, written on or
otherwise affixed to them the following legend:
This certificate also evidences and entitles the holder hereof to
certain rights as set forth in a Rights Agreement between Crescent
Operating, Inc. and The First National Bank Of Boston, dated as of
_____ __, 1997 (the "Rights Agreement"), the terms of which are
hereby incorporated herein by reference and a copy of which is on
file at the principal executive offices of Crescent Operating, Inc.
Under certain circumstances, as set forth in the Rights Agreement,
such Rights will be evidenced by separate certificates and will no
longer be evidenced by this certificate. Crescent Operating, Inc.
will mail to the holder of this certificate a copy of the Rights
Agreement without charge after receipt of a written request therefor.
Under certain circumstances, as set forth in the Rights Agreement,
Rights issued to any Person who becomes an Acquiring Person (as
defined in the Rights Agreement) may become null and void.
With respect to such certificates containing the foregoing legend, until the
Rights Distribution Date, the Rights associated with the Common Shares
represented by such certificates shall be evidenced by such certificates alone,
and the surrender for transfer of any such certificate shall also constitute
the transfer of the Rights associated with the Common Shares represented
thereby. In the event that the Company purchases or acquires any Common Shares
after the Record Date but prior to the Rights Distribution Date, any Rights
associated with such Common Shares shall be deemed cancelled and retired so
that the Company shall not be entitled to exercise any Rights associated with
the Common Shares which are no longer outstanding.
Section 4. Form of Right Certificates. The Right Certificates (and the forms of
election to purchase Preferred Shares and of assignment to be printed on the
reverse thereof) shall be substantially the same as Exhibit B 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 his Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange or automated
quotation system on which the Rights may from time to time be listed, or to
conform to usage. Subject to the provisions of Section 22 hereof, the Right
Certificates shall entitle the holders thereof to purchase such number of one
one-hundredths of a Preferred Share as shall be set forth therein at the price
per one one-hundredth of a Preferred Share set forth therein (the "Purchase
Price"), but the number of such one one-hundredths of a Preferred Share and the
Purchase Price shall be subject to adjustment as provided herein.
Section 5. Countersignature and Registration. The Right Certificates shall be
executed on behalf of the Company by its Chairman of the Board, its Vice
Chairman of the Board, its Chief Executive Officer, its President, any of its
Vice Presidents, or its Treasurer, either manually or by
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<PAGE> 9
facsimile signature, shall have affixed thereto the Company's seal or a
facsimile thereof, and shall be attested by the Secretary or an Assistant
Secretary of the Company, either manually or by facsimile signature. The Right
Certificates shall be manually countersigned by the Rights Agent and shall not
be valid for any purpose unless countersigned. In case any officer of the
Company who shall have signed any of the Right Certificates shall cease to be
such officer of the Company before countersignature by the Rights Agent and
issuance and delivery by the Company, such Right Certificates, nevertheless,
may be countersigned by the Rights Agent and issued and delivered by the
Company with the same force and effect as though the individual who signed such
Right Certificates had not ceased to be such officer of the Company; and any
Right Certificate may be signed on behalf of the Company by any individual who,
at the actual date of the execution of such Right Certificate, shall be a
proper officer of the Company to sign such Right Certificate although at the
date of the execution of this Agreement any such individual was not such an
officer.
Following the Rights Distribution Date, the Rights Agent will keep or cause to
be kept, at its principal office, books for registration and transfer of the
Right Certificates issued hereunder. Such books shall show the names and
addresses of the respective holders of the Right Certificates, the number of
Rights evidenced on its face by each of the Right Certificates and the date of
each of the Right Certificates.
Section 6. Transfer, Split Up, Combination and Exchange of Right Certificates;
Mutilated, Destroyed, Lost or Stolen Right Certificates. Subject to the
provisions of Section 14 hereof, at any time after the Close of Business on the
Rights Distribution Date, and at or prior to the Close of Business on the
earlier of the Redemption Date or the Final Expiration Date, any Right
Certificate or Right Certificates (other than Right Certificates representing
Rights that have become void pursuant to Section 11(a)(ii) hereof or that have
been exchanged pursuant to Section 24 hereof) may be transferred, split up,
combined, or exchanged for another Right Certificate or other Right
Certificates entitling the registered holder to purchase a like number of one
one-hundredths of a Preferred Share as the Right Certificate or Right
Certificates surrendered then entitled such holder to purchase. Any registered
holder desiring to transfer, split up, combine or exchange any Right
Certificate or Right Certificates shall make such request in writing delivered
to the Rights Agent, and shall surrender the Right Certificate or Right
Certificates to be transferred, split up, combined or exchanged at the
principal office of the Rights Agent. Thereupon the Rights Agent shall
countersign and deliver to the Person entitled thereto a Right Certificate or
Right Certificates, as the case may be, as so requested. The Company may
require payment of a sum sufficient to cover any tax or governmental charge
that may be imposed in connection with any transfer, split up, combination or
exchange of Right Certificates.
Upon receipt by the Company and the Rights Agent of evidence reasonably
satisfactory to them of the loss, theft, destruction or mutilation of a Right
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 Right Certificate if mutilated, the Company will make and deliver a new
Right Certificate of like tenor
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<PAGE> 10
to the Rights Agent for delivery to the registered holder in lieu of the Right
Certificate so lost, stolen, destroyed or mutilated.
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Right .
(a) The registered holder of any Right Certificate may exercise the Rights
evidenced thereby (except as otherwise provided herein), in whole or in
part, at any time after the Rights Distribution Date, upon surrender of
the Right Certificate, with the form of election to purchase on the reverse
side thereof duly executed, to the Rights Agent at the principal office of
the Rights Agent, together with payment of the purchase Price for each one
one-hundredth of a Preferred Share as to which the Rights are exercised,
at or prior to the earliest of (i) the Close of Business on _____ __, 2007
(the "Final Expiration Date"), (ii) the time at which the Rights are
redeemed as provided in Section 23 hereof (the "Redemption Date"), or
(iii) the time at which such Rights are exchanged as provided in Section
24 hereof.
(b) The Purchase Price for each one one-hundredth of a Preferred Share
purchasable pursuant to the exercise of a Right shall initially be $[90],
and shall be subject to adjustment from time to time as provided in
Section 11 or 13 hereof and shall be payable in lawful money of the United
States of America in accordance with paragraph (c) below.
(c) Upon receipt of a Right Certificate representing exercisable Rights,
with the form of election to purchase duly executed, accompanied by
payment of the Purchase Price for the shares to be purchased and an amount
equal to any applicable transfer tax required to be paid by the holder of
such Right Certificate in accordance with Section 9 hereof by certified
check, cashier's check or money order payable to the order of the Company,
the Rights Agent shall thereupon promptly (i)(A) requisition from any
transfer agent of the Preferred Shares certificates for the number of
Preferred Shares to be purchased and the Company hereby irrevocably
authorizes any such transfer agent to comply with all such requests, or
(B) requisition from the depositary agent depositary receipts representing
such number of one one-hundredths of a Preferred Share as are to be
purchased (in which case certificates for the Preferred Shares represented
by such receipts shall be deposited by the transfer agent of the Preferred
Shares with such depositary agent) and the Company hereby directs such
depositary agent to comply with such request; (ii) when appropriate,
requisition from the Company the amount of cash to be paid in lieu of
issuance of fractional shares in accordance with Section 14 hereof; (iii)
promptly after receipt of such certificates or depositary receipts, cause
the same to be delivered to or upon the order of the registered holder of
such Right Certificate, registered in such name or names as may be
designated by such holder; and (iv) when appropriate, after receipt,
promptly deliver such cash to or upon the order of the registered holder
of such Right Certificate.
(d) In case the registered holder of any Right Certificate shall exercise
less than all the Rights evidenced thereby, a new Right Certificate
evidencing Rights equivalent to the Rights remaining unexercised shall be
issued by the Rights Agent to the registered holder
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<PAGE> 11
of such Right Certificate or to his duly authorized assigns, subject to
the provisions of Section 14 hereof.
Section 8. Cancellation and Destruction of Right Certificates. All Right
Certificates surrendered for the purpose of exercise, transfer, split up,
combination 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 Right
certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Agreement. The Company shall deliver to the
Rights Agent for cancellation and retirement, and the Rights Agent shall so
cancel and retire, any other Right Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Rights Agent shall
deliver all cancelled Right Certificates to the Company, or shall, at the
written request of the Company, destroy such cancelled Right Certificates, and,
in such case, shall deliver a certificate of destruction thereof to the
Company.
Section 9. Availability of Preferred Shares. The Company covenants and agrees
that it will cause to be reserved and kept available out of its authorized and
unissued Preferred Shares or any Preferred Shares held in its treasury, the
number of Preferred Shares that will be sufficient to permit the exercise in
full of all outstanding Rights in accordance with Section 7. The Company
covenants and agrees that it will take all such action as may be necessary to
ensure that all Preferred Shares delivered upon exercise of Rights shall, at
the time of delivery of the certificates for such Preferred Shares (subject to
payment of the Purchase Price), be duly and validly authorized and issued and
fully paid and nonassessable shares.
The Company further covenants and agrees that it will pay when due and payable
any and all federal and state transfer taxes and charges which may be payable
in respect of the issuance or delivery of the Right Certificates or of any
Preferred Shares upon the exercise of Rights. The Company shall not, however,
be required to pay any transfer tax which may be payable in respect of any
transfer or delivery of Right Certificates to a Person other than, or the
issuance or delivery of certificates or depositary receipts for the Preferred
Shares in a name other than that of, the registered holder of the Right
Certificate evidencing Rights surrendered for exercise or to issue or to
deliver any certificates or depositary receipts for Preferred Shares upon the
exercise of any Rights until any such tax shall have been paid (any such tax
being payable by the holder of such Right Certificate at the time of surrender)
or until it has been established to the Company's reasonable satisfaction that
no such tax is due.
Section 10. Preferred Shares Record Date. Each Person in whose name any
certificate for Preferred Shares is issued upon the exercise of Rights shall
for all purposes be deemed to have become the holder of record of the Preferred
Shares represented thereby on, and such certificate shall be dated, the date
upon which the Right Certificate evidencing such Rights was duly surrendered
and payment of the Purchase Price (and any applicable transfer taxes) was made;
provided, however, that if the date of such surrender and payment is a date
upon which the Preferred Shares transfer books of the Company 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
Preferred Shares transfer books of the Company are open.
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<PAGE> 12
Prior to the exercise of the Rights evidenced thereby, the holder of a Right
Certificate shall not be entitled to any rights of a holder of Preferred Shares
for which the Rights shall be exercisable, including, without limitation, the
right to vote, to receive dividends or other distributions or to exercise any
preemptive rights, and shall not be entitled to receive any notice of any
proceedings of the Company, except as provided herein.
Section 11. Adjustment of Purchase Price, Number of Shares or Number of Rights.
The Purchase Price, the number of Preferred 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) In the event the Company shall at any time after the date of this
Agreement (A) declare a dividend on the Preferred Shares payable in
Preferred Shares, (B) subdivide the outstanding Preferred Shares, (C)
combine the outstanding Preferred Shares into a smaller number of
Preferred Shares or (D) issue any shares of its capital stock in a
reclassification of the Preferred Shares (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing or surviving corporation), except as otherwise
provided in this Section 11(a), the Purchase Price in effect at the time
of the record date for such dividend or of the effective date of such
subdivision, combination or reclassification, and the number and kind of
shares of capital stock issuable on such date, shall be proportionately
adjusted so that the holder of any Right exercised after such time shall
be entitled to receive the aggregate number and kind of shares of capital
stock which, if such Right had been exercised immediately prior to such
date and at a time when the Preferred Shares transfer books of the Company
were open, he would have owned upon such exercise and been entitled to
receive by virtue of such dividend, subdivision, combination or
reclassification; provided, however, that in no event shall the
consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company issuable
upon exercise of one Right.
(ii) Subject to Section 24 of this Agreement, in the event any Person
becomes an Acquiring Person, each holder of a Right shall thereafter
have a right to receive, upon exercise thereof at a price equal to the
then current Purchase Price multiplied by the number of one
one-hundredths of a Preferred Share for which a Right is then
exercisable, in accordance with the terms of this Agreement and in
lieu of Preferred Shares, such number of Common Shares of the Company
as shall equal the result obtained by (A) multiplying the then current
Purchase Price by the number of one one-hundredths of a Preferred
Share for which a Right is then exercisable and dividing that product
by (B) 50% of the then Current Per Share Market Price of the Company's
Common Shares (determined pursuant to Section 11(d)(i) hereof) on the
date of the occurrence of such event. In the event that any Person
shall become an Acquiring Person and the Rights shall then be
outstanding, the Company shall not take any action which would
eliminate or diminish the benefits intended to be afforded by the
Rights.
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<PAGE> 13
From and after the occurrence of such event, any Rights that are or were
acquired or beneficially owned by any Acquiring Person (or any Associate or
Affiliate of such Acquiring Person) shall be void and any holder of such Rights
shall thereafter have no right to exercise such Rights under any provision of
this Agreement. No Right Certificate shall be issued pursuant to Section 3 that
represents Rights beneficially owned by an Acquiring Person whose Rights would
be void pursuant to the preceding sentence, or any Associate or Affiliate
thereof; no Right Certificate shall be issued at any time upon the transfer of
any Rights to an Acquiring Person whose Rights would be void pursuant to the
preceding sentence or any Associate or Affiliate thereof or to any nominee of
such Acquiring Person, Associate or Affiliate; and any Right Certificate
delivered to the Rights Agent for transfer to an Acquiring Person whose Rights
would be void pursuant to the preceding sentence shall be cancelled.
(iii) In the event that there shall not be sufficient Common Shares
issued but not outstanding or authorized but unissued to permit the
exercise in full of the Rights in accordance with the foregoing
subparagraph (ii), the Company shall take all such action as may be
necessary to authorize additional Common Shares for issuance upon
exercise of the Rights. In the event the Company shall, after good
faith effort, be unable to take all such action as may be necessary
to authorize such additional Common Shares, the Company shall
substitute, for each Common Share that would otherwise be issuable
upon exercise of a Right, a number of Preferred Shares or fraction
thereof such that the Current Per Share Market Price of one Preferred
Share multiplied by such number or fraction is equal to the Current
Per Share Market Price of one Common Share as of the date of
issuances of such Preferred Shares or fraction thereof.
(b) In case the Company shall fix a record date for the issuance of
rights, options or warrants to all holders of Preferred Shares entitling
them (for a period expiring within 45 calendar days after such record
date) to subscribe for or purchase Preferred Shares (or shares having the
same rights, privileges and preferences as the Preferred Shares
("equivalent preferred shares")) or securities convertible into Preferred
Shares or equivalent preferred shares at a price per Preferred Share or
equivalent preferred share (or having a conversion price per share, if a
security convertible into Preferred Shares or equivalent preferred shares)
less than the then Current Per Share Market Price of the Preferred Shares
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 record date by a fraction, the numerator of
which shall be the number of Preferred Shares outstanding on such record
date plus the number of Preferred Shares which the aggregate offering
price of the total number of Preferred Shares and/or equivalent preferred
shares so to be offered (and/or the aggregate initial conversion price of
the convertible securities so to be offered) would purchase at such
current market price and the denominator of which shall be the number of
Preferred Shares outstanding on such record date plus the number of
additional Preferred Shares and/or equivalent preferred shares to be
offered for subscription or purchase (or into which the convertible
securities so to be offered are initially convertible); provided, however,
that in no event shall the
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<PAGE> 14
consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of capital stock of the Company issuable
upon exercise of one Right. In case such subscription price may be paid in
a 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, whose determination shall be described in a
statement filed with the Rights Agent and shall be binding on the Rights
Agent and holders of the Rights. Preferred Shares owned by or 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 in the event that 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 the Preferred Shares (including any such
distribution made in connection with a consolidation or merger in which
the Company is the continuing or surviving corporation) of evidences of
indebtedness or assets (other than a regular quarterly cash dividend or a
dividend payable in Preferred Shares) or subscription rights or warrants
(excluding those referred to in Section 11(b) hereof), 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 then Current Per Share
Market Price of the Preferred Shares on such record date, less the fair
market value (as determined in good faith by the Board of Directors, whose
determination shall be described in a statement filed with the Rights
Agent and shall be binding on the Rights Agent and holders of the Rights)
of the portion of the assets or evidences of indebtedness so to be
distributed or of such subscription rights or warrants applicable to one
Preferred Share and the denominator of which shall be such Current Per
Share Market Price of the Preferred Shares; provided, however, that in no
event shall the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital stock of the
Company to be issued upon exercise of one Right. Such adjustments shall be
made successively whenever such a record date is fixed; and in the event
that such distribution is not so made, the Purchase Price shall again 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, the "Current Per
Share Market Price" of any security (a "Security" for the purpose of this
Section 11(d)(i)) on any date shall be deemed to be the average of the
daily closing prices per share of such Security for the 30 consecutive
Trading Days immediately prior to such date; provided, however, that in
the event that the Current Per Share Market Price of the Security is
determined during a period following the announcement by the issuer of
such Security of (A) a dividend or distribution on such Security payable
in shares of such Security or securities convertible into such shares, or
(B) any subdivision, combination or reclassification of such Security and
prior to the expiration of 30 Trading Days 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
Per Share Market Price shall be
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<PAGE> 15
appropriately adjusted to reflect the current market price per share
equivalent of such Security. 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 Security is not listed or
admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which
the Security is listed or admitted to trading or, if the Security is 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 on the Nasdaq
National Market or such other system then in use, or, if on any such date
the Security is 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 Security selected by the Board of Directors. The
term "Trading Day" shall mean a day on which the principal national
securities exchange on which the Security is listed or admitted to trading
is open for the transaction of business or, if the Security is not listed
or admitted to trading on any national Securities exchange, a Business
Day.
(ii) For the purpose of any computation hereunder, the "Current Per
Share Market Price" of the Preferred Shares shall be determined in
accordance with the method set forth in Section 11(d)(i). If the
Preferred Shares are not publicly traded, the "Current Per Share
Market Price" of the Preferred Shares shall be conclusively deemed to
be the Current Per Share Market Price of the Common Shares as
determined pursuant to Section 11(d)(i) (appropriately adjusted to
reflect any stock split, stock dividend or similar transaction
occurring after the date hereof), multiplied by one hundred. If
neither the Common Shares nor the Preferred Shares are publicly held
or so listed or traded, "Current Per Share Market Price" shall mean
the fair value per share as determined in good faith by the Board of
Directors, whose determination shall be described in a statement
filed with the Rights Agent and shall be binding on the Rights Agent
and the holders of the Rights.
(e) 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
one one-millionth of a Preferred Share or one ten-thousandth of any other
share or security as the case may be. Notwithstanding the first sentence
of this Section 11(e), any adjustment required by this Section 11 shall be
made no later than the earlier of (i) three years from the date of the
transaction which requires such adjustment or (ii) the date of the
expiration of the right to exercise any Rights.
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<PAGE> 16
(f) If as a result of an adjustment made pursuant to Section 11(a) hereof,
the holder of any Right thereafter exercised shall become entitled to
receive any shares of capital stock of the Company other than Preferred
Shares, thereafter the number of such other shares so receivable upon
exercise of any Right 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 Shares contained in Section 11(a)
through (c), inclusive, and the provisions of Sections 7, 9, 10 and 13
with respect to the Preferred Shares shall apply on like terms to any such
other shares.
(g) All Rights originally issued by the Company subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right
to purchase, at the adjusted Purchase Price, the number of one
one-hundredths of a Preferred Share purchasable 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 Preferred Share (calculated to the
nearest one one-millionth of a Preferred Share) obtained by (A)
multiplying (x) the number of one one-hundredths of a share covered by a
Right immediately prior to this adjustment by (y) the Purchase Price in
effect immediately prior to such adjustment of the Purchase Price and (B)
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 substitution for any
adjustment in the number of one one-hundredths of a Preferred Share
purchasable 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 Preferred Share for which a Right was
exercisable immediately prior to such adjustment. Each Right held of
record prior to such adjustment of the number of Rights shall become that
number of Rights (calculated to the nearest one 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 Right
Certificates have been issued, shall be at least 10 days later than the
date of the public announcement. If Right 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 Right Certificates on such record date
Right Certificates evidencing, subject to Section 14 hereof, the
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<PAGE> 17
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 Right Certificates held by such holders prior to the date of
adjustment, and upon surrender thereof, if required by the Company, new
Right Certificates evidencing all the Rights to which such holders shall
be entitled after such adjustment. Right Certificates so to be distributed
shall be issued, executed and countersigned in the manner provided for
herein and shall be registered in the names of the holders of record of
Right 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 Preferred Share issuable upon the
exercise of the Rights, the Right Certificates theretofore and thereafter
issued may continue to express the Purchase Price and the number of one
one-hundreths of a Preferred Share which were expressed in the initial
Right Certificates issued hereunder.
(k) Before taking any action that would cause an adjustment reducing the
Purchase Price below one one-hundredth of the then par value, if any, of
the Preferred Shares 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 Preferred Shares 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 issuing to the holder of any Right exercised after such record date of
the Preferred Shares and other capital stock or securities of the
Company, if any, issuable upon such exercise over and above the Preferred
Shares and other capital stock or securities 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 consolidation or subdivision of the Preferred
Shares, issuance wholly for cash of any Preferred Shares at less than the
current market price, issuance wholly for cash of Preferred Shares or
securities which by their terms are convertible into or exchangeable for
Preferred Shares, dividends on Preferred Shares payable in Preferred
Shares or issuance of rights, options or warrants referred to hereinabove
in Section 11(b), hereafter made by the Company to holders of its
Preferred Shares shall not be taxable to such stockholders.
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<PAGE> 18
(n) In the event that at any time after the date of this Agreement and
prior to the Rights Distribution Date, the Company shall (i) declare or
pay any dividend on the Common Shares payable in Common Shares, or (ii)
effect a subdivision, combination or consolidation of the Common Shares
(by reclassification or otherwise than by payment of dividends in Common
Shares) into a greater or lesser number of Common Shares, then in any such
case (A) the number of one one-hundredths of a Preferred Share purchasable
after such event upon proper exercise of each Right shall be determined by
multiplying the number of one one-hundredths of a Preferred Share so
purchasable immediately prior to such event by a fraction, the numerator
of which is the number of Common Shares outstanding immediately before
such event and the denominator of which is the number of Common Shares
outstanding immediately after such event, and (B) each Common Share
outstanding immediately after such event shall have issued with respect to
it that number of Rights which each Common Share outstanding immediately
prior to such event had issued with respect to it. The adjustments
provided for in this Section 11(n) shall be made successively whenever
such a dividend is declared or paid or such a subdivision, combination or
consolidation is effected.
Section 12. Certificate of Adjusted Purchase Price or Number of Shares.
Whenever an adjustment is made as provided in Section 11 or 13 hereof the
Company shall promptly (a) prepare a certificate setting forth such adjustment,
and a brief statement of the facts accounting for such adjustment, (b) file
with the Rights Agent and with each transfer agent for the Common Shares or the
Preferred Shares a copy of such certificate and (c) mail a brief summary
thereof to each holder of a Right Certificate in accordance with Section 25
hereof.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning
Power. In the event, directly or indirectly, at any time after a Person has
become an Acquiring Person, (a) the Company shall consolidate with, or merge
with and into, any other Person, (b) any Person shall consolidate with the
Company, or merge with and into the Company and the Company shall be the
continuing or surviving corporation of such merger and, in connection with such
merger, all or part of the Common Shares shall be changed into or exchanged for
stock or other securities of any other Person (or the Company) or cash or any
other property, or (c) the Company shall sell or otherwise transfer (or one or
more of its Subsidiaries shall sell or otherwise transfer), in one or more
transactions, assets or earning power aggregating 50% or more of the assets or
earning power of the Company and its Subsidiaries (taken as a whole) to any
other Person other than the Company or one or more of its wholly owned
Subsidiaries (except, in the case of each of (a), (b) and (c) above, where such
other Person is a Crescent Entity), then, and in each such case, proper
provision shall be made so that (i) each holder of a Right (except as otherwise
provided herein) shall thereafter have the right to receive, upon the exercise
thereof at a price equal to the then current Purchase Price multiplied by the
number of one one-hundredths of a Preferred Share for which a Right is then
exercisable, in accordance with the terms of this Agreement and in lieu of
Preferred Shares, such number of Common Shares of such other Person (including
the Company as successor thereto or as the surviving corporation) as shall
equal the result obtained by (A) multiplying the then current Purchase Price by
the number of one one-hundredths of a Preferred Share for which a Right is then
exercisable and dividing that product by (B) 50% of the then
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<PAGE> 19
Current Per Share Market Price of the Common Shares of such other Person
(determined pursuant to Section 11(d) hereof) on the date of consummation of
such consolidation, merger, sale or transfer; (ii) the issuer of such Common
Shares shall thereafter be liable for, and shall assume, by virtue of such
consolidation, merger, sale or transfer, all the obligations and duties of the
Company pursuant to this Agreement; (iii) the term "Company" shall thereafter
be deemed to refer to such issuer; and (iv) such issuer shall take such steps
(including, but not limited to, the reservation of a sufficient number of its
Common Shares in accordance with Section 9 hereof) in connection with such
consummation as may be necessary to assure that the provisions hereof shall
thereafter be applicable, as nearly as reasonably may be, in relation to the
Common Shares thereafter deliverable upon the exercise of the Rights. The
Company shall not consummate any such consolidation, merger, sale or transfer
unless prior thereto the Company and such issuer shall have executed and
delivered to the Rights Agent a supplemental agreement so providing. The
Company shall not enter into any transaction of the kind referred to in this
Section 13 if at the time of such transaction there are any rights, warrants,
instruments or securities outstanding or any agreements or arrangements which,
as a result of the consummation of such transaction, would eliminate or
substantially diminish the benefits intended to be afforded by the Rights. The
provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers.
Section 14. Fractional Rights and Fractional Shares. (a) The Company shall not
be required to issue fractions of Rights or to distribute Right Certificates
which evidence fractional Rights. In lieu of such fractional Rights, there
shall be paid to the registered holders of the Right 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 value of a whole Right. For
the purposes of this Section 14(a), the current market value of a whole Right
shall be the closing price of the Rights for the Trading Day immediately prior
to the date on which such fractional Rights would have been otherwise issuable.
The closing price 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 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 Rights are not
listed or admitted to trading on the New York Stock Exchange, as reported in
the principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which the
Rights are listed or admitted to trading or, 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 on the Nasdaq National 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. If on any such date no such market maker is making a
market in the Rights, the fair value of the Rights on such date as determined
in good faith by the Board of Directors shall be used.
(b) The Company shall not be required to issue fractions of Preferred
Shares (other than fractions which are integral multiples of one
one-hundredth of a Preferred Share)
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<PAGE> 20
upon exercise of the Rights or to distribute certificates which evidence
fractional Preferred Shares (other than fractions which are integral
multiples of one one-hundredth of a Preferred Share). Fractions of
Preferred Shares in integral multiples of one one-hundredth of a Preferred
Share may, at the election of the Company, be evidenced by depositary
receipts, pursuant to an appropriate agreement between the Company and a
depositary selected by it; provided that such agreement shall provide that
the holders of such depositary receipts shall have all the rights,
privileges and preferences to which they are entitled as beneficial owners
of the Preferred Shares represented by such depositary receipts. In lieu
of fractional Preferred Shares that are not integral multiples of one
one-hundredth of a Preferred Share, the Company shall pay to the
registered holders of Right Certificates at the time such Rights are
exercised as herein provided an amount in cash equal to the same fraction
of the Current market value of one Preferred Share. For the purposes of
this Section 14(b), the Current market value of a Preferred Share shall be
the closing price of a Preferred Share (as determined pursuant to the
second sentence of Section 11(d)(i) hereof) for the Trading Day
immediately prior to the date of such exercise.
(c) The holder of a Right by the acceptance of the Right expressly waives
his right to receive any fractional Rights or any fractional shares upon
exercise of a Right (except as provided above).
Section 15. Rights of Action. All rights of action in respect of this
Agreement, excepting the rights of action given to the Rights Agent under
Section 18 hereof, are vested in the respective registered holders of the Right
Certificates (and, prior to the Rights Distribution Date, the registered
holders of the Common Shares), and any registered holder of any Right
Certificate (or, prior to the Rights Distribution Date, of the Common Shares),
without the consent of the Rights Agent or of the holder of any other Right
Certificate (or, prior to the Rights Distribution Date, of the Common Shares),
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
Right Certificate in the manner provided in such Right 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:
(a) prior to the Rights Distribution Date, the Rights will be transferable
only in connection with the transfer of the Common Shares;
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<PAGE> 21
(b) after the Rights Distribution Date, the Right Certificates are
transferable only on the registry books of the Rights Agent if surrendered
at the principal office of the Rights Agent, duly endorsed or accompanied
by a proper instrument of transfer; and
(c) the Company and the Rights Agent may deem and treat the person in
whose name the Right Certificate (or, prior to the Rights Distribution
Date, the associated Common Shares Certificate) is registered as the
absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Right
Certificate or the associated Common Shares Certificate made by anyone
other than the Company or the Rights Agent) for all purposes whatsoever,
and neither the Company nor the Rights Agent shall be affected by any
notice to the contrary.
Section 17. Right Certificate Holder Not Deemed a Stockholder. No holder, as
such, of any Right Certificate shall be entitled to vote, receive dividends or
be deemed for any purpose the holder of the Preferred Shares or any other
securities of the Company which may at any time be issuable on the exercise of
the Rights represented thereby, nor shall anything contained herein or in any
Right Certificate be construed to confer upon the holder of any Right
Certificate, as such, any of the rights of a stockholder of the Company or any
right to vote for the election of directors or upon any matter submitted to
stockholders at any meeting thereof or to give or withhold consent to any
corporate action, or to receive notice of meetings or other actions affecting
stockholders (except as provided in Section 25 hereof), or to receive dividends
or subscription rights, or otherwise, until the Right or Rights evidenced by
such Right Certificate shall have been exercised in accordance with the
provisions hereof.
Section 18. Concerning the Rights Agent. The Company agrees to pay to the
Rights Agent reasonable compensation for all services tendered by it hereunder
and, from time to time, on demand of the Rights Agent, its reasonable expenses
arid counsel fees and other disbursements incurred in the administration and
execution 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 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, including the costs and
expenses of defending against any claim of liability in the premises. 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 its
administration of this Agreement in reliance upon any Right Certificate or
certificate for the Preferred Shares or Common Shares or for other securities
of the Company, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement, or other paper or document believed by it to be genuine and to be
signed, executed and, where necessary, verified or acknowledged, by the proper
person or persons, or otherwise upon the advice of counsel as set forth in
Section 20 hereof.
Section 19. Merger or Consolidation or Change of Name of Rights Agent. Any
corporation into which the Rights Agent or any successor Rights Agent may
be merged or with which it may
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<PAGE> 22
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 stock transfer or corporate trust powers 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 that such
corporation would be eligible for appointment as a successor Rights Agent under
the provisions of Section 21 hereof. In case at the time such successor Rights
Agent shall succeed to the agency created by this Agreement, any of the Right
Certificates shall have been countersigned but not delivered, and such
successor Rights Agent may adopt the countersignature of the predecessor Rights
Agent and deliver such Right Certificates so countersigned; and, in case at
that time any of the Right Certificates shall not have been countersigned, any
successor Rights Agent may countersign such Right 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 Right Certificates shall have the full force
provided in the Right Certificates and in this Agreement. In case at any time
the name of the Rights Agent shall be changed and at such time any of the Right
Certificates shall have been countersigned but not delivered, the Rights Agent
may adopt the countersignature under its prior name and deliver Right
Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, the Rights Agent may
countersign such Right Certificates either in its prior name or in its changed
name, and in all such cases such Right Certificates shall have the full force
provided in the Right 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 Right Certificates, by their
acceptance thereof, shall be bound:
(a) The Rights Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel shall be full
and complete authorization and protection to the Rights Agent as to any
action taken or omitted by it in good faith and in accordance with such
opinion.
(b) Whenever in the performance of its duties under this Agreement the
Rights Agent shall deem it necessary or desirable that any fact or matter
be proved or established by the Company prior to taking or suffering any
Section hereunder, such fact or matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be
conclusively proved and established by a certificate signed by any one of
the Chairman of the Board, the Chief Executive Officer, the President, any
Vice President, the Treasurer or the Secretary of the Company and
delivered to the Rights Agent and such certificate shall be full
authorization to the Rights Agent for any action taken or suffered in good
faith by it under the provisions of this Agreement in reliance upon such
certificate.
(c) The Rights Agent shall be liable hereunder to the Company and any
other Person 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 Right
Certificates (except its
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<PAGE> 23
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 Right 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 Right Certificate, nor shall it be responsible for any change in the
exercisability of the Rights (including the Rights becoming void pursuant
to Section 11(a)(ii) hereof) or any adjustment in the terms of the Rights
(including the manner, method or amount thereof) provided for in Section
3, 11, 13, 23 or 24, or the ascertaining of the existence of facts that
would require any such change or adjustment (except with respect to the
exercise of Rights evidenced by Right Certificates after actual notice
that such change or adjustment is required); nor shall it by any act
hereunder be deemed to make any representation or warranty as to the
authorization or reservation of any Preferred Shares to be issued pursuant
to this Agreement or any Right Certificate or as to whether any Preferred
Shares will, when issued, be validly authorized and 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
any one of the Chairman of the Board, the Chief Executive Officer, the
President, any Vice President, the Secretary or the Treasurer of the
Company, and to apply to such officers for advice or instructions in
connection with its duties, and it shall not be liable for any action
taken or suffered by it in good faith in accordance with instructions of
any such officer or for any delay in acting while waiting for those
instructions.
(h) The Rights Agent and any stockholder, director, officer or employee of
the Rights Agent may buy, sell or deal in any of the Rights or 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 Rights Agent under this Agreement. Nothing herein shall
preclude the Rights Agent from acting in any other capacity for the
Company or for any other legal entity.
(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
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<PAGE> 24
resulting from any such act, default, neglect or misconduct, provided
reasonable care was exercised in the selection and continued employment
thereof.
Section 21. Change o Rights Agent. The Rights Agent or any successor Rights
Agent may resign and be discharged from its duties under this Agreement upon 30
days' notice in writing mailed to the Company and to each transfer agent of the
Common Shares or Preferred Shares by registered or certified mail, and to the
holders of the Right Certificates by first-class mail. The Company may remove
the Rights Agent or any successor Rights Agent upon 30 days' notice in writing,
mailed to the Rights Agent or successor Rights Agent, as the case may be, and
to each transfer agent of the Common Shares or Preferred Shares by registered
or certified mail, and to the holders of the Right 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
after giving notice of such removal or after it has been notified in writing of
such resignation or incapacity by the resigning or incapacitated Rights Agent
or by the holder of a Right Certificate (who shall, with such notice, submit
his Right Certificate for inspection by the Company), then the registered
holder of any Right Certificate may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any appointment of a
successor Rights Agent by such a court shall be subject to the prior approval
of the Company, which approval shall not be unreasonably withheld. 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 Shares
or Preferred Shares, and mail a notice thereof in writing to the registered
holders of the Right Certificates. Failure to give any notice provided for in
this Section 21, however, or any defect therein, shall not affect the legality
or validity of the resignation or removal of the Rights Agent or the
appointment of the successor Rights Agent, 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 Right Certificates evidencing Rights in such form as
may be approved by the 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 or property purchasable under the Right Certificates made in
accordance with the provisions of this Agreement.
Section 23. Redemption. (a) The Board of Directors may, at its option, at any
time prior to such time as any Person becomes an Acquiring Person, redeem all
but not less than all the then outstanding Rights at a redemption price of $.01
per Right, appropriately adjusted to reflect any stock split, stock dividend or
similar transaction occurring after the date
hereof (such redemption price being hereinafter referred to as the "Redemption
Price"). The redemption of the Rights by
22
<PAGE> 25
the Board of Directors may be made effective at such time, on such basis and
with such conditions as the Board of Directors, in its sole discretion, may
establish.
(b) Immediately upon the action of the Board of Directors ordering the
redemption of the Rights pursuant to paragraph (a) of this Section 23, and
without any further action and without any notice, the right to exercise
the Rights will terminate and the only right thereafter of the holders of
Rights shall be to receive the Redemption Price. The Company shall
promptly give public notice of any such redemption; provided, however,
that the failure to give, or any defect in, any such notice shall not
affect the validity of such redemption. Within 10 days after such action
of the Board of Directors ordering the redemption of the Rights, the
Company shall mail a notice of redemption to all the holders of the then
outstanding Rights at their last addresses as they appear upon the
registry books of the Rights Agent or, prior to the Rights Distribution
Date, on the registry books of the transfer agent for the Common Shares.
Any notice which is mailed in the manner herein provided shall be deemed
given, whether or not the holder receives the notice. Each such notice of
redemption will state the method by which the payment of the Redemption
Price will be made. Neither the Company nor any of its Affiliates or
Associates may redeem, acquire or purchase for value any Rights at any
time in any manner other than that specifically set forth in this Section
23 or in Section 24 hereof, and other than in connection with the purchase
of Common Shares prior to the Rights Distribution Date.
Section 24. Exchange. (a) The Board of Directors may, at its option, at any
time after any Person becomes an Acquiring Person, exchange all or part of the
then outstanding and exercisable Rights (which shall not include Rights that
have become void pursuant to the provisions of Section 11(a)(ii) hereof) for
Common Shares at an exchange ratio of one Common Share 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"). Notwithstanding the foregoing, the Board of
Directors shall not be empowered to effect such exchange at any time after any
Person (other than the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company or any entity
holding Common Shares for or pursuant to the terms of any such plan or, any
Crescent Entity), together with all Affiliates and Associates of such Person,
becomes the Beneficial Owner of 50% or more of the Common Shares then
outstanding.
(b) Immediately upon the action of the Board of Directors ordering the
exchange of any Rights pursuant to paragraph (a) of this Section 24 and
without any further action and without any notice, the right to exercise
such Rights shall terminate and the only right thereafter of a holder of
such Rights shall be to receive that number of Common Shares equal to the
number of such Rights held by such holder multiplied by the Exchange
Ratio. The Company shall promptly give public notice of any such exchange;
provided, however, that the failure to give, or any defect in, such notice
shall not affect the validity of such exchange. The Company promptly shall
mail a notice of any such exchange to all of the holders of such Rights at
their last addresses as they appear upon the registry books
23
<PAGE> 26
of the Rights Agent. Any notice which is mailed in the manner herein
provided shall be deemed given, whether or not the holder receives the
notice. Each such notice of exchange will state the method by which the
exchange of the Common Shares for Rights will be effected and, in the
event of any partial exchange, the number of Rights which will be
exchanged. Any partial exchange shall be effected pro rata based on the
number of Rights (other than Rights which have become void pursuant to the
provisions of Section 11(a)(ii) hereof) held by each holder of Rights.
(c) In the event that there shall not be sufficient Common Shares issued
but not outstanding or authorized but unissued to permit any exchange of
Rights as contemplated in accordance with this Section 24, the Company
shall take all such action a may be necessary to authorize additional
Common Shares for issuance upon exchange of the Rights. In the event the
Company shall, after good faith effort, be unable to take all such action
as may be necessary to authorize such additional Common Shares, the
Company shall substitute, for each Common Share that would otherwise be
issuable upon exchange of a Right, a number of Preferred Shares or
fraction thereof such that the Current Per Share Market Price of one
Preferred Share multiplied by such number or fraction is equal to the
Current Per Share Market Price of one Common Share as of the date of
issuance of such Preferred Shares or fraction thereof.
(d) The Company shall not be required to issue fractions of Common Shares
or to distribute certificates which evidence fractional Common Shares. In
lieu of such fractional Common Shares, the Company shall pay to the
registered holders of the Right Certificates with regard to which such
fractional Common Shares would otherwise be issuable an amount in cash
equal to the same fraction of the current market value of a whole Common
Share. For the purposes of this paragraph (d), the current market value of
a whole Common Share shall be the closing price of a Common Share (as
determined pursuant to the second sentence of Section 11(d)(i) hereof) for
the Trading Day immediately prior to the date of exchange pursuant to this
Section 24.
Section 25. Notice of Events. (a) In case the Company shall propose (i) to pay
any dividend payable in stock of any class to the holders of its Preferred
Shares or to make any other distribution to the holders of its Preferred Shares
(other than a regular quarterly cash dividend), (ii) to offer to the holders of
its Preferred Shares rights or warrants to subscribe for or to purchase any
additional Preferred Shares or shares of stock of any class or any other
securities, rights or options, (iii) to effect any reclassification of its
Preferred Shares (other than a reclassification involving only the subdivision
of outstanding Preferred Shares), (iv) to effect any consolidation or merger
into or with, or to effect any sale or other transfer (or to permit one or more
of its Subsidiaries to effect any sale or other transfer), in one or more
transactions, of 50% or more of the assets or earning power of the Company and
its Subsidiaries (taken as a whole) to, any other Person, (v) to effect the
liquidation, dissolution or winding up of the Company, or (vi) to declare or
pay any dividend on the Common Shares payable in Common Shares or to effect a
subdivision, combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends in Common Shares),
then, in each such case, the Company shall give to each holder of a Right
Certificate, in accordance with Section 26 hereof, a
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<PAGE> 27
notice of such proposed action, which shall specify the record date for the
purposes of such Stock dividend, or distribution of rights or warrants, or the
date on which such reclassification, consolidation, merger, sale, transfer,
liquidation, dissolution, or winding up is to take place and the date of
participation therein by the holders of the Common Shares and/or Preferred
Shares, 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 10 days
prior to the record date for determining holders of the Preferred Shares for
purposes of such action, and in the case of any such other action, at least 10
days prior to the date of the taking of such proposed action or the date of
participation therein by the holders of the Common Shares and/or Preferred
Shares, whichever shall be the earlier.
(b) In case the event set forth in Section 11(a)(ii) hereof shall occur,
then the Company shall as soon as practicable thereafter give to each
holder of a Right Certificate, in accordance with Section 26 hereof, a
notice of the occurrence of such event, which notice shall describe such
event and the consequences of such event to holders of Rights under
Section 11(a)(ii) hereof.
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 Certificate to
or on the Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed (until another address is filed in writing
with the Rights Agent) as follows:
Crescent Operating, Inc.
777 Main Street, Suite 2100
Fort Worth, Texas 76102
Attention: Corporate Secretary
Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Company or by the holder of any
Right Certificate to or on the Rights Agent shall be sufficiently given or made
it sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Company) as follows:
The First National Bank of Boston
400 Perimeter Center Terrace, Suite 745
Atlanta, Georgia 30346
Notices or demands authorized by this Agreement to be given or made by the
Company or the Rights Agent to the holder of any Right Certificate shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed to such holder at the address of such holder as shown on the registry
books of the Rights Agent.
Section 27. Supplements and Amendments. The Company may from time to time
supplement or amend this Agreement without the approval of any holders of Right
Certificates in order to cure any ambiguity, to correct or supplement any
provision contained herein which may be defective or inconsistent with any
other provisions herein, or to make any other provisions with
25
<PAGE> 28
respect to the Rights which the Company may deem necessary or desirable, any
such supplement or amendment to be evidenced by a writing signed by the Company
and the Rights Agent; provided, however, that from and after such time as any
Person becomes an Acquiring Person, this Agreement shall not be amended in any
manner which would adversely affect the interests of the holders of Rights.
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. 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 Right Certificates (and, prior to the Rights
Distribution Date, the Common Shares) 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 Right Certificates (and, prior to the Rights Distribution Date, the
Common Shares).
Section 30. Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction or other authority
to be invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
Section 31. Governing Law. This Agreement and each Right Certificate issued
hereunder shall be deemed to be a contract made under the laws of the State of
Delaware and for all purposes shall be governed by and construed in accordance
with the laws of such State applicable to contracts to be made and performed
entirely within such State.
Section 32. 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 but one and
the same instrument.
Section 33. Descriptive Headings. Descriptive headings of the several Sections
of this Agreement are inserted for convenience only and shall not control or
affect the meaning or construction of any of the provisions hereof.
26
<PAGE> 29
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and attested, all as of the day and year first above written.
Attest: CRESCENT OPERATING, INC.
By By
Name: Name:
Title: Title:
Attest: THE FIRST NATIONAL BANK OF BOSTON
By By
Name: Name:
Title: Title:
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<PAGE> 30
Exhibit A
FORM
of
CERTIFICATE OF DESIGNATIONS
of
SERIES A JUNIOR PARTICIPATING PREFERRED STOCK
of
CRESCENT OPERATING, INC.
(Pursuant to Section 151 of the Delaware General Corporation Law)
Crescent Operating, Inc., a corporation organized and existing under the
General Corporation Law of the State of Delaware (hereinafter called the
"Corporation"), hereby certifies that the following resolution was adopted by
the Board of Directors of the Corporation as required by Section 151 of the
General Corporation Law at a meeting duly called and held on _____ _, 1997:
RESOLVED, that pursuant to the authority granted to and vested in the Board of
Directors of this Corporation (hereinafter called the "Board of Directors" or
the "Board") in accordance with the provisions of the Certificate of
Incorporation, the Board of Directors hereby creates a series of Preferred
Stock, par value $.01 per share, of the Corporation (the "Preferred Stock") and
hereby states the designation and number of shares, and fixes the relative
rights, preferences, and limitations thereof as follows:
Series A Junior Participating Preferred Stock:
Section 1. Designation and Amount. The shares of such series shall be
designated as "Series A Junior Participating Preferred Stock" (the "Series A
Preferred Stock") and the number of shares constituting the Series A Preferred
Stock shall be _________. Such number o shares may be increased or decreased by
resolution of the Board of Directors; provided, 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 reserved for
issuance upon the exercise of outstanding options, rights or warrants or upon
the conversion of any outstanding securities issued by the Corporation
convertible into Series A Preferred Stock.
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<PAGE> 31
Section 2. Dividends and Distributions.
(a) Subject to the rights of the holders of any shares of any series of
Preferred Stock (or any similar stock) ranking prior and superior to the
Series A Preferred Stock with respect to dividends, the holders of shares
of Series A Preferred Stock, in preference to the holders of Common Stock,
par value $.01 per share (the "Common Stock"), of the Corporation, and of
any other junior 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 in cash on the first day of March,
June, September and December in 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 a 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 (i) $1 or (ii)
subject to the provision for adjustment hereinafter set forth, 100 times
the aggregate per share amount of all cash dividends, and 100 times the
aggregate per share amount (payable in kind) of all non-cash dividends or
other distributions, other than a dividend payable in shares of Common
Stock or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock since 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. In the event the
Corporation shall at any time declare or pay any dividend on the 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 than by payment of a dividend in shares of
Common Stock) into a greater or lesser number of shares of Common Stock,
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
(ii) 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 paragraph (a) of this Section immediately
after it declares a dividend or distribution on the Common Stock (other
than a dividend payable in shares of Common Stock); provided that, in the
event 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, a dividend of $1 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, unless the date of
issue of such shares is prior to the record date for
29
<PAGE> 32
the first Quarterly Dividend Payment Date, in which case dividends on such
shares shall begin to accrue from the date of issue of such shares, or
unless the date of issue is a Quarterly Dividend Payment Date or 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 before such
Quarterly Dividend Payment Date, in either of which events such 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 the 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 be not more than 60 days prior
to the date fixed for the payment thereof.
Section 3. Voting Rights. 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 vote of the stockholders of the
Corporation. In the event the Corporation shall at any time declare or pay
any dividend on the 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 than by payment
of a dividend in shares of Common Stock) 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, in any other Certificate of
Designations creating a series of Preferred Stock or any similar stock, or
by law, the holders of shares of Series A Preferred Stock and the holders
of shares of Common Stock and any other capital stock of the Corporation
having general voting rights shall vote together as one class on all
matters submitted to a vote of stockholders of the Corporation.
(c) Except as set forth herein, or as otherwise provided by law, 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.
30
<PAGE> 33
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 shares of Series A Preferred
Stock outstanding shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends, 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, 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 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 or purchase or otherwise acquire for consideration
shares of any stock ranking junior (either as to dividends or upon
liquidation, dissolution or winding up) to the Series A Preferred
Stock, provided that the Corporation may at any time redeem, purchase
or otherwise acquire shares of any such junior stock in exchange for
shares of any stock of the Corporation ranking junior (either as to
dividends or upon dissolution, liquidation or winding up) to the
Series A Preferred Stock; or
(iv) redeem or purchase or otherwise acquire for consideration any
shares of Series A Preferred Stock, or any shares of stock ranking on
a parity 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 such shares upon such terms
as the Board of Directors, after consideration of the respective
annual dividend rates and other relative rights and preferences of
the respective series and classes, shall determine in good faith will
result in fair and equitable treatment among the respective series or
classes.
(b) The Corporation shall not permit any subsidiary of the Corporation to
purchase or otherwise acquire for consideration any shares of stock of the
Corporation unless the Corporation could, under paragraph (a) of this
Section 4, purchase or otherwise acquire such shares at such time and in
such manner.
Section 5. Reacquired Shares. Any shares of Series A Preferred Stock
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 and may be reissued as part of a new series of Preferred Stock
31
<PAGE> 34
subject to the conditions and restrictions on issuance set forth herein, in the
Certificate of Incorporation, or in any other Certificate of Designations
creating a series of Preferred Stock or any similar stock or as otherwise
required by 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 $100 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 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 shares of Common
Stock, or (2) to the holders of 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 distributions made ratably on the Series A Preferred
Stock and all such 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. In the event the Corporation shall at any time declare or pay any
dividend on the 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 than by payment of a dividend in shares
of Common Stock) 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, Merger, etc. In case 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 and/or any other property, then in any such case each share of Series A
Preferred Stock shall at the same time be similarly exchanged 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
and/or any other property (payable in kind), as the case may be, into which or
for which each share of Common Stock is changed or exchanged. In the event the
Corporation shall at any time declare or pay any dividend on the 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 than by payment of a dividend in shares of Common Stock) 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
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<PAGE> 35
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
Section 8. No Redemption. The shares of Series A Preferred Stock shall not be
redeemable.
Section 9. Rank. The Series A Preferred Stock shall rank, with respect to the
payment of dividends and the distribution of assets, junior to all series of
any other class of the Corporation's Preferred Stock.
Section 10. Amendment. The Certificate of Incorporation of the Corporation
shall not be 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 at least
two-thirds of the outstanding shares of Series A Preferred Stock, voting
together as a single class.
33
<PAGE> 36
IN WITNESS WHEREOF, this Certificate of Designations is executed on behalf of
the Corporation by its _______________________ and attested by its
_________________ this ____ day of _________________, 1997.
Attest:
34
<PAGE> 37
Exhibit B
Form of Right Certificate
Certificate No. R-
_________________ Rights
NOT EXERCISABLE AFTER _____ __, 2007 OR EARLIER IF
REDEMPTION OR EXCHANGE OCCURS. THE RIGHTS ARE
SUBJECT TO REDEMPTION AT $.01 PER RIGHT AND TO
EXCHANGE ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
Right Certificate
CRESCENT OPERATING, INC.
This certifies that ______________ or registered assigns, is the registered
owner of the number of Rights set forth above, each of which entities the owner
thereof, subject to the terms, provisions and conditions of the Rights
Agreement, dated as of _____ __, 1997 (the "Rights Agreement"), between
Crescent Operating, Inc., a Delaware corporation (the "Company"), and The First
National Bank Of Boston (the "Rights Agent"), to purchase from the Company at
any time after the Rights Distribution Date (as such term is defined in the
Rights Agreement) and prior to 5:00 P.M., New York time, on _____ __, 2007 at
the principal office of the Rights Agent, or at the office of its successor as
Rights Agent, one one-hundredth of a fully paid non-assessable share of Series
A Junior Participating Preferred Stock, par value $.01 per share, of the
Company (the "Preferred Shares"), at a purchase price of $__ per one
one-hundredth of a Preferred Share (the "Purchase Price"), upon presentation
and surrender of this Right Certificate with the Form of Election to Purchase
duly executed. The number of Rights evidenced by this Right Certificate (and
the number of one one-hundredths of a Preferred Share which may be purchased
upon exercise hereof) set forth above, and the Purchase Price set forth above,
are the number and Purchase Price as of _____ __, 1997, based on the Preferred
Shares as constituted at such date. As provided in the Rights Agreement, the
Purchase Price and the number of one one-hundredths of a Preferred Share which
may be purchased upon the exercise of the Rights evidenced by this Right
Certificate are subject to modification and adjustment upon the happening of
certain events.
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 Right Certificates. Copies of
the Rights Agreement are on file at the principal executive offices of the
Company and the offices of the Rights Agent.
35
<PAGE> 38
This Right Certificate, with or without other Right Certificates, upon
surrender at the principal office of the Rights Agent, may be exchanged for
another Right Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number of
Preferred Shares as the Rights evidenced by the Right Certificate or Right
Certificates surrendered shall have entitled such holder to purchase. If this
Right Certificate shall be exercised in part, the holder shall be entitled to
receive upon surrender hereof another Right Certificate or Right Certificates
for the number of whole Rights not exercised.
Subject to the provisions of the Rights Agreement, the Rights evidenced by this
Right Certificate (i) may be redeemed by the Company at a redemption price of
$.01 per Right or (ii) may be exchanged in whole or in part for Preferred
Shares or shares of the Company's Common Stock.
No fractional Preferred Shares will be issued upon the exercise of any Right or
Rights evidenced hereby (other than fractions which are integral multiples of
one one-hundredth of a Preferred Share, which may, at the election of the
Company, be evidenced by depositary receipts), but, in lieu thereof, a cash
payment will be made, as provided in the Rights Agreement.
No holder of this Right Certificate shall be entitled to vote or receive
dividends or be deemed for any purpose the holder of the Preferred Shares or of
any other securities of the Company which may at any time be issuable on the
exercise hereof, nor shall anything contained in the Rights Agreement or herein
be construed to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote for the election of directors
or upon any matter submitted to stockholders at any meeting thereof, or to give
or withhold consent to any corporate action, or to receive notice of meetings
or other actions affecting stockholders (except as provided in the Rights
Agreement), or to receive dividends or subscription rights, or otherwise, until
the Right or Rights evidenced by this Right Certificate shall have been
exercised as provided in the Rights Agreement.
This Right Certificate shall not be valid or obligatory for any purpose until
it shall have been countersigned by the Rights Agent.
36
<PAGE> 39
WITNESS the facsimile signature of the proper officers of the Company and its
corporate seal. Dated as of ________________________.
ATTEST: CRESCENT OPERATING, INC.
By: By:
Name: Name:
Title: Title:
Countersigned: BOSTON EQUISERVE LIMITED
PARTNERSHIP
By:
Name:
Title:
37
<PAGE> 40
Form of Reverse Side of Right Certificate
FORM OF ASSIGNMENT
(To be executed by the registered holder if
such holder desires to transfer the Right Certificate.)
FOR VALUE RECEIVED __________________ hereby sells, assigns and transfers unto
________________________________________________________________________________
(Please print name and address of transferee)
this Right Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint Attorney, to transfer the
within Right certificate on the books of the within-named Company, with full
power of substitution.
Dated: ____________________________
Signature
Signature Guaranteed:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States or by another eligible guarantor
institution, as defined in Rule 17Ad-15 under the Securities Exchange Act of
1934.
The undersigned hereby certifies that the Rights evidenced by this Right
Certificate are not beneficially owned by an Acquiring Person or an Affiliate
or Associate thereof (as defined in the Rights Agreement).
Signature
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<PAGE> 41
Form of Reverse Side of Right Certificate -- continued
FORM OF ELECTION TO PURCHASE
(To be executed if holder desires to exercise
Rights represented by the Right Certificate.)
To: CRESCENT OPERATING, INC.
The undersigned hereby irrevocably elects to exercise ______________ Rights
represented by this Right Certificate to purchase the Preferred Shares issuable
upon the exercise of such Rights and requests that certificates for such
Preferred Shares be issued in the name of:
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 Right
Certificate, a new Right Certificate for the balance remaining 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:
Signatures must be guaranteed by a member firm of a registered national
securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States or by another eligible guarantor
institution, as defined in Rule 17Ad-15 under the Securities Exchange Act of
1934.
The undersigned hereby certifies that the Rights evidenced by this Right
Certificate are not beneficially owned by an Acquiring Person or an Affiliate
or Associate thereof (as defined in the Rights Agreement).
39
<PAGE> 42
Signature
NOTICE
The signature in the Form of Assignment or Form of Election to Purchase, as the
case may be, must conform to the name as written upon the face of this Right
Certificate in every particular, without alteration or enlargement or any
change whatsoever.
In the event the certification set forth above in the Form of Assignment or the
Form of Election to Purchase, as the case may be, is not completed, the Company
and the Rights Agent will deem the beneficial owner of the Rights evidenced by
this Right Certificate to be an Acquiring Person or an Affiliate or Associate
thereof (as defined in the Rights Agreement) and such Assignment or Election to
Purchase will not be honored.
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<PAGE> 43
Exhibit C
SUMMARY OF RIGHT TO PURCHASE
PREFERRED SHARES
On _____ __, 1997, the Board of Directors of Crescent Operating, Inc. (the
"Company") declared a dividend of one preferred share purchase right (a
"Right") for each outstanding share of common stock, par value $.01 per share,
of the Company (the "Common Shares"). The dividend is payable on _____ __, 1997
(the "Record Date") to the stockholders of record on that date. Each Right
entitles the registered holder to purchase from the Company one one-hundredth
of a share of Series A Junior Participating Preferred Stock, par value $.01 per
share, of the Company (the "Preferred Shares") at a price of $[90] per one
one-hundredth of a Preferred Share (the "Purchase Price"), subject to
adjustment. The description and terms of the Rights are set forth in a Rights
Agreement (the "Rights Agreement") between the Company and The First National
Bank Of Boston, as Rights Agent (the "Rights Agent").
Until the earlier to occur of (i) 10 days following a public announcement that
a person or group of affiliated or associated persons (an "Acquiring Person")
has acquired beneficial ownership of 10% or more of the outstanding Common
Shares or (ii) 10 business days (or such later date as may be determined by
action of the Board of Directors of the Company prior to such time as any
person or group of affiliated persons becomes an Acquiring Person) following
the commencement of, or announcement of an intention to make, a tender offer or
exchange offer the consummation of which would result in the beneficial
ownership by a person or group of 10% or more of the outstanding Common Shares
(the earlier of such dates being the "Rights Distribution Date"), the Rights
will be evidenced, with respect to any of the Common Share certificates
Outstanding as of the Record Date, by such Common Share certificate with a copy
of this Summary of Rights attached thereto. The Rights Agreement contains
exceptions from its operating provision for Crescent and its affiliates and
associates.
The Rights Agreement provides that, until the Rights Distribution Date (or
earlier redemption or expiration of the Rights), the Rights will be transferred
with and only with the Common Shares. Until the Rights Distribution Date (or
earlier redemption or expiration of the Rights), new Common Share certificates
issued after the Record Date upon transfer or new issuance of Common Shares
will contain a notation incorporating the Rights Agreement by reference. Until
the Rights Distribution Date (or earlier redemption or expiration of the
Rights), the surrender for transfer of any certificates for Common Shares
outstanding as of the Record Date, even without such notation or a copy of this
Summary of Rights being attached thereto, will also constitute the transfer of
the Rights associated with the Common Shares represented by such certificates.
As soon as practicable following the Rights Distribution Date, separate
certificates evidencing the Rights ("Right Certificates") will be mailed to
holders of record of the Common Shares as of the close of business on the
Rights Distribution Date and such separate Right Certificates alone will
evidence the Rights.
41
<PAGE> 44
The Rights are not exercisable until the Rights Distribution Date. The Rights
will expire on ______ __, 2007 (the "Final Expiration Date"), unless the Final
Expiration Date is extended or unless the Rights are earlier redeemed or
exchanged by the Company, in each case, as described below.
The Purchase Price payable, and the number of Preferred Shares or other
securities or property issuable, upon exercise of the Rights are subject to
adjustment from time to time to prevent dilution (i) in the event of a stock
dividend on, or a subdivision, combination or reclassification of, the
Preferred Shares; (ii) upon the grant to holders of the Preferred Shares of
certain rights or warrants to subscribe for or purchase Preferred Shares at a
price, or securities convertible into Preferred Shares with a conversion price,
less than the then-current market price of the Preferred Shares; or (iii) upon
the distribution to holders of the Preferred Shares of evidences of
indebtedness or assets (excluding regular periodic cash dividends paid out of
earnings or retained earnings or dividends payable in Preferred Shares) or of
subscription rights or warrants (other than those referred to above).
The number of outstanding Rights and the number of one one-hundredths of a
Preferred Share issuable upon exercise of each Right are also subject to
adjustment in the event of a stock split of the Common Shares or a stock
dividend on the Common Shares payable in Common Shares or subdivisions,
consolidations or combinations of the Common Shares occurring, in any such
case, prior to the Rights Distribution Date.
Preferred Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to a minimum preferential
quarterly dividend payment of $1 per share but will be entitled to an aggregate
dividend of 100 times the dividend declared per Common Share. In the event of
liquidation, the holders of the Preferred Shares will be entitled to a minimum
preferential liquidation payment of $100 per share but will be entitled to an
aggregate payment of 100 times the payment made per Common Share. Each
Preferred Share will have 100 votes, voting together with the Common Shares.
Finally, in the event of any merger, consolidation or other transaction in
which Common Shares are exchanged, each Preferred Share will be entitled to
receive 100 times the amount received per Common Share. These rights are
protected by customary antidilution provisions.
Because of the nature of the Preferred Shares' dividend, liquidation and voting
rights, the value of the one one-hundredth interest in a Preferred Share
purchasable upon exercise of each Right should approximate the value of one
Common Share.
In the event that the Company is acquired in a merger or other business
combination transaction or 50% or more of its consolidated assets or earning
power are sold after a person or group has become an Acquiring Person, proper
provision will be made so that each holder of a Right will thereafter have the
right to receive, upon the exercise thereof at the then current exercise price
of the Right, that number of shares of common stock of the acquiring company
which at the time of such transaction will have a market value of two times the
exercise price of the Right. In the event that any person or group of
affiliated or associated persons becomes an Acquiring Person,
42
<PAGE> 45
proper provision shall be made so that each holder of a Right, other than
Rights beneficially owned by the Acquiring Person (which will thereafter be
void), will thereafter have the right to receive upon exercise that number of
Common Shares having a market value of two times the exercise price of the
Right.
At any time after any person or group becomes an Acquiring Person and prior to
the acquisition by such person or group of 50% or more of the outstanding
Common Shares, the Board of Directors of the Company may exchange the Rights
(other than Rights owned by such person or group which will have become void),
in whole or in part, at an exchange ratio of one Common Share, or one
one-hundredth of a Preferred Share, per Right (subject to adjustment).
With certain exceptions, no adjustment in the Purchase Price will be required
until cumulative adjustments require an adjustment of at least 1% in such
Purchase Price.
No fractional Preferred Shares will be issued (other than fractions which are
integral multiples of one one-hundredth of a Preferred Share, which may, at the
election of the Company, be evidenced by depositary receipts) and, in lieu
thereof, an adjustment in cash will be made based on the market price of the
Preferred Shares on the last trading day prior to the date of exercise.
At any time prior to the acquisition by a person or group of affiliated or
associated persons of beneficial ownership of 10% or more of the then
Outstanding Common Shares, the Board of Directors of the Company may redeem the
Rights in whole, but not in part, at a price of $.01 per Right (the "Redemption
Price"). The redemption of the Rights may be made effective at such time on
such basis with such conditions as the Board of Directors in its sole
discretion may establish. Immediately upon any redemption of the Rights, the
right to exercise the Rights will terminate and the only right of the holders
of Rights will be to receive the Redemption Price.
The terms of the Rights may be amended by the Board of Directors of the Company
without the consent of the holders of the Rights, except that from and after
such time as any person or group of affiliated or associated persons becomes an
Acquiring Person no such amendment may adversely affect the interests of the
holders of the Rights.
Until a Right is exercised, the holder thereof, as such, will have no rights as
a stockholder of the Company, including, without limitations the right to vote
or to receive dividends.
A copy of the Rights Agreement has been filed with the Securities and Exchange
Commission as an Exhibit to a Registration Statement on Form S-1 (Registration
No. 33-_____). 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,
which is hereby incorporated herein by reference.
43
<PAGE> 1
EXHIBIT 10.1
1997 CRESCENT OPERATING, INC.
STOCK INCENTIVE PLAN
ARTICLE I
THE PLAN
1.1 NAME. This plan will be known as the "1997 Crescent Operating, Inc.
Stock Incentive Plan." Capitalized terms used herein are defined in Article X
hereof.
1.2 PURPOSE. The purpose of the Plan is to promote the growth and general
prosperity of the Company by permitting the Company, its Subsidiaries, and
Affiliated Companies to grant Options to their Employees, Outside Directors and
Advisors and Restricted Stock to their Employees and Advisors. The Plan is
designed to help the Company, its Subsidiaries, and Affiliated Companies
attract and retain superior personnel for positions of substantial
responsibility and to provide Employees (including officers), Outside Directors
and Advisors with an additional incentive to contribute to the success of the
Company, its Subsidiaries, and Affiliated Companies. The Company intends that
Incentive Stock Options granted pursuant to Article IV will qualify as
"incentive stock options" within the meaning of Section 422 of the Code.
Subject to Article VII, Outside Directors may elect to receive Common Stock in
lieu of Director's Fees. With respect to Reporting Participants, transactions
under the Plan are intended to comply with all applicable conditions of Rule
16b-3 or its successors under the Exchange Act. To the extent that any
provision of the Plan or action by the Committee fails to so comply, it will be
deemed null and void to the extent permitted by law and deemed advisable by the
Committee.
1.3 EFFECTIVE DATE. The Plan will become effective upon the Effective
Date.
1.4 ELIGIBILITY TO PARTICIPATE. Any Employee, Outside Director or Advisor
will be eligible to participate in the Plan; provided that Incentive Stock
Options may be granted only to persons who are Employees of the Company and its
Subsidiaries. The Committee may grant Options to Employees and Advisors in
accordance with such determinations as the Committee from time to time in its
sole discretion may make.
1.5 MAXIMUM NUMBER OF SHARES OF COMMON STOCK SUBJECT TO AWARDS. The
shares of Common Stock subject to Awards pursuant to the Plan may be either
authorized and unissued shares or shares issued and thereafter acquired by the
Company. Subject to adjustment pursuant to the provisions of Section 8.2, and
subject to any additional restrictions elsewhere in the Plan, the maximum
aggregate number of shares of Common Stock that may be issued from time to time
pursuant to the Plan shall be 1,425,000. Subject to adjustment pursuant to the
provisions of Section 8.2, and subject to any additional restrictions elsewhere
in the Plan, the maximum aggregate number of shares of Common Stock that may be
issued under the Plan shall
<PAGE> 2
increase automatically on January 1 of each year by an amount equal
to 8.5% of the increase in the number of shares of Common Stock outstanding
since January 1 of the preceding year. The maximum number of shares of Common
Stock with respect to which Awards may be granted to any Reporting Participant
during any calendar year shall be two hundred thousand (200,000) shares under
this Plan. The maximum number of shares of Common Stock which may be subject
to Incentive Stock Options during the life of the Plan shall be seventy-five
thousand (75,000) shares. If shares of Restricted Stock are reacquired by the
Company pursuant to the provisions of Section 6.1 of the Plan or if an Option
expires or terminates for any reason without having been exercised in full, the
reacquired shares and/or the shares not purchased or distributed will again be
available for issuance under the Plan.
1.6 CONDITIONS PRECEDENT. The Company will not issue or deliver any
certificate for Plan Shares pursuant to the Plan prior to fulfillment of all of
the following conditions:
(a) The admission of the Plan Shares to listing on all stock
exchanges on which the Common Stock is then listed, unless the Committee
determines in its sole discretion that such listing is neither necessary
nor advisable;
(b) The completion of any registration or other qualification of the
sale of the Plan Shares under any federal or state law or under the
rulings or regulations of the Securities and Exchange Commission or any
other governmental regulatory body that the Committee in its sole
discretion deems necessary or advisable; and
(c) The obtaining of any approval or other clearance from any
federal or state governmental agency that the Committee in its sole
discretion determines to be necessary or advisable.
1.7 RESERVATION OF SHARES OF COMMON STOCK. During the term of the Plan,
the Company will at all times reserve and keep available such number of shares
of Common Stock as may be necessary to satisfy the requirements of the Plan as
to the number of Plan Shares. In addition, the Company will from time to time,
as is necessary to accomplish the purposes of the Plan, use its best efforts to
obtain from any regulatory agency having jurisdiction any requisite authority
necessary to issue Plan Shares hereunder. The inability of the Company to
obtain from any regulatory agency having jurisdiction the authority deemed by
the Company's counsel to be necessary for the lawful issuance of any Plan
Shares will relieve the Company of any liability in respect of the nonissuance
of Plan Shares as to which the requisite authority has not been obtained.
1.8 TAX WITHHOLDING.
(a) Condition Precedent. The issuances of Plan Shares pursuant to
Awards under the Plan are subject to the condition that if at any time
the Committee determines, in its discretion, that the satisfaction of
withholding tax or other withholding liabilities under any federal, state
or local law is necessary or desirable as a condition of, or in
connection with effective unless the
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<PAGE> 3
withholding has been effected or obtained in a manner acceptable to the
Committee. Each Option granted to a Reporting Participant shall contain
a provision in the related Option Agreement making any required
withholding tax or other withholding liability mandatory, and specifying
that the Company withhold a portion of the Plan Shares as specified in
clause (iv) of paragraph (b) below.
(b) Manner of Satisfying Withholding Obligation. When a Participant
is required to pay to the Company an amount required to be withheld under
applicable income tax laws in connection with an Award, such payment may
be made (i) in cash, (ii) by check, (iii) by delivery to the Company of
shares of Common Stock already owned by the Participant having a Fair
Market Value on the date the amount of tax to be withheld is to be
determined (the "Tax Date") equal to the amount required to be withheld,
(iv) with respect to Options, through the withholding by the Company
("Company Withholding") of a portion of the Plan Shares acquired upon the
exercise of the Options (provided that, with respect to any Option held
by a Reporting Participant, at least six months has elapsed between the
grant of such Option and the exercise involving tax withholding) having a
Fair Market Value on the Tax Date equal to the amount required to be
withheld or (v) in any other form of valid consideration, as permitted by
the Committee in its discretion.
(c) Notice of Disposition of Stock Acquired Pursuant to Incentive
Stock Options. The Company may require as a condition to the issuance of
Plan Shares covered by any Incentive Stock Option that the party
exercising such Option give a written representation to the Company,
which is satisfactory in form and substance to its counsel and upon which
the Company may reasonably rely, that he will report to the Company any
disposition of such shares prior to the expiration of the holding periods
specified by Section 422(a)(1) of the Code. If and to the extent that
the realization of income in such a disposition imposes upon the Company
federal, state or local withholding tax requirements, or any such
withholding is required to secure for the Company an otherwise available
tax deduction, the Company will have the right to require that the
recipient remit to the Company an amount sufficient to satisfy those
requirements; and the Company may require as a condition to the issuance
of Plan Shares covered by an Incentive Stock Option that the party
exercising such Option give a satisfactory written representation
promising to make such a remittance.
1.9 ACCELERATION IN CERTAIN EVENTS. The Committee may accelerate the
exercisability of any Option or waive any restrictions with respect to shares
of Restricted Stock in whole or in part at any time. Notwithstanding the
provisions of any Option Agreement or Restricted Stock Agreement, the following
provisions will apply:
(a) Mergers and Reorganizations. If the Company or its shareholders
enter into an agreement to dispose of all or substantially all of the
assets of the Company by means of a sale, merger or other reorganization,
liquidation or otherwise in a transaction in which the Company is not the
surviving corporation, any Option will become immediately exercisable
with respect to the full number of shares subject to that Option
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<PAGE> 4
and all restrictions will lapse with respect to an Award of Restricted
Stock during the period commencing as of the date of the agreement to
dispose of all or substantially all of the assets of the Company and
ending when the disposition of assets contemplated by that agreement is
consummated or the Award is otherwise terminated in accordance with its
provisions or the provisions of the Plan, whichever occurs first;
provided that no Reporting Participant may exercise an Option and no
restrictions will lapse with respect to an Award of Restricted Stock to a
Reporting Participant unless at least six months have elapsed since the
grant of such Option or Award; provided, further, that no Option will be
immediately exercisable and no restrictions will lapse with respect to an
Award of Restricted Stock under this Section on account of any agreement
of merger or other reorganization when the shareholders of the Company
immediately before the consummation of the transaction will own at least
fifty percent of the total combined voting power of all classes of stock
entitled to vote of the surviving entity immediately after the
consummation of the transaction. An Option will not become immediately
exercisable and no restrictions will lapse with respect to an Award of
Restricted Stock if the transaction contemplated in the agreement is a
merger or reorganization in which the Company will survive.
(b) Change in Control. In the event of a change in control or
threatened change in control of the Company, all Options granted prior to
the change in control or threatened change in control will become
immediately exercisable, and all restrictions will lapse with respect to
awards of Restricted Stock granted prior to the change in control or
threatened change in control, provided that no Reporting Participant may
exercise an Option and no restriction will lapse with respect to an Award
of Restricted Stock to a Reporting Participant unless at least six months
have elapsed since the grant of such Option or Award. The term "change
in control" for purposes of this Section refers to the acquisition of 15%
or more of the voting securities of the Company by any person or by
persons acting as a group within the meaning of Section 13(d)(3) of the
Exchange Act (other than an acquisition by (i) a person or group meeting
the requirements of clauses (i) and (ii) of Rule 13d-l(b)(1) promulgated
under the Exchange Act, (ii) or any employee pension benefit plan (within
the meaning of Section 3(2) of ERISA) of the Company or of its
Subsidiaries, including a trust established pursuant to such plan);
provided that no change in control or threatened change in control will
be deemed to have occurred (i) if prior to the acquisition of, or offer
to acquire, 15% or more of the voting securities of the Company, the full
Board has adopted by not less than two-thirds vote a resolution
specifically approving such acquisition or offer or (ii) from (A) a
transfer of the Company's voting securities by Richard E. Rainwater
("Rainwater") to (i) a member of Rainwater's immediate family (within the
meaning of Rule 16a-1(e) of the Exchange Act) either during Rainwater's
lifetime or by will or the laws of descent and distribution; (ii) any
trust as to which Rainwater or a member (or members) of his immediate
family (within the meaning of Rule 16a-1(e) of the Exchange Act) is the
beneficiary; (iii) any trust as to which Rainwater is the settlor with
sole power to revoke; (iv) any entity over which Rainwater has the power,
directly or indirectly, to direct or cause the direction of the
management and policies of the entity, whether through the ownership of
voting securities, by contract or otherwise; or (v) any charitable trust,
foundation or corporation
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<PAGE> 5
under Section 501(c)(3) of the Code that is funded by Rainwater; or (B)
the acquisition of voting securities of the Corporation by either (i)
Rainwater or (ii) a person, trust or other entity described in the
foregoing clauses (A)(i)-(v) of this subsection. The term "person" for
purposes of this Section refers to an individual or a corporation,
partnership, trust, association, joint venture, pool, syndicate, sole
proprietorship, unincorporated organization or any other form of entity
not specifically listed herein. Whether a change in control is
threatened will be determined solely by the Committee.
1.10 COMPLIANCE WITH SECURITIES LAWS. Plan Shares will not be issued with
respect to any Award unless the issuance and delivery of the Plan Shares (and
the exercise of an Option, if applicable) complies with all relevant provisions
of federal and state law, including without limitation the Securities Act, the
rules and regulations promulgated thereunder and the requirements of any stock
exchange upon which the Plan Shares may then be listed, and will be further
subject to the approval of counsel for the Company with respect to such
compliance. The Committee may also require a Participant to finish evidence
satisfactory to the Company, including, without limitation, a written and
signed representation letter and consent to be bound by any transfer
restrictions imposed by law, legend, condition or otherwise, and a
representation that the Plan Shares are being acquired only for investment and
without any present intention to sell or distribute the shares in violation of
any federal or state law, rule or regulation. Further, each Participant will
consent to the imposition of a legend on the certificate representing the Plan
Shares issued pursuant to an Award restricting their transferability as
required by law or by this Section.
1.11 EMPLOYMENT OF PARTICIPANT. Nothing in the Plan or in any Award
granted hereunder will confer upon any Participant any right to continued
employment by the Company, any of its Subsidiaries, or any Affiliated Company or
to continued service as a Director or Advisor or limit in any way the right of
the Company, any Subsidiary, or any Affiliated Company at any time to terminate
or alter the terms of that employment or services as a Director or Advisor.
1.12 INFORMATION TO PARTICIPANTS. The Company will furnish to each
Participant copies of annual reports, proxy statements and all other reports
sent to the Company's shareholders. Upon written request, the Company will
furnish to each Participant a copy of its most recent Annual Report on Form 10-K
and each quarterly report to shareholders issued since the end of the Company's
most recent fiscal year.
ARTICLE II
ADMINISTRATION
2.1 COMMITTEE. The Plan will be administered by the Board or by a
Committee of not fewer than two directors appointed by the Board. As used
herein, if the Company has any class of common equity securities required to be
registered under Section 12 of the Exchange Act, as to any grant to a Reporting
Participant, "Committee" shall mean a committee consisting of two or more
Directors, each of whom shall be an "outside director" as defined in Section
162(m) of the Code. Subject to the provisions of the Plan, the Board or
Committee will have the
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<PAGE> 6
sole discretion and authority to determine from time to time the Employees and
Advisors to whom Awards will be granted and the number of Plan Shares subject to
each Award, to interpret the Plan, to prescribe, amend and rescind any rules and
regulations necessary or appropriate for the administration of the Plan, to
determine and interpret the details and provisions of each Option Agreement and
Restricted Stock Agreement, to modify or amend any Option Agreement or
Restricted Stock Agreement or waive any conditions or restrictions applicable to
any Option (or the exercise thereof) or to any shares of Restricted Stock, and
to make all other determinations or advisable for the administration of the
Plan. With respect to any provision of the Plan granting the Board or the
Committee the right to agree, in its sole discretion, to further extend the term
of any Award hereunder, the Board or the Committee may exercise such right at
the time of grant, in the Option Agreement relating to such Award, or at any
time or from time-to-time after the grant of any Award hereunder.
Notwithstanding any other provision of this Section 2.1 or this Plan, all Awards
made to Outside Directors shall be automatic and nondiscretionary as set forth
in this Plan.
2.2 MAJORITY RULE; UNANIMOUS WRITTEN CONSENT. A majority of the members
of the Board or the Committee will constitute a quorum, and any action taken by
a majority present at a meeting at which a quorum is present or any action taken
without a meeting evidenced by a writing executed by all members of the Board or
the Committee will constitute the action of the Board or the Committee. Meetings
of the Committee may take place by telephone conference call.
2.3 COMPANY ASSISTANCE. The Company will supply full and timely
information to the Committee on all matters relating to Employees, Outside
Directors and Advisors, their employment, death, Retirement, Disability or other
termination of employment, and such other pertinent facts as the Board or the
Committee may require. The Company will furnish the Board or the Committee with
such clerical and other assistance as is necessary to the performance of its
duties.
ARTICLE III
OPTIONS
3.1 METHOD OF EXERCISE. Each Option will be exercisable at any time and
from time in whole or in part in accordance with the terms of the Option
Agreement pursuant to which the Option was granted. No Option may be exercised
for a fraction of a Plan Share.
3.2 PAYMENT OF PURCHASE PRICE. The purchase price of any Plan Shares
purchased will be paid at the time of exercise of the Option either (i) in cash,
(ii) by certified or cashier's check, (iii) by shares of Common Stock, if
permitted by the Committee, (iv) as to Outside Directors, by cash or certified
or cashier's check for the par value of the Plan Shares plus a recourse
promissory note for the balance of the purchase price, such note to provide for
the right to repay the note partially or wholly with Common Stock and with an
interest rate based on the current dividend yield of the Common Stock, (v) as to
Employees and Advisors, by cash or certified or cashier's check for the par
value of the Plan Shares plus a promissory note for the balance of the purchase
price, which note will contain such terms and provisions as the Board or
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the Committee may approve, including without limitation the right to repay the
note partially or wholly with Common Stock and to base the interest rate on the
current dividend yield of the Common Stock, (vi) by delivery of a copy of
irrevocable instructions from the Optionee to a broker or dealer, reasonably
acceptable to the Company, to sell certain of the Plan Shares upon exercise of
the Option or to pledge them as collateral for a loan and promptly deliver to
the Company the amount of sale or loan proceeds necessary to pay such purchase
price or (vii) as to Employees and Advisors, in any other form of valid
consideration, as permitted by the Board or the Committee in its discretion. If
any portion of the purchase price or a note given at the time of exercise is
paid in shares of Common Stock, those shares will be valued at the then Fair
Market Value.
3.3 WRITTEN NOTICE REQUIRED. Any Option will be deemed to be exercised
for purposes of the Plan when written notice of exercise has been received by
the Company at its principal office from the person entitled to exercise the
Option and payment for the Plan Shares with respect to which the Option is
exercised has been received by the Company in accordance with Section 3.2.
3.4 RIGHTS OF OPTIONEES UPON TERMINATION OF EMPLOYMENT OR SERVICE.
(a) In the event an Optionee ceases to be an Employee and Advisor,
and does not continue to be a Director, for any reason other than death,
Retirement, Disability or for Cause, (i) the Board or the Committee shall have
the ability to accelerate the vesting of the Optionee's Option in its sole
discretion, and (ii) such Optionee's Option shall be exercisable (to the extent
exercisable on the date of termination of employment or service as an Employee
or Advisor, or, if the Committee, in its discretion, has accelerated the
vesting of such Option, to the extent exercisable following such acceleration)
(a) if such Option is an Incentive Stock Option, at any time within three
months after the date of termination of employment with the Company or any
Subsidiary, unless by its terms the Option expires earlier; or (b) if such
Option is a Nonqualified Stock Option, at any time within one year after the
date of termination of employment or service as an Employee or Advisor, unless
by its terms the Option expires earlier or unless the Committee agrees, in its
sole discretion, to further extend the term of such Nonqualified Stock Option;
provided that the term of any such Nonqualified Stock Option shall not be
extended beyond its initial term. An Employee or Advisor who continues to be a
Director shall not be deemed to have terminated employment or service as to any
Nonqualified Stock Option. Notwithstanding any provision in this Plan to the
contrary, no Option granted to a Reporting Participant may be exercised unless
at least six months have elapsed since the grant of such Option.
(b) In addition, unless the Board or the Committee agrees, in its
sole discretion, to extend the term of a Nonqualified Stock Option granted to
an Employee or Advisor (provided that the term of any such Option shall not be
extended beyond its initial term), an Optionee's Option may be exercised as
follows in the event such Optionee ceases to serve as an Employee, Outside
Director or Advisor due to death, Disability, Retirement or for Cause:
(i) Death. If an Optionee dies while serving as an Employee,
Outside Director or Advisor, or within three months after ceasing to be
an Employee, Outside Director or
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Advisor, his option shall become fully exercisable on the date of his
death and shall expire 12 months thereafter, unless by its terms it
expires sooner. During such period, the Option may be fully exercised, to
the extent that it remains unexercised on the date of death, by the
Optionee's personal representative or by the distributees to whom the
Optionee's rights under the Option shall pass by will or by the laws of
descent and distribution.
(ii) Retirement. If an Optionee ceases to serve as an Employee,
Outside Director or Advisor as a result of Retirement, his Option shall
become fully exercisable on the date of his Retirement and (a) if such
Option is an Incentive Stock Option, such Option will be exercisable at
any time within three months after the effective date of such Retirement,
unless by its terms the Option expires earlier, and (b) if such Option is
a Nonqualified Stock Option, such Option will be exercisable at any time
within one year after the effective date of such Retirement, unless by
its terms the Option expires sooner.
(iii) Disability. If an Optionee ceases to serve as an Employee,
Outside Director or Advisor as a result of Disability, the Optionee's
Option shall become fully exercisable and shall expire 12 months
thereafter, unless by its terms it expires sooner.
(iv) Cause. If an Optionee ceases to serve as an Employee, Outside
Director or Advisor, because the Optionee is terminated for Cause, the
Optionee's Option shall automatically expire. If any facts that would
constitute Cause for termination or removal of an Employee or Advisor are
discovered after the Optionee's relationship with the Company has ended,
any Options then held by the Optionee may be immediately terminated by
the Committee. Notwithstanding the foregoing, if an Optionee is an
Employee employed pursuant to a written employment agreement, or is an
Advisor retained pursuant to a written agreement, the Optionee's
relationship with the Company will be deemed terminated for 'Cause' for
purposes of the Plan only if the Optionee is considered under the
circumstances to have been terminated for cause for purposes of such
written agreement.
3.5 TRANSFERABILITY OF OPTIONS. Options shall not be transferable other
than pursuant to a qualified domestic relations order, by will or by the laws
of descent and distribution and, with respect to an Incentive Stock Option, may
be exercised during the lifetime of an Optionee only by that Optionee or by his
legally authorized representative.
ARTICLE IV
INCENTIVE STOCK OPTIONS
4.1 OPTION TERMS AND CONDITIONS. The terms and conditions of Options
granted under this Article may differ from one another as the Board or the
Committee may, in its discretion, determine, as long as all Options granted
under this Article satisfy the requirements of this Article.
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4.2 DURATION OF OPTIONS. Each Option granted under this Article will
expire on the date determined by the Committee, but in no event will any Option
granted under this Article expire earlier than one year or later than ten years
after the date on which the Option is granted. In addition, each Option will be
subject to early termination as provided elsewhere in the Plan.
4.3 PURCHASE PRICE. The purchase price for Plan Shares acquired pursuant
to the exercise, in whole or in part, of any Option granted under this Article
will not be less than the Fair Market Value of the Plan Shares at the time of
the grant of the Option.
4.4 MAXIMUM AMOUNT OF OPTIONS FIRST EXERCISABLE IN ANY CALENDAR YEAR. The
maximum aggregate Fair Market Value of Plan Shares (determined at the time the
Option is granted) with respect to which Options issued under this Article are
exercisable for the first time by any Employee during any calendar year under
all incentive stock option plans of the Company and its Subsidiaries and
affiliates may not exceed $100,000. Any portion of an Option granted under the
Plan and first exercisable in excess of the foregoing limitations will be
considered granted under Article V.
4.5 REQUIREMENTS AS TO CERTAIN OPTIONS. In the event of the grant of any
Option to an individual who, at the time the Option is granted, owns shares of
stock possessing more than ten percent of the total combined voting power of all
classes of stock of the Company or any of its Subsidiaries or affiliates within
the meaning of Section 422 of the Code, the purchase price for the Plan Shares
subject to that Option must be at least 110% of the Fair Market Value of those
Plan Shares at the time the Option is granted, and the Option must not be
exercisable after the expiration of five years from the date of its grant.
4.6 INDIVIDUAL OPTION AGREEMENTS. Each Employee receiving Options under
this Article will be required to enter into a written Option Agreement with the
Company. In such Option Agreement, the Employee will agree to be bound by the
terms and conditions of the Plan and such other matters as the Committee deems
appropriate.
ARTICLE V
NONQUALIFIED STOCK OPTIONS
5.1 OPTION TERMS AND CONDITIONS. The terms and conditions of Options
granted under this Article may differ from one another as the Committee may, in
its discretion, determine, as long as all Options granted under this Article
satisfy the requirements of this Article.
5.2 OUTSIDE DIRECTOR OPTION TERMS AND CONDITIONS. Each Outside Director
shall be granted an Option to purchase seven thousand (7,000) shares of Common
Stock on May __, 1997. Each Outside Director shall be granted an Option to
purchase seven thousand (7,000) shares of Common Stock on the date of
commencement of each regular annual stockholders' meeting beginning with the
1997 Annual Stockholder's meeting. Each Option granted under this Section 5.2
shall vest ratably at the rate of twenty percent (20%) per year on each
anniversary of
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the date of grant of the Option, provided that the Optionee is a Director on
such date. Notwithstanding the preceding sentence, each Option granted under
this Section 5.2 shall vest if the Outside Director dies while serving as an
Outside Director, or ceases to serve as an Outside Director as a result of
Retirement or Disability as provided in Section 3.4(b). Each Option granted to
an Outside Director shall expire ten (10) years from the date of grant, subject
to early termination as provided elsewhere in the Plan.
5.3 DURATION OF OPTIONS. Each Option granted to an Employee or Advisor
under this Article and all rights thereunder will expire on the date determined
by the Committee, but in no event will any Option granted under this Article
expire later than ten years after the date on which the Option is granted. In
addition, each Option will be subject to early termination as provided elsewhere
in the Plan.
5.4 PURCHASE PRICE. The purchase price for Plan Shares acquired pursuant
to the exercise, in whole or in part, of any Option granted under this Article
shall be the Fair Market Value of the Plan Shares at the time of the grant of
the Option.
5.5 INDIVIDUAL OPTION AGREEMENTS. Each Employee, Outside Director or
Advisor receiving Options under this Article will be required to enter into a
written Option Agreement with the Company. In such Option Agreement, the
Employee, Outside Director or Advisor will agree to be bound by the terms and
conditions of the Plan and such other matters as the Committee deems
appropriate.
ARTICLE VI
RESTRICTED STOCK
6.1 TERMS AND CONDITIONS. Each Restricted Stock Grant confers upon the
recipient thereof the right to receive a specified number of shares of Common
Stock of the Company in accordance with the terms and conditions of each
Participant's individual written agreement as set forth in Section 6.2. The
general terms and conditions of the Restricted Stock awards shall be as
follows:
(a) Any shares of Common Stock awarded hereunder to a Participant
shall be restricted for a period of time to be determined by the
Committee for each participant at the time of the Award, which period
shall be not less than one year or more than ten years. The restrictions
shall prohibit the sale, assignment, transfer, pledge or other
encumbrance of such shares, and will provide for possible reversion
thereof to the Company in accordance with subparagraph (b) during the
period of restriction.
(b) All Restricted Stock awarded under this Plan to a Participant
shall be forfeited and returned to the Company in the event the
Participant ceases to be employed by, serve as a Director of, or serve as
an Advisor to the Company, one of its Subsidiaries, or any Affiliated
Company prior to the expiration of the period of restriction, unless the
Participant's termination of employment is due to his or her death,
Disability or
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Retirement. An Employee or Advisor who continues to be a Director shall
not be deemed to have terminated employment or service.
(c) In the event of a Participant's death or Disability, the
restrictions under subparagraph (a) will lapse with respect to all
Restricted Stock awarded to the Participant under this Plan prior to any
such event, and the shares of Common Stock involved shall cease to be
Restricted Stock within the meaning of this Plan and shall no longer be
subject to forfeiture to the Company pursuant to subparagraph (b).
(d) In the event of a Participant's Retirement, the restrictions
under subparagraph (a) shall continue to apply unless the Board or the
Committee in its discretion shall shorten the restriction period.
(e) Stock certificates issued with respect to awards of Restricted
Stock made under this Plan shall be registered in the name of the
Participant, but shall be delivered by him or her to the Company together
with a stock power endorsed in blank. Each such certificate shall bear
the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO FORFEITURE, RESTRICTIONS ON TRANSFER AND
CERTAIN OTHER TERMS AND CONDITIONS SET FORTH IN THE
1997 CRESCENT OPERATING, INC. STOCK INCENTIVE PLAN AND
THE AGREEMENT BETWEEN THE REGISTERED OWNER OF THE
SHARES REPRESENTED BY THIS CERTIFICATE AND CRESCENT
OPERATING, INC. ENTERED INTO PURSUANT TO SUCH PLAN."
(f) Upon the lapse of a restriction period as determined pursuant to
subparagraph (a), the Company will return the stock certificates
representing the shares with respect to which the restriction has lapsed
to the Participant or his or her legal representative, and pursuant to
the instruction of the Participant or his or her legal representative
will issue a certificate for such shares which does not bear the legend
set forth in subparagraph (e).
(g) Any other securities or assets (other than ordinary cash
dividends) which are received by a Participant with respect to Restricted
Stock awarded to him, which is still subject to restrictions provided for
in subparagraph (a), will be subject to the same restrictions and shall
be delivered by the Participant to the Company as provided in
subparagraph (e).
(h) From the time of grant of the Restricted Stock Award, the
Participant shall be entitled to exercise all rights attributable to the
Restricted Stock, subject to forfeiture of such rights and the stock as
provided in subparagraph (b).
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<PAGE> 12
6.2 INDIVIDUAL AGREEMENTS. Each Participant receiving an Award of
Restricted Stock under this Article will be required to enter into a written
Restricted Stock Agreement with the Company. In such Restricted Stock
Agreement, the Participant will agree to be bound by the terms and conditions of
the Plan and such other matters as the Board or the Committee deems appropriate.
ARTICLE VII
OUTSIDE DIRECTOR STOCK-FOR-FEES ELECTIONS
7.1 OUTSIDE DIRECTOR STOCK-FOR-FEES ELECTION. Each Outside Director shall
be permitted to receive Director's Fees in the form of Common Stock rather than
cash in accordance with the following provisions:
(a) Each Outside Director shall have the right to elect to receive
one-half or all of such Outside Director's Fees in the form of Common
Stock rather than cash by tendering an irrevocable written election to
the Secretary of the Company pursuant to which all Director's Fees
otherwise payable to the Outside Director shall be paid in the form of
Common Stock as provided in (b) below. Such election shall become
effective six (6) months after its delivery to the Secretary of the
Company by the Outside Director. Such election shall remain in effect
until the earlier of (i) the date six (6) months after such Outside
Director shall have delivered to the Secretary of the Company irrevocable
written notice that his or her election to receive Common Stock shall
cease as of the date six months following delivery of the notice, or (ii)
the date on which such Outside Director terminates as a member of the
Board of Directors by reason of resignation, non-reelection, death, or
disability. Any Outside Director who having terminated an election to
receive Common Stock or having failed to elect to receive Common Stock
rather than cash may elect to receive Director's Fees in the form of
Common Stock as of the date six (6) months following delivery of
irrevocable written notice of such election to the Secretary of the
Company. An Outside Director who does not elect to have Director's Fees
paid in Common Stock shall receive his or her remuneration in cash at
such times that such remuneration is otherwise due.
(b) If an Outside Director elects to receive payment of Director's
Fees in the form of Common Stock, such Common Stock shall be issued as
soon as practicable after the annual meeting of shareholders or meeting
of the Board or Committee of the Board to which such remuneration
relates. The number of shares of Common Stock to be issued to such
Outside Director shall be determined by dividing:
(i) the remuneration otherwise payable to the Outside Director, by
(ii) ninety percent (90%) of the Fair Market Value of the Company's
Common Stock on the determination date on the rounding up or down of any
fractional share to the nearest whole share.
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The determination date shall be the date that the relevant payment of
Director's Fees is payable.
(c) Shares of Common Stock issued under this Article VII shall be
free of any restrictions except for restrictions applicable under the
Exchange Act.
7.2 INCOME TAX. Each Outside Director who elects to receive Director's
Fees in the form of Common Stock rather than cash shall be responsible for
payment of federal, state, and local income taxes on the Fair Market Value of
such Common Stock.
ARTICLE VIII
TERMINATION, AMENDMENT AND ADJUSTMENT
8.1 TERMINATION AND AMENDMENT. The Plan will terminate on May __, 2007.
No Awards will be granted under the Plan after that date of termination,
although Awards granted prior to such date shall remain outstanding in
accordance with their terms. Subject to the limitations contained in this
Section 8.1, the Board or the Committee may at any time amend or revise the
terms of the Plan, including the form and substance of the Option Agreements
and Restricted Stock Agreements to be used in connection herewith; provided
that, without shareholder approval, no amendment or revision may (i) increase
the maximum aggregate number of Plan Shares, except as permitted under Section
1.5 and Section 8.2, (ii) change the minimum purchase price for shares under
Article IV or Article V or (iii) permit the granting of an Award to anyone
other than as provided in the Plan. No amendment, suspension or termination of
the Plan may, without the consent of the Optionee who has received an Award
hereunder, alter or impair any of that Participant's rights or obligations
under any Award granted under the Plan prior to that amendment, suspension or
termination.
8.2 ADJUSTMENT. If the outstanding Common Stock is increased, decreased,
changed into or exchanged for a different number or kind of shares or
securities through merger, consolidation, combination, exchange of shares,
other reorganization, recapitalization, reclassification, stock dividend, stock
split or reverse stock split, an appropriate and proportionate adjustment will
be made in the maximum number and kind of Plan Shares as to which Awards may be
granted under the Plan. A corresponding adjustment will be made in the number
or kind of shares allocated to and purchasable under unexercised Options or
shares of Restricted Stock with respect to which restrictions have not yet
lapsed prior to any such change. Any such adjustment in outstanding Options
will be made without change in the aggregate purchase price applicable to the
unexercised portion of the Option, but with a corresponding adjustment in the
price for each share purchasable under the Option. Any new or additional or
different class of securities that are distributed to a Participant in his
capacity as the owner of Restricted Stock as granted hereunder shall be
considered to be Restricted Stock and shall be subject to all of the conditions
and restrictions provided herein applicable to Restricted Stock. The foregoing
adjustments and the manner of application of the foregoing provisions will be
determined solely by the Board or the Committee, and any such adjustment may
provide for the elimination of fractional share interests.
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ARTICLE IX
MISCELLANEOUS
9.1 OTHER COMPENSATION PLANS. The adoption of the Plan will not affect
any other stock option or incentive or other compensation plans in effect for
the Company, any of its Subsidiaries, or any Affiliated Company, nor will the
Plan preclude the Company, any of its Subsidiaries, or any Affiliated Company
from establishing any other forms of incentive or other compensation for
Employees.
9.2 PLAN BINDING ON SUCCESSORS. The Plan will be binding upon the
successors and assigns of the Company and any of its Subsidiaries that adopt the
Plan.
9.3 NUMBER AND GENDER. Whenever used herein, nouns in the singular will
include the plural where appropriate, and the masculine pronoun will include the
feminine gender.
9.4 HEADINGS. Headings of articles and sections hereof are inserted for
convenience of reference and constitute no part of the Plan.
ARTICLE X
DEFINITIONS
As used herein with initial capital letters, the following terms have the
meanings set forth unless the context clearly indicates to the contrary:
10.1 "Advisor" means any person performing advisory or consulting services
for the Company, any Subsidiary of the Company, or any Affiliated Company, with
or without compensation, to whom the Company chooses to grant Options in
accordance with the Plan, provided that bona fide services must be rendered by
such person and such services shall not be rendered in connection with the offer
or sale of securities in a capital raising transaction.
10.2 "Affiliated Company" means any entity that owns more than fifty
percent (50%) of the Company's Common Stock.
10.3 "Award" means a grant of Options under Articles IV and V of the Plan
or an Award of Restricted Stock under Article VI of the Plan.
10.4 "Board" means the Board of Directors of the Company, provided that,
if the Board delegates all or any part of its authority to a committee composed
of one or more directors, then the term "Board" shall be deemed to refer to
such committee to the extent of such delegation.
10.5 "Cause" will mean an act or acts involving a felony, fraud, willful
misconduct, commission of any act that causes or reasonably may be expected to
cause substantial injury to the Company or other good cause. The term "other
good cause" as used in this Section will include, but shall not be limited to,
habitual impertinence, a pattern of conduct that tends to hold the Company up
to ridicule in the community, conduct disloyal to the Company, conviction of
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any crime of moral turpitude and substantial dependence, as judged by the
Committee, on alcohol or any controlled substance. "Controlled substance"
means a drug, immediate precursor or other substance listed in Schedules I-V of
the Federal Comprehensive Drug Abuse Prevention Control Act of 1970, as
amended.
10.6 "Code" means the Internal Revenue Code of 1986, as amended.
10.7 "Committee" shall have the meaning set forth in Section 2.1.
10.8 "Common Stock" means the Common Stock, par value $.01 per share, of
the Company or, in the event that the outstanding shares of such Common Stock
are hereafter changed into or exchanged for shares of a different stock or
security of the Company or some other corporation, such other stock or
security.
10.9 "Company" means Crescent Operating, Inc., a Delaware corporation.
10.10 "Director" means a member of the Board of Directors of the Company.
10.11 "Director's Fees" means the remuneration otherwise payable to an
Outside Director as an annual retainer and for attending meetings of the Board
and meetings of the committees of the Board.
10.12 "Disability" of a Participant shall be deemed to occur whenever a
Participant is rendered unable to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment which can be
expected to result in death or which has lasted or can be expected to last for
a continuing period of not less than 12 months.
10.13 "Effective Date" means May__, 1997, or, if later, the date on which
an amendment to this Plan is approved by the shareholders of the Company in
accordance with the provisions of Sections 162(m) and 422 of the Code and Rule
16b-3 under the Exchange Act.
10.14 "Employee" means an officer or other employee of the Company, any of
its Subsidiaries, or any Affiliated Company, as defined under Section 3401(c) of
the Code and the regulations promulgated thereunder.
10.15 "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
10.16 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
10.17 "Fair Market Value" means such value as will be determined by the
Board or the Committee on the basis of such factors as it deems appropriate;
provided that if the Common Stock is traded on a national securities exchange,
such value will be determined by the Committee on the basis of the last sale
price for the Common Stock on the date for which such determination is relevant,
as reported on the [New York Stock Exchange]. If the Common Stock
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is traded on more than one exchange, such value will be determined on the basis
of the exchange trading the greatest volume of shares on such date. In no
event shall "Fair Market Value" be less than the par value of the Common Stock.
10.18 "Incentive Stock Option" means an Option granted under Article IV.
10.19 "Nonqualified Stock Option" means an Option granted under Article V.
10.20 "Option" means an Incentive Stock Option or a Nonqualified Stock
Option granted under the Plan.
10.21 "Option Agreement" means an agreement between the Company and a
Participant with respect to one or more Options.
10.22 "Outside Director" means a Director who is not an Employee of the
Company or a Subsidiary.
10.23 "Participant" means an Employee, Director or Advisor to whom an
Award has been granted hereunder.
10.24 "Plan" means the 1997 Crescent Operating, Inc. Stock Incentive Plan,
as amended from time to time.
10.25 "Plan Shares" means shares of Common Stock issuable pursuant to the
Plan.
10.26 "Reporting Participant" means a Participant who is subject to the
reporting requirements of Section 16 of the Exchange Act or who is a "covered
employee" within the meaning of Section 162(m) of the Code.
10.27 "Restricted Stock" means an Award of Common Stock granted under
Article VI.
10.28 "Restricted Stock Agreement" means an agreement between the Company
and a Participant with respect to an Award of Restricted Stock.
10.29 "Retirement" means termination of employment or service as a
Director on or after the date on which a Participant attains age 70.
10.30 "Securities Act" means the Securities Act of 1933, as amended.
10.31 "Subsidiary" means a subsidiary corporation of the Company, as
defined in Section 424(f) of the Code.
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EXHIBIT 10.2
FORM OF INTERCOMPANY AGREEMENT
THIS INTERCOMPANY AGREEMENT (the "Agreement") is made and entered into as
of the ____ day of _____________, 1997, by and between Crescent Real Estate
Equities Limited Partnership, a Delaware limited partnership (the "Operating
Partnership") and Crescent Operating, Inc., a Delaware corporation ("Crescent
Operating").
W I T N E S S E T H:
WHEREAS, Crescent Real Estate Equities Company, a Texas real estate
investment trust ("Crescent Equities"), owns, directly or indirectly, a one
percent general partnership and an approximately _______ percent limited
partnership interest in the Operating Partnership;
WHEREAS, the Operating Partnership may in certain circumstances determine
that it is precluded from pursuing, or is limited in the manner in which it
pursues, various business opportunities due to the status of Crescent Equities
as a real estate investment trust ("REIT") under sections 856 through 860 of
the Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, Crescent Operating is a newly created corporation that was formed
for the purposes of, among other things, becoming a lessee and operator of
various types of assets, including real estate owned by the Operating
Partnership and others; and
WHEREAS, in light of the purposes for which Crescent Operating was formed,
the Operating Partnership and Crescent Operating desire to enter into this
Agreement in order to provide to each other a right of first opportunity and
notification right with respect to certain investment opportunities available
to each of them.
NOW, THEREFORE, in consideration of the premises and mutual undertakings
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by each of the parties hereto, the
undersigned parties hereby agree as follows:
1. Definitions. Except as may be otherwise herein expressly provided,
the following terms and phrases shall have the meanings set forth below:
<PAGE> 2
(a) "Company Affiliate" means any entity in which a majority of the
beneficial ownership interests are owned by the Operating Partnership or by any
entity controlled by, controlling or under common control with the Operating
Partnership.
(b) "Insider" means Gerald W. Haddock, John C. Goff, Richard E.
Rainwater or any senior officer or director of the Operating Partnership or of
any entity controlled by, controlling or under common control with the
Operating Partnership.
(c) "REIT Opportunity" means a direct or indirect opportunity to
invest in (i) real estate (including without limitation the opportunity to
provide services related to real estate or to invest in a hotel property), real
estate mortgages, real estate derivatives, or entities that invest primarily in
or have a substantial portion of their assets in the aforementioned types of
real estate assets, or (ii) any other investments which may be structured in a
manner so as to be REIT-Qualified Investments (as hereinafter defined), as
determined by the Operating Partnership in its sole discretion. The Operating
Partnership shall have the right from time to time to provide written notice
to Crescent Operating specifying certain criteria for a REIT Opportunity in
addition to the criteria specified above in this definition of REIT
Opportunity. Any such written notice from the Operating Partnership may be
modified or canceled by written notice given by the Operating Partnership at
any time. The definition of REIT Opportunity shall be modified as appropriate
from time to time in accordance with any such written notices sent by the
Operating Partnership.
(d) "Tenant Opportunity" means the opportunity to become the lessee
under a "master" lease arrangement of a property owned or subsequently acquired
by the Operating Partnership if the Operating Partnership, in its sole
discretion, determines that, consistent with the status of Crescent Equities as
a REIT, the Operating Partnership is required to enter into such a "master"
lease arrangement for such property, including without limitation a hotel or
similar type of facility, so long as the Operating Partnership determines, in
its sole discretion, that Crescent Operating or an entity that Crescent
Operating controls is qualified to be the lessee based on experience in the
industry and financial and legal qualifications, provided that all
determinations relating to both (i) the ability or inability of the Operating
Partnership to pursue an opportunity or acquire assets and (ii) the necessity
for the Operating Partnership to enter into a "master" lease arrangement for a
property, shall be made by the Operating Partnership in its sole discretion. A
Tenant Opportunity shall not include (1) a property which already has an
existing "master" lessee as of the date of this Agreement (or, with respect to
a property acquired subsequent to the date of this Agreement, which has an
existing binding "master" lessee arrangement that predates the acquisition of
the property by the Operating Partnership), provided that the Operating
Partnership shall offer any such "master" lessee interest to Crescent
Operating if the lessee interest subsequently becomes available), or (2) an
opportunity in which the seller of the property (or any affiliate or designee
of the seller) desires to enter into a "master"
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<PAGE> 3
lease agreement with the Operating Partnership. Crescent Operating shall have
the right from time to time to provide written notice to the Operating
Partnership specifying certain criteria for a Tenant Opportunity
in addition to the criteria specified above in this definition of Tenant
Opportunity. Any such written notice from Crescent Operating may be modified or
canceled by written notice given by Crescent Operating at any time. The
definition of Tenant Opportunity shall be modified as appropriate from time to
time in accordance with any such written notices sent by Crescent Operating.
2. Operating Partnership Right of First Opportunity; Notification Right.
(a) Right of First Opportunity.
(i) During the term of this Agreement, if Crescent Operating
develops a REIT Opportunity, or if any REIT Opportunity otherwise becomes
available to Crescent Operating, Crescent Operating shall first offer such REIT
Opportunity to the Operating Partnership. The offer shall be made by written
notice (the "Crescent Operating Notice") from Crescent Operating to the
Operating Partnership, which Crescent Operating Notice shall contain a detailed
description of the material terms and conditions of the REIT Opportunity. The
Operating Partnership shall have ten days (the "Ten-Day Period") from the
date of receipt of the Crescent Operating Notice to notify Crescent Operating
in writing that it has accepted or rejected the REIT Opportunity. If the
Operating Partnership does not respond by the end of the Ten-Day Period, the
Operating Partnership shall be deemed to have rejected the REIT Opportunity. If
the Operating Partnership accepts a REIT Opportunity, but subsequently decides
not to pursue such opportunity, or for any other reason fails to consummate
the REIT Opportunity, the Operating Partnership shall immediately provide
written notice that it is no longer pursuing such REIT Opportunity to Crescent
Operating.
(ii) If the Operating Partnership rejects a REIT Opportunity, or
accepts such REIT Opportunity but thereafter provides, or is required by the
provisions hereof to provide, written notice to Crescent Operating that it is
no longer pursuing such REIT Opportunity, Crescent Operating shall, for a period
of one year after the Operating Partnership Withdrawal Date (as hereinafter
defined), be entitled to acquire the REIT Opportunity (A) at a price, and on
terms and conditions, that are not more favorable to Crescent Operating in any
material respect than the price and terms and conditions set forth in the
Crescent Operating Notice relating to such REIT Opportunity or (B) if the
Operating Partnership, at any time after the Crescent Operating Notice,
negotiated a different price, terms or conditions with the seller, then at a
price, and on terms and conditions, that are not more favorable than, the price
and terms and conditions negotiated by the Operating Partnership with the
seller). If Crescent Operating does not enter into a binding agreement to
acquire the REIT Opportunity within such one-year period, or if the price and
terms and conditions are more favorable to Crescent Operating in any material
respect than the price and terms and conditions set forth in the Crescent
Operating Notice (or, if applicable, than the
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<PAGE> 4
price and terms and conditions negotiated by the Operating Partnership with the
seller subsequent to the Crescent Operating Notice), Crescent Operating shall
again be required to comply with the procedures set forth above in Section
2(a)(i) if it desires to acquire such REIT Opportunity. The Operating
Partnership Withdrawal Date means any one of the following dates, as applicable:
(A) the date that the Operating Partnership notifies Crescent Operating that it
has rejected the REIT Opportunity, (B) if the Operating Partnership does not
respond to Crescent Operating regarding the REIT Opportunity, the expiration
date of the Ten-Day Period, or (C) if the Operating Partnership accepts the REIT
Opportunity but subsequently ceases to pursue the opportunity, the earlier of
(i) 30 days after the date on which the Operating Partnership ceases to pursue
the REIT Opportunity or (ii) the date of receipt by Crescent Operating of
written notice from the Operating Partnership that it is no longer pursuing the
REIT Opportunity.
(iii) Crescent Operating agrees to use its commercially
reasonable best efforts to assist the Operating Partnership in structuring and
consummating any REIT Opportunity accepted by the Operating Partnership, on
terms determined by the Operating Partnership (including without limitation
structuring such investment opportunity as a "REIT-Qualified Investment," as
hereinafter defined). A "REIT-Qualified Investment" means an investment, the
income from which would qualify under the 95% gross income test set forth in
section 856(c)(2) of the Code, the ownership of which would not cause a REIT to
violate the asset limitations set forth in section 856(c)(5) of the Code, and
which otherwise meets the federal income tax requirements applicable to REITs.
Any expenses incurred that are directly related to structuring an investment as
a REIT-Qualified Investment shall be borne solely by the Operating Partnership.
(b) Notification Right. In the event that Crescent Operating develops
or becomes aware of any investment opportunity during the term of this Agreement
(other than a REIT Opportunity), and Crescent Operating is not interested in
pursuing such opportunity, or the opportunity is otherwise unavailable to
Crescent Operating, Crescent Operating shall immediately notify the Operating
Partnership of such opportunity and provide to the Operating Partnership a copy
of all written information, and a description of all material terms not set
forth in writing, available to Crescent Operating concerning such opportunity.
3. Crescent Operating Right of First Opportunity for Tenant Opportunity.
(a) During the term of this Agreement, if the Operating Partnership
develops a Tenant Opportunity, or if a Tenant Opportunity otherwise becomes
available to the Operating Partnership, the Operating Partnership shall first
offer such Tenant Opportunity to Crescent Operating. The offer shall be made by
written notice (the "Operating Partnership Notice") from the Operating
Partnership to Crescent Operating, which Operating Partnership Notice shall
contain a detailed description of the material terms and conditions under which
the Operating Partnership
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<PAGE> 5
proposes to offer such Tenant Opportunity to Crescent Operating. The Operating
Partnership shall thereafter provide or cause to be provided promptly to
Crescent Operating such additional information relating to the Tenant
Opportunity as Crescent Operating reasonably may request. For a period of 30
days after the date that the Operating Partnership delivers the Operating
Partnership Notice to Crescent Operating, the Operating Partnership and Crescent
Operating shall negotiate with each other on an exclusive basis with respect to
such Tenant Opportunity. If the Operating Partnership and Crescent Operating are
unable to enter into a mutually satisfactory arrangement with respect to the
Tenant Opportunity within such 30-day period, or if Crescent Operating indicates
that it is not interested in pursuing such Tenant Opportunity (in which event
Crescent Operating shall provide written notice to the Operating Partnership as
soon as Crescent Operating decides against pursuing such opportunity), then the
Operating Partnership shall be free for a period of one year after the
expiration of such 30-day period to enter into a binding agreement with
respect to such Tenant Opportunity with any party at a price and on
terms and conditions that are not more favorable to the Operating Partnership in
any material respect than the price and terms and conditions last proposed in
writing by the Operating Partnership to Crescent Operating. If the Operating
Partnership does not enter into a binding agreement with respect to such
Tenant Opportunity within such one-year period, or if the price
and terms and conditions are more favorable to the Operating Partnership in any
material respect than the price and terms and conditions last proposed in
writing by the Operating Partnership to Crescent Operating, the Operating
Partnership shall again be required to comply with the procedures set forth
above in this Section 3(a) if it desires to pursue such Tenant Opportunity.
(b) Notwithstanding anything to the contrary contained in this
Agreement, (1) the Operating Partnership shall not be required to offer to
Crescent Operating any Tenant Opportunity in connection with a proposed
acquisition until a binding contract has been entered into with respect to such
acquisition, and the consummation of any agreement between the Operating
Partnership and Crescent Operating with respect to a Tenant Opportunity shall
be subject to the actual closing of such acquisition by the Operating
Partnership, (2) the Operating Partnership shall have the right in its sole
discretion to decide not to pursue, or to discontinue at any time pursuing, any
investment opportunity, even if such opportunity, if pursued, would create a
Tenant Opportunity, and (3) the Operating Partnership shall have no obligation
to offer any opportunity other than a Tenant Opportunity to Crescent Operating.
(c) Crescent Operating agrees to cooperate with the Operating
Partnership in structuring all dealings with outside parties in connection with
any Tenant Opportunity that Crescent Operating and the Operating Partnership
agree to enter into pursuant to Section 3(a) above. Crescent Operating agrees
to cooperate with the Operating Partnership in structuring any Tenant
Opportunity with the Operating Partnership as a "REIT-Qualified Investment" for
the Operating Partnership. The Operating Partnership shall have the right, in
its sole discretion, to structure any investment as a REIT-Qualified Investment,
even if such structuring prevents the Operating Partnership from creating a
Tenant Opportunity for Crescent Operating.
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<PAGE> 6
4. General Terms and Conditions for Rights of First Opportunity/
Notification Rights.
(a) Unless waived or unless agreed to as part of an investment,
each party shall bear its own expenses with respect to any opportunity to which
this Agreement is applicable, and each party agrees that it shall not be
entitled to any compensation from the other party with respect to any such
opportunity.
(b) A party shall not be required to comply with the right of
first opportunity and notification requirements set forth in this Agreement
during any period in which the other party or any Controlled Affiliate of such
other party (as hereinafter defined) is in default of this Agreement or any
other agreement entered into by the parties hereto or any of their Controlled
Affiliates, if such default is material and remains uncured for fifteen days
after receipt of notice thereof. A "Controlled Affiliate" of a party means any
entity controlled by, controlling or under common control with such party.
(c) Any opportunity which is offered to a party under this
Agreement and rejected by such party may thereafter be offered to Insiders,
subject to the reoffer provisions set forth in Sections 2(a)(ii) and 3(a) above.
(d) Any opportunity which is offered to and accepted by the
Operating Partner ship under this Agreement may be entered into by or on behalf
of the Operating Partnership or by any designee which is a Company Affiliate or
Controlled Affiliate of the Operating Partnership. Any opportunity which is
offered to and accepted by Crescent Operating under this Agreement may be
entered into by or on behalf of Crescent Operating or by any designee which is
a Controlled Affliate of Crescent Operating.
(e) All right of first opportunity and notification rights set
forth in this Agreement shall be subordinated to any seller consent and
confidentiality requirements; no party shall
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<PAGE> 7
be required to comply with the first opportunity and notification rights set
forth in this Agreement if such compliance would violate any seller consent or
confidentiality requirements.
(f) While it is the intention of the parties to align their
businesses in accordance with the terms of this Agreement, each party shall act
independently in its own best interests, and neither party shall be considered
a partner or agent of the other party or to owe any fiduciary or other common
law duties to the other party.
5. Specific Performance. Each party hereto hereby acknowledges that the
obligations undertaken by it pursuant to this Agreement are unique and that the
other party hereto would likely have no adequate remedy at law if such party
shall fail to perform its obligations hereunder, and such party therefor
confirms that the other party's right to specific performance of the terms of
this Agreement is essential to protect the rights and interests of the other
party. Accordingly, in addition to any other remedies that a party hereto may
have at law or in equity, such party shall have the right to have all
obligations, covenants, agreements and other provisions of this Agreement
specifically performed by the other party hereto and the right to obtain a
temporary restraining order or a temporary or permanent injunction to secure
specific performance and to prevent a breach or threatened breach of this
Agreement by the other party hereto. Each party submits to the jurisdiction of
the courts of the State of Delaware for this purpose.
6. Affiliates. Each party hereto shall cause all entities that are under
its control to comply with the terms hereof. Crescent Equities, by its
signature below, hereby agrees that it and Crescent Real Estate Equities, Ltd.
shall comply with the terms of this Agreement applicable to the Operating
Partnership.
7. Term. The term of the Agreement shall commence as of the date first
written above and shall terminate on December 31, 2007. Notwithstanding the
foregoing, (i) this Agreement shall terminate if Crescent Equities terminates it
REIT status for any reason, and (ii) a party hereto may terminate this Agreement
if the other party or any Controlled Affiliate of such other party is in default
of this Agreement or any other agreement entered into by the parties hereto or
any of their Controlled Affiliates, if such default is material and remains
uncured for fifteen days after receipt of notice thereof.
8. Miscellaneous.
(a) Notices. Notices shall be sent to the parties at the following
addresses:
Crescent Real Estate Equities Limited Partnership
777 Main Street, Suite 2100
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<PAGE> 8
Fort Worth, Texas 76102
Facsimile: 817-878-0429
with a copy to:
-------------------------
-------------------------
Facsimile:
-------------
Crescent Operating, Inc.
777 Main Street, Suite 2100
Fort Worth, Texas 76102
Facsimile: 817-878-0429
with a copy to:
-------------------------
-------------------------
Facsimile:
-------------
Notices may be sent be certified mail, return receipt requested, Federal
Express or comparable overnight delivery service, or facsimile. Notice will be
deemed received on the fourth business day following deposit in U.S. mail and
on the first business day following deposit with Federal Express or other
delivery service, or transmission by facsimile. Any party to this Agreement may
change its address for notice by giving written notice to the other party at
the address and in accordance with the procedures provided above.
(b) Reasonable and Necessary Restrictions. Each of the parties
hereto hereby acknowledges and agrees that the restrictions, prohibitions and
other provisions of this Agreement are reasonable, fair and equitable in
scope, term and duration, are necessary to protect the legitimate business
interests of the parties hereto and are a material inducement to the parties
hereto to enter into the transactions described in and contemplated by the
recitals hereto. Each party hereto covenants that it will not sue to challenge
the enforceability of this Agreement or raise any equitable defense to its
enforcement.
(c) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective successors and
assigns. This Agreement shall not be assigned without the express written
consent of each of the parties hereto. Notwithstanding the foregoing, this
Agreement may be assigned without the consent of any party hereto in connection
with any merger, consolidation, reorganization or other combination of a party
with or into another entity where the party is not the surviving entity.
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<PAGE> 9
(d) Amendments; Waivers. No termination, cancellation, modification,
amendment, deletion, addition or other change in this Agreement, or any
provision hereof, or waiver of any right or remedy herein provided, shall be
effective for any purpose unless such change or waiver is specifically set
forth in a writing signed by the party or parties to be bound thereby. The
waiver of any right or remedy with respect to any occurrence on one occasion
shall not be deemed a waiver of such right or remedy with respect to such
occurrence on any other occasion.
(e) Choice of Law. This Agreement and the rights and obligations of
the parties hereunder shall be governed by the laws of the State of Delaware,
without regard to the principles of choice of law thereof.
(f) Severability. In the event that one or more of the terms or
provisions of this Agreement or the application thereof to any person(s) or in
any circumstance(s) shall, for any reason and to any extent be found by a
court of competent jurisdiction to be invalid, illegal or unenforceable, such
court shall have the power, and hereby is directed, to substitute for or limit
such invalid term(s), provision(s) or application(s) and to enforce such
substituted or limited terms or provisions, or the application thereof.
Subject to the foregoing, the invalidity, illegality or enforceability of any
one or more of the terms or provisions of this Agreement, as the same may be
amended from time to time, shall not affect the validity, legality or
enforceability of any other term or provision hereof.
(g) Entire Agreement; No Third-Party Beneficiaries. This Agreement
(i) constitutes the entire agreement and supersedes all prior agreements,
understandings, negotiations and discussions, whether written or oral, between
the parties hereto with respect to the subject matter hereof, so that no such
external or separate agreement relating to the subject matter of this Agreement
shall have any effect or be binding, unless the same is referred to
specifically in this Agreement or is executed by the parties after the date
hereof; and (ii) is not intended to confer upon any other person any rights or
remedies hereunder, and shall not be enforceable by any party not a signatory
to this Agreement.
(h) Gender; Number. As the context requires, any word used herein in
the singular shall extend to and include the plural, any word used in the
plural shall extend to and include the singular and any word used in any gender
or the neuter shall extend to and include each other gender or be neutral.
(i) Headings. The headings of the sections hereof are inserted for
convenience of reference only and are not intended to be a part of or affect
the meaning or interpretation of this Agreement or of any term or provision
hereof.
(j) Counterparts. This Agreement may be executed in two or more
counterparts, each of which together shall be deemed to be an original and all
of which together shall be deemed to constitute one and the same agreement.
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<PAGE> 10
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed by one of its duly authorized corporate officers, as of the date
first above written.
CRESCENT REAL ESTATE EQUITIES
LIMITED PARTNERSHIP, a Delaware limited
partnership
By: Crescent Real Estate Equities, Ltd.,
a Delaware corporation, its sole
general partner
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
CRESCENT OPERATING, INC., a Delaware
corporation
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
The undersigned, on its own behalf and in its capacity as the sole
shareholder of Crescent Real Estate Equities, Ltd., the sole general partner of
the Operating Partnership, hereby agrees to the restrictions imposed upon it
and Crescent Real Estate Equities, Ltd. pursuant to Section 6 of the Agreement.
CRESCENT REAL ESTATE EQUITIES COMPANY,
a Texas real estate investment trust
By:
------------------------------------
Name:
-------------------------------
Title:
------------------------------
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