<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 6, 1997
REGISTRATION NO. 333-
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
SIGNATURE INNS, INC.
(Exact name of Registrant as specified in its charter)
INDIANA 35-1426996
- -------------------------------- -----------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
250 East 96th Street, Suite 450
Indianapolis, Indiana 46240
- ---------------------------------------- ---------------------
(Address of principal executive offices) (Zip Code)
SIGNATURE INNS, INC.
1996 EQUITY INCENTIVE PLAN
(Full title of the Plan)
Thomas N. Eckerle, Esquire
JOHNSON SMITH PENCE
DENSBORN WRIGHT & HEATH
1800 One Indiana Square
Indianapolis, Indiana 46204
Telephone:(317) 686-4240
------------------------
(Name, Address, Telephone Number, including area code of agent for service)
<TABLE>
CALCULATION OF REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------
<CAPTION>
TITLE OF PROPOSED PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO AMOUNT TO BE MAXIMUM OFFERING AGGREGATE OFFERING REGISTRATION
BE REGISTERED REGISTERED PRICE PER SHARE* PRICE FEE
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock,
no par 750,000 shares $6.00 $4,500,000 $1,552
- ---------------------------------------------------------------------------------------------------
* Estimated pursuant to Rule 457 (c) and (h) solely for the purpose of
calculating the registration fee based upon the average of the bid and
asked price of the Common Stock on May 27, 1997.
</TABLE>
<PAGE> 2
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The Registrant's latest Annual Report on Form 10-KSB originally filed
with the Securities and Exchange Commission (the "Commission") on March, 28,
1997, containing audited financial statements for the fiscal year ended December
31, 1996, and the Registrant's Quarterly Report on Form 10-QSB originally filed
with the Commission on May 15, May 28, 19971997, containing unaudited financial
statements for the fiscal quarter ended March 31, 1997, are hereby incorporated
by reference into this Registration Statement.
The description of the Registrant's Common Stock contained in the
Registrant's Form SB-2, as amended, which was originally filed with the
Commission on September 26, 1996, and which was declared effective as of January
21, 1997, is hereby incorporated by reference into this Registration Statement.
All documents filed subsequent to the filing of this Form S-8 by the
Registrant with the Commission pursuant to Section 13 (a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), prior to
the filing of a post-effective amendment to this Form S-8 which indicates that
all securities offered have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference into this
Registration Statement and to be a part hereof from the date of filing such
documents.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
None
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Indiana Code Section 23-1-37-1 eq seq. grants to each corporation
organized under the laws of the State of Indiana, the right, privilege and power
to indemnify any director, officer, employee or agent of such corporation, or
such party who is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation,
2
<PAGE> 3
partnership, joint venture, trust or other enterprise, against liability
incurred by him in connection with any threatened, pending or contemplated
action, suit or proceeding, whether civil, criminal, administrative or
investigative and whether formal or informal, if his conduct was in good faith
and he reasonably believed that, in the case of conduct in his capacity with the
corporation, that his conduct was in the corporation's best interests, and in
all other cases, that his conduct was at least not opposed to its best
interests. In the case of a criminal proceeding, however, the corporation may
indemnify such an individual if he either had reasonable cause to believe his
conduct was lawful, or had no reasonable cause to believe his conduct was
unlawful. Additionally, unless limited by its articles of incorporation, an
Indiana corporation must indemnify officers and directors who are wholly
successful, on the merits or otherwise, in the defense of any proceeding to
which such director or officer was a party because that director or officer is
or was a director or officer of the corporation against reasonable expenses
incurred by that director or officer in connection with the proceeding. This
statutory provision for indemnification does not exclude any of the rights to
indemnification or advances for expenses that such a person may have under the
corporation's articles of incorporation or by-laws, a resolution of the board of
directors or of stockholders, or any other authorization, whenever adopted,
after notice, by a majority vote of all of the voting shares then issued and
outstanding.
The Registrant's Articles of Incorporation provide for the
indemnification as afforded by Indiana statutory law described above. In
accordance with Indiana law, the Articles of Incorporation provide that the
Registrant may advance expenses incurred by a person eligible for such
indemnification prior to the final disposition of any proceedings upon receipt
of an undertaking by or on behalf or the recipient of such an advance to repay
such amount unless he is ultimately determined to be entitled to such
indemnification.
The Registrant has in effect a policy of insurance indemnifying it
against certain liabilities to its directors and officers, and indemnifying its
directors and officers against certain liabilities incurred by them, all within
specific limits. The Registrant pays all premiums on such insurance policies.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court
3
<PAGE> 4
of appropriate jurisdiction the question whether such indemnification by it is
against public policy are expressed in the Act and will be governed by the final
adjudication of such issue.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not Applicable.
ITEM 8. EXHIBITS.
The list of exhibits is incorporated herein by reference to the Index to
Exhibits at page 7.
ITEM 9. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement to include
any additional or changed material information on the plan of
distribution;
(2) For the purpose of determining any liability under the Securities
Act of 1933, to treat each such post-effective amendment as a new
registration statement relating to the securities offered therein, and
the offering of such securities at that time to be the initial bona
fide offering thereof;
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering; and
(4) To deliver or cause to be delivered with the prospectus to each
employee to whom the prospectus is sent or given a copy of the
Registrant's annual report to stockholders for its last fiscal year,
unless such employee otherwise has received a copy of such report, in
which case the Registrant shall state in the prospectus that it will
promptly furnish, without charge, a copy of such report on written
request of the employee. If the last fiscal year of the Registrant has
ended within 120 days prior to the use of the prospectus, the annual
report of the Registrant for the preceding fiscal year may be so
delivered, but within such 120 day period the annual report for the
last fiscal year will be furnished to each such employee.
4
<PAGE> 5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Indianapolis, State of Indiana, on the 20th day of
May, 1997.
SIGNATURE INNS, INC.
Date: May 20, 1997 By: /s/ John D. Bontreger
------------------------------------------
John D. Bontreger, Chairman of the Board,
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities and on the
date indicated:
Date: May 20, 1997 /s/ Mark D. Carney
---------------------------------------------
Mark D. Carney, Vice President-Finance,
Chief Financial Officer and Director of
Signature Inns, Inc.
Date: May 20, 1997 /s/ Martin D. Brew
---------------------------------------------
Martin D. Brew, Treasurer and Controller
Date: May 20, 1997 /s/ Bo L. Hagood
---------------------------------------------
Bo L. Hagood, Vice President Hotel Operations
and Director of Signature Inns, Inc.
5
<PAGE> 6
Date: May 20, 1997 /s/ David R. Miller
---------------------------------------------
David R. Miller, Secretary, Executive Director
Sales and Marketing and Director of Signature
Inns, Inc.
Date: May 20, 1997 /s/ Stephen M. Huse
---------------------------------------------
Stephen M. Huse, Director of Signature Inns
Inc.
Date: May 20, 1997 /s/ George A. Morton
---------------------------------------------
George A. Morton, Director of Signature Inns,
Inc.
Date: May 20, 1997 /s/ Richard L. Russell
---------------------------------------------
Richard L. Russell, Director of Signature Inns,
Inc.
Date: May 20, 1997 /s/ William S. Watson
---------------------------------------------
William S. Watson, Director of Signature Inns,
Inc.
6
<PAGE> 7
INDEX TO EXHIBITS
-----------------
The following exhibits accompany this Registration Statement pursuant
to Item 601 of Regulation S-B.
<TABLE>
<CAPTION>
Exhibit Number Description of Exhibit
-------------- ----------------------
<S> <C>
4 Signature Inns, Inc., 1996 Equity Incentive Plan
5 Opinion of JOHNSON SMITH PENCE
DENSBORN WRIGHT & HEATH re legality
23 Consent of Counsel (included in Exhibit 5)
</TABLE>
7
<PAGE> 1
EXHIBIT 4
---------
1996 EQUITY INCENTIVE PLAN
--------------------------
ARTICLE 1
---------
ESTABLISHMENT, PURPOSE AND DURATION
-----------------------------------
1.1. ESTABLISHMENT OF THE PLAN. Signature Inns, Inc., an Indiana
corporation (hereinafter referred to as the "Company"), hereby establishes an
equity incentive compensation plan to be known as the "Signature Inns, Inc. 1996
Equity Incentive Plan" (hereinafter referred to as the "Plan"), as set forth in
this document. The Plan permits the granting of Non-qualified Stock Options,
Incentive Stock Options and Restricted Stock.
Upon approval by the Board of Directors of the Company, subject to
ratification by an affirmative vote of holders of a majority of Shares present
and entitled to vote at the 1996 Annual Meeting at which a quorum is present,
the Plan shall become effective as of February 20, 1996 (the "Effective Date"),
and shall remain in effect as provided in Section 1.3 herein.
1.2. PURPOSE OF THE PLAN. The purpose of the Plan is to promote the
success, and enhance the value, of the Company by linking the personal interests
of Employees and Directors with those of Company stockholders.
The Plan is further intended to provide flexibility to the Company in
its ability to motivate, attract and retain the services of Employees upon whose
judgment, interest and special effort the successful conduct of its operation
largely is dependent.
1.3. DURATION OF THE PLAN. Subject to approval by the Board of
Directors of the Company and ratification by the stockholders of the Company,
the Plan shall commence on the Effective Date and shall remain in effect,
subject to the right of the Board of Directors to terminate the Plan at any time
pursuant to Article 14 herein, until all Shares subject to it shall have been
purchased or acquired according to the Plan's provisions. However, in no event
may an Award be granted under the Plan on or after the tenth (10th) anniversary
of the Plan's Effective Date.
1.4. PRIOR INCENTIVE STOCK OPTION PLAN SUPERSEDED. The Plan is intended
to supersede and replace the 1986 Signature Inns, Inc. Incentive Stock Option
Plan and to govern in all respects any outstanding unexercised stock options
granted under that plan. In addition, any unissued incentive stock options
reserved for issuance under the prior plan are, upon adoption of this Plan,
reserved for issuance hereunder.
ARTICLE 2
---------
DEFINITIONS AND CONSTRUCTION
----------------------------
2.1. DEFINITIONS. Whenever used in the Plan, the following terms shall
have the meanings set forth below:
(a) "Award" means, individually or collectively, a grant under this
Plan of Non-qualified Stock Options, Incentive Stock Options or
Restricted Stock.
<PAGE> 2
(b) "Board" or "Board or Directors" means the Board of Directors of
the Company.
(c) "Cause" means Participant's personal dishonesty, incompetence,
willful misconduct, breach of fiduciary duty involving personal
profit, intentional failure to perform stated duties, willful
violation of any law, rule, or regulation (other than traffic
violations or similar offenses) or final cease-and-desist order,
or material breach of this agreement. For purposes of this
subsection, no act, or failure to act, on Participant's part
shall be considered "willful" unless done, or omitted to be
done, not in good faith and without reasonable belief that the
action or omission was in the best interest of the Company. In
determining incompetence, the acts or omissions shall be
measured against standards generally prevailing in the hotel
industry. Notwithstanding the foregoing, the Participant shall
be deemed to have been terminated for Cause upon the affirmative
vote of not less than fifty percent (50%) of the quorum of the
Board at a meeting of the Board called and held for that
purpose, which vote shall be recorded in the minutes of such
meeting.
(d) "Change in Control" of the Company shall be defined in
accordance with Section 10.2 herein.
(e) "Code" means the Internal Revenue Code of 1986, as amended and
in effect from time to time, or any successor statute thereto.
(f) "Committee" means the Committee, as specified in Article 3,
appointed by the Board to administer the Plan or the Board if a
Committee has not been appointed.
(g) "Company" means Signature Inns, Inc., an Indiana corporation
(including any and all Subsidiaries), or any successor thereto
as provided in Article 14 herein.
(h) "Director" means any individual who is a member of the Board of
Directors of the Company or Subsidiary who is not an Employee of
the Company or Subsidiary on the relevant date.
(i) "Disability" means a permanent and total disability as
determined under procedures established by the Committee for
purposes of the Plan.
(j) "Employee" means a full-time, salaried Employee of the Company
or a Subsidiary. Directors who are not otherwise employed by the
Company shall not be considered Employees under this Plan.
(k) "Exchange Act" means the Securities Exchange Act of 1934, as
amended and in effect from time to time, or any successor
statute thereto.
(1) "Fair Market Value" of a Share on any particular date is the
closing market price of a Share on the relevant date, according
to a stock quotation source selected by the Committee. If the
Shares did not trade on the relevant date, the Fair Market Value
is determined as of the most recent preceding date for which a
quoted price is available, or as of the most recent date for
which quoted bid and asked prices are available, whichever is
the most recent, from a qualified third party selected by the
Committee.
2
<PAGE> 3
Should Fair Market Value be determined at the time of the most
recent quoted bid and asked prices, Fair Market Value shall be
equal to the average of such bid and asked prices. In the event
none of the foregoing information is available, Fair Market
Value for a relevant date shall be established by the Board of
Directors.
(m) "Incentive Stock Option," or "ISO," means an option to purchase
Shares granted under Article 6 herein, which is designated as an
Incentive Stock Option and is intended to meet the requirements
of Section 422 of the Code.
(n) "Non-qualified Stock Option," or "NQSO," means an option to
purchase Shares, granted under Article 6 herein, which is not
intended to be an Incentive Stock Option.
(o) "Option" means an Incentive Stock Option or a Non-qualified
Stock Option.
(p) "Option Price" means the price at which a Share may be purchased
by a Participant pursuant to an Option, as determined by the
Committee.
(q) "Participant" means an Employee or Director of the Company who
has outstanding an Award granted under the Plan.
(r) "Period of Restriction" means the period during which the
transfer of Shares of Restricted Stock is limited in some way
(based on the passage of time, the achievement of performance
goals, or upon the occurrence of other events as determined by
the Committee, in its discretion), and the Shares are subject to
a substantial risk of forfeiture, as provided in Article 7
herein.
(s) "Person" shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act.
(t) "Retirement" means termination of a Participant's employment
with the Company after the Participant attains age 65.
(u) "Restricted Stock" means an Award granted to an Employee or
Director pursuant to Article 7 herein.
(v) "Rule 16b-3" means Rule 16b-3, as promulgated by the Securities
and Exchange Commission, or its successor agency, under Section
16(b) of the Exchange Act, as amended and in effect from time to
time, or its successor provision.
(w) "Shares" mean the Common Stock of the Company.
(x) "Subsidiary" means any corporation in which the Company owns
directly, or indirectly through subsidiaries, at least 50
percent of the total combined voting power of all classes of
stock, or any other entity (including, but not limited to,
partnerships and joint ventures) in which the Company owns at
least 50 percent of the combined equity thereof; provided,
however, that with respect to Incentive Stock Options, it has
the meaning set forth in Section 424(f) of the Code.
3
<PAGE> 4
2.2. GENDER AND NUMBER. Except where otherwise indicated by the
context, any masculine term used herein also shall include the feminine; and,
the plural shall include the singular and the singular shall include the plural.
2.3. SEVERABILITY. In the event any provision of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.
ARTICLE 3
---------
ADMINISTRATION
--------------
3.1. THE COMMITTEE. The Plan shall be administered exclusively by a
Committee appointed by the Board of Directors consisting of not less than two
(2) Directors who serve on the Compensation Committee and who shall be appointed
from time to time by, and shall serve at the discretion of, the Board. No member
of the Committee shall receive any Award pursuant to the Plan or any similar
plan of the Company or any of its Subsidiaries while serving on the Committee,
or shall have received any such Award at any time within one (1) year prior to
his or her service on the Committee (or, if different, for the time period just
necessary to fulfill the then requirements of Rule 16b-3), other than Restricted
Stock Shares pursuant to Section 7.2. However, if for any reason the Committee
does not qualify to administer the Plan, as contemplated by Rule 16b-3, the
Board may appoint a new Committee so as to comply with Rule 16b-3. Subject to
the foregoing, the Board may from time to time remove members from the
Committee, fill all vacancies in the Committee, however caused, and may select
one of the members of the Committee to serve as its Chairman.
3.2. AUTHORITY OF THE COMMITTEE. The Committee shall have sole power
except as limited by law or by the Articles of Incorporation or Bylaws of the
Company, and subject to the provisions herein, to determine the size and types
of Awards; to determine the terms and conditions of such Awards in a manner
consistent with the Plan; and (subject to the provisions of Article 11 herein)
to amend the terms and conditions of any outstanding Award to the extent such
terms and conditions are within the discretion of the Committee as provided in
the Plan. The Committee shall recommend any of foregoing determinations and
actions in respect of Awards to the Board of Directors, which shall only accept
or reject such recommendations, acting by affirmative vote of not less than
fifty percent of Directors attending a meeting of the Board called and held for
that purpose. No Awards may be granted other than those recommended by the
Committee.
The Committee shall also have the sole power to construe and interpret
the Plan and any agreement or instrument entered into under the Plan; and to
establish, amend or waive rules and regulations for the Plan's administration.
Further, the Committee shall make all other determinations which may be
necessary or advisable for the administration of the Plan. As permitted by law,
the Committee may delegate its authorities as identified hereunder.
The discretion of the Committee shall be limited to the extent
necessary to retain the status of the members of the Committee as "disinterested
persons" pursuant to Rule 16b-3.
3.3. DECISIONS BINDING. All determinations and decisions made by the
Committee pursuant to the provisions of the Plan and all related orders or
resolutions of the Board shall be final, conclusive and binding on all Persons,
including the Company, its stockholders, Employees, Participants and their
respective successors.
4
<PAGE> 5
ARTICLE 4
---------
SHARES SUBJECT TO THE PLAN
--------------------------
4.1. NUMBER OF SHARES. Subject to adjustment as provided in Section 4.3
herein, the aggregate number of Shares available for grant under the Plan shall
not exceed 750,000 (which includes all Shares in any options awarded under prior
plans), provided, however, (i) no more than five (5) percent of the Shares
available for grant under the Plan shall be granted other than through Options;
and (ii) Shares subject to the Plan (and prior plans) at any time shall not
exceed ten (10) percent of then issued and outstanding Shares. The Shares
available for grant under the Plan may be either authorized but unissued or
Shares that have been reacquired by the Company. The grant of an Option or
Restricted Stock Award shall reduce the Shares available for grant under the
Plan by the number of Shares subject to such Award.
4.2. LAPSED AWARDS. If any Award granted under this Plan (or prior
plans) terminates, expires, or lapses for any reason, any Shares subject to such
Award again shall be available for the grant of an Award under the Plan, with
the exception of Restricted Stock Awards upon which dividends have been paid to
the Participants.
4.3. ADJUSTMENTS IN AUTHORIZED SHARES. Except as provided in Section
4.4 hereof, in the event of any merger, reorganization, consolidation,
recapitalization, separation, liquidation, stock dividend or split, reverse
stock split, split-up, Share combination, or other change in the corporate
structure of the Company affecting the Shares (in each case, a "Capital
Readjustment"), such adjustment shall be made in the number and class of Shares
which may be delivered under the Plan, and in the number and class of and/or
price of Shares subject to outstanding Options and Restricted Stock granted
under the Plan, as may be determined to be appropriate and equitable by the
Committee, in its sole discretion, to prevent dilution or enlargement of rights;
and provided that the number of Shares subject to any Award shall always be a
whole number.
4.4. CERTAIN CAPITAL READJUSTMENTS IGNORED. Section 4.3 hereof will not
apply to a Capital Readjustment which occurs within eighteen (18) months after
approval by the stockholders of the Company of the Plan.
ARTICLE 5
---------
ELIGIBILITY AND PARTICIPATION
-----------------------------
5.1. ELIGIBILITY. Persons eligible to participate in this Plan include
all Employees of the Company, including Employees who are members of the Board,
and all Directors, including Directors of Subsidiaries; provided, however, that
Directors shall be eligible to receive Awards only pursuant to Section 7.2 of
this Plan.
5.2. ACTUAL PARTICIPATION. Subject to the provisions of the Plan, the
Committee may, from time to time, select from all eligible Employees those to
whom Awards shall be granted and shall determine the nature and amount of each
Award. No Employee or Director shall have any right to be granted an Award under
this Plan.
5
<PAGE> 6
ARTICLE 6
---------
STOCK OPTIONS
-------------
6.1. GRANT OF OPTIONS. Subject to the terms and provisions of the Plan,
Options may be granted to Employees at any time and from time to time as shall
be determined by the Committee. The Committee shall have discretion in
determining the number of Shares subject to Options granted to each Employee.
The Committee may grant ISOs, NQSOs, or a combination thereof. Nothing in this
Article 6 shall be deemed to prevent the grant of NQSOs in excess of the limits
on ISO grants imposed by Section 422 of the Code. Notwithstanding anything in
this Section 6.1 to the contrary, the aggregate Fair Market Value of Shares with
respect to which ISOs are exercisable, determined as of the date of grant, for
the first time by a grantee in any calendar year under the Plan shall not exceed
$100,000.
6.2. OPTION AGREEMENT. Each Option grant shall be evidenced by an
Option agreement that shall specify the Option Price, the duration of the
Option, the number of Shares to which the Option pertains, and the percentage of
the Option that becomes exercisable on specified dates in the future. The Option
agreement also shall specify whether the Option is intended to be an ISO within
the meaning of Section 422 of the Code or a NQSO whose grant is intended not to
be subject to the provisions of such Section 422. The Option agreement may
contain such other provisions as the Committee deems advisable, including an
obligation of the Company, to be undertaken at its own expense, to list,
register or qualify Shares subject to the Option upon any applicable securities
exchange or under any applicable Federal or state law.
6.3. OPTION PRICE. The Option Price for each grant of an Option to an
Employee shall be determined by the Committee, provided that (a) the Option
Price shall not be less than the Fair Market Value of the Share(s) covered by
the Option on the date of grant; and (b) if at the time an ISO is granted the
grantee owns or would be considered to own by reason of Section 424(d) of the
Code more than ten (10) percent of the total combined voting power of all
classes of stock of the Company or any Subsidiary, the Option Price of the
Shares covered by such ISO shall be not less than 110 percent of the Fair Market
Value of a Share on the date of grant.
6.4. DURATION OF OPTIONS. Except as otherwise provided in this Section
6.4 or in Section 6.8 below, each Option granted to an Employee shall expire or
terminate at such time as the Committee shall determine at the time of grant. No
Option shall be exercisable later than (i) ten (10) years from the date of grant
or (ii) five (5) years from the date of grant in the case of an ISO the grantee
of which, on the date of grant, owns or would be considered to own by reason of
Section 424(d) of the Code more than ten (10) percent of the total combined
voting power of all classes of stock of the Company or any Subsidiary.
6.5. EXERCISE OF OPTIONS. Options granted to Employees under the Plan
shall be exercisable at such times and be subject to such restrictions and
conditions as the Committee shall in each instance approve, which need not be
the same for each grant or for each Employee. However, each Non-qualified Stock
Option shall become exercisable in respect of 33 1/3 percent of the Shares
subject to the Option on the first, second and third anniversary of grant.
Notwithstanding any other provision of the Plan, in no event may any Option
granted under this Plan to an Employee subject to the restrictions of Section 16
of the Exchange Act become exercisable prior to six (6) months following the
date of its grant, or following the date upon which this Plan is approved by
stockholders, whichever is later.
6.6. PAYMENT. Options shall be exercised by the delivery of a written
notice of exercise to the Chief Financial Officer of the Company, setting forth
the number of Shares with respect to which the Option is to be exercised,
accompanied by payment in full of the Option Price.
6
<PAGE> 7
The Option Price upon exercise of any Option shall be payable to the
Company in full either (a) in cash or its equivalent, (b) by tendering
previously acquired Shares having a Fair Market Value at the time of exercise
equal to the total Option Price (provided that the Shares which are tendered
must have been held by the Participant for at least six (6) months prior to
their tender to satisfy the Option Price), or (c) by a combination of (a) and
(b). The proceeds from such a payment shall be added to the general funds of the
Company and shall be used for general corporate purposes. In addition, the
Company may establish a cashless exercise program in accordance with Federal
Reserve Board Regulation T.
As soon as practicable after receipt of a written notification of
exercise and payment in full of the Option Price, the Company shall deliver to
the Participant, in the participant's name, Share certificates in an appropriate
amount based upon the number of Shares purchased under the Option(s).
6.7. RESTRICTIONS ON SHARE TRANSFERABILITY. The Committee shall impose
such restrictions on any Shares acquired pursuant to the exercise of an Option
under the Plan, as it may deem advisable, including, without limitation,
restrictions under applicable Federal securities laws, under the requirements of
any stock exchange or market upon which such Shares are then listed and/or
traded, and under any blue sky or state securities laws applicable to such
Shares.
6.8. TERMINATION OF SERVICE DUE TO DEATH, DISABILITY, OR RETIREMENT.
(a) TERMINATION BY DEATH. In the event death terminates the
employment of a Participant, any outstanding Options granted to him
that are not exercisable as of the date of termination shall
immediately become exercisable. All of such Options shall remain
exercisable until their respective expiration dates, or for one (1)
year after the termination date, whichever period is shorter, by such
Person or Persons as shall have acquired the rights of the Participant
under the Option by will or by the laws of descent and distribution.
(b) TERMINATION BY DISABILITY. In the event Disability
terminates the employment of a Participant, any outstanding Options
granted to him that are not exercisable as of the date of termination
shall immediately become exercisable. All of such Options shall remain
exercisable until their respective expiration dates, or for one (1)
year after the date such Disability is determined by the Committee to
be total and permanent, whichever period is shorter. Should the
Participant die during this period, exercisability of his Options shall
be permitted for a period of one (1) year following the date of death.
(c) TERMINATION BY RETIREMENT. In the event Retirement
terminates the employment of a Participant, any outstanding Options
granted to him that are not exercisable as of the date of termination
shall immediately become exercisable. All of such Options shall remain
exercisable until their respective expiration dates, or for one (1)
year after the date of such termination, whichever period is shorter.
6.9. TERMINATION OF EMPLOYMENT FOR OTHER REASONS. Except as otherwise
provided in Section 6.8. above, if the employment of a Participant shall
terminate, all outstanding Options that are not exercisable as of the date of
termination immediately shall be forfeited to the Company. However, unless such
termination is for Cause, the Committee, in its sole discretion, shall have the
right immediately to make exercisable all or any portion of such Options.
Thereafter, all exercisable Options shall remain exercisable at any time prior
to their expiration date, or for one (1) year after the date of termination,
whichever period is shorter. If termination is for Cause, all outstanding
Options shall be immediately forfeited to the Company and no additional exercise
period shall be allowed, regardless of the status of the Options.
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6.10. NONTRANSFERABILITY OF OPTIONS. No Option granted under the Plan
may be sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will or the laws of descent and distribution.
Further, all Options granted to an Employee under the Plan shall be exercisable
during his or her lifetime only by such Employee.
6.11. SHAREHOLDER RIGHTS. A Participant holding an Option shall have no
rights as a holder of the Shares subject to such Option until the actual
issuance of such Shares to him and his payment to the Company of the full
purchase price for the Shares. No adjustment will be made for dividends or other
rights for which the record date is prior to the date of issuance of the Shares.
ARTICLE 7
---------
RESTRICTED STOCK
----------------
7.1. GRANT OF RESTRICTED STOCK TO EMPLOYEES. Subject to the terms and
provisions of the Plan, the Committee, at any time and from time to time, may
grant Shares of Restricted Stock to Employees in such amounts as the Committee
shall determine.
7.2. GRANT OF RESTRICTED STOCK TO DIRECTORS. Subject to the terms and
provisions of the Plan, including Sections 4.3 and 4.4, the Committee shall
grant to each Director for no consideration five hundred (500) Shares of
Restricted Stock, effective as of the date of his election or re-election to the
Board of Directors by the Company's stockholders, provided such Director serves
his full term as Director and subject to such other restrictions and conditions
as the Committee shall determine pursuant to Section 7.3 hereof. In addition,
subject to the foregoing restrictions and conditions, the Committee shall grant
to each Director on the Board, on the date of stockholder approval of the Plan,
for no consideration that number of Shares of Restricted Stock equal to five
hundred (500) multiplied by the fraction obtained from dividing the number of
years remaining in such Director's present term, rounded to the nearest complete
year, by three (3), with the resulting number of Shares rounded to the nearest
whole number.
7.3. RESTRICTED STOCK AGREEMENT. Each Restricted Stock grant shall be
evidenced by a Restricted Stock agreement that shall specify the Period (or
Periods) of Restriction and the number of Restricted Stock Shares granted. A
Restricted Stock agreement shall also contain such other provisions as the
Committee shall determine, including an obligation of the Company, to be
undertaken at its own expense, to list, register or qualify Restricted Stock
shares upon any applicable securities exchange or under any applicable Federal
or state law.
7.4. TRANSFERABILITY. Except as provided in this Section 7.4, the Shares
of Restricted Stock granted herein may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated until the end of the applicable
Period of Restriction established by the Committee and specified in the
Restricted Stock agreement, or upon earlier satisfaction of any other
conditions, as specified by the Committee in its sole discretion and set forth
in the Restricted Stock agreement. The Restricted Stock is subject to
substantial risk of forfeiture during the Period of Restriction. However,
notwithstanding any other provisions of the Plan, in no event may any Restricted
Stock granted under the Plan become vested in a Participant prior to six (6)
months following the date of its grant, or following the date upon which this
Plan is approved by stockholders, whichever is later. All rights with respect to
the Restricted Stock granted to a Participant under the Plan shall be available
during his or her lifetime only to such Participant and may not be transferred.
8
<PAGE> 9
7.5. OTHER RESTRICTIONS. The Committee may impose such other
restrictions on any Shares of Restricted Stock as it may deem advisable
including, without limitation, restrictions based upon the achievement of
specific performance goals (Company-wide, Subsidiary, and/or individual), and/or
restrictions under or in respect of applicable Federal or state securities or
tax laws; and may legend the certificate representing Restricted Stock to give
appropriate notice of such restrictions. The Committee may also require that
Participants make cash payments at the time of grant or upon lapsing of
restrictions. Such cash payments, if imposed, will be in an amount not less than
the par value of the Shares.
7.6. CERTIFICATE LEGEND. In addition to any legends placed on
certificates pursuant to Section 7.5 herein, each certificate representing
Shares of Restricted Stock granted pursuant to the Plan shall bear the following
legend:
"The sale or other transfer of the Shares of stock represented by
this certificate, whether voluntary, involuntary, or by operation of
law, is subject to certain restrictions on transfer as set forth in
the Signature Inns Inc. 1996 Equity Incentive Plan, and in a
Restricted Stock agreement dated . A copy of the Plan and such
Restricted Stock agreement may be obtained from the Chief Financial
Officer of Signature Inns Inc."
7.7. REMOVAL OF RESTRICTIONS. Except as otherwise provided in this
Section 7.7, Shares of Restricted Stock covered by each Restricted Stock grant
made under the Plan shall become freely transferable by the participant after
the last day of the Period of Restriction. Once the Shares are released from the
restrictions, the Participant shall be entitled to have the legend required by
Section 7.6 removed from his or her Share certificate.
7.8. VOTING RIGHTS. During the Period of Restriction, Participants
holding Shares of Restricted Stock granted hereunder may exercise full voting
rights with respect to those Shares.
7.9. DIVIDENDS AND OTHER DISTRIBUTIONS. During the Period of
Restriction, Participants holding Shares of Restricted Stock granted hereunder
shall be entitled to receive all dividends and other distributions paid with
respect to those Shares while they are so held. If any such dividends or
distributions are paid in Shares, the Shares shall be subject to the same
restrictions on transferability and forfeitability as the Shares of Restricted
Stock with respect to which they were paid.
7.10. TERMINATION OF SERVICE DUE TO DEATH OR DISABILITY. In the event
death or Disability terminates a Participant's employment with, or a Director's
service on the Board of Directors for, the Company, the restrictions on the
Restricted Stock held by him shall lapse as of the date of termination (in the
case of Disability, the restrictions shall lapse on the date the Participant's
Disability is determined by the Committee to be total and permanent).
7.11. TERMINATION OF SERVICE FOR OTHER REASONS. Except as otherwise
provided in Section 7.10. above, if the employment of the Participant or service
of a Director shall terminate for any reason, all nonvested Shares of Restricted
Stock held by him at that time immediately shall be forfeited and returned to
the Company. In the case of such a termination other than for Cause, the
Committee, in its sole discretion and with any affected Director abstaining,
shall have the right to provide for lapsing of the restrictions on Restricted
Stock following termination, upon such terms and provisions as it deems proper.
No such right shall exist in respect of a termination for Cause.
9
<PAGE> 10
ARTICLE 8
---------
BENEFICIARY DESIGNATION
-----------------------
Each Participant under the Plan may, from time to time, name any
beneficiary or beneficiaries (who may be named contingently or successively) to
whom any benefit under the Plan is to be paid in case of his or her death before
he or she receives any or all of such benefit. Each such designation shall
revoke all prior designations by the same Participant, shall be in a form
prescribed by the Company, and will be effective only when filed by the
Participant in writing with the Chief Financial Officer of the Company during
the Participant's lifetime. In the absence of any such designation, benefits
remaining unpaid at the Participant's death shall be paid to his estate.
ARTICLE 9
---------
RIGHTS OF EMPLOYEES
-------------------
9.1. EMPLOYMENT. Nothing in the Plan shall interfere with or limit in
any way the right of the Company to terminate any Participant's employment at
any time, nor confer upon any Participant any right to continue in the employ of
the Company.
For purposes of the Plan, transfer of employment of a Participant
between the Company and any one of its Subsidiaries (or between Subsidiaries)
shall not be deemed a termination of employment.
9.2. PARTICIPATION. No Employee shall have the right to be selected to
receive an Award under this Plan, or, having been so selected, to be selected to
receive a future Award.
ARTICLE 10
----------
CHANGE IN CONTROL
-----------------
10.1. GENERAL. In the event of a Change in Control of the Company as
defined in Section 10.2 below, all Options granted under this Plan that are
still outstanding and not yet exercisable shall become immediately exercisable
as of the date of the Change in Control and shall remain exercisable for their
term. Further, all restrictions placed on Restricted Stock Awards shall lapse in
the event of a Change in Control.
10.2. DEFINITION. For purposes of the Plan, a Change in Control shall
mean liquidation, dissolution, consolidation, or merger of the Company in which
the Company is not the resulting institution, or transfer of all or
substantially all of its assets in which the Company is not the resulting
institution, except, in each case, where the resulting institution is a
Subsidiary of the Company. The Board has final authority to determine the exact
date on which a Change in Control has been deemed to have occurred.
10
<PAGE> 11
ARTICLE 11
----------
AMENDMENT, MODIFICATION, AND TERMINATION
----------------------------------------
The Committee may amend, alter, or discontinue the Plan, but no
amendment, alteration or discontinuation shall be made more than once every six
(6) months or which would (i) impair an Award without the consent of the
Participant, except such an amendment made to cause the Plan to qualify for the
exemption provided by Rule 16b-3 or (ii) disqualify the Plan from the exemption
provided by Rule 16b-3. In addition, no such amendment shall be made without the
approval of the Company's stockholders to the extent such approval is required
by law, agreement or the rules of any exchange upon which the Common Stock is
listed or quoted.
The Committee may amend the terms of any Award theretofore granted,
prospectively or retroactively, but no such amendment shall impair the rights of
the Participant without his consent except such an amendment made to cause the
Plan or Award to qualify for the exemption provided by Rule 16b-3. The Committee
may also substitute new Options for previously granted Options, including
previously granted Stock Options having higher option prices.
Subject to the above provisions, the Committee shall have the authority
to amend the Plan to take into account changes in law and tax and accounting
rules, as well as other factors necessary to administer the Plan in accordance
with the intentions of the Company in establishing the Plan and to grant Awards
which qualify for beneficial treatment under such rules without shareholder
approval.
ARTICLE 12
----------
WITHHOLDING
-----------
12.1. TAX WITHHOLDING. The Company shall have the power and the right to
deduct or withhold, or require a Participant to remit to the Company, an amount
sufficient to satisfy Federal, state and local income, payroll and unemployment
taxes required to be withheld with respect to any grant, exercise, or payment
made under or as a result of this Plan.
12.2. SHARE WITHHOLDING. With respect to withholding required upon the
exercise of Options, upon the lapse of restrictions on Restricted Stock, or upon
any other taxable event hereunder, Employees may elect, subject to the approval
of the Committee, to satisfy the withholding requirement, in whole or in part,
by having the Company withhold Shares having a Fair Market Value, on the date
the tax is to be determined, equal to the minimum marginal tax which could be
imposed on the transaction.
Stock withholding upon the exercise of an Option will be done if the
Participant makes a signed, written election and one of the following occurs:
(a) The Option exercise occurs during a "window period" and the
election to use stock withholding is made at any time prior to exercise.
For this purpose, "window period" means the period beginning on the
third (3rd) business day following the date of public release of the
Company's quarterly financial information and ending on the twelfth
(12th) business day following such date. An earlier election can be
revoked up until the exercise of the Option during the window period; or
11
<PAGE> 12
(b) An election to withhold stock is made at least six (6) months
before the Option is exercised. If this election is made, then the
Option can be exercised outside of the window period.
Stock withholding upon the vesting of Restricted Stock will be done if
the Participant makes a signed, written election and one of the following
occurs:
(a) The election occurs during a window period, and the Restricted
Stock Award is subject to vesting according to a fixed schedule
established by the Committee at the time of grant; or
(b) An election to use stock withholding is made at least six (6)
months before vesting occurs.
ARTICLE 13
----------
INDEMNIFICATION
---------------
Each Person who is or shall have been a member of the Committee, or of the
Board, shall be indemnified and held harmless by the Company against and from
any loss, cost, liability, or expense that may be imposed upon or reasonably
incurred by him or her in connection with or resulting from any claim, action,
suit, or proceeding to which he or she may be a party or in which he or she may
be involved by reason of any action taken or failure to act under the Plan and
against and from any and all amounts paid by him or her in settlement thereof,
with the Company's approval, or paid by him or her in satisfaction of any
judgment in any such action, suit, or proceeding against him or her, provided he
or she shall give the Company an opportunity, at its own expense, to handle and
defend the same before he or she undertakes to handle and defend it on his or
her own behalf. The foregoing right of indemnification shall not be exclusive of
any other rights of indemnification to which such Persons may be entitled under
the Company's Certificate of Incorporation or Bylaws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold them
harmless.
ARTICLE 14
----------
SUCCESSORS
----------
All obligations of the Company under the Plan, with respect to Awards
granted hereunder, shall be binding on any successor to the Company.
ARTICLE 15
----------
REQUIREMENTS OF LAW
-------------------
15.1. REQUIREMENTS OF LAW. The granting of Awards and the issuance of
Shares under the Plan shall be subject to all applicable laws, rules, and
regulations, and to such approvals by any governmental agencies or national
securities exchanges as may be required.
15.2. GOVERNING LAW. To the extent not pre-empted by Federal law, the
Plan, and all agreements hereunder, shall be construed in accordance with and
governed by the laws of the State of Indiana.
12
<PAGE> 1
EXHIBIT 5
JOHNSON-SMITH
PENCE
DENSBORN
WRIGHT & HEATH
ATTORNEYS AT LAW
THOMAS N. ECKERLE
(317) 686-4240
May 28, 1997
Signature Inns, Inc.
250 E. 96th Street, Suite 450
Indianapolis, Indiana 46240
Re: Shares to be Issued Pursuant to Signature Inns, Inc. 1996
Equity Incentive Plan and Registered on Form S-8
Dear Sirs:
We have acted as counsel to Signature Inns, Inc., an Indiana
corporation (the "Company), in connection with the registration of shares of the
Company's Common Stock to be issued under the Company's 1996 Equity Incentive
Plan (the "Plan"), as reflected by the Company's Registration Statement on Form
S-8 (the "Registration Statement") being filed with the Securities and Exchange
Commission. This opinion is prepared and submitted pursuant to Item 601 of
Regulation S-B.
We have made such investigations of Law and fact as, in our judgment,
have been necessary to render this Opinion Letter. We have also reviewed the
Company's Constituent Documents and the Plan. As to various factual matters
relevant to our opinion, we have relied upon inquiries made by us to officers of
the Company.
This opinion is governed by and shall be interpreted in accordance with
the Legal Opinion Accord (the "Accord") of the ABA Section of Business Law
(1991). As a consequence, it is subject to a number of qualifications,
exceptions, definitions, limitations on coverage and other limitations, all as
described in the Accord, and this opinion should be read in conjunction
therewith. The law covered by the opinion expressed herein is limited to the
laws of the State of Indiana.
Based upon the foregoing, and subject to the qualifications and
exceptions set forth herein, we are of the opinion that the shares of Common
Stock of the Company to be issued under the Plan will be, at such time as all
conditions for such issuance have been satisfied, legally issued, fully paid and
nonassessable.
Suite 1800
One Indiana Square
Indianapolis, Indiana 46204
Telephone: (317) 634-9777
Facsimile: (317) 636-9061
<PAGE> 2
JOHNSON, SMITH, PENCE, DENSBORN, WRIGHT & HEATH
Page 2
Signature Inns, Inc.
May 28, 1997
We hereby consent to the filing of this opinion, or copies thereof, as
an Exhibit to the Registration Statement. In giving this consent, we do not
hereby admit that we are within the category of persons whose consent is
required under the Securities Act of 1933 or the rules and regulations of the
Securities and Exchange Commission thereunder.
Very truly yours,
/s/ Johnson, Smith, Pence
Densborn, Wright & Heath
JOHNSON, SMITH, PENCE,
DENSBORN, WRIGHT & HEATH
