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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
HOMESTEAD VILLAGE INCORPORATED
(NAME OF SUBJECT COMPANY)
COMMON STOCK, PAR VALUE $.01 PER SHARE
WARRANTS TO PURCHASE SHARES OF COMMON STOCK
(TITLE OF CLASSES OF SECURITIES)
437851 10 8
437851 11 6
(CUSIP NUMBER OF CLASSES OF SECURITIES)
JEFFREY A. KLOPF, SECRETARY
SECURITY CAPITAL GROUP INCORPORATED
125 LINCOLN AVENUE
SANTA FE, NEW MEXICO 87501
(505) 982-9292
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO RECEIVE
NOTICES AND COMMUNICATIONS)
October 22, 1996
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and filing
this schedule because of Rule 13d-1(b)(3) or (4), check the following box. [_]
Check the following box if a fee is being paid with this statement [_]. (A
fee is not required only if the reporting person: (1) has a previous statement
on file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
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- --------------------------------------------
CUSIP NOS.: 437851 10 8; 437851 11 6
- --------------------------------------------
- ------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Security Capital Group Incorporated
- ------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [_]
(b) [_]
- ------------------------------------------------------------------------------
3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC, BK, OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [_]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
STATE OF MARYLAND
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7 SOLE VOTING POWER 12,657,277 (includes 4,840,789
Shares that may be acquired
NUMBER OF upon exercise of Warrants)
SHARES -----------------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
-0-
OWNED BY
-----------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER 12,657,277 (includes 4,840,789
Shares that may be acquired
REPORTING upon exercise of Warrants)
PERSON -----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
WITH
-0-
- ------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
12,657,277 Shares (includes 4,840,789 Shares that may be acquired upon
exercise of Warrants)
- ------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[_]
- ------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
56.0%
- ------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
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CUSIP NOS.: 437851 10 8; 437851 11 6
- --------------------------------------------
- ------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
William D. Sanders
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [_]
(b) [_]
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3 SEC USE ONLY
- ------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
AF, OO
- ------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [_]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
UNITED STATES
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7 SOLE VOTING POWER 63,819 (includes 25,624 Shares
that may be acquired upon
NUMBER OF exercise of Warrants
SHARES -----------------------------------------------------------
8 SHARED VOTING POWER 12,657,277 (includes 4,840,789
BENEFICIALLY Shares that may be acquired
OWNED BY upon exercise of Warrants)
-----------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER 63,819 (includes 25,624 Shares
that may be acquired upon
REPORTING exercise of Warrants)
PERSON -----------------------------------------------------------
10 SHARED DISPOSITIVE 12,657,277 (includes 4,840,789
WITH POWER Shares that may be acquired
upon exercise of Warrants)
- ------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
12,721,096 Shares (includes 4,866,413 Shares that may be acquired upon
exercise of Warrants)
- ------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[_]
- ------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
56.0%
- ------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
IN
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SCHEDULE 13D
ITEM 1. SECURITY AND ISSUER
Shares of Common Stock, par value $.01 per share (the "Shares"), of
Homestead Village Incorporated ("Homestead") and Warrants to purchase Shares
("Warrants"), 125 Lincoln Avenue, Santa Fe, New Mexico 87501.
ITEM 2. IDENTITY AND BACKGROUND
The persons listed in Numbers 1 and 2 below are persons filing this
statement. A copy of their written agreement relating to the filing of this
joint statement is filed as Exhibit A hereto.
1. (a) Name and Organization: Security Capital Group
Incorporated, a Maryland corporation ("SCG");
(b) Principal Business: Real estate investment and management;
(c) Principal Office: 125 Lincoln Avenue, Santa Fe, New Mexico
87501;
(d) SCG has not been convicted in a criminal proceeding during the
last five years;
(e) SCG has not been subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws or
finding any violation with respect to such laws during the last
five years.
2. (a) Name: William D. Sanders;
(b) Business Address: 125 Lincoln Avenue, Santa Fe, New Mexico
87501;
(c) Principal Employment: Chairman of the Board and Chief
Executive Officer of SCG;
(d) Mr. Sanders has not been convicted in a criminal proceeding
during the last five years;
(e) Mr. Sanders has not been subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities
laws or finding any violation with respect to such laws during
the last five years;
(f) Citizenship: United States.
3. (a) Name: Samuel W. Bodman;
(b) Business Address: 75 State Street, Boston, Massachusetts
02109;
(c) Principal Employment: Chairman and Chief Executive Officer of
Cabot Corporation;
(d) Mr. Bodman has not been convicted in a criminal proceeding
during the last five years;
(e) Mr. Bodman has not been subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities
laws or finding any violation with respect to such laws during
the last five years;
(f) Citizenship: United States.
4. (a) Name: John P. Frazee, Jr.;
(b) Business Address: 9512 Bull Headley Road, Quin Que Farm,
Tallahassee, Florida 32312;
(c) Principal Employment: Private investor;
(d) Mr. Frazee has not been convicted in a criminal proceeding
during the last five years;
(e) Mr. Frazee has not been subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities
laws or finding any violation with respect to such laws during
the last five years;
(f) Citizenship: United States.
5. (a) Name: Cyrus F. Freidheim, Jr.;
(b) Business Address: 225 West Wacker Drive, Chicago, Illinois
60606;
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(c) Principal Employment: Vice Chairman of Booz, Allen & Hamilton,
Inc.;
(d) Mr. Freidheim has not been convicted in a criminal proceeding
during the last five years;
(e) Mr. Freidheim has not been subject to a judgment, decree or
final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities
laws or finding any violation with respect to such laws during
the last five years;
(f) Citizenship: United States.
6. (a) Name: H. Laurance Fuller;
(b) Business Address: 200 East Randolph Drive, Chicago, IL 60601;
(c) Principal Employment: Chairman, President and Chief Executive
Officer of Amoco Corporation;
(d) Mr. Fuller has not been convicted in a criminal proceeding
during the last five years;
(e) Mr. Fuller has not been subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities
laws or finding any violation with respect to such laws during
the last five years;
(f) Citizenship: United States.
7. (a) Name: Ray L. Hunt;
(b) Business Address: 1445 Ross at Field, 20th Floor, Dallas, TX
75202;
(c) Principal Employment: Chairman, President and Chief Executive
Officer of Hunt Consolidated, Inc., and Chairman and Chief
Executive Officer of Hunt Oil Company;
(d) Mr. Hunt has not been convicted in a criminal proceeding during
the last five years;
(e) Mr. Hunt has not been subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities
laws or finding any violation with respect to such laws during
the last five years;
(f) Citizenship: United States.
8. (a) Name: John T. Kelley, III;
(b) Business Address: 7777 Market Center Avenue, El Paso, Texas
79912;
(c) Principal Employment: Managing Member of J. Edwards Jewelry
Distributing Company, L.L.C.;
(d) Mr. Kelley has not been convicted in a criminal proceeding
during the last five years;
(e) Mr. Kelley has not been subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities
laws or finding any violation with respect to such laws during
the last five years;
(f) Citizenship: United States.
9. (a) Name: Peter S. Willmott;
(b) Business Address: 919 North Michigan Avenue, Suite 1220,
Chicago, IL 60611;
(c) Principal Employment: Chairman and Chief Executive Officer of
Willmott Services, Inc. and interim Chief Executive Officer and
President of Zenith Electronics Corporation;
(d) Mr. Willmott has not been convicted in a criminal proceeding
during the last five years;
(e) Mr. Willmott has not been subject to a judgment, decree or
final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities
laws or finding any violation with respect to such laws during
the last five years;
10. (a) Name: C. Ronald Blankenship;
(b) Business Address: 125 Lincoln Avenue, Santa Fe, New Mexico
87501;
(c) Principal Employment: Chairman of Security Capital Pacific
Trust and Managing Director of SCG;
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(d) Mr. Blankenship has not been convicted in a criminal proceeding
during the last five years;
(e) Mr. Blankenship has not been subject to a judgment, decree or
final order enjoining future violation of, or prohibiting or
mandating activities subject to, federal or state securities
laws or finding any violations with respect to such laws during
the last five years;
(f) Citizenship: United States.
11. (a) Name: Michael Simmons;
(b) Business Address: 7777 Market Center Avenue, El Paso, Texas
79912;
(c) Principal Employment: Managing Director and Chief
Administrative Officer of SCG;
(d) Mr. Simmons has not been convicted in a criminal proceeding
during the last five years;
(e) Mr. Simmons has not been subject to a judgment, decree or final
order enjoining future violation of, or prohibiting or
mandating activities subject to, federal or state securities
laws or finding any violation with respect to such laws during
the last five years;
(f) Citizenship: United States.
12. (a) Name: Thomas G. Wattles;
(b) Business Address: 125 Lincoln Avenue, Santa Fe, New Mexico
87501;
(c) Principal Employment: Co-Chairman and Chief Investment Officer
of Security Capital Industrial Trust and Managing Director of
SCG;
(d) Mr. Wattles has not been convicted in a criminal proceeding
during the last five years;
(e) Mr. Wattles has not been subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities
laws or finding any violation with respect to such laws during
the last five years;
(f) Citizenship: United States.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
SCG acquired its initial 1,000 Shares primarily by purchase from its
working capital. It directly acquired ownership of 1,819,750 Shares and 817,694
Warrants as a result of the closing of the transactions contemplated by the
Merger and Distribution Agreement, dated as of May 21, 1996, among Security
Capital Pacific Trust ("PTR"), Security Capital Atlantic Incorporated
("Atlantic"), SCG and Homestead (the "Merger Agreement"). It will acquire up to
approximately 3,570,082 Shares and 2,395,099 Warrants from PTR and 2,426,656
Shares and 1,627,996 Warrants from Atlantic as a result of the distributions
contemplated by the Merger Agreement. To finance any exercises of Warrants, SCG
intends to use working capital or funds borrowed under a $300 million revolving
line of credit facility with a syndicate of banks agented by Wells Fargo Realty
Advisors Funding, Incorporated.
ITEM 4. PURPOSE OF TRANSACTION
SCG has acquired Homestead's Shares and Warrants to provide Homestead with
capital to acquire and develop moderate priced, extended-stay lodging
facilities. SCG intends to play a major role in the direction of Homestead for
the purpose of maximizing the value of Homestead. Except as otherwise noted, SCG
does not have any plans or proposals that relate to or would result in the
following:
(a) The acquisition of additional securities of Homestead or the
disposition of securities of Homestead, except that SCG may acquire
Shares in the future at the same times and on the same terms available
to other shareholders or to the general public and that SCG intends,
over time, to dispose of Shares to maintain an ownership interest in
Homestead below 50%;
(b) An extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving Homestead or any of its
subsidiaries;
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(c) A sale or transfer of a material amount of assets of Homestead or
any of its subsidiaries;
(d) Any change in the present board of directors or management of
Homestead, including any plans or proposals to change the
number or term of directors or to fill any existing vacancies
on the board, except that SCG intends to provide significant
input into the selection of two additional independent
directors to join the present Homestead board of directors;
(e) Any material change in the present capitalization or dividend
policy of Homestead;
(f) Any other material change in Homestead's business or corporate
structure;
(g) Changes in Homestead's charter, bylaws or instruments
corresponding thereto or other actions which may impede the
acquisition of control of Homestead by any person;
(h) Causing the Shares or the Warrants, other than pursuant to the
terms of the Warrants, to be delisted from the American Stock
Exchange;
(i) A class of equity securities of Homestead becoming eligible for
termination of registration pursuant to Section 12(g)(4) of the
Securities Exchange Act of 1934; or
(j) Any action similar to any of those enumerated above.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER
(a),(b) The following table sets forth the beneficial ownership of Shares
for each person named in Item 2. Unless otherwise indicated in the footnotes,
each such person has sole power to vote or to direct the vote and sole power to
dispose or direct the disposition of such Shares.
<TABLE>
<CAPTION>
Number of Shares Percent of
Person Beneficially Owned (1) All Shares
- ------ ---------------------- ----------
<S> <C> <C>
Security Capital Group Incorporated 12,381,384(2) 56.0%
William D. Sanders (Corporate Ownership) 12,381,384(3) 56.0
William D. Sanders (Personal Ownership) 61,565(4) *
Samuel W. Bodman 0 *
John P. Frazee, Jr. 2,758(5) *
Cyrus F. Freidheim, Jr. 1,102 *
H. Laurance Fuller 155 *
Ray L. Hunt 102,274 *
John T. Kelley, III 3,149 *
Peter S. Willmott 3,448 *
C. Ronald Blankenship 7,599 *
Michael Simmons 209 *
Thomas G. Wattles 0 *
</TABLE>
* Less than 1%
(1) Includes, for SCG, Messrs. Sanders, Bodman, Frazee, Freidheim, Fuller,
Hunt, Kelley, Willmott, Blankenship, Simmons and Wattles, 4,730,014,
24,719, 0, 1,107, 442, 62, 41,064, 1,264, 1,384, 3,051, 84 and 0 Shares,
respectively, that may be acquired upon exercise of Warrants.
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(2) These Shares are, or will be, owned of record by SC Realty Incorporated, a
wholly owned subsidiary of SCG, and are, or will be, pledged to secure a
$300 million revolving line of credit facility with a syndicate of banks.
As of October 31, 1996, there were $57 million of borrowings outstanding
under the line of credit. The line of credit is also secured by securities
owned indirectly by SCG of PTR, Atlantic, Security Capital Industrial Trust
and Security Capital U.S. Realty, an entity based in Luxembourg that is
affiliated with SCG and which invests in real estate operating companies in
the United States. SCG estimates that the aggregate market value of the
pledged securities exceeded $2.0 billion as of October 31, 1996. SCG was in
compliance with all covenants under the line of credit as of June 30, 1996.
Does not include 2,243,038 Shares which are currently being held by State
Street Bank and Trust Company in escrow for SCG, and will only be released
to SCG upon the satisfaction of certain conditions.
(3) Mr. Sanders may be deemed to beneficially own these Shares, which are owned
by SCG, because Mr. Sanders, as Chairman and Chief Executive Officer of
SCG, shares voting and dispositive power with respect to all Shares owned
by SCG.
(4) 3,062 Shares are, or will be, owned by Mr. Sanders directly. Mr. Sanders
may be deemed to beneficially own 55,876 Shares which are, or will be,
owned by Sanders Partners Incorporated and CAMPR Partners Limited, family
entities with respect to which Mr. Sanders shares voting and dispositive
power, and 2,625 Shares which are, or will be owned by a foundation of
which Mr. Sanders is a director.
(5) Does not include Shares which may be issued under Homestead's Outside
Directors Plan.
(c) No transactions in Shares or Warrants were effected in the past sixty
days by the persons listed in the above table, except as described in response
to Item 3 above.
(d) No other person is known to have the right to receive or the power to
direct the receipt of dividends from, or the proceeds from the sale of, the
Shares owned by the persons listed in the above table.
(e) No person filing this statement has ceased to be a beneficial owner of
more than five percent of the Shares or Warrants.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER
Homestead and SCG are parties to an Investor Agreement, dated as of October
17, 1996 (the "Investor Agreement"), which requires SCG, upon notice from
Homestead, to exercise all of the Warrants (at an exercise price of $10.00 per
share) received by SCG at the closing of the transactions contemplated by the
Merger Agreement. Homestead may call for the exercise of Warrants by SCG upon 10
days' prior written notice. The Investor Agreement, among other things, provides
that, without having first consulted with the nominee of SCG designated in
writing, Homestead may not seek board approval of (i) Homestead's annual budget,
(ii) incurring expenses in any year exceeding (A) any line item in the annual
budget by 20% and (B) the total expenses set forth in the annual budget by 5%,
(iii) acquisitions or dispositions in a single transaction or group of related
transactions where the aggregate purchase price paid or received exceeds $5
million, (iv) new contracts with a service provider for (A) investment
management, property management or leasing services, or (B) that reasonably
contemplates annual contract payments by Homestead in excess of $200,000, (v)
the declaration or payment of any dividend or other distribution, (vi) the
approval of stock option plans, (vii) the offer or sale of any Shares or any
securities convertible into Shares (other than the sale or grant of any stock or
grants of options or exercise of options granted under any benefit option plan
approved by stockholders) and (viii) the incurrence, restructuring,
renegotiation or repayment of indebtedness for borrowed money in which the
aggregate amount involved exceeds $5 million. The Investor Agreement also
provides that, so long as SCG owns at least 10% of the outstanding Shares,
Homestead may not increase the number of persons serving on the Homestead board
to more than seven. SCG also will be entitled to designate one or more persons
as directors
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of Homestead, as follows: (i) so long as SCG owns at least 10% but less than 30%
of the outstanding Shares, it is entitled to nominate one person; and (ii) so
long as SCG owns at least 30% of the outstanding Shares, it is entitled to
nominate that number of persons as shall bear approximately the same ratio to
the total number of members of the Homestead board as the number of Shares
beneficially owned by SCG bears to the total number of outstanding Shares,
provided that SCG shall be entitled to designate no more than two persons so
long as the Homestead board consists of no more than seven members. Any person
who is employed by SCG or who is an employee, a 25% shareholder or a director of
any corporation of which SCG is a 25% shareholder (except for Homestead) shall
be deemed to be a designee of SCG. In addition, the Investor Agreement provides
SCG with registration rights pursuant to which, in certain specified
circumstances, SCG may request, at any time after October 22, 1997, and on not
more than three occasions, registration of all of SCG's Shares pursuant to Rule
415 under the Securities Act of 1933, as amended. A copy of the Investor
Agreement is filed as Exhibit B hereto.
Under Maryland law, certain "business combinations" between a Maryland
corporation and any person who (i) beneficially owns 10% or more the voting
power of the corporation's shares or (ii) is an affiliate of the corporation
who, within the two-year period prior to the date in question, was the
beneficial owner of 10% or more of the voting power of the voting stock of the
corporation, are prohibited for five years. Thereafter, any such business
combination must be recommended by the board of directors and approved by at
least (i) 80% of the outstanding voting shares of the corporation and (ii) two-
thirds of the disinterested holders of outstanding voting shares. These
provisions of Maryland law do not apply, however, to business combinations that
are approved or exempted by the board of directors. Homestead's board has
exempted from these provisions any business combination with SCG and its
affiliates and successors.
Maryland law also provides that "Control Shares" of a Maryland corporation
acquired in a "Control Share acquisition" have no voting rights except to the
extent approved by a vote of two-thirds of the votes entitled to be cast on the
matter by disinterested holders. However, the Control Share acquisition statute
does not apply to shares acquired in a merger, consolidation or share exchange
if the corporation is a party to the transaction or to acquisitions approved or
exempted by the charter or bylaws of the corporation. Homestead's Bylaws contain
a provision exempting SCG and its affiliates and successors from the provisions
of the Control Share acquisition statute.
On May 16, 1996, Homestead's board declared a dividend of one preferred
share purchase right (a "Purchase Right") for each Share outstanding pursuant to
the Rights Agreement, dated as of May 16, 1996, between Homestead and The First
National Bank of Boston (the "Rights Agreement"). Each purchaser of a Share
subsequent to May 16, 1996 will also receive a Purchase Right with each Share
purchased. Each Purchase Right entitles the holder, under certain circumstances,
to purchase from Homestead one one-hundredth of a share of Series A Junior
Participating Preferred Stock of Homestead, par value $.01 per share (the
"Participating Preferred Shares"), at a price of $50 per one one-hundredth of a
Participating Preferred Share, subject to adjustment. Purchase Rights are
exercisable when a person or group of persons (other than certain affiliates of
Homestead) (i) acquires 20% or more of the outstanding Shares, (ii) announces or
commences a tender offer or exchange offer for 25% or more of the outstanding
Shares, or (iii) announces an intention to enter into a transaction or series of
transactions resulting in the ownership of 25% or more of the outstanding
Shares. Under certain circumstances, each Purchase Right entitles the holder to
purchase, at the Purchase Right's then current exercise price, a number of
Shares having a market value of twice the Purchase Right's exercise price. The
acquisition of Homestead pursuant to certain mergers or other business
transactions would entitle each holder to purchase, at the Purchase Right's then
current exercise price, a number of the acquiring company's common shares having
a market value at that time equal to twice the Purchase Right's exercise price.
The Purchase Rights held by certain 20% shareholders (other than certain
affiliates of Homestead) would not be exercisable. The Rights Agreement exempts
acquisitions by SCG and its affiliates and successors from these provisions. A
copy of the Rights Agreement is filed as Exhibit C hereto.
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ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
The following are filed as exhibits: a written agreement relating to the
filing of the joint acquisition statement, a copy of the Investor Agreement
dated as of October 17, 1996 between Homestead and SCG, a copy of the Rights
Agreement dated as of May 16, 1996 between Homestead and The First National Bank
of Boston and a copy of a Power of Attorney and Confirming Statement for William
D. Sanders.
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SIGNATURE
After reasonable inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
Date: November 1, 1996 HOMESTEAD VILLAGE INCORPORATED
By:/s/ Jeffrey A. Klopf
-----------------------------------------
Name: Jeffrey A. Klopf
Title: Secretary
WILLIAM D. SANDERS
By:/s/ Jeffrey A. Klopf
-----------------------------------------
Name: Jeffrey A. Klopf, as attorney-in-fact
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<PAGE>
EXHIBIT INDEX
-------------
EXHIBIT A Agreement relating to filing of joint acquisition statement.
EXHIBIT B Investor Agreement dated as of October 17, 1996 between Homestead
and SCG.
EXHIBIT C Rights Agreement dated as of May 16, 1996 between Homestead and The
First National Bank of Boston.
EXHIBIT D Power of Attorney and Confirming Statement for William D. Sanders.
<PAGE>
EXHIBIT A
This Agreement is entered into by and among Security Capital
Group Incorporated, a Maryland corporation, and William D. Sanders, an
individual.
Each of the persons named above hereby agrees that the Schedule
13D of even date herewith and to which the Agreement is attached as an exhibit,
which is to be filed with the Securities and Exchange Commission, is to be filed
on behalf of each such person.
This Agreement may be executed in multiple counterparts, each
of which shall constitute an original.
IN WITNESS HEREOF, each of the undersigned has executed this
Agreement or caused this Agreement to be executed on its behalf this 1st day of
November, 1996.
SECURITY CAPITAL GROUP INCORPORATED
By:/s/ Jeffrey A. Klopf
--------------------------------------
Jeffrey A. Klopf
Secretary
WILLIAM D. SANDERS
By:/s/ Jeffrey A. Klopf
--------------------------------------
Jeffrey A. Klopf, as attorney-in-fact
<PAGE>
EXHIBIT B
INVESTOR AGREEMENT
THIS INVESTOR AGREEMENT (this "Agreement"), dated as of October 17,
1996, is by and between Homestead Village Incorporated, a Maryland corporation
(the "Company") and Security Capital Group Incorporated, a Maryland corporation
("SCG").
W I T N E S S E T H
-------------------
WHEREAS, the Company and SCG have entered into that certain Merger and
Distribution Agreement, dated as of May 21, 1996, among Security Capital
Atlantic Incorporated ("Atlantic"), Security Capital Pacific Trust ("PTR"), SCG
and the Company (the "Merger Agreement");
WHEREAS, pursuant to a Warrant Purchase Agreement dated as of May 21,
1996 (the "Warrant Purchase Agreement"), each of SCG, PTR and Atlantic will be
issued warrants (the "Warrants") to acquire Common Stock (as hereinafter
defined);
WHEREAS, pursuant to the Merger Agreement, SCG will be issued, through
a distribution from Atlantic and PTR, Warrants and shares of common stock, $0.01
par value per share ("Common Stock"), of the Company; and
WHEREAS, concurrently herewith, each of PTR and Atlantic are entering
into an Investor Agreement (as applicable, the "PTR Investor Agreement" and the
"Atlantic Investor Agreement"), with Homestead, pursuant to which, among other
things, each of PTR and Atlantic will be entitled to nominate one person to the
Board (as hereafter defined).
NOW, THEREFORE, in consideration of the premises, the mutual covenants
herein contained and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
(f) Definitions. In addition to the terms defined elsewhere herein,
the following terms shall have the following meanings:
"Articles of Incorporation" shall mean the Company's Articles of
Incorporation, as now in effect or as amended from time to time.
"Beneficial Owner" shall mean any Person deemed to be a "Beneficial
Owner" of or to "Beneficially Own" any Common Stock in accordance with the term
"beneficial ownership" as defined in Rule 13d-3 under the Exchange Act.
"Board" shall mean the Board of Directors of the Company.
"Commission" shall mean the Securities and Exchange Commission or any
successor agency or entity thereto.
"Common Stock" shall have the meaning set forth in the preamble of
this Agreement.
"Company" shall have the meaning set forth in the first paragraph of
this Agreement.
<PAGE>
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
A "group" shall have the meaning assigned thereto in Section 13(d)(3)
of the Exchange Act.
"Nominee" shall have the meaning set forth in Section 6(a) of this
Agreement.
A "Person" shall mean any individual, firm, corporation, partnership
or other entity.
"SCG" shall have the meaning set forth in the first paragraph of this
Agreement.
"Securities Act" shall mean the Securities Act of 1933, as amended.
(g) Exercise of Warrants. Subject to the terms and conditions
hereafter set forth, from and after the date hereof, at any time and from time
to time, upon not less than 10 business days' prior written notice, SCG shall
exercise such number of Warrants then owned by SCG as requested by the Company.
(h) Representations and Warranties of the Company. The Company hereby
represents and warrants to SCG as follows:
(a) Organization and Standing. The Company has been duly
organized and is validly existing as a corporation in good standing
under the laws of the State of Maryland, with full power and authority
to own its properties and conduct its business as now conducted and as
proposed by it to be conducted. The Company is duly qualified to do
business and is in good standing in each jurisdiction in which the
character of the business conducted by it or the location of the
properties owned or leased by it makes such qualification necessary,
except where the failure to be so qualified and in good standing would
not reasonably be expected to have a material adverse effect on the
business, operations, properties, assets, condition (financial or
other), results of operations or properties of the Company.
(b) No Defaults. The Company is not in violation of its
Articles of Incorporation, Bylaws or other governing documents, nor is
it in default in the performance of any obligation, agreement or
condition contained in any license, contract, indenture, mortgage,
deed of trust, lease or loan agreement or in any bond, debenture, note
or any other evidence of indebtedness to which it is a party or by
which it is bound, except where such default does not materially
adversely affect the condition (financial or other), properties or
business of the Company. The performance of this Agreement and the
consummation of the transactions herein contemplated will not conflict
with the Articles of Incorporation, Bylaws or other governing
documents of the Company, or result in a breach of, or default under,
any agreement, indenture, mortgage, deed of trust, lease or other
instrument to which the Company is a party or by which it is bound, or
any law, rule, administrative regulation or decree of any court, or
governmental agency or body having jurisdiction over the Company or
its properties or result in the creation or imposition of any lien,
charge, claim or encumbrance upon any property or asset of the
Company, except as any of the foregoing would not reasonably be
expected to have a material adverse effect on the business,
operations, properties, assets, condition (financial or other),
results of operations or prospects of the Company.
<PAGE>
(c) Issuance. The Common Stock, when issued and delivered by the
Company to SCG upon exercise of Warrants, will be duly authorized,
validly issued and, when paid for, will be fully paid and non-
assessable, free and clear of any security interest, lien, charge or
encumbrance whatsoever and will have the voting powers, preferences
and other rights, and will be subject to qualifications and
restrictions, as set forth in the Articles of Incorporation.
(d) Authority. The Company has full right, power and authority
to enter into this Agreement and to carry out its obligations
hereunder. This Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and binding agreement
of the Company enforceable against it in accordance with its terms,
except to the extent that its enforceability may be limited by
applicable bankruptcy, insolvency, reorganization or other laws
affecting the enforcement of creditors' rights generally and judicial
limitations on the right of specific performance or by general
equitable principles, and except as enforceability of indemnification
provisions hereof may be limited by federal securities laws.
(e) No Violation. The Company is not in violation of any law,
ordinance, governmental rule or regulation or court decree to which it
may be subject nor has it failed to obtain any license, permit,
franchise or other governmental authorization necessary to the
ownership of its property or to the conduct of its business, which
violation or failure to obtain is reasonably expected to have a
material adverse effect on the business, operations, properties,
assets, condition (financial or other), results of operations or
prospects of the Company.
(f) Investment Company Act. The Company is not required to be
registered under the Investment Company Act of 1940, as amended.
(i) Representations and Warranties of SCG. SCG hereby represents and
warrants to the Company as follows:
(a) Organization and Standing. SCG has been duly organized and
is validly existing as a corporation in good standing under the laws
of the State of Maryland, with corporate power and authority to own
its properties and conduct its business as now conducted.
(b) Authorization. SCG has full right, power and authority to
enter into this Agreement and to carry out its obligations hereunder.
This Agreement has been duly authorized, executed and delivered by SCG
and constitutes a valid and binding agreement of SCG enforceable
against it in accordance with its terms, except to the extent that its
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or other laws affecting the enforcement of creditors'
rights generally and judicial limitations on the right of specific
performance or by general equitable principles. The performance by SCG
of all of its obligations under this Agreement and the consummation of
the transactions herein contemplated will not conflict with or result
in a breach of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan agreement
or other material agreement or instrument to which SCG is a party or
by which SCG is bound or to which any of the property or assets of SCG
is subject, nor will any such action result in any violation of the
provisions of the Articles of Incorporation or the By-Laws of SCG or
any applicable law or statute or any order, rule or regulation of any
<PAGE>
court or governmental agency or body having jurisdiction over SCG or
any of its properties.
(c) Investment Company Act. SCG is not required to be registered
under the Investment Company Act of 1940, as amended.
(j) Conditions to the Obligations of SCG. The obligations of SCG to
exercise any Warrants under this Agreement are subject to the fulfillment at
each time of exercise of each of the following conditions:
(a) Representations and Warranties. The representations and
warranties in this Agreement made by the Company shall have been true
in all material respects when made, and shall be true in all material
respects on the date of exercise of the Warrants as though such
representations and warranties were made at such date.
(b) Performance. The Company shall have performed and complied
in all material respects with all agreements, covenants, obligations
and conditions required by this Agreement to be performed or complied
with by it.
(c) Casualty and Other Calamity. The Company shall not have
sustained any loss on account of fire, explosion, flood, accident,
calamity or any other cause, of such character as materially adversely
affects its business or property considered as an entire entity,
whether or not such loss is covered by insurance.
(d) Litigation and Other Proceedings. There shall be no
litigation instituted or threatened against the Company and there
shall be no proceeding instituted or threatened against the Company
before or by any federal or state commission, regulatory body or
administrative agency or other governmental body, domestic or foreign,
wherein an unfavorable ruling, decision or finding would materially
adversely affect the business, franchise, licenses, patents,
operations or financial condition or income of the Company.
(e) Lack of Material Change. The Company shall not have
experienced any event (other than changes in general economic or
market conditions) which would reasonably be expected to result in a
material adverse change, individually or in the aggregate, in the
business, operations, properties, assets, liabilities, condition
(financial or other), results of operations or prospects of the
Company.
(k) Covenants of the Company. The Company covenants and agrees with
SCG as follows:
(a) Board Representation. From and after the date hereof and for
so long thereafter as SCG Beneficially Owns 10% or more of the
outstanding shares of Common Stock, the Company shall not increase the
number of members of its Board to more than seven (7), and SCG shall
be entitled to designate one or more Persons for nomination to the
Board (such Person, a "Nominee") as follows and the Company will use
its best efforts to cause the election of such Nominee or Nominees:
<PAGE>
1. So long as SCG Beneficially Owns at least 10% but less
than 30% of the outstanding shares of Common Stock, one (1)
Nominee;
2. So long as SCG Beneficially Owns 30% or more of the
outstanding shares of Common Stock, that number of Nominees as
shall bear approximately the same ratio (rounded down to the
nearest whole number) to the total number of members of the Board
as the number of shares of Common Stock Beneficially Owned by SCG
bears to the total number of outstanding shares of Common Stock,
provided, that (A) SCG shall be entitled to designate not more
than two (2) Nominees so long as the Board consists of not more
than seven (7) members; and (B) any Person who is employed by SCG
or who is an employee, a 25% shareholder or a director of any
corporation of which SCG is a 25% shareholder (except for the
Company) shall be deemed to be a designee of SCG.
The Nominee or Nominees of SCG may, but need not, include the same
person or persons nominated by either PTR or Atlantic pursuant to the
PTR Investor Agreement or the Atlantic Investor Agreement.
(b) File Reports. For as long as SCG shall continue to
Beneficially Own any shares of Common Stock, the Company shall file on
a timely basis all annual, quarterly and other reports required to be
filed by it under Sections 13 and 15(d) of the Exchange Act, and the
Rules and Regulations of the Commission thereunder, as amended from
time to time.
(c) Advice of Actions. Without first having consulted with the
Nominee or Nominees of SCG designated by SCG in writing, the Company
will not seek approval by the Board of any proposal relating to:
1. Budget. The Company's annual budget.
2. Expenses. Incurring expenses in any year exceeding (A)
any line item in the annual budget by 20% and (B) the total
expenses set forth in the annual budget by 5%.
3. Assets. The acquisition or sale of any assets in any
single transaction or any series of related transactions where
the aggregate purchase price paid or received by the Company
exceeds $5,000,000.
4. Contracts. Entering into any new contract with a service
provider (A) for investment management, property management, or
leasing services or (B) that reasonably contemplates annual
contract payments by the Company in excess of $200,000.
5. Dividends. The declaration or payment of any dividend or
other distribution.
6. Benefit Plans. The adoption of any employee benefit plan
pursuant to which shares of stock of the Company or any
securities convertible into shares of stock of the Company may be
issued.
<PAGE>
7. Equity Securities. The offer or sale of any shares of
stock of the Company or any securities convertible into shares of
stock of the Company (other than the sale or grant of any stock
of the Company or options to purchase stock of the Company
pursuant to the provisions of any benefit plan approved by the
stockholders of the Company and the exercise of any options so
granted); provided, however, that nothing contained in this
clause (vii) shall in any way restrict or impair the obligations
and rights of any party under the terms of any agreement entered
into in connection with the transactions contemplated by the
Merger Agreement.
8. The incurrence, restructuring, renegotiation or repayment
of indebtedness for borrowed money (including guarantees thereof)
in which the aggregate amount involved exceeds $5,000,000;
provided, however, that nothing contained in this clause (viii)
shall in any way restrict or impair the obligations and rights of
any party under the terms of any agreement entered into in
connection with the transactions contemplated by the Merger
Agreement.
Notwithstanding the foregoing, the Company shall have no
obligation to accept or comply with any advice offered by SCG or its
designated Nominees in any consultation pursuant to this Section 6(c).
(d) Inspection. At any time during regular business hours and as
often as reasonably requested of the Company's officers, permit SCG or
any authorized employee, agent or representative of SCG to examine and
make copies and abstracts from the records and books of account of,
and to visit the properties of, the Company and to discuss the
affairs, finances, and accounts of the Company with any of its
officers or directors; provided, that all costs and expenses of such
inspection shall be borne by SCG.
(l) Registration Rights.
(a) Demand. At any time after the first anniversary of the date
on which the Common Stock is registered under Section 12(b) or 12(g)
of the Exchange Act, SCG may request, on not more than three (3)
separate occasions, registration of all or any part of its Registrable
Securities (as defined in subsection (g) below) pursuant to Rule 415
under the Securities Act by delivering written notice to the Company
specifying the number of Registrable Securities that SCG desires to
sell and the Company shall use its reasonable efforts to effect the
registration of such Registrable Securities under the Securities Act.
(b) Registration Procedures. If and whenever the Company is
required by any of the provisions of this Section 7 to use its
reasonable efforts to effect the registration of any of the
Registrable Securities under the Securities Act, the Company shall:
1. prepare and file with the Commission a registration
statement with respect to such securities and use its reasonable
efforts to cause such registration statement to become effective
and remain effective for as long as shall be necessary to
complete the distribution of at least 90% of the Registrable
Securities so registered;
<PAGE>
2. prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such
registration statement effective for so long as shall be
necessary to complete the distribution of at least 90% of the
Registrable Securities so registered and to comply with the
provisions of the Securities Act with respect to the sale or
other disposition of all securities covered by such registration
statement whenever SCG shall desire to sell or otherwise dispose
of the same within such period;
3. furnish to SCG such numbers of copies of such
registration statement, each amendment and supplement thereto,
the prospectus included in such registration statement, including
any preliminary prospectus, and any amendment or supplement
thereto, and such other documents, as may be reasonably requested
in order to facilitate the sale or other disposition of the
Registrable Securities owned by SCG;
4. use its reasonable efforts to register and qualify the
securities covered by such registration statement under such
other securities or blue sky laws of such jurisdictions as SCG
shall reasonably request, and do any and all other acts and
things reasonably requested by SCG to assist the public sale or
other disposition by SCG in such jurisdictions of the securities
owned by SCG except that the Company shall not for any such
purpose be required to qualify to do business as a foreign
corporation in any jurisdiction wherein it is not so qualified or
to file therein any general consent to service of process;
5. otherwise use its reasonable efforts to comply with all
applicable rules and regulations of the Commission, and make
available to its security holders, as soon as reasonably
practicable, an earnings statement covering the period of at
least twelve months, beginning with the first fiscal quarter
beginning after the effective date of the registration statement,
which earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act;
6. use its reasonable efforts to list such securities on any
securities exchange or quotation system on which any securities
of the Company are then listed, if the listing of such securities
is then permitted under the rules of such exchange or quotation
system; and
7. notify SCG, at any time when a prospectus relating to the
Registrable Securities is required to be delivered under the
Securities Act, of the happening of any event of which it has
knowledge as a result of which the prospectus included in such
registration statement, as then in effect, contains an untrue
statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then
existing.
(c) Company's Ability to Postpone. The Company shall have the
right to postpone the filing of a registration statement under this
Section 7 for a reasonable period of time (not exceeding 60 days) if
the Company furnishes SCG with
<PAGE>
a certificate signed by the Chairman of the Board or the President of
the Company stating that, in its good faith judgment, the Board has
determined that effecting the registration at such time would
adversely affect a material financing, acquisition, disposition of
assets or stock, merger or other comparable transaction or would
require the Company to make public disclosure of information the
public disclosure of which would have a material adverse effect upon
the Company.
(d) Expenses. All expenses incurred in the registration of
Registrable Securities under this Agreement shall be paid by the
Company. The expenses shall include, without limitation, the expenses
of preparing the registration statement and the prospectus used in
connection therewith and any amendment or supplement thereto, printing
and photocopying expenses, all registration and filing fees under
Federal and state securities laws, and expenses of complying with the
securities or blue sky laws of any jurisdictions; provided, however,
that SCG shall be responsible for paying the fees and disbursements of
its own counsel.
(e) Indemnification. In the event any Registrable Securities are
included in a registration statement under this Section 7:
1. Indemnity by Company. Without limitation of any other
indemnity provided to SCG, to the extent permitted by law, the
Company will indemnify and hold harmless SCG and its officers,
directors and each Person, if any, who controls SCG (within the
meaning of the Securities Act or the Exchange Act), against any
losses, claims, damages, liabilities and expenses (joint or
several) to which they may become subject under the Securities
Act, the Exchange Act or other federal or state law, insofar as
such losses, claims, damages, liabilities and expenses (or
actions in respect thereof) arise out of or are based upon any of
the following statements, omissions or violations (collectively a
"Violation"): (i) any untrue statement or alleged untrue
statement of a material fact contained in any registration
statement (including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements
thereto), (ii) the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under
which they were made, not misleading, or (iii) any violation or
alleged violation by the Company of the Securities Act, the
Exchange Act, any state securities law or any rule or regulation
promulgated under the Securities Act, the Exchange Act or any
state securities law, and the Company will reimburse SCG and its
officers, directors and any controlling person thereof for any
reasonable legal or other expenses incurred by them in connection
with investigating or defending any such loss, claim, damage,
liability, expense or action; provided, however, that the Company
shall not be liable in any such case for any such loss, claim,
damage, liability, expense or action to the extent that it arises
out of or is based upon a Violation that occurs in reliance upon
and in conformity with written information furnished expressly
for use in connection with such registration by SCG or any
officer, director or controlling person thereof.
2. Indemnity by SCG. In connection with any registration
statement in which SCG is participating, SCG will furnish to the
Company in writing such information and affidavits as the Company
reasonably requests
<PAGE>
for use in connection with any such registration statement or
prospectus and, to the extent permitted by law, will indemnify
the Company, its directors and officers and each Person who
controls the Company (within the meaning of the Securities Act or
Exchange Act) against any losses, claims, damages, liabilities
and expenses resulting from any Violation, but only to the extent
that such Violation is contained in any information or affidavit
so furnished in writing by SCG; provided, that the obligation to
indemnify will be several and not joint and several with any
other Person and will be limited to the net amount received by
SCG from the sale of Registrable Securities pursuant to such
registration statement.
3. Notice; Right to Defend. Promptly after receipt by an
indemnified party under this Section 7(e) of notice of the
commencement of any action (including any governmental action),
such indemnified party will, if a claim in respect thereof is to
be made against any indemnifying party under this Section 7(e),
deliver to the indemnifying party a written notice of the
commencement thereof and the indemnifying party shall have the
right to participate in, and, if the indemnifying party agrees in
writing that it will be responsible for any costs, expenses,
judgments, damages and losses incurred by the indemnified party
with respect to such claim, jointly with any other indemnifying
party similarly noticed, to assume the defense thereof with
counsel mutually satisfactory to the parties; provided, however,
that an indemnified party shall have the right to retain its own
counsel, with the fees and expenses to be paid by the
indemnifying party, if the indemnified party reasonably believes
that representation of such indemnified party by the counsel
retained by the indemnifying party would be inappropriate due to
actual or potential differing interests between such indemnified
party and any other party represented by such counsel in such
proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement
of any such action shall relieve such indemnifying party of any
liability to the indemnified party under this Section 7(e) only
if and to the extent that such failure is prejudicial to its
ability to defend such action, and the omission so to deliver
written notice to the indemnifying party will not relieve it of
any liability that it may have to any indemnified party other
than under this Section 7(e).
4. Contribution. If the indemnification provided for in this
Section 7(e) is held by a court of competent jurisdiction to be
unavailable to an indemnified party with respect to any loss,
liability, claim, damage or expense referred to therein, then the
indemnifying party, in lieu of indemnifying such indemnified
party thereunder, shall contribute to the amount paid or payable
by such indemnified party as a result of such loss, liability,
claim, damage or expense in such proportion as is appropriate to
reflect the relative fault of the indemnifying party on the one
hand and of the indemnified party on the other hand in connection
with the statements or omissions which resulted in such loss,
liability, claim, damage or expense as well as any other relevant
equitable considerations. The relevant fault of the indemnifying
party and the indemnified party shall be determined by reference
to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material
fact relates to information supplied by the indemnifying party or
by the indemnified party
<PAGE>
and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement
or omission. Notwithstanding the foregoing, the amount SCG shall
be obligated to contribute pursuant to this Section 7(e)(iv)
shall be limited to an amount equal to the proceeds to SCG of the
Registrable Securities sold pursuant to the registration
statement which gives rise to such obligation to contribute (less
the aggregate amount of any damages which SCG has otherwise been
required to pay in respect of such loss, claim, damage, liability
or action or any substantially similar loss, claim, damage,
liability or action arising from the sale of such Registrable
Securities).
5. Survival of Indemnity. The indemnification provided by
this Section 7(e) shall be a continuing right to indemnification
and shall survive the registration and sale of any securities by
any Person entitled to indemnification hereunder and the
expiration or termination of this Agreement.
(f) Limitations on Registration Rights.
1. The Company shall not, without the prior written consent
of SCG, include in any registration in which SCG has a right to
participate pursuant to this Agreement any securities of any
Person other than SCG.
2. SCG shall not, without the prior written consent of the
Company, effect any public sale or distribution (including sales
pursuant to Rule 144 under the Securities Act) of securities of
the Company during any period commencing 30 days prior to and
ending 60 days after the effective date any registration
statement filed by the Company on behalf of any Person (including
the Company), other than a registration statement on Form S-8 or
any successor form.
(g) Registrable Security. The term Registrable Security means
(i) any shares of Common Stock issuable to SCG upon exercise of
Warrants, (ii) any other shares of Common Stock owned by SCG and (iii)
any shares of Common Stock or other securities that may subsequently
be issued with respect to such shares of Common Stock as a result of a
stock split or dividend or any sale, transfer, assignment or other
transaction by the Company involving the shares of Common Stock and
any securities into which the shares of Common Stock may thereafter be
changed as a result of merger, consolidation, recapitalization or
otherwise. As to any particular Registrable Securities, such
securities will cease to be Registrable Securities when they have been
distributed to the public pursuant to an offering registered under the
Securities Act. All Registrable Securities shall cease to be
Registrable Securities when all such securities may be sold in any
three-month period pursuant to Rule 144, or any successor to such
rule, under the Securities Act.
(h) Assignment. SCG may assign without the consent of the
Company its rights under this Section 7 with respect to any
Registrable Securities to any party (a "Lender") to whom it provides a
bona fide pledge, assignment or hypothecation of such Registrable
Securities. If (i) SCG assigns its rights under this Section 7 with
respect to Registrable Securities having an aggregate offering value
of at least
<PAGE>
$10,000,000 to a Lender, (ii) any Event of Default occurs and is
continuing under the related loan agreement between SCG and the Lender
and (iii) the Common Stock is not registered under Section 12(b) or
12(g) of the Exchange Act, the Lender may request one registration of
all or part of its Registrable Securities having an aggregate offering
value of at least $10,000,000 on Form S-1 (or any successor form)
under the Securities Act by delivering written notice to the Company
specifying the number of Registrable Securities that the Lender
desires to sell and the Company shall use its reasonable efforts to
effect the registration of such Registrable Securities under the
Securities Act in accordance with and subject to the provisions of
this Section 7.
(m) Reports. For so long as SCG owns any Registrable Securities, the
Company shall file on a timely basis all annual, quarterly and other reports
required to be filed by it under Section 13 and 15(d) of the Exchange Act, and
the rules and regulations of the Commission thereunder, as amended from time to
time.
(n) Rule 144. From and after the time the Company has securities
registered under Section 12(b) or 12(g) of the Exchange Act, in order to permit
SCG to sell the Registrable Securities it holds, if it so desires, from time to
time pursuant to Rule 144 under the Securities Act, or any successor to such
rule, the Company shall make available adequate current public information and
file with the Commission in a timely manner all reports and other documents
required of the Company under the Exchange Act.
(o) Miscellaneous.
(a) Survival of Representations, Warranties and Covenants. All
representations, warranties and covenants contained herein shall survive the
execution of this Agreement and shall remain in full force and effect following
the exercise by SCG of all Warrants required by it to be exercised hereunder;
provided, that Sections 2 and 6 of this Agreement shall terminate and be of no
further force or effect if SCG Beneficially Owns less than 10% of the shares of
Common Stock then outstanding.
(b) Successors and Assigns. This Agreement shall be binding upon, and
inure to the benefit of, the parties hereto and their respective heirs, personal
representatives, successors, assigns and affiliates, but shall not be assignable
by any party hereto without the prior written consent of the other party hereto.
(c) Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally, sent via a
recognized overnight courier with delivery confirmed in writing or sent via
facsimile to the parties at the following addresses (or such other address for a
party as shall be specified by like notice):
If to the Company:
Homestead Village Incorporated
125 Lincoln Avenue, Suite 300
Santa Fe, New Mexico 87501
Attention: David C. Dressler, Jr.
Facsimile: (505) 982-2925
<PAGE>
If to SCG:
Security Capital Group Incorporated
125 Lincoln Avenue
Santa Fe, New Mexico 87501
Attention: Jeffrey A. Klopf
Facsimile: (505) 988-8920
(d) Waiver. No party may waive any of the terms or conditions of this
Agreement, except by a duly executed writing referring to the specific provision
to be waived.
(e) Amendment. This Agreement may be amended only by a writing duly
executed by both the Company and SCG.
(f) Severability. Insofar as is possible, each provision of this
Agreement shall be interpreted so as to render it valid and enforceable under
applicable law and severable from the remainder of this Agreement. A finding
that any such provision is invalid or unenforceable in any jurisdiction shall
not affect the validity or enforceability of any other provision or the validity
or enforceability of such provision under the laws of any other jurisdiction.
(g) Entire Agreement. This Agreement constitutes the entire
agreement, and supersedes all other prior agreements and understandings, both
written and oral, among the parties hereto and their affiliates, with respect to
the subject matter hereof.
(h) Expenses. Except as otherwise expressly contemplated herein to
the contrary, regardless of whether the transactions contemplated hereby are
consummated, each party hereto shall pay its own expenses incident to preparing
for, entering into and carrying out this Agreement and the consummation of the
transactions contemplated hereby.
(i) Captions. The Section and Paragraph captions herein are for
convenience of reference only, do not constitute part of this Agreement and
shall not be deemed to limit or otherwise affect any of the provisions hereof.
(j) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument.
(k) Governing Law. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of Maryland.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered as of the day and year first above written.
HOMESTEAD VILLAGE INCORPORATED
By: /s/ David C. Dressler,
-------------------------------
David C. Dressler, Jr.
Chairman
SECURITY CAPITAL GROUP INCORPORATED
By: /s/ Jeffrey A. Klopf
-------------------------------
Jeffrey A. Klopf
Senior Vice President
<PAGE>
EXHIBIT C
================================================================================
RIGHTS AGREEMENT
between
HOMESTEAD VILLAGE PROPERTIES INCORPORATED
and
THE FIRST NATIONAL BANK OF BOSTON
Rights Agent
Dated as of May 16, 1996
================================================================================
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TABLE OF CONTENTS
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Section 1. Certain Definitions................................................... 1
Section 2. Appointment of Rights Agent........................................... 4
Section 3. Issuance of Right Certificates........................................ 5
Section 4. Form of Right Certificates............................................ 7
Section 5. Countersignature and Registration..................................... 7
Section 6. Transfer, Division, Combination and Exchange of
Right Certificates; Mutilated, Destroyed, Lost
or Stolen Right Certificates......................................... 8
Section 7. Exercise of Rights; Purchase Price; Expiration Date of Rights......... 9
Section 8. Cancellation and Destruction of Right Certificates.................... 11
Section 9. Availability of Preferred Shares...................................... 11
Section 10. Preferred Shares Record Date.......................................... 12
Section 11. Adjustment of Purchase Price, Number of Shares or Number of Rights.... 12
Section 12. Certificate of Adjusted Purchase Price or Number of Shares............ 19
Section 13. Consolidation, Merger or Sale or Transfer of Assets or Earning Power.. 19
Section 14. Fractional Rights and Fractional Shares............................... 21
Section 15. Rights of Action...................................................... 22
Section 16 Agreement of Right Holders............................................ 23
Section 17. Right Certificate Holder Not Deemed a Shareholder..................... 23
Section 18. Concerning the Rights Agent........................................... 24
Section 19. Merger or Consolidation or Change of Name of Rights Agent............. 24
Section 20. Duties of Rights Agent................................................ 25
Section 21. Change of Rights Agent................................................ 27
Section 22. Issuance of New Right Certificates.................................... 28
Section 23. Redemption............................................................ 28
</TABLE>
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<TABLE>
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Section 24. Exchange.............................................................. 29
Section 25. Notice of Certain Events.............................................. 30
Section 26. Notices............................................................... 31
Section 27. Supplements and Amendments............................................ 31
Section 28. Successors............................................................ 32
Section 29. Benefits of this Agreement............................................ 32
Section 30. Severability.......................................................... 32
Section 31. Governing Law......................................................... 32
Section 32. Counterparts.......................................................... 32
Section 33. Descriptive Headings.................................................. 32
Section 34. Notice as to Liability of Directors and Shareholders.................. 33
Exhibit A - Form of Articles Supplementary of Homestead Village Properties
Incorporated
Exhibit B - Form of Right Certificate
</TABLE>
<PAGE>
RIGHTS AGREEMENT
----------------
Agreement, dated as of May 16, 1996 between Homestead Village Properties
Incorporated, a Maryland corporation (the "Corporation"), and The First National
Bank of Boston, a national banking association (the "Rights Agent").
The Board of Directors of the Corporation has authorized and declared a
dividend of one preferred share purchase right (a "Right") for each Common Share
(as hereinafter defined) of the Corporation outstanding as of the close of
business on May 16, 1996 (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
agreed to authorize and direct the issuance of one Right with respect to each
Common Share that shall become outstanding between the Record Date and the first
to occur of 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:
"Acquiring Person" shall mean any Person (as hereinafter defined) who
or which, together with all Affiliates and Associates (as such terms are
hereinafter defined) of such Person, shall be the Beneficial Owner (as
hereinafter defined) of 20% or more of the Common Shares of the Corporation
then outstanding, but shall not include the SCG Group, the Corporation, any
Affiliate or Subsidiary (as hereinafter defined) of the Corporation, any
employee benefit plan of the Corporation or of any Affiliate or Subsidiary
of the Corporation or any entity holding Common Shares for or pursuant to
the terms of any such plan. Notwithstanding the foregoing, no Person shall
become an "Acquiring Person" as the result of (i) an acquisition of Common
Shares by the Corporation which, by reducing the number of Common Shares
outstanding, increases the proportionate number of Common Shares
beneficially owned by such Person to 20% or more of the Common Shares of
the Corporation then outstanding, or (ii) the acquisition by such Person of
newly issued Common Shares directly from the Corporation (it being
understood that a purchase from an underwriter or other intermediary is not
directly from the Corporation); provided, however, that if a Person shall
become the Beneficial Owner of 20% or more of the Common Shares of the
Corporation then outstanding, by reason of Common Share purchases by the
Corporation or the receipt of newly issued Common Shares directly from the
Corporation and shall, after such Common Share purchases or direct issuance
by the Corporation, become the Beneficial Owner of any additional Common
Shares of the Corporation, then such Person shall be deemed to be an
"Acquiring Person"; provided further, however, that any transferee from
such Person who becomes the Beneficial Owner of 20% or more of the Common
Shares of the Corporation then outstanding shall nevertheless be deemed to
be an "Acquiring Person." Notwithstanding the foregoing, if the Board of
Directors of the Corporation determines in good faith that a Person who
would otherwise be an "Acquiring Person," as defined pursuant to the
foregoing provisions of this paragraph, has become such inadvertently, and
such Person divests as promptly as practicable (and in any event within ten
Business Days after notification by the Corporation) 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, then
such Person shall not be deemed to be an "Acquiring Person" for any
purposes of this Agreement.
<PAGE>
"Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 of the General Rules and Regulations
under the Exchange Act, as in effect on the date of this Agreement.
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, directly or indirectly, 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, whether written or oral (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
the 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; (B) the sole or shared right to vote or
dispose (including any such right pursuant to any agreement,
arrangement or understanding, whether written or oral); 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 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 (C) "beneficial
ownership" (as determined pursuant to Rule 13d-3 of the General Rules
and Regulations under the Exchange Act); or
(iii) which are beneficially owned, directly or indirectly, by
any other Person (or any Affiliate or Associate thereof) with which
such Person or any of 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 clause (B) of subparagraph (ii) of this
definition) or disposing of any securities of the Corporation.
Notwithstanding anything in this definition of Beneficial Ownership to
the contrary, the phrase "then outstanding," when used with reference to
the Beneficial Ownership of securities of the Corporation by any Person,
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.
"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.
"Close of business" on any given date shall mean 5:00 P.M., Eastern
time, on such date; provided, however, that if such date is not a Business
Day it shall mean 5:00 P.M., Eastern time, on the next succeeding Business
Day.
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"Common Shares" when used with reference to the Corporation shall mean
the shares of common stock, par value $0.01 per share, of the Corporation.
"Common Shares" when used with reference to any Person other than the
Corporation shall mean the capital stock (or equity interest) with the
greatest voting power of such other Person or the equity securities or
other equity interest having power to control or direct the management of
such other Person.
"Distribution Date" shall have the meaning set forth in Section 3
hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Final Expiration Date" shall have the meaning set forth in Section 7
hereof.
"Person" shall mean any individual, firm, corporation or other entity,
and shall include any successor (by merger or otherwise) of such entity.
"Preferred Shares" shall mean the shares of Series A Junior
Participating Preferred Stock, par value $0.01 per share, of the
Corporation having the rights and preferences set forth in the form of
Articles Supplementary attached to this Agreement as Exhibit A.
"Purchase Price" shall have the meaning set forth in Section 4 hereof.
"Redemption Date" shall have the meaning set forth in Section 7
hereof.
"Right Certificate" shall have the meaning set forth in Section 3
hereof.
"SCG" shall mean Security Capital Group Incorporated, a Maryland
corporation.
"SCG Group" shall mean SCG, together with its wholly owned
subsidiaries, Affiliates and Associates.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Shares Acquisition Date" shall mean the first date of public
announcement (which, for purposes of this definition, shall include,
without limitation, a report filed pursuant to Section 13(d) promulgated
under the Exchange Act) by the Corporation or an Acquiring Person that an
Acquiring Person has become such.
"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.
"Triggering Event" shall mean any event described in Section 11(a)(ii)
or Section 13(a).
Any determination or interpretation required in connection with any of the
definitions contained in this Section 1 shall be made by the Board of Directors
of the Corporation in their good faith judgment, which determination shall be
final and binding on the Rights Agent.
Section 2. Appointment of Rights Agent. The Corporation hereby appoints the
Rights Agent to act as agent for the Corporation and the holders of the Rights
(who, in accordance with Section 3 hereof, shall prior to the Distribution Date
also be the holders of the Common Shares) in accordance with the terms and
conditions
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hereof, and the Rights Agent hereby accepts such appointment. The Corporation
may from time to time appoint such co-Rights Agents as it may deem necessary or
desirable.
Section 3. Issuance of Right Certificates.
(a) Until the earlier of (i) the close of business on the tenth day after
the Shares Acquisition Date, (ii) the close of business on the fifteenth
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 SCG Group, the
Corporation, any Affiliate or Subsidiary of the Corporation, any employee
benefit plan of the Corporation or of any Affiliate or Subsidiary of the
Corporation or any entity holding Common Shares for or pursuant to the terms of
any such plan) of, or of the first public announcement of, the intention of any
Person (other than SCG Group, the Corporation, any Affiliate or Subsidiary of
the Corporation, any employee benefit plan of the Corporation or of any
Affiliate or Subsidiary of the Corporation or any entity holding Common Shares
for or pursuant to the terms of any such plan) to commence, a tender or exchange
offer the consummation of which would result in any Person becoming the
Beneficial Owner of Common Shares aggregating 25% or more of the then
outstanding Common Shares, or (iii) the close of business on 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
filing by any Person of, or the first public announcement of the intention of
any Person to file, any application, request, submission or other document with
any federal or state regulatory authority seeking approval of, attempting to
rebut any presumption of control upon, or otherwise indicating an intention to
enter into, any transaction or series of transactions the consummation of which
would result in any Person (other than the SCG Group) becoming the Beneficial
Owner of Common Shares aggregating 25% or more of the then outstanding Common
Shares, other than a transaction in which newly issued Common Shares are issued
directly by the Corporation to such Person (including any such date which is
after the date of this Agreement and prior to the issuance of the Rights; the
earlier of such dates being herein referred to as the "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 certificates for Rights)
and not by separate certificates, and (y) the Rights will be transferable only
in connection with the transfer of the underlying Common Shares (including a
transfer to the Corporation). As soon as practicable after the Distribution
Date, the Corporation will prepare and execute, the Rights Agent will
countersign, and the Corporation will send or cause to be sent (and the Rights
Agent will, if requested, send) by first-class, insured, postage-prepaid mail,
to each record holder of Common Shares as of the close of business on the
Distribution Date, at the address of such holder shown on the records of the
Corporation, a Right Certificate, in substantially the form of Exhibit B hereto
(a "Right Certificate"), evidencing one Right for each Common Share so held. As
of the Distribution Date, the Rights will be evidenced solely by such Right
Certificates.
(b) With respect to certificates for Common Shares outstanding as of the
Record Date, until the Distribution Date, the Rights will be evidenced by such
certificates registered in the names of the holders thereof, and registered
holders of Common Shares shall also be the registered holders of the associated
Rights (regardless of whether such ownership is indicated on the Common Share
certificates). Until the earliest of the Distribution Date, the Redemption Date
or the Final Expiration Date, the transfer of any certificate for Common Shares
shall also constitute the transfer of the Rights associated with the Common
Shares represented thereby.
(c) Rights shall be issued in respect of all Common Shares which are
issued (whether originally issued or delivered from the Corporation's treasury)
after the Record Date but prior to the earliest of the Distribution Date, the
Redemption Date or the Final Expiration Date. Certificates representing such
Common Shares shall also be deemed to be certificates for Rights. Certificates
representing both Common Shares and Rights in accordance with this Section 3
which are executed and delivered (whether the Common Shares represented thereby
are originally issued, delivered from the Corporation's treasury or are
presented for transfer) by the Corporation (including, without limitation,
certificates representing reacquired Common Shares
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referred to in the last sentence of this paragraph (c)) after the Record Date
but prior to the earliest of the Distribution Date, the Redemption Date or the
Final Expiration Date shall have impressed on, printed on, written on or
otherwise affixed to them a legend that by itself or together with prior legends
is substantially to the following effect:
This certificate also evidences and entitles the holder hereof to
certain rights as set forth in the Rights Agreement between Homestead
Village Properties Incorporated (the "Corporation") and The First
National Bank of Boston, dated as of May 16, 1996 (the "Rights
Agreement"), the terms of which are hereby incorporated herein by
reference and a copy of which is on file at the principal offices of
the Corporation. Under certain circumstances, as set forth in the
Rights Agreement, the Rights will be evidenced by separate
certificates and will no longer be evidenced by this certificate. The
Corporation will mail to the holder of this certificate a copy of the
Rights Agreement, as in effect on the date of mailing, without charge
promptly after receipt of a written request therefor. Under certain
circumstances set forth in the Rights Agreement, Rights issued to, or
held by, any Person who is, was or becomes an Acquiring Person or an
Affiliate or Associate thereof (as such terms are defined in the
Rights Agreement), whether currently held by or on behalf of such
Person or by any subsequent holder, shall become null and void.
Until the Distribution Date, the Rights associated with the Common Shares shall
be evidenced by the certificates representing the associated Common Shares alone
(regardless of whether any such certificate contains the above legend), and the
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 Corporation purchases or acquires any Common Shares after the Record Date
but prior to the Distribution Date, any Rights associated with such Common
Shares shall be deemed cancelled and retired so that the Corporation shall not
be entitled to exercise any Rights associated with the Common Shares which are
no longer outstanding.
Section 4. Form of Right Certificates.
(a) 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 Corporation may deem appropriate and as are not
inconsistent with the provisions of this Agreement, or as may be required to
comply with any applicable law or with any rule or regulation made pursuant
thereto or with any rule or regulation of any stock exchange on which the Rights
may from time to time be listed, or to conform to usage. Subject to the
provisions of Section 11 and Section 22 hereof, the 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 amount
and type of securities purchasable upon the exercise of each Right and the
Purchase Price thereof shall be subject to adjustment as provided herein.
(b) Any Right Certificate issued pursuant to Section 3(a) or Section 22
hereof that represents Rights beneficially owned by: (i) an Acquiring Person or
any Associate or Affiliate of an Acquiring Person, (ii) a transferee of an
Acquiring Person (or any Associate or Affiliate) who becomes a transferee after
the Acquiring Person becomes an Acquiring Person, or (iii) a transferee of an
Acquiring Person (or any Associate or Affiliate) who becomes a transferee prior
to or concurrently with the Acquiring Person becoming such and receives such
Rights pursuant to either (A) a transfer (whether or not for consideration) from
the Acquiring Person to holders of equity interests in such Acquiring Person or
to any Person with whom the Acquiring Person has any continuing agreement,
arrangement or understanding, whether written or oral, regarding the transferred
Rights or (B) a transfer which is part of a plan, arrangement or understanding,
whether written or oral, which has as a
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<PAGE>
primary purpose or effect the avoidance of Section 7(e) hereof, and any Right
Certificate issued pursuant to Section 6 or Section 11 hereof upon transfer,
exchange, replacement or adjustment of any other Right Certificate referred to
in this sentence, shall contain (to the extent feasible and otherwise reasonably
identifiable as such) the following legend:
The Rights represented by this Right Certificate are or were
beneficially owned by a Person who was or became an Acquiring Person
or an Affiliate or Associate of an Acquiring Person (as such terms are
defined in the Rights Agreement). Accordingly, this Right Certificate
and the Rights represented hereby may become void in the circumstances
specified in Section 7(e) of such Agreement.
The provisions of Section 7(e) shall apply whether or not any Right Certificate
actually contains the foregoing legend.
Section 5. Countersignature and Registration. The Right Certificates shall
be executed on behalf of the Corporation by any Co-Chairman of the Board, any
Managing Director, any of its Vice Presidents, or its Secretary, either manually
or by facsimile signature, shall have affixed thereto the Corporation's seal or
a facsimile thereof, and shall be attested by the Secretary or an Assistant
Secretary of the Corporation, 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
Corporation who shall have signed any of the Right Certificates shall cease to
be such officer of the Corporation before countersignature by the Rights Agent
and issuance and delivery by the Corporation, such Right Certificates,
nevertheless, may be countersigned by the Rights Agent and issued and delivered
by the Corporation with the same force and effect as though the person who
signed such Right Certificates had not ceased to be such officer of the
Corporation; and any Right Certificate may be signed on behalf of the
Corporation by any person who, at the actual date of the execution of such Right
Certificate, shall be a proper officer of the Corporation to sign such Right
Certificate, although at the date of the execution of this Rights Agreement any
such person was not such an officer.
Following the Distribution Date, the Rights Agent will keep or cause to be
kept, at its office designated for such purpose, 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, Division, Combination and Exchange of Right
Certificates; Mutilated, Destroyed, Lost or Stolen Right Certificates. Subject
to the provisions of Sections 4(b), 7(e), 14 and 24 hereof, at any time after
the close of business on the 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 may be transferred, divided, combined or
exchanged for another Right Certificate or Right Certificates, entitling the
registered holder to purchase a like number of Preferred Shares (or, following a
Triggering Event, Common Shares or other securities or property, as the case may
be) as the Right Certificate or Right Certificates surrendered then entitled
such holder to purchase. Any registered holder desiring to transfer, divide,
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, divided, combined or
exchanged at the office of the Rights Agent designated for such purpose. Neither
the Rights Agent nor the Corporation shall be obligated to take any action
whatsoever with respect to the transfer of any such surrendered Right
Certificate until the registered holder shall have completed and signed the
certificate contained in the form of assignment on the reverse side of such
Right Certificate and the Corporation shall have been provided with such
additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Corporation shall
reasonably request. Thereupon the Rights Agent shall, subject to Sections 4 and
7 hereof, countersign and deliver to the person entitled thereto a Right
Certificate or Right Certificates, as the
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case may be, as so requested. The Corporation may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer, division, combination or exchange of Right
Certificates.
Upon receipt by the Corporation 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 Corporation's request,
reimbursement to the Corporation 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 Corporation will make and deliver a new
Right Certificate of like tenor to the Rights Agent for countersignature and
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 Rights.
(a) Subject to Section 7(e) hereof, 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 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 office of
the Rights Agent designated for such purpose, together with payment of the
Purchase Price with respect to each surrendered Right for the total number of
Preferred Shares (or Common Shares or other securities or property, as the case
may be) as to which the Rights are exercised, at or prior to the earliest of (i)
the close of business on May 16, 2006 (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
pursuant to the exercise of a Right shall initially be $50.00, shall be subject
to adjustment from time to time as provided in Sections 11 and 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 and the certificate on the reverse side of
the Right Certificate duly executed, accompanied by payment of the Purchase
Price for the Preferred Shares (or Common Shares or other securities or
property, as the case may be) 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 Corporation, the Rights Agent
shall thereupon promptly (i) (A) requisition from any transfer agent of the
Preferred Shares (or make available, if the Rights Agent is the transfer agent
of the Preferred Shares) certificates for the number of Preferred Shares to be
purchased and the Corporation hereby irrevocably authorizes its transfer agent
to comply with all such requests, or (B) if the Corporation shall have elected
to deposit the Preferred Shares issuable upon exercise of the Rights with a
depositary agent, 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 with the depositary
agent) and the Corporation will direct the depositary agent to comply with such
request, (ii) when appropriate, requisition from the Corporation the amount of
cash to be paid in lieu of issuance of fractional shares in accordance with
Section 14 hereof, (iii) 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, deliver such
cash to or upon the order of the registered holder of such Right Certificate. In
the event that the Corporation is obligated to issue other securities (including
Common Shares) of the Corporation, pay cash and/or distribute other property
pursuant to Section 11(a) hereof, the Corporation will make all arrangements
necessary so that such other securities, cash and/or property are available for
distribution by the Rights Agent, if and when appropriate.
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(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 and delivered to the registered holder of such Right Certificate or
to his duly authorized assigns, subject to the provisions of Section 14 hereof.
(e) Notwithstanding anything in this Agreement to the contrary, from and
after the occurrence of a Triggering Event, any Rights beneficially owned by (i)
an Acquiring Person or an Associate or Affiliate of an Acquiring Person, (ii) a
transferee of an Acquiring Person (or of any such Associate or Affiliate) who
becomes a transferee after the Acquiring Person becomes an Acquiring Person or
(iii) a transferee of an Acquiring Person (or any Associate or Affiliate) who
becomes a transferee prior to or concurrently with the Acquiring Person becoming
an Acquiring Person and receives such Rights pursuant to either (x) a transfer
(whether or not for consideration) from the Acquiring Person to holders of
equity interests in such Acquiring Person or to any Person with whom the
Acquiring Person has any continuing agreement, arrangement or understanding,
whether written or oral, regarding the transferred Rights or (y) a transfer
which the Board of Directors otherwise concludes in good faith is part of a
plan, arrangement or understanding, whether written or oral, which has as a
primary purpose or effect the avoidance of this Section 7(e), shall become null
and void without any further action, and any holder of such Rights shall
thereupon have no rights whatsoever with respect to such Rights, whether under
any provision of this Agreement or otherwise, from and after the occurrence of a
Triggering Event. The Corporation shall use all reasonable efforts to insure
that the provisions of this Section 7(e) hereof are complied with, but shall
have no liability to any holder of Rights for the inability to make any
determinations with respect to an Acquiring Person or its Affiliates, Associates
or transferees hereunder.
(f) Notwithstanding anything in this Agreement to the contrary, neither the
Rights Agent nor the Corporation shall be obligated to undertake any action with
respect to a registered holder upon the occurrence of any purported exercise as
set forth in this Section 7 unless the certificate contained in the form of
election to purchase set forth on the reverse side of the Right Certificate
surrendered for such exercise shall have been completed and signed by the
registered holder thereof and the Corporation shall have been provided with such
additional evidence of the identity of the Beneficial Owner (or former
Beneficial Owner) or Affiliates or Associates thereof as the Corporation shall
reasonably request.
(g) The Corporation covenants and agrees that it will cause to be reserved
and kept available out of its authorized and unissued Preferred Shares (and,
following the occurrence of a Triggering Event, Common Shares and/or other
securities) or any Preferred Shares (and, following the occurrence of a
Triggering Event, Common Shares and/or other securities) held in its treasury,
the number of Preferred Shares (and, following the occurrence of a Triggering
Event, Common Shares and/or other securities) that will be sufficient to permit
the exercise in full of all outstanding Rights.
Section 8. Cancellation and Destruction of Right Certificates. All Right
Certificates surrendered for the purpose of exercise, transfer, division,
combination or exchange shall, if surrendered to the Corporation 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 Rights Agreement. The Corporation 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
Corporation otherwise than upon the exercise thereof. The Rights Agent shall
deliver all cancelled Right Certificates to the Corporation, or shall, at the
written request of the Corporation, destroy such cancelled Right Certificates,
and in such case shall deliver a certificate of destruction thereof to the
Corporation.
Section 9. Availability of Preferred Shares. The Corporation covenants and
agrees that it will take all such action as may be necessary to ensure that all
Preferred Shares (and, following the occurrence of a Triggering Event, Common
Shares and/or other securities) delivered upon exercise of Rights shall, at the
time
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of delivery of the certificates for such Preferred Shares (and, following the
occurrence of a Triggering Event, Common Shares and/or other securities),
subject to payment of the Purchase Price, be duly and validly authorized and
issued and fully paid and nonassessable.
The Corporation 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 (or Common Shares and/or other securities, as the case may
be) upon the exercise of Rights. The Corporation 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 (or
Common Shares and/or other securities, as the case may be) 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 (or Common Shares and/or other
securities, as the case may be) 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
Corporation'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 (or Common Shares and/or other securities, as
the case may be) is issued upon the exercise of Rights shall for all purposes be
deemed to have become the holder of record of the shares or securities
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 (or Common Shares and/or other securities, as the case may be)
transfer books of the Corporation are closed, such person shall be deemed to
have become the record holder of such shares or securities on, and such
certificate shall be dated, the next succeeding Business Day on which the
Preferred Shares (or Common Shares and/or other securities, as the case may be)
transfer books of the Corporation are open. 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 (or Common Shares and/or other
securities, as the case may be) 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 Corporation, 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 Corporation 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 of its shares in a reclassification of the
Preferred Shares (including any such reclassification in connection with a
consolidation or merger in which the Corporation is the continuing or
surviving entity), except as otherwise provided in this Section 11(a) and
Section 7(e) hereof, 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 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 which, if such Right had been exercised
immediately prior to such date and at a time when the Preferred Shares
transfer books of the Corporation 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 the
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Corporation issuable upon exercise of one Right. If an event occurs which
would require an adjustment under both Section 11(a)(i) and Section
11(a)(ii), the adjustment provided for in this Section 11(a)(i) shall be in
addition to, and shall be made prior to, any adjustment required pursuant
to Section 11(a)(ii).
(ii) Subject to Section 24 of this Agreement, in the event any Person
becomes an Acquiring Person, each holder of a Right, except as provided
below and in Section 7(e) hereof, 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 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 current per share market price of the
Corporation's Common Shares (determined pursuant to Section 11(d) 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 Corporation shall not take any action which would eliminate or diminish
the benefits intended to be afforded by the Rights.
(iii) In lieu of issuing Common Shares of the Corporation in
accordance with Section 11(a)(ii) hereof, the Corporation may, in the sole
discretion of the Board of Directors, elect to (and, in the event that the
Board of Directors has not exercised the exchange right contained in
Section 24 hereof and there are not sufficient issued but not outstanding
and authorized but unissued Common Shares to permit the exercise in full of
the Rights in accordance with the foregoing subparagraph (ii), the
Corporation shall) take all such action as may be necessary to authorize,
issue or pay, upon the exercise of the Rights, cash (including by way of a
reduction of the Purchase Price), property, other securities or any
combination thereof having an aggregate value equal to the value of the
Common Shares of the Corporation which otherwise would have been issuable
pursuant to Section 11(a)(ii), which aggregate value shall be determined by
a majority of the Board of Directors. For purposes of the preceding
sentence, the value of the Common Shares shall be determined pursuant to
Section 11(d) hereof and the value of any equity securities which a
majority of the Board of Directors determines to be equivalent to a Common
Share (including the Preferred Shares, in such ratio as the Board of
Directors shall determine) shall be deemed to have the same value as the
Common Shares. Any such election by the Board of Directors must be made and
publicly announced within 60 days following the date on which the event
described in Section 11(a)(ii) shall have occurred. Following the
occurrence of the event described in Section 11(a)(ii), a majority of the
Board of Directors then in office may suspend the exercisability of the
Rights for a period of up to 60 days following the date on which the event
described in Section 11(a)(ii) shall have occurred to the extent that the
Board of Directors has not determined whether to exercise the Corporation's
right of election under this Section 11(a)(iii). In the event of any such
suspension, the Corporation shall issue a public announcement stating that
the exercisability of the Rights has been temporarily suspended.
(b) In case the Corporation 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 (as defined in Section 11(d)) 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
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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
consideration to be paid upon the exercise of one Right be less than the
aggregate par value of the shares of the Corporation issuable upon exercise of
one Right. In case such subscription price is 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 of the
Corporation, whose determination shall be described in a statement filed with
the Rights Agent and shall be binding on the Rights Agent. Preferred Shares
owned by or held for the account of the Corporation 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 Corporation 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
Corporation is the continuing or surviving entity) of evidences of indebtedness
or assets (other than a regular periodic 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 of the Corporation, whose determination shall be described in
a statement filed with the Rights Agent) of the portion of the assets or
evidences of indebtedness so to be distributed or of such subscription rights or
warrants attributable 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 the
Corporation 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, other than under
Section 11(a)(iii) hereof, 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 (as such term is hereinafter defined)
immediately prior to such date, and for the purpose of any computation under
Section 11(a)(iii) hereof, the "current per share market price" of a Security on
any date shall be deemed to be the average of the daily closing prices per share
of such Security for thirty (30) consecutive Trading Days immediately following
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 (other than the Rights), 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 appropriately adjusted to
reflect the current market price per share equivalent (ex-dividend) 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
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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 by the National Association
of Securities Dealers, Inc. Automated Quotation System ("NASDAQ") 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 of the Corporation. If on any such date no market maker is
making a market in the Security, the fair value of such Security on such date
(as determined in good faith by the Board of Directors of the Corporation) shall
be used. 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 of the Corporation as determined pursuant to Section 11(d)(i)
(appropriately adjusted to reflect any share split, share dividend or similar
transaction occurring after the date hereof), multiplied by one hundred. If
neither the Common Shares of the Corporation 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 of the Corporation, whose determination shall be described in a
statement filed with the Rights Agent.
(e) Anything herein to the contrary notwithstanding, no adjustment in the
Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least 1% in the Purchase Price; provided, however,
that any adjustments which by reason of this Section 11(e) are not required to
be made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 11 shall be made to the nearest
cent or to the nearest 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.
(f) If as a result of an adjustment made pursuant to Section 11(a) or
Section 13(a) hereof, the holder of any Right thereafter exercised shall become
entitled to receive any shares of the Corporation 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 this Section 11, and the provisions of Sections 7,
9, 10, 13 and 14 with respect to the Preferred Shares shall apply on like terms
to any such other shares.
(g) All Rights originally issued by the Corporation 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 Corporation 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 (i) multiplying (A) the number of one one-hundredths of a
Preferred Share covered by a Right immediately prior to such adjustment by (B)
the Purchase
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Price in effect immediately prior to such adjustment of the Purchase
Price and (ii) dividing the product so obtained by the Purchase Price in
effect immediately after such adjustment of the Purchase Price.
(i) The Corporation 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
Corporation 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
Corporation 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 additional Rights to which such
holders shall be entitled as a result of such adjustment, or, at the option of
the Corporation, 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
Corporation, 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-hundredths 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 Corporation shall
take any action which may, in the opinion of its counsel, be necessary in order
that the Corporation 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 Corporation may elect to defer until the occurrence of such event the
issuance to the holder of any Right exercised after such record date of the
Preferred Shares and other securities of the Corporation, if any, issuable upon
such exercise over and above the Preferred Shares and other securities of the
Corporation, if any, issuable upon such exercise on the basis of the Purchase
Price in effect prior to such adjustment; provided, however, that the
Corporation 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
Corporation 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
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Shares or issuance of rights, options or warrants referred to hereinabove
in Section 11(b), hereafter made by the Corporation to holders of its
Preferred Shares shall not be taxable to such shareholders.
(n) In the event that at any time after the date of this Agreement and
prior to the Distribution Date, the Corporation 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 (x) 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 (y) 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.
(o) So long as the shares issuable upon the exercise of the Rights may be
listed on any national securities exchange, the Corporation shall use its best
efforts to cause, from and after such time as the Rights become exercisable, all
shares reserved for such issuance to be listed on such exchange upon official
notice of issuance upon such exercise.
(p) The Corporation shall use its best efforts to (i) file, as soon as
practicable following the first occurrence of a Triggering Event, a registration
statement under the Securities Act with respect to the securities purchasable
upon exercise of the Rights on an appropriate form, (ii) cause such registration
statement to become effective as soon as practicable after such filing, and
(iii) cause such registration statement to remain effective (with a prospectus
at all times meeting the requirements of the Securities Act) until the date of
the expiration of the Rights. The Corporation will also take such action as may
be appropriate under the blue sky laws of the various states. The Corporation
may temporarily suspend, for a period of time not to exceed 90 days, the
exercisability of the Rights in order to prepare and file such registration
statement or in order to comply with such blue sky laws. Upon any such
suspension, the Corporation shall issue a public announcement stating that the
exercisability of the Rights has been temporarily suspended.
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
Corporation 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. The Rights Agent shall be fully protected in relying on any such
certificate and on any adjustment therein contained and may assume that no
adjustment has been made unless and until it shall have received such
certificate.
Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.
(a) If after the Shares Acquisition Date, directly or indirectly, (x) the
Corporation shall consolidate with, or merge with and into, any other Person,
(y) any Person shall consolidate with the Corporation, or merge with and into
the Corporation and the Corporation shall be the continuing or surviving entity
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 Corporation) or cash or any other property, or (z) the
Corporation 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
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the Corporation and its Subsidiaries (taken as a whole) to any Person or Persons
other than the Corporation or one or more of its wholly-owned Subsidiaries,
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 validly
authorized and issued, fully paid, non-assessable and freely tradeable common
shares of the Principal Party (as hereinafter defined), free and clear of all
liens, rights of call or first refusal, encumbrances or other adverse claims, 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 (or, if such Right is not then exercisable for a number of
one one-hundredths of a Preferred Share, the number of such fractional shares
for which it was exercisable immediately prior to an event described under
Section 11(a)(ii) hereof) and dividing that product by (B) 50% of the then
current per share market price of the common shares of such Principal Party
(determined pursuant to Section 11(d) hereof) on the date of consummation of
such consolidation, merger, sale or transfer; (ii) such Principal Party shall
thereafter be liable for, and shall assume, by virtue of such consolidation,
merger, sale or transfer, or otherwise, all the obligations and duties of the
Corporation pursuant to this Agreement; (iii) the term "Corporation" shall
thereafter be deemed to refer to such Principal Party and (iv) such Principal
Party 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 its common shares thereafter deliverable upon the exercise of
the Rights.
(b) "Principal Party" shall mean:
(i) In the case of any transaction described in (x) or (y) of the
first sentence of Section 13(a), the Person that is the issuer of any
securities into which Common Shares of the Corporation are converted in
such merger or consolidation, and if no securities are so issued, the
Person that is the surviving entity of such merger or consolidation
(including the Corporation if applicable); and
(ii) in the case of any transaction described in (z) of the first
sentence in Section 13(a), the Person that is the party receiving the
greatest portion of the assets or earning power transferred pursuant to
such transaction or transactions;
provided, however, that in any such case described in clauses (b)(i) and
(b)(ii): (1) if the common shares of such Person are not at such time and have
not been continuously over the preceding 12-month period registered under
Section 12 of the Exchange Act, and such Person is a direct or indirect
Subsidiary of another Person the common shares of which are and have been so
registered, "Principal Party" shall refer to such other Person; (2) in case such
Person is a Subsidiary, directly or indirectly, of more than one Person, the
common shares of two or more of which are and have been so registered,
"Principal Party" shall refer to whichever of such Persons is the issuer of the
common shares having the greatest aggregate market value; and (3) in case such
Person is owned, directly or indirectly, by a joint venture formed by two or
more Persons that are not owned, directly or indirectly, by the same Person, the
rules set forth in (1) and (2) above shall apply to each of the chains of
ownership having an interest in such joint venture as if such party were a
"Subsidiary" of both or all of such joint venturers and the Principal Parties in
each such chain shall bear the obligations set forth in this Section 13 in the
same ratio as their direct or indirect interests in such Person bear to the
total of such interests.
(c) The Corporation shall not consummate any such consolidation, merger,
sale or transfer unless the Principal Party shall have sufficient common shares
authorized to permit the full exercise of the Rights and prior thereto the
Corporation and such Principal Party shall have executed and delivered to the
Rights Agent a supplemental agreement providing for the terms set forth in
paragraphs (a) and (b) of this Section 13 and further
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providing that, as soon as practicable after the date of any consolidation,
merger or sale of assets mentioned in paragraph (a) of this Section 13, the
Principal Party will:
(i) prepare and file a registration statement under the Securities
Act, with respect to the Rights and the securities purchasable upon
exercise of the Rights on an appropriate form, and will use its best
efforts to cause such registration statement to (A) become effective as
soon as practicable after such filing and (B) remain effective (with a
prospectus at all times meeting the requirements of the Securities Act)
until the Expiration Date;
(ii) deliver to holders of the Rights historical financial statements
for the Principal Party and each of its Affiliates which comply in all
respects with the requirements for registration on Form 10 under the
Exchange Act; and
(iii) take such actions as may be necessary or appropriate
under the blue sky laws of the various states.
The provisions of this Section 13 shall similarly apply to successive mergers or
consolidations or sales or other transfers. In the event that one of the
transactions described in this Section 13(a) shall occur at any time after the
occurrence of a transaction described in Section 11(a)(ii) hereof, the Rights
which have not theretofore been exercised shall thereafter become exercisable in
the manner described in Section 13(a).
Section 14. Fractional Rights and Fractional Shares.
(a) The Corporation 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 may 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 by NASDAQ or such other
system then in use or, if on any such date the Rights are not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Rights selected by the Board of
Directors of the Corporation. 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 of the Corporation shall be used.
(b) The Corporation 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) 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 Corporation, be evidenced by depositary receipts,
pursuant to an appropriate agreement between the Corporation 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
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depositary receipts. In lieu of fractional Preferred Shares that are not
integral multiples of one one-hundredth of a Preferred Share, the Corporation
may, to the extent necessary to reduce such fraction to an integral multiple of
one one-hundredth, 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 one-hundredth of a Preferred
Share. For the purposes of this Section 14(b), the current market value of one
one-hundredth of a Preferred Share shall be one one-hundredth of 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) Following the occurrence of a Triggering Event, the Corporation shall
not be required to issue fractions of Common Shares upon exercise of the Rights
or to distribute certificates which evidence fractional Common Shares. In lieu
of fractional Common Shares, the Corporation may 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
Common Share. For purposes of this Section 14(c), the current market value of
one Common Share shall be the closing price of one 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 such exercise.
(d) The holder of a Right by the acceptance of the Right expressly waives
his right to receive any fractional Rights or any fractional shares upon
exercise of a Right (except as 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 Distribution Date, the registered holders of the
Common Shares); and any registered holder of any Right Certificate (or, prior to
the 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
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 Corporation 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 Corporation and the Rights
Agent and with every other holder of a Right that:
(a) prior to the Distribution Date, the Rights will be transferable
only in connection with the transfer of the Common Shares;
(b) after the 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;
(c) the Corporation and the Rights Agent may deem and treat the person
in whose name the Right Certificate (or, prior to the 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 Certificates or the
associated Common Shares certificate made by anyone other than the
Corporation or the Rights Agent) for all purposes whatsoever, and neither
the Corporation nor the Rights Agent shall be affected by any notice to the
contrary; and
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(d) notwithstanding anything in this Agreement to the contrary,
neither the Corporation nor the Rights Agent shall have any liability to
any holder of a Right or any other Person as a result of its inability to
perform any of its obligations under this Agreement by reason of any
preliminary or permanent injunction or other order, decree or ruling issued
by a court of competent jurisdiction or by a governmental, regulatory or
administrative agency or commission, or any statute, rule, regulation or
executive order promulgated or enacted by any governmental authority
prohibiting or otherwise restraining performance of such obligation.
Section 17. Right Certificate Holder Not Deemed a Shareholder. 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 Corporation 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 shareholder of the Corporation or
any right to vote for the election of trustees or upon any matter submitted to
shareholders at any meeting thereof, or to give or withhold consent to any trust
action, or to receive notice of meetings or other actions affecting shareholders
(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 Corporation agrees to pay to
the Rights Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent, its reasonable
expenses and counsel fees and other disbursements incurred in the administration
and execution of this Agreement and the exercise and performance of its duties
hereunder. The Corporation 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 Corporation, 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 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 business of the Rights Agent or any successor Rights Agent,
shall be the successor to the Rights Agent under this Agreement without the
execution or filing of any paper or any further act on the part of any of the
parties hereto; provided, 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; any 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.
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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 Corporation 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 Corporation), 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 Corporation prior to taking or suffering any action
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 the Chairman or one of any Co-Chairman of
the Board, any Managing Director, any Vice President, or the Secretary of the
Corporation 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 Corporation and any
other Person only for any and all losses, liabilities, costs, damages and
expenses (including attorneys' fees) arising out of or in connection with the
Rights Agent's negligence, bad faith or willful misconduct. Anything in this
Agreement to the contrary notwithstanding, in no event shall the Rights Agent be
liable for special, indirect or consequential loss or damage of any kind
whatsoever (including but not limited to lost profits), even if the Rights Agent
has been advised of the likelihood of such loss or damage and regardless of the
form of the action.
(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 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 Corporation 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 Corporation 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 7(e) 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 receipt of a
certificate furnished pursuant to Section 12 describing a change or adjustment);
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 or
Common Shares to be issued pursuant to this
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Agreement or any Right Certificate or as to whether any Preferred Shares or
Common Shares will, when issued, be validly authorized and issued, fully paid
and nonassessable.
(f) The Corporation agrees that it will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and delivered all such
further and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.
(g) The Rights Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from the
Chairman or any one of any Co-Chairman of the Board, any Managing Director, any
Vice President, the Secretary or the Treasurer of the Corporation, 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. Any application by the Rights Agent for
written instructions from the Corporation may, at the option of the Rights
Agent, set forth in writing any action proposed to be taken or omitted by the
Rights Agent under this Agreement and the date on and/or after which such action
shall be taken or such omission shall be effective. The Rights Agent shall not
be liable for any action taken by, or omission of, the Rights Agent in
accordance with a proposal included in any such application on or after the date
specified in such application (which date shall not be less than five Business
Days after the date any officer of the Corporation actually receives such
application, unless any such officer shall have consented in writing to an
earlier date) unless, prior to taking any such action (or the effective date in
the case of an omission), the Rights Agent shall have received written
instructions in response to such application specifying the action to be taken
or omitted.
(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 Corporation or its Subsidiaries or become pecuniarily interested in any
transaction in which the Corporation or its Subsidiaries may be interested, or
contract with or lend money to the Corporation or its Subsidiaries 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 Corporation or its Subsidiaries 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 Corporation resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection
and continued employment thereof.
(j) If, with respect to any Rights Certificate surrendered to the Rights
Agent for exercise or transfer, the certificate attached to the form of
assignment or form of election to purchase, as the case may be, has either not
been completed or indicates an affirmative response to clause 1 and/or 2
thereof, the Rights Agent shall not take any further action with respect to such
requested exercise of transfer without first consulting with the Corporation.
Section 21. Change of Rights Agent. The Rights Agent or any successor
Rights Agent may resign and be discharged from its duties under this Agreement
upon 30 days' notice in writing mailed to the Corporation 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
Corporation 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 Corporation shall appoint a
successor to the
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Rights Agent. If the Corporation 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
Corporation), 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 successor Rights Agent, whether appointed by the Corporation or by such a
court, shall be a corporation or bank organized and doing business under the
laws of the United States or of any other state of the United States, which is
authorized under such laws to exercise corporate trust or stock transfer powers
and is subject to supervision or examination by federal or state authority and
which has at the time of its appointment as Rights Agent a combined capital and
surplus of at least $100 million. 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 Corporation 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 Corporation
may, at its option, issue new Right Certificates evidencing Rights in such form
as may be approved by its Board of Directors to reflect any adjustment or change
in the Purchase Price and the number or kind or class of shares or other
securities or property purchasable under the Right Certificates made in
accordance with the provisions of this Agreement.
Section 23. Redemption.
(a) The Board of Directors of the Corporation 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 share split, share 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 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. The Corporation may, at its option, pay the Redemption Price in cash,
Common Shares (based on the current per share market price of the Common Shares
at the time of redemption) or any other form of consideration deemed appropriate
by the Board of Directors.
(b) Immediately upon the action of the Board of Directors of the
Corporation ordering the redemption of the Rights (or at the effective time of
such redemption established by the Board of Directors of the Corporation
pursuant to the last sentence of 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 Corporation 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 or, if later, the effectiveness of the redemption of
the Rights pursuant to the last sentence of paragraph (a), the Corporation 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 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. The
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Corporation may, at its option, discharge all of its obligations with respect to
the Rights by (i) issuing a press release announcing the manner of redemption of
the Rights, (ii) depositing with a bank or trust company having a capital and
surplus of at least $100,000,000, funds necessary for such redemption, in trust,
to be applied to the redemption of the Rights so called for redemption and (iii)
arranging for the mailing of the Redemption Price to the registered holders of
the Rights; then, and upon such action, all outstanding Rights Certificates
shall be null and void without further action by the Corporation. Neither the
Corporation 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, in Section 24 hereof, or in
connection with the purchase of Common Shares prior to the Distribution Date.
Section 24. Exchange.
--------
(a) The Board of Directors of the Corporation may, at its option, at any
time after a Triggering Event, 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 7(e) hereof) for Common Shares at an
exchange ratio of one Common Share per Right, appropriately adjusted to reflect
any share split, share 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
SCG Group, the Corporation, any Affiliate or Subsidiary of the Corporation, any
employee benefit plan of the Corporation or of any Affiliate or Subsidiary of
the Corporation or any entity holding Common Shares for or pursuant to the terms
of any such plan), 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 of the
Corporation 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 Corporation 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 Corporation 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 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 7(e) hereof) held by each holder of Rights.
(c) In any exchange pursuant to this Section 24, the Corporation, at its
option, may substitute Preferred Shares (or equivalent preferred shares, as such
term is defined in Section 11(b) hereof) for Common Shares exchangeable for
Rights, at the initial rate of one one-hundredth of a Preferred Share (or
equivalent preferred share) for each Common Share, as appropriately adjusted to
reflect adjustments in the voting rights of the Preferred Shares pursuant to the
terms thereof, so that the fraction of a Preferred Share delivered in lieu of
each Common Share shall have the same voting rights as one Common Share.
(d) In the event that there shall not be sufficient Common Shares or
Preferred Shares issued but not outstanding or authorized but unissued to permit
any exchange of Rights as contemplated in accordance with this
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Section 24, the Corporation shall take all such action as may be necessary to
authorize additional Common Shares or Preferred Shares for issuance upon
exchange of the Rights.
(e) The Corporation 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 Corporation 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 (e), 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 Certain Events.
(a) In case the Corporation shall propose at any time after the
Distribution Date (i) to pay any dividend payable in shares 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 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 Corporation
and its Subsidiaries (taken as a whole) to, any other Person, (v) to effect the
liquidation, dissolution or winding up of the Corporation, 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 Corporation shall give to each holder of a Right
Certificate, in accordance with Section 26 hereof, a notice of such proposed
action, which shall specify the record date for the purposes of such share
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 any of the events set forth in Section 11(a)(ii) hereof shall
occur, then the Corporation 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 Corporation 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:
Homestead Village Properties Incorporated
125 Lincoln Avenue
Santa Fe, New Mexico 87501
Attention: Secretary
S-23
<PAGE>
Subject to the provisions of Section 21 hereof, any notice or demand
authorized by this Agreement to be given or made by the Corporation or by the
holder of any Right Certificate to or on the Rights Agent shall be sufficiently
given or made if sent by first-class mail, postage prepaid, addressed (until
another address is filed in writing with the Corporation) as follows:
The First National Bank of Boston
150 Royall Street
Mail Stop 45-02-62
Canton, Massachusetts 02021
Attention: Shareholders Services Division
Notices or demands authorized by this Agreement to be given or made by the
Corporation 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 Corporation.
Section 27. Supplements and Amendments. The Corporation 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 respect to the Rights
(including, without limitation, changes to the Purchase Price) which the
Corporation may deem necessary or desirable, any such supplement or amendment to
be evidenced by a writing signed by the Corporation 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 Corporation 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 Corporation, the Rights Agent and
the registered holders of the Right Certificates (and, prior to the Distribution
Date, the Common Shares) any legal or equitable right, remedy or claim under
this Agreement; and this Agreement shall be for the sole and exclusive benefit
of the Corporation, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the 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
Maryland 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, except that those provisions of this Agreement
affecting the rights, duties and responsibilities of the Rights Agent shall be
governed by and construed in accordance with the law of the State of New York.
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.
S-24
<PAGE>
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.
Section 34. Determinations and Actions by the Board of Directors. The Board
of Directors of the Corporation shall have the exclusive power and authority to
administer this Agreement and to exercise all rights and powers specifically
granted to the Directors or the Corporation or as may be necessary or advisable
in the administration of this Agreement, including, without limitation, the
right and power to (a) interpret the provisions of this Agreement, and (b) make
all determinations deemed necessary or advisable for the administration of this
Agreement (including a determination to redeem or not redeem the Rights or to
amend this Agreement). All such actions, interpretations and determinations
(including, for purpose of clause (b) above, all omissions with respect to the
foregoing) which are done or made by the Directors in good faith, shall (x) be
final, conclusive and binding on the Corporation, the Rights Agent, the holders
of the Right Certificates and all other parties, and (y) not subject the
Directors to any liability to the holders of the Right Certificates.
S-25
<PAGE>
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.
HOMESTEAD VILLAGE PROPERTIES INCORPORATED
By /s/ David C. Dressler, Jr.
--------------------------
David C. Dressler, Jr.
Chairman
Attest:
By /s/ Jeffrey A. Klopf
--------------------
Jeffrey A. Klopf
Secretary
THE FIRST NATIONAL BANK OF BOSTON
By /s/ Valerie G. Gray
-------------------
Name: Valerie G. Gray
Title: Director, Client Administration
Authorized Signatory
Attest:
By /s/ Stephen Plefka
----------------------
Name: Stephen Plefka
Title: Account Manager
S-26
<PAGE>
Exhibit A
---------
FORM OF
ARTICLES SUPPLEMENTARY
RIGHTS OF SERIES A JUNIOR
PARTICIPATING PREFERRED STOCK
of
HOMESTEAD VILLAGE PROPERTIES INCORPORATED
The undersigned, being a duly authorized officer of Homestead Village
Properties Incorporated, a Maryland corporation (the "Corporation"), do hereby
certify to the State Department of Assessments and Taxation of Maryland pursuant
to Section 8-203(b) of the Annotated Code of Maryland that:
FIRST: The Board of Directors has classified _________ unissued shares of
the Corporation as shares of Series A Junior Participating Preferred Stock.
SECOND: The following is a description of the Series A Preferred Shares
(as defined below), including the preferences, conversion and other rights,
voting powers, restrictions, limitations as to dividends, qualifications, and
terms and conditions of redemption thereof:
Section 1. Designation and Amount. There shall be a series of preferred
stock of the Corporation, $0.01 par value per share, which shall be designated
"Series A Junior Participating Preferred Stock," $0.01 par value per share (the
"Series A Preferred Shares"), and the number of shares constituting that series
shall be __________. Such number of shares may be increased or decreased by
resolution of the Board of Directors and by the filing of articles supplementary
in accordance with the provisions of the General Corporation Law of the State of
Maryland stating that such increase or reduction has been so authorized;
provided, however, that no decrease shall reduce the number of Series A
Preferred Shares to a number less than the number of Series A Preferred Shares
then outstanding plus the number of Series A Preferred Shares issuable upon
exercise of outstanding rights, options or warrants or upon conversion of
outstanding securities issued by the Corporation.
Section 2. Dividends and Distributions.
(A) Subject to the prior and superior rights of the holders of any shares
of any class or series of preferred shares of the Corporation ranking prior and
superior to the Series A Preferred Shares with respect to dividends, the holders
of Series A Preferred Shares 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 to holders of record on the last
Business Day of January, April, July and October 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 Series A
Preferred Share or fraction thereof) in an amount per share (rounded to the
nearest cent) equal to the greater of (a) $1.00 or (b) 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 Common Shares (hereinafter defined) or a subdivision of the
outstanding Common Shares (by a reclassification or otherwise), declared on the
shares of common stock, par value $0.01 per share, of the Corporation (the
"Common Shares") since the immediately preceding Quarterly Dividend Payment
Date, or, with respect to the first Quarterly Dividend Payment Date, since the
first issuance of any Series A Preferred Share or fraction thereof. In the event
the Corporation shall at any time following May 16, 1996 (i) declare any
dividend on Common Shares payable in Common Shares, (ii) subdivide the
outstanding Common Shares or (iii) combine the outstanding Common Shares into a
smaller number of shares, then in each such case the amount to
<PAGE>
which holders of Series A Preferred Shares were entitled immediately prior to
such event under clause (b) of the preceding sentence shall be adjusted by
multiplying each such amount by a fraction the numerator of which is the number
of Common Shares outstanding immediately after such event and the denominator of
which is the number of Common Shares that were outstanding immediately prior to
such event.
(B) The Corporation shall declare a dividend or distribution on the Series
A Preferred Shares as provided in paragraph (A) above at the time it declares a
dividend or distribution on the Common Shares (other than a dividend payable in
Common Shares).
(C) No dividend or distribution (other than a dividend or distribution
payable in Common Shares) shall be paid or payable to the holders of Common
Shares unless, prior thereto, all accrued but unpaid dividends to the date of
that dividend or distribution shall have been paid to the holders of Series A
Preferred Shares.
(D) Dividends shall begin to accrue and be cumulative on outstanding
Series A Preferred Shares from the Quarterly Dividend Payment Date next
preceding the date of issuance of such Series A Preferred Shares, unless the
date of issuance of such shares is prior to the record date for the first
Quarterly Dividend Payment Date, in which case dividends on such shares shall
begin to accrue and be cumulative from the date of issuance of such shares, or
unless the date of issuance is a Quarterly Dividend Payment Date or is a date
after the record date for the determination of holders of Series A Preferred
Shares 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 Series A
Preferred Shares 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 Series A
Preferred Shares entitled to receive payment of a dividend or distribution
declared thereon, which record date shall be no more than 30 days prior to the
date fixed for the payment thereof.
Section 3. Voting Rights. The holders of Series A Preferred Shares shall
have the following voting rights:
(A) Subject to the provision for adjustment hereinafter set forth, each
one one-hundredth of a Series A Preferred Share shall entitle the holder thereof
to one vote on all matters submitted to a vote of the shareholders of the
Corporation. In the event the Corporation shall at any time following May 16,
1996 (i) declare any dividend on Common Shares payable in Common Shares, (ii)
subdivide the outstanding Common Shares or (iii) combine the outstanding Common
Shares into a smaller number of shares, then in each such case the number of
votes per share to which holders of Series A Preferred Shares 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 Common Shares outstanding
immediately after such event and the denominator of which is the number of
Common Shares that were outstanding immediately prior to such event.
(B) Except as otherwise provided herein or required by law, the holders of
Series A Preferred Shares and the holders of Common Shares and any other capital
shares of the Corporation having general voting rights shall vote together as
one class on all matters submitted to a vote of shareholders of the Corporation.
(C) (i) Whenever, at any time or times, dividends payable on any Series A
Preferred Shares shall be in arrears in an amount equal to at least six
full quarterly dividends (whether or not declared and whether or not
consecutive), the holders of record of the outstanding Series A Preferred
Shares shall have the exclusive right, voting separately as a single class,
to elect two directors of the Corporation at a special meeting of
shareholders of the Corporation or at the Corporation's next annual meeting
of shareholders, and at each subsequent annual meeting of shareholders, as
provided below.
S-2
<PAGE>
At elections for such directors, the holders of Series A Preferred Shares
shall be entitled to cast one vote for each one one-hundredth of a Series A
Preferred Share held, subject to adjustment.
(ii) Upon the vesting of such right of the holders of the Series A
Preferred Shares, the maximum authorized number of members of the Board of
Directors shall automatically be increased by two and the two vacancies so
created shall be filled by vote of the holders of the outstanding Series A
Preferred Shares as hereinafter set forth. A special meeting of the
shareholders of the Corporation then entitled to vote shall be called by
any Co-Chairman, Managing Director, Senior Vice President or the Secretary
of the Corporation, if requested in writing by the holders of record of not
less than 10% of the Series A Preferred Shares then outstanding. At such
special meeting, or, if no such special meeting shall have been called,
then at the next annual meeting of shareholders of the Corporation, the
holders of the Series A Preferred Shares shall elect, voting as above
provided, two directors of the Corporation to fill the aforesaid vacancies
created by the automatic increase in the number of members of the Board of
Directors. At any and all such meetings for such election, the holders of a
majority of the outstanding Series A Preferred Shares shall be necessary to
constitute a quorum for such election, whether present in person or by
proxy, and such two directors shall be elected by the vote of at least a
plurality of shares held by such shareholders present or represented at the
meeting. Any director elected by holders of Series A Preferred Shares
pursuant to this Section may be removed at any annual or special meeting,
by vote of a majority of the shareholders voting as a class who elected
such director, with or without cause. In case any vacancy shall occur among
the directors elected by the holders of the Series A Preferred Shares
pursuant to this Section, such vacancy may be filled by the remaining
director so elected, or his successor then in office, and the director so
elected to fill such vacancy shall serve until the next meeting of
shareholders for the election of directors. After the holders of the Series
A Preferred Shares shall have exercised their right to elect directors in
any default period and during the continuance of such period, the number of
directors shall not be further increased or decreased except by vote of the
holders of Series A Preferred Shares as herein provided or pursuant to the
rights of any equity securities ranking senior to or pari passu with the
Series A Preferred Shares.
(iii) The right of the holders of the Series A Preferred Shares,
voting separately as a class, to elect two members of the Board of
Directors of the Corporation as aforesaid shall continue until, and only
until, such time as all arrears in dividends (whether or not declared) on
the Series A Preferred Shares shall have been paid or declared and set
apart for payment, at which time such right shall terminate, except as
herein or by law expressly provided, subject to revesting in the event of
each and every subsequent default of the character above-mentioned. Upon
any termination of the right of the holders of the Series A Preferred
Shares as a class to vote for directors as herein provided, the term of
office of all directors then in office elected by the holders of Series A
Preferred Shares pursuant to this Section shall terminate immediately.
Whenever the term of office of the directors elected by the holders of the
Series A Preferred Shares pursuant to this Section shall terminate and the
special voting powers vested in the holders of the Series A Preferred
Shares pursuant to this Section shall have expired, the maximum number of
members of the Board of Directors of the Corporation shall be such number
as may be provided for in the Bylaws of the Corporation irrespective of any
increase made pursuant to the provisions of this Section.
(D) Except as otherwise provided herein or required by law, holders of
Series A Preferred Shares 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 Shares as provided herein) for taking any corporate action.
Section 4. Certain Restrictions.
(A) Whenever any quarterly dividends or other dividends or distributions
payable on the Series A Preferred Shares as provided in Section 2 are in
arrears, then, thereafter and until all accrued and unpaid
S-3
<PAGE>
dividends and distributions, whether or not declared, on Series A Preferred
Shares outstanding shall have been paid in full, the Corporation shall not:
(i) declare or pay dividends on, make any other distributions on, or
redeem or purchase or otherwise acquire for consideration any shares
ranking junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series A Preferred Shares, other than dividends paid or
payable in such junior shares;
(ii) declare or pay dividends on or make any other distributions on
any shares ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Preferred Shares, except
dividends paid ratably on the Series A Preferred Shares and all such parity
shares 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 ranking on a parity (either as to dividends or upon liquidation,
dissolution or winding up) with the Series A Preferred Shares, provided
that the Corporation may at any time redeem, purchase or otherwise acquire
any such parity shares in exchange for shares of the Corporation ranking
junior (either as to dividends or upon dissolution, liquidation or winding
up) to the Series A Preferred Shares; or
(iv) purchase or otherwise acquire for consideration any Series A
Preferred Shares, 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 the Corporation
unless the Corporation could, under paragraph (A) of this Section, purchase or
otherwise acquire such shares at such time and in such manner.
Section 5. Reacquired Shares. Any Series A Preferred Shares 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 preferred shares and may be
reissued as part of a new series of preferred shares to be created by resolution
or resolutions of the Board of Directors, subject to the conditions and
restrictions on issuance set forth herein.
Section 6. Liquidation, Dissolution or Winding Up. (A) Upon any
voluntary liquidation, dissolution or winding up of the Corporation, no
distribution shall be made to the holders of shares ranking junior (either as to
dividends or upon liquidation, dissolution or winding up) to the Series A
Preferred Shares unless, prior thereto, the holders of Series A Preferred Shares
shall have received $1.00 per share, plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment (the "Series A Liquidation Preference"). Following the payment of
the full amount of the Series A Liquidation Preference, no additional
distributions shall be made to the holders of Series A Preferred Shares unless,
prior thereto, the holders of Common Shares shall have received an amount per
share (the "Common Adjustment") equal to the quotient obtained by dividing (i)
the Series A Liquidation Preference by (ii) 100 (as appropriately adjusted as
set forth in subparagraph C below to reflect such events as share splits, share
dividends and recapitalizations with respect to the Common Shares) (such number
in clause (ii), the "Adjustment Number"). Following the payment of the full
amount of the Series A Liquidation Preference and the Common Adjustment in
respect of all outstanding Series A Preferred Shares and Common Shares,
respectively, holders of Series A Preferred Shares and holders of Common Shares
shall receive their ratable and proportionate share of the
S-4
<PAGE>
remaining assets to be distributed in the ratio, on a per share basis, of the
Adjustment Number to 1 with respect to such Series A Preferred Shares and Common
Shares, on a per share basis, respectively.
(B) In the event, however, that there are not sufficient assets available
to permit payment in full of the Series A Liquidation Preference and the
liquidation preferences of all other series of preferred shares, if any, which
rank on a parity with the Series A Preferred Shares, then such remaining assets
shall be distributed ratably to the holders of the Series A Preferred Shares and
such parity shares in proportion to their respective liquidation preferences.
(C) In the event the Corporation shall at any time following May 16, 1996
(i) declare any dividend on Common Shares payable in Common Shares, (ii)
subdivide the outstanding Common Shares or (iii) combine the outstanding Common
Shares into a smaller number of shares, then in each such case the Adjustment
Number in effect immediately prior to such event shall be adjusted by
multiplying such Adjustment Number by a fraction the numerator of which is the
number of Common Shares outstanding immediately after such event and the
denominator of which is the number of Common Shares 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 Common Shares are exchanged for or changed into other shares or securities,
cash and/or any other property, then in any such case, the Series A Preferred
Shares shall at the same time be similarly exchanged or changed in an amount per
share (subject to the provision for adjustment hereinafter set forth) equal to
100 times the aggregate amount of shares, securities, cash and/or any other
property (payable in kind), as the case may be, into which or for which each
Common Share is exchanged or changed. In the event the Corporation shall at any
time (i) declare any dividend on Common Shares payable in Common Shares, (ii)
subdivide the outstanding Common Shares or (iii) combine the outstanding Common
Shares into a smaller number of shares, then in each such case the amount set
forth in the preceding sentence with respect to the exchange or change of Series
A Preferred Shares shall be adjusted by multiplying such amount by a fraction
the numerator of which is the number of Common Shares outstanding immediately
after such event and the denominator of which is the number of Common Shares
that were outstanding immediately prior to such event.
Section 8. Redemption. The Series A Preferred Shares shall not be
redeemable by the Corporation. The preceding sentence shall not limit the
ability of the Corporation to purchase or otherwise deal in such shares to the
extent permitted by law.
Section 9. Ranking. The Series A Preferred Shares shall rank junior to
all other series of the Corporation's preferred stock (whether with or without
par value) as to the payment of dividends and the distribution of assets, unless
the terms of any such series shall provide otherwise.
Section 10. Amendment. Neither the Corporation's Amended and Restated
Articles of Incorporation, nor any Articles Supplementary relating to the Series
A Preferred Shares shall be amended in any manner which would materially alter
or change the powers, preferences or special rights of the Series A Preferred
Shares so as to affect the holders of Series A Preferred Shares adversely
without the affirmative vote of the holders of a majority or more of the
outstanding Series A Preferred Shares, voting separately as a class.
Section 11. Fractional Shares. Series A Preferred Shares may be issued in
fractions of a share that are integral multiples of one-one hundredth of a
share, which shall entitle the holder, in proportion to such holder's fractional
shares, to exercise voting rights, receive dividends and participate in
distributions and to have the benefit of all other rights of holders of Series A
Preferred Shares.
S-5
<PAGE>
FOURTH: The undersigned officer acknowledges these Articles Supplementary
to be the act of the Corporation and further, as to all matters or facts
required to be verified under oath, such officer acknowledges that to the best
of his or her knowledge, information and belief, these matters and facts are
true in all material respects and that this statement is made under the
penalties of perjury.
S-6
<PAGE>
IN WITNESS WHEREOF, these Articles Supplementary have been duly executed by
the undersigned officer this ___ day of __________, 19__.
HOMESTEAD VILLAGE PROPERTIES INCORPORATED
By:
--------------------------------------------
Name:
--------------------------------------------
Title:
--------------------------------------------
S-7
<PAGE>
Exhibit B
---------
[Form of Right Certificate]
Certificate No. R- ________ Rights
NOT EXERCISABLE AFTER MAY 16, 2006 OR EARLIER IF THE RIGHTS EXPIRE UNDER
CERTAIN CIRCUMSTANCES OR ARE EXCHANGED OR REDEEMED BY THE CORPORATION. THE
RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE CORPORATION, AT $.01
PER RIGHT ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES, RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON (AS SUCH
TERM IS DEFINED IN THE RIGHTS AGREEMENT) AND ANY SUBSEQUENT HOLDER OF SUCH
RIGHTS MAY BECOME NULL AND VOID. [THE RIGHTS REPRESENTED BY THIS
CERTIFICATE ARE OR WERE BENEFICIALLY OWNED BY A PERSON WHO WAS OR BECAME AN
ACQUIRING PERSON OR AN AFFILIATE OR ASSOCIATE OF AN ACQUIRING PERSON (AS
SUCH TERMS ARE DEFINED IN THE RIGHTS AGREEMENT). ACCORDINGLY, THIS RIGHT
CERTIFICATE AND THE RIGHTS REPRESENTED HEREBY MAY BECOME VOID IN THE
CIRCUMSTANCES SPECIFIED IN SECTION 7(e) OF SUCH AGREEMENT.]*
Right Certificate
HOMESTEAD VILLAGE PROPERTIES INCORPORATED
This certifies that , or registered assigns, is the registered owner of the
number of Rights set forth above, each of which entitles the owner thereof,
subject to the terms, provisions and conditions of the Rights Agreement, dated
as of May 16, 1996 (the "Rights Agreement"), between Homestead Village
Properties Incorporated, a Maryland corporation (the "Corporation"), and The
First National Bank of Boston (the "Rights Agent") to purchase from the
Corporation at any time after the Distribution Date (as such term is defined in
the Rights Agreement) and prior to 5:00 p.m. (Eastern time) on May 16, 2006 or
notice of redemption or exchange at the office of the Rights Agent (or its
successors as Rights Agent) designated for such purpose, one one-hundredth of a
fully paid, non-assessable Series A Junior Participating Preferred Share (a
"Preferred Share") of the Corporation, 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 appropriate Form of Election to
Purchase and related Certificate duly executed. The number of Rights evidenced
by this Right Certificate (and the number of Preferred Shares which may be
purchased upon exercise thereof) set forth above, and the Purchase Price per
Preferred Share set forth above, are the number and Purchase Price as of May __,
1996, based on the Preferred Shares as constituted at such date. Capitalized
terms not defined in this Right Certificate that are defined in the Rights
Agreement shall have the meanings ascribed to them in the Rights Agreement.
- --------------------------
* The portion of the legend in brackets shall be inserted only if applicable
and shall replace the preceding sentence.
<PAGE>
Upon the occurrence of a Triggering Event, if the Rights evidenced by this
Right Certificate are beneficially owned by (i) an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person, (ii) under certain
circumstances specified in the Rights Agreement, a transferee of any such
Acquiring Person, Associate or Affiliate, or (iii) under certain circumstances
specified in the Rights Agreement, a transferee of a person who, after such
transfer, became an Acquiring Person, or an Affiliate or Associate of an
Acquiring Person, such Rights shall become null and void and no holder hereof
shall have any right with respect to such Rights from and after the occurrence
of any such Triggering Event.
As provided in the Rights Agreement, the Purchase Price and the number and
kind of Preferred Shares or other securities, 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 Corporation and the holders of the Right Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under certain circumstances specified in such Rights Agreement.
Copies of the Rights Agreement are on file at the above-mentioned office of the
Rights Agent and are also available upon written request to the Rights Agent.
This Right Certificate, with or without other Right Certificates, upon
surrender at the principal corporate trust 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 Certificate may be redeemed by the Corporation at its option at a
redemption price of $.01 per Right at any time prior to the earlier of (i) such
time as any Person becomes an Acquiring Person or (ii) the close of business on
the Final Expiration Date.
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 Corporation, 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, as such, shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of Preferred Shares or
of any other securities of the Corporation which may at any time be issuable on
the exercise hereof, nor shall anything contained in the Rights Agreement or
herein be construed to confer upon the holder hereof, as such, any of the rights
of a shareholder of the Corporation or any right to vote for the election of
trustees or upon any matter submitted to shareholders at any meeting thereof, or
to give or withhold consent to any trust action, or, to receive notice of
meetings or other actions affecting shareholders (except as provided in the
Rights Agreement), or to receive dividends or subscription rights, or otherwise,
until the Right 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.
S-2
<PAGE>
WITNESS the facsimile signature of the proper officers of the Corporation
and its seal.
Dated as of _______________ __, 19__
HOMESTEAD VILLAGE PROPERTIES INCORPORATED
By:
---------------------------------
Name:
Title:
Attest: (SEAL)
- -------------------------------------
Name:
Title:
Countersigned:
THE FIRST NATIONAL BANK OF BOSTON
By:
-----------------------------
Authorized Signature
S-3
<PAGE>
[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
Corporation, with full power of substitution.
Date: _______________, 19___ ________________________________________
Signature
Signature Guaranteed:
Certificate
-----------
The undersigned hereby certifies by checking the appropriate boxes that:
(1) this Rights Certificate [_] is [_] is not being sold, assigned and
transferred by or on behalf of a Person who is or was an Acquiring Person or an
Affiliate or Associate of any such Acquiring Person (as such terms are defined
pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it [_]
did [_] did not acquire the Rights evidenced by this Rights Certificate from
any Person who is, was or subsequently became an Acquiring Person or an
Affiliate or Associate of an Acquiring Person.
Date: ______________, 19___ ________________________________________
Signature
NOTICE
------
The signature to the foregoing Assignment and Certificate must correspond
to the name as written upon the face of this Right Certificate in every
particular, without alteration or enlargement or any change whatsoever.
<PAGE>
FORM OF ELECTION TO PURCHASE
----------------------------
(To be executed if holder desires
to exercise Rights represented by
the Right Certificate.)
To: HOMESTEAD VILLAGE PROPERTIES INCORPORATED
The undersigned hereby irrevocably elects to exercise _______ Rights
represented by this Right Certificate to purchase the Preferred Shares issuable
upon the exercise of the Rights (or such other securities of the Corporation or
of any other person which may be issuable upon the exercise of the Rights) and
requests that certificates for such shares be issued in the name of:
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 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)
Date: __________________, 19__ ____________________________________
Signature
<PAGE>
Signature Guaranteed:
Certificate
-----------
The undersigned hereby certifies by checking the appropriate boxes that:
(1) the Rights evidenced by this Rights Certificate [_] are [_] are not
being exercised by or on behalf of a Person who is or was an Acquiring Person or
an Affiliate or Associate of any such Acquiring Person (as such terms are
defined pursuant to the Rights Agreement);
(2) after due inquiry and to the best knowledge of the undersigned, it [_]
did [_] did not acquire the Rights evidenced by this Rights Certificate from any
Person who is, was or became an Acquiring Person or an Affiliate or Associate of
an Acquiring Person.
Dated: _________________, 19___ ________________________________________
Signature
NOTICE
------
The signature to the foregoing Election to Purchase and Certificate must
correspond to the name as written upon the face of this Right Certificate in
every particular, without alteration or enlargement or any change whatsoever.
<PAGE>
EXHIBIT D
POWER OF ATTORNEY AND CONFIRMING STATEMENT
KNOW ALL MEN BY THESE PRESENTS, that William D. Sanders ("Sanders"), does
hereby constitute and appoint Jeffrey A. Klopf and Ariel Amir, each
individually, his true and lawful attorney-in-fact and agent, for him and in his
name, place and stead, in any and all capacities, with full power to act alone,
to sign the Schedule 13D (the "Schedule 13D") filed by Security Capital Group
Incorporated and Sanders with the Securities and Exchange Commission ("SEC") and
the American Stock Exchange ("AMEX") on October __, 1996 with respect to
Homestead Village Incorporated ("Homestead") and all amendments thereto, and to
sign Form 4s reporting Sanders' transactions in Homestead's securities, hereby
granting unto said attorney-in-fact and agent, full power and authority to do
and perform any and all acts and things requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said attorney-in-
fact and agent may lawfully do or cause to be done by virtue hereof, and in
particular ratifying and confirming the signing and filing of the Schedule 13D
with the SEC and the AMEX reporting Sanders' ownership of Homestead's
securities, understanding and intending that this Power of Attorney and
Confirming Statement shall be filed as an exhibit to the Schedule 13D and shall
apply to all amendments thereto.
Dated: November 1, 1996 /s/ William D. Sanders
----------------------------------
William D. Sanders
