SHAREHOLDERS AGREEMENT
This SHAREHOLDERS AGREEMENT, dated as of January 11, 1998, by and among
Meditrust Corporation, a Delaware corporation ("Reitco"), Meditrust Operating
Company, a Delaware corporation ("Opco"), the shareholders of Cobblestone
Holdings, Inc., a Delaware corporation (the "Company") named on the signature
page hereto (individually, a "Shareholder," and collectively, the
"Shareholders").
WHEREAS, as of the date hereof, each Shareholder owns the number of shares
of Common Stock, par value $0.01 per share ("Company Stock") and Series A
Preferred Stock, par value $.01 per share ("Preferred Stock"), of the Company
set forth on Exhibit A (such shares, and any shares of Common Stock or Preferred
Stock hereafter acquired by such Shareholders, are hereinafter referred to as
the "Shares");
WHEREAS, Reitco, Opco and the Company propose to enter into an Agreement
and Plan of Merger, dated as of the date hereof (as the same may be amended from
time to time, the "Merger Agreement"), which provides, on the terms and subject
to the conditions thereof, for the merger of the Company with and into Reitco
(the "Merger"); and
WHEREAS, as a condition to the willingness of Reitco to enter into the
Merger Agreement, Reitco has requested that the Shareholders agree, and, in
order to induce Reitco to enter into the Merger Agreement, the Shareholders are
willing to agree, to vote, or to otherwise cause to be voted, the Shares
pursuant to the terms and conditions hereof on the terms and conditions
contained herein.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
ARTICLE 1.
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
Each Shareholder hereby represents and warrants severally to Reitco and
Opco as follows:
1.1. Due Authority. Such Shareholder has full power and authority to
execute and deliver this Agreement and to perform its obligations hereunder and
consummate the transactions contemplated hereby. This Agreement has been duly
executed and delivered by or on behalf of such Shareholder and, assuming its due
authorization, execution and delivery by Reitco and Opco, constitutes a legal,
valid and binding obligation of such Shareholder, enforceable against such
Shareholder in accordance with its terms.
1.2. Conflict; Consents.
(a) The execution and delivery of this Agreement by such Shareholder does
not, and the performance by such Shareholder of its obligations under this
Agreement and the compliance by such Shareholder with the provisions hereof do
not and will not, (i) conflict with or violate any law, statute, rule,
regulation, order, writ, judgment or decree applicable to such Shareholder or
its Shares, (ii) conflict with or violate the instruments under which such
Shareholder was formed, (iii) result in any breach of or constitute a default
(or an event that with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or encumbrance on such
Shareholder's Shares pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which such Shareholder is a party or by which such Shareholder or any of its
Shares are bound or (iv) violate any order, writ, injunction, decree, judgment,
order, statute, rule or resolution applicable to such Shareholder or its Shares.
(b) The execution and delivery of this Agreement by such Shareholder does
not, and the performance of this Agreement by such Shareholder will not, require
any consent, approval, authorization or permit of, or filing with (except for
applicable requirements, if any, of the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) or notification to, any government or regulatory
authority by such Shareholder.
1.3. Title to Shares. Such Shareholder (a) is the record or beneficial
owner of the Shares as listed on Exhibit A free and clear of any proxy or voting
restriction other than pursuant to this Agreement and (b) has, and during the
Term (as defined in Section 3.2(b)) will have, sole power of disposition with
respect to the Shares. Such Shares are the only Shares of the Company's stock
owned of record or beneficially by such Shareholder.
1.4. No Encumbrances. The Shares and the certificates representing the
Shares are now and will be held by the Shareholder, or by a nominee or custodian
for the benefit of the Shareholder, free and clear of all proxies, voting trusts
and voting agreements, understandings or arrangements and free and clear of all
liens, claims, security interests and any other encumbrances whatsoever except
any such encumbrances or proxies arising under this Agreement.
1.5. Brokers. Such Shareholder is not liable for, and will indemnify the
Company, Reitco and Opco against, any broker's, finder's, financial advisor's or
other similar fee or commission in connection with the transactions contemplated
hereby based upon arrangements made by or on behalf of such Shareholder.
1.6. Tax Representations. Such Shareholder does not have and will not have
at the effective time of the Merger any plan or intention to sell or dispose of
any of the Paired Shares (as defined in the Merger Agreement) to be received in
the Merger. For purposes of this Section 1.6, a sale or disposition includes any
constructive sale" within
the meaning of Section 1259(c)(1)(A) - (E) of the Internal Revenue Code of 1986,
as amended (the "Code"), but a sale or disposition does not include one or more
distributions by Brentwood ---- Golf Partners, L.P. of any or all of the Paired
Shares received by it in the Merger to the partners of Brentwood Golf Partners,
L.P.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF Reitco AND Opco
Reitco and Opco each hereby represent and warrant to the Shareholders as
follows:
2.1. Due Authority. Such party has full power, corporate or otherwise, and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. This Agreement has been duly executed and delivered by or on behalf
of such party and, assuming its due authorization, execution and delivery by the
other parties hereto, constitutes a legal, valid and binding obligation of such
party, enforceable against such party in accordance with its terms.
2.2. No Conflict; Consents.
(a) The execution and delivery of this Agreement by such party do not, and
the performance by such party of its obligations contemplated by this Agreement
and the compliance by such party with any provisions hereof do not and will not,
(i) conflict with or violate any law, statute, rule, regulation, order, writ,
judgment or decree applicable to such party, (ii) conflict with or violate such
party's charter or bylaws, or (iii) result in any breach of or constitute a
default (or an event that with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which such party is a party or by which such party is bound.
(b) The execution and delivery of this Agreement by such party do not, and
the performance of this Agreement by such party will not, require any consent,
approval, authorization or permit of, or filing with (except for applicable
requirements, if any, of the Exchange Act) or notification to, any governmental
or regulatory authority by such party.
ARTICLE III
CERTAIN COVENANTS
The Shareholders hereby covenant and agree with Reitco and Opco as
follows:
3.1. Transfer of Shares. During the Term (as defined below), the
Shareholders will not (a) sell, tender, transfer, encumber, pledge, assign or
otherwise dispose of any of the Shares, (b) deposit the Shares into a voting
trust or enter into a voting agreement or arrangement with respect to the Shares
or grant any proxy or power of attorney with
respect thereto, (c) enter into any contract, option or other legally binding
undertaking providing for any transaction prohibited by (a) or (b) hereof, or
(d) take any action that would make any representation or warranty of the
Shareholders contained herein untrue or incorrect or have the effect of
preventing or disabling the Shareholders from performing any of the
Shareholders' obligations under this Agreement.
3.2. Voting Agreement.
(a) Each Shareholder, by this Agreement, agrees to vote each of the Shares
owned by such Shareholder, at every meeting of the shareholders of the Company
or any adjournment thereof or in connection with any written consent of the
Company's shareholders, (i) in favor of the adoption of the Merger Agreement and
approval of the Merger and the other transactions contemplated by the Merger
Agreement, (ii) against (x) any Acquisition Proposal (which term as used in this
Agreement shall have the meaning as defined in the Merger Agreement), and any
proposal for any action or agreement that would result in a breach of any
covenant, representation or warranty or any other obligation or agreement of the
Company under the Merger Agreement or which is reasonably likely to result in
any of the conditions of the Company's obligations under the Merger Agreement
not being fulfilled and (y) any change in the directors of the Company, any
change in the present capitalization of the Company or any amendment to the
Company's articles of organization or bylaws, any other material change in the
Company's corporate structure or business, or any other action which in the case
of each of the matters referred to in this clause (y) could reasonably be
expected to impede, interfere with, delay, postpone or materially adversely
affect the transactions contemplated by the Merger Agreement or the likelihood
of such transactions being consummated, and (iii) in favor of any other matter
necessary for consummation of the transactions contemplated by the Merger
Agreement which is considered at any such meeting of shareholders or in such
consent, and in connection therewith to execute any documents which are
necessary or appropriate in order to effectuate the foregoing.
(b) For the purposes of this Agreement, "Term" means the period from the
date hereof until the effective time of the Merger.
(c) The execution of this Agreement by each Shareholder constitutes its
written consent in favor of the Merger and in favor of the adoption of the
Merger Agreement.
3.3. Further Assurances. During the Term, each Shareholder in its capacity
as a shareholder of the Company shall perform such further acts and execute such
further documents and instruments as Reitco or Opco may reasonably request.
3.4. No Solicitation. During the Term, each Shareholder individually or in
its capacity as a Shareholder of the Company shall not (i) solicit, initiate or
knowingly encourage the submission of, any inquiries, proposals or offers from
any person relating to an Acquisition Proposal, (ii) enter into any agreement
with respect to any Acquisition Proposal, or (iii) enter into or participate in
any discussions or negotiations regarding, or
furnish to any person any information with respect to, or take any other action
to knowingly facilitate any inquiries or the making of any proposal that
constitutes, or would reasonably be expected to lead to, any Acquisition
Proposal.
3.5. Certain Events. Each Shareholder agrees that this Agreement and the
obligations hereunder will attach to the Shares and will be binding upon any
person or entity to which legal or beneficial ownership of the Shares may pass,
whether by operation of law or otherwise.
3.6. Cooperation. Each Shareholder agrees to cooperate with Reitco after
the date hereof in determining and investigating whether there exist any
circumstances which could cause Reitco to be "closely held" within the meaning
of Section 856(a) of the Code or to derive or accrue or be allocated any amount
that is treated as other than "rents from real property" by reason of Section
856(d)(2)(B) of the Code and without limiting the foregoing agrees to provide to
Reitco as promptly as practical all relevant information and documents (or, with
respect to information and documents which such Shareholder does not have or
own, use commercially reasonable efforts to obtain and provide them to Reitco as
promptly as practical) which Reitco reasonably requests in connection with such
determination and investigation.
3.7. Additional Parties. It is contemplated that Northwestern Mutual Life
Insurance Company will become a party hereto at or prior to the effective time
of the Merger; provided that this Section 3.7 is not a condition to the
obligations hereunder of any of the parties hereto.
3.8. Blackout Period. Each Shareholder hereby covenants and agrees that
during the Blackout Period such Shareholder will not, without the prior written
consent of Reitco, directly or indirectly, sell, assign, transfer, pledge or
otherwise dispose of, any Paired Shares (as defined in the Merger Agreement)
issued in the Merger to be received by such Shareholder in the Merger (the "New
Stock"). For purposes of this Agreement, the term "Blackout Period" shall mean
the period (i) beginning on the date, if any, on which the Joint Proxy Statement
(as defined in that certain Agreement and Plan of Merger, dated as of January 3,
1998 by and among La Quinta Inns, Inc., Reitco and Opco (the "La Quinta
Agreement") is mailed to the holders of Common Stock of La Quinta Inns, Inc. and
(ii) ending on the date that the Meeting Date Price (as defined in the La Quinta
Agreement) is determined.
3.9. Registration Rights. Each of the Shareholders shall have the right to
have any New Stock owned by them registered by the Company under the Securities
Act of 1933, as amended, under any Shelf Registration Statement (as defined in
the Registration Agreement) filed under the requirements of the Registration
Agreement (the "La Quinta Shelf") or any other Shelf Registration Statement
filed prior to the filing of the La Quinta Shelf, unless an agreement (entered
into prior to the date hereof) under which such other Shelf Registration
Statement is filed prohibits the registration of the New Stock owned by the
Shareholders from being registered under such other Shelf Registration
Statement.
With respect to the registration rights granted to the Shareholders in this
paragraph, the Shareholders shall have the rights and be subject to the
restrictions provided in Sections 2, 4, 5 and 6 of the Registration Agreement as
if the Shareholders were "Holders" thereunder. For purposes of this Agreement,
the term "Registration Agreement" means that certain Registration Rights
Agreement, entered into as of January 3, 1998, by and between Reitco, Opco and
each of the parties signatory thereto.
3.10. Notification of Sales. If at any time within six months after the
effective time of the Merger, any Shareholder sells more than fifty thousand
(50,000) Paired Shares of New Stock (appropriately adjusted to give effect to
any stock split, dividend or similar event) in a brokers transaction,
simultaneously with such sale, such Shareholder will provide oral notice of such
sale to the Chief Executive Officer of Reitco.
ARTICLE IV
MISCELLANEOUS; GENERAL PROVISIONS
4.1. Severability. If any term or other provision of this Agreement is
determined to be invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other conditions and provisions of this Agreement will
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of beinginvalid, illegal or incapable
of being enforced by any rule of law or public policy, all other conditions and
provisions of this Agreement will nevertheless remain in full force and effect
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to any party. Upon such
determination that any term or other provision is invalid, illegal or incapable
of being enforced, the parties hereto will negotiate in good faith to modify
this Agreement so as to effect the original intent of the parties as closely as
possible to the fullest extent permitted by applicable law in an acceptable
manner to the end that the transactions contemplated hereby are fulfilled to the
extent possible.
4.2. Entire Agreement. This Agreement constitutes the entire agreement of
the parties and supersedes all prior agreements and undertakings, both written
and oral, between the parties with respect to the subject matter hereof.
4.3. Amendments. This Agreement may not be modified, amended, waived,
altered or supplemented, except upon the execution and delivery of a written
agreement executed by the parties hereof.
4.4. Assignment. This Agreement may not be assigned by operation of law or
otherwise.
4.5. Parties in Interest. This Agreement is binding upon, and shall inure
solely to the benefit of, each party hereto and the Company and nothing in this
Agreement, express or implied, is intended to or will confer upon any other
person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement.
4.6. Specific Performance. The parties hereto agree that irreparable
damage would occur in the event any provision of this Agreement was not
performed in accordance with the terms hereof or was otherwise breached. It is
accordingly agreed that
the parties will be entitled to specific relief hereunder including, without
limitation, an injunction or injunctions to prevent and enjoin breaches of the
provisions of this Agreement and to enforce specifically the terms and
provisions hereof, in any state or federal court in the State of Delaware, in
addition to any other remedy to which they may be entitled at law or in equity.
Any requirements for the securing or posting of any bond with respect to any
such remedy are hereby waived.
4.7. Governing Law; Jurisdiction and Venue. This Agreement shall be
governed by, and construed in accordance with, the internal laws of the State of
Delaware without regard to its rules of conflict of laws. The parties hereto
hereby irrevocably and unconditionally consent to and submit to the exclusive
jurisdiction of the Delaware Courts for any litigation arising out of or
relating to this Agreement and the transactions contemplated hereby (and agree
not to commence any litigation relating thereto except in such courts), waive
any objection to the laying of venue of any such litigation in the Delaware
Courts and agree not to plead or claim in any Delaware Court that such
litigation brought therein has been brought in any inconvenient forum.
4.8. Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed will be deemed to be an original but all of which taken
together will constitute one and the same agreement.
4.9. Directors and Officers. Notwithstanding anything herein to the
contrary, the covenants and agreements set forth herein shall not prevent any
Shareholder or its representatives or designees who are serving on the Board of
Directors of the Company or who are officers of the Company from taking any
action, subject to the applicable provisions of the Merger Agreement, in his or
her capacity as a director or officer of the Company.
(Signature Page(s) to Follow)
IN WITNESS WHEREOF, the parties have caused this Shareholders Agreement to
be signed as of the date first written above.
MEDITRUST CORPORATION
By: /s/ Xxxxx X. Xxxxxx
-------------------
Name: Xxxxx X. Xxxxxx
Title: President
MEDITRUST OPERATING COMPANY
By: /s/ Xxxxxxx X. Xxxxxx
---------------------
Name: Xxxxxxx X. Xxxxxx
Title: Chief Executive Officer
BRENTWOOD GOLF PARTNERS, L.P.
By: BRENTWOOD BUYOUT PARTNERS, L.P.
Title: General Partner
By: /s/ Xxxxx X. Xxxx
-------------------
Name: Xxxxx X. Xxxx
Title: General Partner
XXXXX X. HUSBAND, JR.
/s/ Xxxxx X. Husband, Jr.
--------------------------
EXHIBIT A
Name and Address of Number of Shares of Number of Shares of
Shareholder Company Common Company Preferred
Stock Stock
---------------------------- ----------------------- -----------------------
Brentwood Golf Partners, L.P. 1,075,081 3,686,349
Xxxxx X. Husband, Jr. 137,649 29,813
