Exhibit E
STOCKHOLDER AGREEMENT
THIS STOCKHOLDER AGREEMENT (the "Agreement") is dated as of January 6,
1999, by and among Marriott International, Inc., a Delaware corporation
("Marriott"), MI Subsidiary I, Inc., a Delaware corporation and a direct,
wholly-owned subsidiary of Marriott ("Acquisition") and Xxxxx X. Xxxxx
("Xxxxx").
WHEREAS, concurrently herewith, Marriott, Acquisition and XxxxxXxxx
Corporation, a Maryland corporation ("ExecuStay"), are entering into a Merger
Agreement, a form of which is appended hereto as Exhibit I (as such agreement
may hereafter be amended from time to time, the "Merger Agreement"), pursuant to
which ExecuStay will be merged with and into Acquisition (the "Merger").
Capitalized terms used and not defined herein have the respective meanings
assigned to them in the Merger Agreement;
WHEREAS, concurrently herewith, certain other stockholders of ExecuStay are
entering into three agreements with Marriott and Acquisition (the "Other
Stockholders Agreements"), concerning certain matters connected with the Merger
and their ExecuStay Shares (defined below);
WHEREAS, Xxxxx Beneficially Owns (as defined herein) the number of shares,
par value $0.01 per share, of common stock (the "Common Stock") of ExecuStay
(the "ExecuStay Shares") set forth opposite Xxxxx'x name on Schedule A hereto;
WHEREAS, the Merger Agreement contemplates that, in anticipation of
consummation of the Merger, one share of Class B Preferred Stock, par value
$0.01 per share, of ExecuStay ("Class B Shares") will be issued to Xxxxx in
exchange (the "Exchange") for each ExecuStay Share held by Xxxxx (as used
herein, the term "Shares" refers to the ExecuStay Shares prior to the Exchange
and the Class B Shares after the Exchange);
WHEREAS, Marriott has agreed that Xxxxx shall receive shares of Marriott
common stock, par value $0.01 per share ("Marriott Stock"), in the Merger, in
respect of her Shares, and Xxxxx desires to receive such Marriott Stock; and
WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, Marriott has required that Xxxxx agrees, and Xxxxx has agreed, to
enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual promises,
representations, warranties, covenants and agreements contained herein, the
parties hereby agree as follows:
1. Agreement to Vote; Irrevocable Proxy.
------------------------------------
(a) Xxxxx hereby agrees that during the period commencing on the Tender
Offer Purchase Time and continuing until the first to occur of the Closing and
the termination of the Merger Agreement in accordance with its terms, at any
meeting of the holders of the Shares, however called, or in connection with any
written consent of the holders of Shares, Xxxxx shall
vote (or cause to be voted) the Shares held of record or Beneficially Owned (as
defined herein) by Xxxxx, whether owned on the date hereof or hereafter
acquired, (i) in favor of approval of the Merger Agreement, all transactions
contemplated thereby, and any actions required in furtherance thereof and hereof
(including election of such directors of ExecuStay as Marriott is entitled to
designate pursuant to the Merger Agreement); (ii) against any action or
agreement that is intended, or could reasonably be expected, to impede,
interfere with, or prevent the Merger or result in a breach in any respect of
any covenant, representation or warranty or any other obligation or agreement of
ExecuStay or any of its subsidiaries under the Merger Agreement, the Other
Stockholders Agreements or this Agreement; and (iii) except as specifically
requested in writing in advance by Marriott or Acquisition, against the
following actions (other than the Exchange, the Merger and the transactions
contemplated by the Merger Agreement and this Agreement): (A) any extraordinary
corporate transaction, such as a merger, consolidation or other business
combination involving ExecuStay or any of its subsidiaries or affiliates; (B) a
sale, lease, transfer or disposition by ExecuStay or any of its subsidiaries of
any assets outside the ordinary course of business or any assets which in the
aggregate are material to ExecuStay and its subsidiaries taken as a whole, or a
reorganization, recapitalization, dissolution or liquidation of ExecuStay or any
of its subsidiaries or affiliates; (C)(1) any change in the management of
ExecuStay or in a majority of the persons who constitute the board of directors
of ExecuStay; (2) any change in the present capitalization of ExecuStay or any
amendment of XxxxxXxxx'x charter or By-Laws; (3) any other material change in
XxxxxXxxx'x or any of its subsidiaries' corporate structure or business; or (4)
any other action that, in the case of each of the matters referred to in clauses
(C)(1), (2) or (3), is intended, or could reasonably be expected, to impede,
interfere with, delay, postpone or materially adversely affect the Exchange, the
Merger or the transactions contemplated by this Agreement, the Other
Stockholders Agreements and the Merger Agreement. Xxxxx shall not enter into any
agreement or understanding with any Person (as defined herein) the effect of
which would be inconsistent with or violative of the provisions and agreements
contained in Section 1 or 2 hereof.
(b) By her execution hereof and in order to secure her obligations
hereunder, Xxxxx hereby grants to, and appoints, Acquisition and Xxxxxxx X.
Xxxxxxx and Xxxxxx Xxxx, in their respective capacities as officers of
Acquisition, and any individual who shall hereafter succeed to any such office
of Acquisition, and any other designee of Acquisition, and each of them
individually, Xxxxx'x true and lawful irrevocable (until the Termination Date)
proxy and attorney-in-fact (with full power of substitution) to vote the Shares,
or grant a consent or approval in respect of such Shares, as indicated in
Section 1(a) above, provided, however, that this proxy shall not take effect
until purchase of the Shares at the Tender Offer Purchase Time. Xxxxx intends
this proxy to be irrevocable (from the Tender Offer Purchase Time until the
Termination Date) and coupled with an interest and will take such further action
and execute such other instruments as may be necessary to effectuate the intent
of this proxy and hereby represents that any proxy heretofore given in respect
of her Shares is not irrevocable, and hereby revokes any proxy previously
granted by Xxxxx with respect to the Shares. Xxxxx understands and acknowledges
that Acquisition is entering into the Merger Agreement in reliance on her
execution and delivery of this irrevocable proxy. Xxxxx hereby affirms that
this irrevocable proxy is given in connection with the execution of this
Agreement and the Merger Agreement, and further affirms that this irrevocable
proxy is coupled with an interest in this Agreement for the term stated herein
2
and may under no circumstances be revoked. Xxxxx hereby ratifies and confirms
all that this irrevocable proxy may lawfully do or cause to be done by virtue
hereof. This proxy is executed and intended to be irrevocable in accordance
with the provisions of Section 2-507(d) of the Maryland General Corporation Law.
This proxy shall terminate automatically on the termination of the Merger
Agreement.
2. Other Covenants, Representations and Warranties. Xxxxx hereby
-----------------------------------------------
represents and warrants to Marriott and Acquisition as of the date hereof and as
of the Closing as follows:
(a) Ownership of Shares. Xxxxx is the record and Beneficial Owner of
-------------------
the number of Shares set forth opposite Xxxxx'x name on Schedule A hereto. On
the date hereof, the Shares set forth opposite Xxxxx'x name on Schedule A hereto
constitute all of the Shares owned of record or Beneficially Owned by Xxxxx.
Xxxxx owns such Shares free and clear of all liens, claims, charges, security
interests, mortgages or other encumbrances, and such Shares are subject to no
rights of first refusal, put rights, other rights to purchase or encumber such
Shares, or to any agreements other than this Agreement as to the encumbrance or
disposition of such Shares. Such Shares are duly and validly issued, fully paid
and non-assessable. Xxxxx has sole voting power and sole power to issue
instruction with respect to the matters set forth in Section 1 hereof, sole
power of disposition, sole power of conversion, sole power to demand appraisal
rights and sole power to agree to all of the matters set forth in this
Agreement, in each case with respect to all of the Shares set forth opposite
Xxxxx'x name on Schedule A hereto, with no limitations, qualifications or
restrictions on such rights.
(b) Power; Binding Agreement. Xxxxx has the legal capacity, power and
------------------------
authority to enter into and perform all of Xxxxx'x obligations under this
Agreement. The execution, delivery and performance of this Agreement by Xxxxx
will not violate any other agreement to which Xxxxx is a party including,
without limitation, any voting agreement, shareholder agreement or voting trust.
This Agreement has been duly and validly executed and delivered by Xxxxx and
constitutes a valid and binding agreement of Xxxxx, enforceable against Xxxxx in
accordance with its terms, except as such enforceability may be limited by any
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally, and except as the
availability of equitable remedies may be limited by the application of general
principles of equity (regardless of whether such equitable principle are applied
in a proceeding at law or in equity). There is no beneficiary or holder of a
voting trust certificate or other interest of any trust of which Xxxxx is
trustee who is not a party to this Agreement and whose consent is required for
the execution and delivery of this Agreement or the consummation by Xxxxx of the
transactions contemplated hereby. If Xxxxx is married and Xxxxx'x Shares
constitute community property, this Agreement has been duly authorized, executed
and delivered by, and constitute a valid and binding agreement of, Xxxxx'x
spouse, enforceable against such person in accordance with its terms, except as
such enforceability may be limited by any applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally, and except as the availability of equitable
remedies may be limited by the application of general principles of equity
(regardless of whether such equitable principle are applied in a proceeding at
law or in equity).
3
(c) No Conflicts. (i) Except for filings, permits, authorizations,
------------
consents and approvals as may be required under and other applicable
requirements of the HSR Act, no filing with, and no permit, authorization,
consent or approval of, any state or federal public body or authority is
necessary for the execution of this Agreement by Xxxxx and the consummation by
Xxxxx of the transactions contemplated hereby and (ii) none of the execution or
delivery of this Agreement by Xxxxx, the consummation by Xxxxx of the
transactions contemplated hereby or compliance by Xxxxx with any of the
provisions hereof shall (A) result in a violation or breach of, or constitute
(with or without notice or lapse of time or both) a default (or give rise to any
third party right of termination, cancellation, material modification or
acceleration) under any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, license, contract, commitment, arrangement,
understanding, agreement or other instrument or obligation of any kind to which
Xxxxx is a party or by which Xxxxx or, to the best of Xxxxx'x knowledge, any of
Xxxxx'x properties or assets may be bound, or (B) violate any order, writ,
injunction, decree, judgment, order, statute, rule or regulation applicable to
Xxxxx or any of Xxxxx'x properties or assets. This Agreement hereby supersedes
all prior agreements to which Xxxxx is a party with respect to Xxxxx'x Shares,
including without limitation any registration rights agreement with respect to
any of Xxxxx'x Shares.
(d) No Finder's Fees. No broker, investment banker, financial adviser
----------------
or other person is entitled to any broker's, finder's, financial adviser's or
other similar fee or commission in connection with the transactions contemplated
by the Merger Agreement based upon arrangements made by or on behalf of Xxxxx.
(e) Other Potential Acquirors. Xxxxx (i) shall immediately cease any
-------------------------
existing discussions or negotiations, if any, with any parties conducted
heretofore with respect to any acquisition of all or any material portion of the
assets of, or any equity interest in, ExecuStay or any of its subsidiaries or
any business combination with ExecuStay or any of its subsidiaries, in her
capacity as such, and (ii) from and after the date hereof until termination of
the Merger Agreement, unless and until ExecuStay is permitted to take such
actions under Section 5.4 of the Merger Agreement, shall not, in such capacity,
directly or indirectly, initiate, solicit or knowingly encourage (including by
way of furnishing non-public information or assistance), or take any other
action to facilitate knowingly, any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any such transaction or
acquisition, or agree to or endorse any such transaction or acquisition, or
authorize or permit any of Xxxxx'x agents to do so, and Xxxxx shall promptly
notify Marriott or Acquisition of any proposal and shall provide a copy of any
such written proposal and a summary of any oral proposal to Marriott or
Acquisition immediately after receipt thereof (and shall specify the material
terms and conditions of such proposal and identify the person making such
proposal) and thereafter keep Marriott or Acquisition advised of any development
with respect thereto.
(f) Restriction on Transfer, Proxies and Non-Interference. Xxxxx shall
-----------------------------------------------------
not, directly or indirectly: (i) tender her Shares in the Offer (as defined in
the preamble to the Merger Agreement) or any other tender offer for ExecuStay
Shares; (ii) except as contemplated by this Agreement, the Other Stockholders
Agreements or the Merger Agreement, otherwise offer for sale, sell, transfer,
tender, pledge, encumber, assign or otherwise dispose of, or enter into any
contract, option or other arrangement or understanding with respect to or
consent to the offer for
4
sale, sale, transfer, tender, pledge, encumbrance, assignment or other
disposition of, any or all of Xxxxx'x Shares or any interest therein; (iii)
grant any proxies or powers of attorney, deposit any Shares into a voting trust
or enter into a voting agreement with respect to any Shares; or (iv) take any
action that would make any representation or warranty of Xxxxx contained herein
untrue or incorrect or have the effect of preventing or disabling Xxxxx from
performing Xxxxx'x obligations under this Agreement.
(g) Investment Intention.
---------------------
(i) Xxxxx confirms that Marriott and Acquisition have made
available to Xxxxx, and her representatives and agents, (A) information about
Marriott, (B) the opportunity to ask questions of the officers and employees of
Marriott and (C) the opportunity to acquire such additional information about
the business and financial condition of Marriott as Xxxxx has requested, and
such information has been received.
(ii) The shares of Marriott Stock to be issued to Xxxxx in
connection with the Merger will be acquired for investment and not with a view
to distribution of such shares within the meaning of Section 2(11) of the
Securities Act.
(iii) Xxxxx does not have in mind the sale or other
disposition of shares of Marriott Stock at some fixed time in the future (such
as the expiration of the holding period for capital gains tax treatment) or upon
the occurrence or nonoccurrence of any particular events.
(iv) Except as to the persons listed on Schedule 2(g), Xxxxx
is an "accredited investor" within the meaning of Section 2(a)(15) of the
Securities Act.
(h) Reliance by Marriott and Acquisition. Xxxxx understands and
------------------------------------
acknowledges that Marriott and Acquisition are relying upon the foregoing
representations by Xxxxx, and on Xxxxx'x execution and delivery of this
Agreement (i) in entering into the Merger Agreement and (ii) in issuing the
Marriott Stock in connection with the Merger without registration under the
Securities Act or qualification under any state securities laws (collectively,
"Blue Sky Laws"). Xxxxx agrees that the Marriott Stock will not be transferred
unless in the opinion of Marriott's legal counsel such transfer will not violate
the registration requirements of the Securities Act or Blue Sky Laws.
3. Further Assurances; Merger Agreement Compliance. From time to time, at
-----------------------------------------------
Marriott's or Acquisition's request and without further consideration, Xxxxx
agrees to execute and deliver such additional documents and take all such
further lawful action as may be necessary or desirable to consummate and make
effective, and to cause the Company to consummate and make effective, in the
most expeditious manner practicable, the transactions contemplated by this
Agreement, the Other Stockholders Agreements and the Merger Agreement. Xxxxx
further agrees not to take any action, or omit to take any action, which would,
or would be reasonably likely to, result in a breach by the Company of any of
the provisions of the Merger Agreement.
5
4. Stop Transfer; Form of Legend.
-----------------------------
(a) Xxxxx agrees with, and covenants to, Marriott that Xxxxx shall not
request that ExecuStay register the transfer (book-entry or otherwise) of any
certificate or uncertificated interest representing any of Xxxxx'x Shares,
unless such transfer is made in compliance with this Agreement. In the event of
a stock dividend or distribution, or any change in the Common Stock or the Class
B Shares by reason of any stock dividend, split-up, recapitalization,
combination, exchange of shares or the like, the term "Shares" shall be deemed
to refer to and include the Shares as well as all such stock dividends and
distributions and any shares into which or for which any or all of the Shares
may be changed or exchanged.
(b) All certificates representing any of Xxxxx'x Shares shall contain
the following legend:
"The securities represented by this certificate are subject to certain
restrictions on transfer and other terms of a Stockholder Agreement,
dated as of January 6, 1999, among Marriott International, Inc., MI
Subsidiary I, Inc. and Xxxxx X. Xxxxx, a copy of which is on file in
the principal office of Marriott International, Inc."
5. Stock Issuance and Registration.
-------------------------------
(a) In accordance with the provisions of Section 2.1 of the Merger
Agreement, immediately prior to the Merger, ExecuStay will, in the Exchange,
issue to Xxxxx on a share-for-share basis, Class B Shares in exchange for Common
Stock held of record or Beneficially Owned by them. In the Merger, Xxxxx shall
receive, in respect of each Class B Share held of record or Beneficially Owned
by Xxxxx, shares of Marriott Stock in an amount determined by the "Class B
Exchange Ratio" as defined in Section 2.9(b) of the Merger Agreement.
(b) Marriott shall, no later than the First Registration Date (as
defined below), file with the SEC and thereafter use its reasonable efforts to
cause to be declared effective, a registration statement on Form S-3 or an
equivalent successor form (the "Form S-3") relating to the offer and sale from
time to time by Xxxxx of shares of Marriott Stock held by her that are
Registrable Securities. As used herein, the "First Registration Date" means the
later of (i) 30 days following the Closing Time, or (ii) April 30, 1999,
provided, however, that if on such date Marriott is not eligible to use Form S-3
for registration of the resale of Registrable Securities as provided herein,
then the First Registration Date shall be the earliest date after April 30, 1999
on which Marriott becomes eligible to use Form S-3 in connection with such
resale registration. Subject to the limitations contained herein, Marriott shall
use its reasonable efforts to keep the Form S-3 continuously effective in order
to permit the prospectus forming part thereof to be usable by Xxxxx for a period
of one year from the Closing Time, or for such shorter period that will
terminate when all Registrable Securities covered by the Form S-3 have been sold
pursuant to the Form S-3 or cease to be outstanding or otherwise to be
Registrable Securities.
(c) Marriott further agrees, if necessary, to supplement or amend the
Form S-3, as required by Section 6 below, and to furnish to Xxxxx, if she is
holding Registrable
6
Securities copies of any such supplement or amendment promptly after its being
used or filed with the SEC.
(d) Marriott agrees to use its reasonable efforts to ensure that (i)
the Form S-3 and any amendments thereof, at the time each such Form S-3 or
amendment thereof becomes effective, and any prospectus forming a part thereof
and any supplement thereto complies in all material respects with the Securities
Act and the rules and regulations thereunder, (ii) the Form S-3 and any
amendment thereto does not, when it becomes effective, contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading and
(iii) any prospectus forming part of the Form S-3, and any supplement to such
prospectus (as amended or supplemented from time to time)(each, as of the date
thereof), does not include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements, in light of the
circumstances under which they were made, not misleading; provided that clauses
(ii) and (iii) of this paragraph shall not apply to any information provided by
Xxxxx.
(e) Xxxxx may not use the Form S-3 unless she provides Marriott with
the information required by Section 7 of this Agreement on a timely basis.
Notwithstanding any other provision herein or in the Merger Agreement, (i)
Marriott shall have no obligation under Sections 5 or 6 hereof with respect to
any shares of Marriott Stock that are (x) not Registrable Securities or (y) held
of record or Beneficially Owned by Xxxxx if she has not performed her
obligations under, or otherwise has breached, violated or is in default under,
the Agreement or the Merger Agreement, and (ii) all obligations of Marriott
under Sections 5 and 6 hereof automatically shall terminate and be of no further
force or effect in the event that the Merger Agreement is terminated or the
Offer or the Merger is not consummated.
(f) Notwithstanding any other provision herein, Marriott may delay
filing the Form S-3, may withhold efforts to cause the Form S-3 to become
effective, and may advise holders of Registrable Securities to suspend use of
the prospectus that is part of the Form S-3, for limited periods of time if and
to the extent that Marriott reasonably determines in good faith that any such
action is necessary in order for Marriott to comply with its disclosure
obligations under Section 5(d) hereof. In the event that Marriott advises the
holders of registered Registrable Securities that Marriott considers it
appropriate to suspend the use of the prospectus, such holders shall suspend any
further sales of their registered securities until Marriott advises them that
the Form S-3 has been amended or that such sales may be resumed.
6. Registration Procedures.
-----------------------
(a) Marriott shall prepare and file a Form S-3, within the relevant time
period specified in Section 5(a), and use its reasonable efforts to cause such
Form S-3 to become effective and remain effective in accordance with Section 5
hereof.
(b) Marriott shall prepare and file such amendments and post-effective
amendments to the Form S-3 as may be necessary under applicable law to keep such
Form S-3 effective for the applicable period; and cause each prospectus that is
part of the Form S-3 to be supplemented by
7
any required prospectus supplement, and as so supplemented to be filed with the
SEC pursuant to applicable requirements of the Securities Act and the rules and
regulations thereunder.
(c) Marriott shall use its reasonable efforts to register or qualify the
Registrable Securities under all applicable Blue Sky Laws as Xxxxx, if she is
holding Registrable Securities covered by the Form S-3 shall reasonably request;
provided, however, that Marriott shall not be required to (i) qualify as a
foreign corporation or as a dealer in securities in any jurisdiction where it
would not otherwise be required to qualify but for this Section 6(c), or (ii)
take any action which would subject it to general service of process or taxation
in any such jurisdiction where it is not then so subject.
(d) Marriott shall furnish to Xxxxx, if she is holding Registrable
Securities, without charge, as many copies of each prospectus and any amendment
thereof or supplement thereto as Xxxxx may reasonably request.
(e) Marriott shall cooperate with Xxxxx as a selling stockholder of
Registrable Securities to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold and not bearing any
restrictive legends.
(f) Marriott shall cause all Registrable Securities covered by the Form S-3
to be listed on the NYSE.
7. Condition Precedent. It shall be a condition precedent to the
-------------------
obligations of Marriott to take any action pursuant hereto that Xxxxx shall
furnish to Marriott such information regarding her, the Registrable Securities
held by her and the intended method of disposition of such Registrable
Securities as Marriott shall reasonably request and as shall be required in
connection with the action to be taken by Marriott.
8. Expenses of Registration. All expenses incurred in connection with any
------------------------
registrations pursuant to Section 5 hereof, including without limitation all
registration and qualification fees, printers' and accounting fees, reasonable
fees and disbursements of counsel for Marriott, shall be borne by Marriott,
except for (a) fees and disbursements of counsel for Xxxxx, and (b) any
underwriting or brokers' discounts or similar transaction fees, which shall be
borne by Xxxxx.
9. Indemnification.
---------------
(a) Marriott agrees to indemnify and hold harmless Xxxxx (as the
"Holder Indemnified Party"), against any losses, claims, damages or liabilities,
joint or several, to which the Holder Indemnified Party may become subject,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based on any Misstatement (defined below) in the
Form S-3 or any amendments thereof or supplements thereto. Marriott will
reimburse such Holder Indemnified Party for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action. Notwithstanding anything to the
contrary contained in this Section 9(a), the indemnity agreement contained in
this Section 9(a) shall not (i) apply to amounts paid in settlement of any
8
such loss, claim, damage, liability or action if such settlement is effected
without the consent of Marriott (which consent shall not be unreasonably
withheld); (ii) apply to any such case for any such loss, claim, damage,
liability, or action to the extent that it arises out of or is based upon a
Misstatement made in reliance upon and in conformity with written information
furnished expressly for use in connection with such registration by such Holder
Indemnified Party.
(b) Xxxxx agrees to indemnify and hold harmless Marriott, each of its
directors, each of its officers who have signed the Form S-3, and each person,
if any, who controls Marriott within the meaning of the Securities Act, and each
agent (the "Marriott Indemnified Parties") against any losses, claims, damages
or liabilities to which any Marriott Indemnified Party may become subject,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereto) (i) arise out of or are based upon any Misstatement in the Form S-3 and
any amendments thereof or supplements thereto made in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by any such Holder Indemnified Party. Xxxxx will
reimburse any legal or other expenses reasonably incurred by such Marriott
Indemnified Party in connection with investigating or defending any such loss,
claim, damage, liability or action. Notwithstanding anything to the contrary
contained in this Section 9(b), the indemnity agreement contained in this
Section 9(b) shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability or action if such settlement is effected without the
consent of Xxxxx (which consent shall not be unreasonably withheld).
(c) If the indemnification provided for in this Section 9 is unavailable to
an indemnified party under Section 9(a) or Section 9(b) above (other than by
reason of exceptions provided in those Sections) in respect of any losses,
claims, damages or liabilities referred to in such Sections, then each
applicable indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities in such proportion as is
appropriate to reflect the relative benefit and relative fault as well as any
other equitable considerations.. The amount paid or payable by a party as a
result of the losses, claims, damages, or liabilities referred to above shall be
deemed to include, subject to the limitations set forth in Section 9(d), any
legal or other fees or expenses reasonably incurred by such party in connection
with investigating or defending any action or claim. The relative benefit shall
be determined by the allocation of proceeds from such Form S-3. The relative
fault of the indemnified party on the one hand and of the indemnifying party on
the other shall be determined by reference to, among other things, whether the
Misstatement or alleged Misstatement relates to information supplied by the
indemnified party or the indemnifying party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
Misstatement or alleged Misstatement. Marriott and Xxxxx agree that it would
not be just and equitable if contribution pursuant to this Section 9(c) were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to above. No
person guilty of fraudulent misrepresentation (within the meaning of Section
9(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
(d) Any person entitled to indemnification hereunder will: (i) give prompt
notice to the indemnifying party of any claim with respect to which it seeks
indemnification; and (ii) unless in such indemnified party's reasonable judgment
a conflict of interest between such
9
indemnified and indemnifying parties may exist with respect to such claim,
permit such indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. If such defense is assumed,
the indemnifying party will not be subject to any liability for any settlement
made without its consent (but such consent will not be unreasonably withheld).
An indemnifying party who is not entitled or elects not to assume the defense of
a claim will not be obligated to pay the fees and expenses of more than one
counsel for all parties indemnified by such indemnifying party with respect to
such claim, unless in the reasonable judgment of any indemnified party a
conflict of interest may exist between such indemnified party and any other such
indemnified parties with respect to such claim. The failure to notify an
indemnifying party promptly of the commencement of any such action, if
prejudicial to her ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this
paragraph, but the omission so to notify the indemnifying party will not relieve
her of any liability that she may have to any indemnified party otherwise than
under this Section.
10. Termination of Marriott's Obligations. Marriott shall have no
-------------------------------------
obligations pursuant to Section 6 with respect to Registrable Securities more
than one year after the Closing.
11. Employment Agreement. Xxxxx agrees to the assignment to and
--------------------
assumption by Acquisition at the Closing Time of her employment agreement with
the Company dated January 1, 1998.
12. The Options. Xxxxx hereby agrees as follows:
-----------
(a) Grant of Options. Subject to the terms of this Section 12, Xxxxx
----------------
hereby grants to Acquisition (or its designee), effective upon the purchase of
the shares by Acquisition at the Tender Offer Purchase Time, an irrevocable
option (each, an "Option") to purchase all Shares held of record or Beneficially
Owned by Xxxxx at a purchase price per Share equal to $14.
(b) Exercise of Options. Acquisition may exercise the Options, in
-------------------
whole or in part, at any time and from time to time, following the occurrence of
a Purchase Event (as defined below); provided that any Options not theretofore
exercised shall expire and be of no further force and effect upon the earliest
to occur (the "Expiration Date") of (i) the Closing Time, (ii) 5 months after
the first occurrence of a Purchase Event, or (iii) termination of the Merger
Agreement in accordance with its terms. Notwithstanding anything herein to the
contrary, in the event of termination of the Merger Agreement, Marriott at its
option either may elect to exercise the Options, or may accept payment of the
Liquidated Damages Amount provided for in Section 9.3 of the Merger Agreement,
but shall not be entitled to exercise the Options and retain Liquidated Damages
Amount. In the event Marriott determines to exercise the Options, promptly upon
a termination of the Merger Agreement giving rise to payment of the Liquidated
Damages Amount, Marriott shall notify XxxxxXxxx of its waiver of receipt of the
Liquidated Damages Amount pursuant to the Merger Agreement.
As used herein, a "Purchase Event" shall mean any of the following events that
occurs after the date hereof:
10
(i) Beneficial Ownership of more than 20% of the outstanding capital
stock of XxxxxXxxx (or rights to acquire such capital stock of XxxxxXxxx) shall
have been acquired by any Person or "group" other than Acquisition, any
affiliate of Acquisition or Xxxxx;
(ii) XxxxxXxxx shall have entered into a definitive agreement or
approved or recommended any proposal which provides for the acquisition of 20%
or more of the outstanding capital stock of XxxxxXxxx or substantially all of
the assets of XxxxxXxxx by any Person or group other than Acquisition, an
affiliate of Acquisition or Xxxxx;
(iii) (A) the failure of XxxxxXxxx'x stockholders to approve the
Merger Agreement or the transactions contemplated thereby at a meeting called to
consider such Merger Agreement, if such meeting shall have been preceded by (x)
the public announcement by any Person or group (other than Acquisition or an
affiliate of Acquisition) of an offer or proposal to acquire, merge or
consolidate with XxxxxXxxx, or (y) the Board of Directors of XxxxxXxxx'x
publicly withdrawing or modifying, or publicly announcing its intent to withdraw
or modify, its recommendation that the stockholders of XxxxxXxxx approve the
transactions contemplated by the Merger Agreement, as prohibited by Section
5.4(b) of the Merger Agreement; or (B) the acceptance by XxxxxXxxx'x Board of
Directors of, or the public recommendation by XxxxxXxxx'x Board of Directors
that the stockholders of XxxxxXxxx accept, an offer or proposal from any Person
or group (other than Acquisition or an affiliate of Acquisition), to acquire 20%
or more of the outstanding capital stock of XxxxxXxxx or for a merger or
consolidation or any similar transaction involving XxxxxXxxx, as prohibited by
Section 5.4(b) of the Merger Agreement;
(iv) a proposal made by a third party to XxxxxXxxx, its affiliates or
their respective officers, directors, employees, representatives or agents, as
described in Section 5.4 of the Merger Agreement, resulting in a breach by
XxxxxXxxx of the covenant and obligation contained in that Section 5.4 and such
breach (x) would entitle Acquisition or Marriott to terminate the Merger
Agreement pursuant to Section 9.1(b) thereof and (y) shall not have been cured
prior to the date that Acquisition duly gives notices to Xxxxx of its desire to
exercise an Option pursuant to Section 12 hereof; or
(v) any breach by Xxxxx of this Agreement.
(c) Notice of Exercise. To exercise an Option, Acquisition shall, prior to
------------------
the Expiration Date, give written notice to Xxxxx specifying the location in
Maryland or Washington, D.C. and time for the closing (the "Option Closing") of
such purchase. The Option Closing shall be held on the date that is no later
than three business days after the date on which each of the conditions set
forth in Section 12(d) below has been satisfied or waived by Acquisition.
(d) Conditions to Option Closing Following Exercise of Options. The
----------------------------------------------------------
occurrence of the Option Closing shall be subject to the satisfaction of each of
the following conditions:
(i) to the extent necessary, any applicable waiting periods (and any
extension thereof) under the HSR Act with respect to the purchase of the Shares
following the exercise of an Option shall have expired or been terminated; and
11
(ii) no preliminary or permanent injunction or other order, decree or
ruling issued by any court of governmental or regulatory authority, domestic or
foreign, of competent jurisdiction prohibiting the exercise of an Option or the
delivery of Shares shall be in effect.
(e) Transferability of Options. Acquisition may sell or transfer the
---------------------------
Options and any Shares acquired upon exercise of an Option at any time, without
the written consent of Xxxxx, to any affiliate or affiliates of Acquisition.
(f) Payment for and Delivery of Certificates. At the Option Closing, (i)
----------------------------------------
Acquisition (or its designee) shall pay, by check, an amount equal to the
product of (x) $14 and (y) the number of Shares owned by Xxxxx; and (ii) Xxxxx
shall deliver or shall cause to be delivered to Acquisition a certificate or
certificates evidencing Xxxxx'x Shares, and Xxxxx agrees that such Shares shall
be transferred free and clear of all liens. All such certificates representing
Shares shall be duly endorsed in blank, or with appropriate stock powers, duly
executed in blank, attached thereto, in proper form for transfer, with the
signature of Xxxxx thereon guaranteed, and with all applicable taxes paid or
provided for.
14. Termination. Except as otherwise provided herein, the covenants and
-----------
agreements contained herein with respect to the Shares shall terminate upon the
earliest of (a) termination of the Merger Agreement in accordance with its
terms, or (b) the Effective Time.
15. Xxxxx'x Capacity. To the extent that Xxxxx is or becomes during the
----------------
term hereof a director or executive officer of XxxxxXxxx makes any agreement or
understanding herein in her capacity as such director or executive officer.
Xxxxx signs solely in her or her capacity as the record and/or beneficial owner
of her Shares.
16. Waiver of Appraisal and Dissenter's Rights. Xxxxx hereby irrevocably
------------------------------------------
waives any rights of appraisal or rights to dissent from the Merger that she may
have.
17. Non-Competition Agreement. As of the Closing Time, Xxxxx hereby
-------------------------
agrees to the assignment to, and assumption by, Acquisition of the Non-
Competition Agreement dated January 1, 1998 by and among XxxxxXxxx, XxxxxXxxx
Corporation of America, a Maryland corporation, and Xxxxx.
18. Miscellaneous.
-------------
(a) Certain Definitions. As used in this Agreement, the following
-------------------
capitalized terms shall have the following meanings:
(i) "Beneficially Own" or "Beneficial Ownership" with respect to
any securities shall mean having "beneficial ownership" of such securities (as
determined pursuant to Rule 13d-3 under the Exchange Act), including pursuant to
any agreement, arrangement or understanding, whether or not in writing. Without
duplicative counting of the same securities by the same holder, securities
Beneficially Owned by a Person shall include securities Beneficially Owned by
all other Persons with whom such Person would constitute a "group" as within the
meanings of Section 13(d)(3) of the Exchange Act.
12
(ii) "Misstatement" means an untrue statement of a material fact
or an omission to state a material fact required to be stated in a publicly-
filed document necessary to make the statements in such a document not
misleading; provided, however, that such term shall not apply to any statement
or omission based on information supplied by Xxxxx to Marriott or Acquisition
for inclusion in the publicly-filed document.
(iii) "Person" shall mean an individual, corporation, partnership,
joint venture, association, trust, unincorporated organization or other entity.
(iv) "register," "registered," and "registration" refer to a
registration effected by preparing and filing with the SEC a registration
statement in compliance with the Securities Act and the declaration or ordering
by the SEC of effectiveness of such registration statement.
(v) "Registrable Securities" refers to any and all of the shares
of Marriott Stock held by Xxxxx as of the Closing Time, except that any such
Marriott Stock shall cease to be Registrable Securities when and to the extent
(A) a Form S-3 with respect to the sale of such Marriott Stock has become
effective under the Securities Act and such Marriott Stock has been disposed of
in accordance with such Form S-3; (B) such Marriott Stock has been sold to the
public pursuant to Rule 144 or any successor provision under the Securities Act;
(C) such Marriott Stock shall have been otherwise transferred, new certificates
therefor not bearing a legend restricting further transfer shall have been
delivered by Marriott and subsequent disposition of such Marriott Stock does not
require registration or qualification under the Securities Act or any similar
state law then in force in the opinion of legal counsel for Marriott; or (D)
such Common Stock shall have ceased to be outstanding.
(vi) "subsidiary" or "subsidiaries" of Marriott, Acquisition,
XxxxxXxxx or any other person means any corporation, partnership, limited
liability company, association, trust, unincorporated association or other legal
entity of which the Marriott, Acquisition, XxxxxXxxx or any such other person,
as the case may be, (either alone or through or together with any other
subsidiary) owns, directly or indirectly, 50% or more of the capital stock the
holders of which are generally entitled to vote for the election of the board of
directors or other governing body of such corporation or other legal entity.
(b) Entire Agreement. This Agreement and the Merger Agreement
----------------
constitute the entire agreement between the parties with respect to the subject
matter hereof and supersede all other prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter hereof.
(c) Certain Events. Xxxxx agrees that this Agreement, the Other
--------------
Stockholders Agreements and the obligations hereunder shall attach to Xxxxx'x
Shares and shall be binding upon any person or entity to which legal or
beneficial ownership of such Shares shall pass, whether by operation of law or
otherwise, including, without limitation, Xxxxx'x heirs, guardians,
administrators or successors. Notwithstanding any transfer of Shares, the
transferor shall remain liable for the performance of all obligations under this
Agreement of the transferor.
13
(d) Assignment. This Agreement shall not be assigned by operation of
----------
law or otherwise without the prior written consent of the other party, provided
that Marriott may assign, in its sole discretion, its rights and obligations
hereunder to any direct or indirect wholly-owned subsidiary of Marriott, but no
such assignment shall relieve Marriott of its obligations hereunder if such
assignee does not perform such obligations.
(e) Amendments, Waivers, Etc. This Agreement may not be amended,
------------------------
changed, supplemented, waived or otherwise modified or terminated, with respect
to Xxxxx, except upon the execution and delivery of a written agreement executed
by the relevant parties hereto.
(f) Notices. All notices, requests, claims, demands and other
-------
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram, telex
or telecopy, or by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any courier service, such as Federal Express, providing
proof of delivery. All communications hereunder shall be addressed to the
respective parties at the following addresses:
If to Xxxxx: At the address set forth on Schedule A hereto.
If to Marriott or Acquisition: MARRIOTT INTERNATIONAL, INC.
00000 Xxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Telecopier: (000) 000-0000
Attention: General Counsel, Dept. 52/923
with a copy to: Xxxxxx, Xxxx & Xxxxxxxx LLP
0000 Xxxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxx, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(g) Severability. Whenever possible, each provision or portion of any
------------
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law, but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
14
(h) Specific Performance. Each of the parties hereto recognizes and
--------------------
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain damages for which it would
not have an adequate remedy at law for money damages, and therefore each of the
parties hereto agrees that in the event of any such breach the aggrieved party
shall be entitled to the remedy of specific performance of such covenants and
agreements and injunctive and other equitable relief in addition to any other
remedy to which it may be entitled, at law or in equity.
(i) Remedies Cumulative. All rights, powers and remedies provided under
-------------------
this Agreement or otherwise available in respect hereof at law or in equity
shall be cumulative and not alternative, and the exercise of any thereof by any
party shall not preclude the simultaneous or later exercise of any other such
right, power or remedy by such party.
(j) No Waiver. The failure of any party hereto to exercise any right,
---------
power or remedy provided under this Agreement or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by any other party
hereto with its obligations hereunder, and any custom or practice of the parties
at variance with the terms hereof, shall not constitute a waiver by such party
of its right to exercise any such or other right, power or remedy or to demand
such compliance.
(k) No Third Party Beneficiaries. This Agreement is not intended to be
----------------------------
for the benefit of, and shall not be enforceable by, any person or entity who or
which is not a party hereto.
(l) Governing Law. Except as to Section 17, which shall be governed by
-------------
the laws of the State of Maryland, without giving effect to the principles of
conflicts of laws thereof, this Agreement shall be governed and construed in
accordance with the laws of the State of New York, without giving effect to the
principles of conflicts and laws thereof.
(m) Descriptive Headings. The descriptive headings used herein are
--------------------
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
15
(n) Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be deemed to be an original, but all of which, taken
together, shall constitute one and the same Agreement.
IN WITNESS WHEREOF, Marriott and Acquisition have caused this Agreement to
be duly executed, and Xxxxx has duly executed this Agreement, as of the day and
year first above written.
MARRIOTT INTERNATIONAL, INC.
By: /s/ Xxxxxx Xxxx
------------------------------
Name: Xxxxxx Xxxx
Title: Executive Vice President and
General Counsel
MI SUBSIDIARY I, INC.
By: /s/ Xxxxxx Xxxx
------------------------------
Name: Xxxxxx Xxxx
Title: Vice President
/s/ Xxxxx X. Xxxxx
--------------------------
Xxxxx X. Xxxxx
16
SCHEDULE A
----------
------------------------------------------------------------------------------------------------
NAME OF STOCKHOLDER ADDRESS NUMBER OF SHARES OWNED
------------------------------------------------------------------------------------------------
Xxxxx X. Xxxxx 0 Xxxxxxx Xxxxx Xxxx 45,455
Xxxxxx, Xxxxxxxxxxx 00000
------------------------------------------------------------------------------------------------
17
