SHAREHOLDERS AGREEMENT
This Shareholders Agreement, dated as of January 3, 1998 (this
"Agreement"), is among Meditrust Corporation, a Delaware corporation ("REIT"),
Meditrust Operating Company, a Delaware corporation ("OPCO"), the shareholders
of the Company named on the signature page hereto (individually, a "Shareholder"
and collectively, the "Shareholders") and, solely for purposes of Section 3.6
hereof, La Quinta Inns, Inc., a Texas corporation (the "Company").
RECITALS:
A. As of the date hereof, each Shareholder owns the number of Shares
of Common Stock, par value $0.01 per share ("Company Stock"), of the Company set
forth on Exhibit A (such shares, and any shares of Common Stock hereafter
acquired by such Shareholders, are hereinafter referred to as the "Shares");
B. REIT, 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 REIT (the
"Merger"); and
C. As a condition to the willingness of REIT to enter into the Merger
Agreement, REIT has requested that the Shareholders agree, and, in order to
induce REIT to enter into the Merger Agreement, the Shareholders are willing to
agree, to grant REIT an irrevocable proxy to vote, or to otherwise cause to be
voted, the Shares pursuant to the terms and conditions hereof and to grant REIT
an option to purchase the Shares owned by Shareholders on the terms and
conditions contained herein.
NOW, THEREFORE, the parties hereto agree as follows:
I. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
The Shareholders hereby represent and warrant to REIT and OPCO as
follows:
1.1 Due Authority. The Shareholders have full power and authority to
execute and deliver this Agreement and to perform their obligations hereunder
and consummate the transactions contemplated hereby. This Agreement has been
duly executed and delivered by or on behalf of the Shareholders and, assuming
its due authorization, execution and delivery by REIT and OPCO, constitutes a
legal, valid and binding obligation of the Shareholders, enforceable against
them in accordance with their terms.
1.2 No Conflict; Consents. (a) The execution and delivery of this
Agreement by the Shareholders do not, and the performance by the Shareholders of
their obligations under this Agreement and the compliance by the Shareholders
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 any of the Shareholders or the Shares, (ii) conflict with
or violate the instruments under which any of the Shareholders were 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 any of the Shares pursuant to, any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which any of the Shareholders is
a party or by which any of the Shareholders or any of the Shares are bound or
(iv) violate any order, writ, injunction, decree, judgment, order, statute, rule
or resolution applicable to any of the Shareholders or any of the Shares.
(b) The execution and delivery of this Agreement by the Shareholders
do not, and the performance of this Agreement by the Shareholders 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 the Shareholders.
(c) No other person or entity has or will have during the Proxy Term
any right directly or indirectly to vote or control or affect the voting of the
Shares.
1.3 Title to Shares. The Shareholders (a) are the record or
beneficial owners 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) have,
and during the Proxy Term 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 any of the Shareholders.
1.4 No Encumbrances. The Shares and the certificates representing the
Shares are now and at all times during the Proxy Term hereof will be held by the
Shareholders, or by a nominee or custodian for the benefit of the Shareholders,
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 and except as set forth on Exhibit A.
1.5 Brokers. The Shareholders are not liable for, and will indemnify
the Company, REIT 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 any of the
Shareholders.
1.6 Tax Representations. (a) Neither the issuance of Paired Shares
(as such term is defined in the Merger Agreement) to the Shareholders in
connection with the Merger nor the other transactions contemplated by this
Agreement will cause any person to violate the restrictions on ownership and
transfer contained in the Certificate of Incorporation, as amended, of REIT or
in the By-laws, as amended, of REIT, copies of which have been
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provided to and reviewed by the Shareholders and their counsel. The Shareholders
will provide to REIT such information as REIT may reasonably request so that
REIT may confirm the accuracy of this representation.
(b) No Shareholder has or will have at the Effective Date any present
plan, intention, or arrangement to sell or dispose of any of the Paired Shares
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").
II. REPRESENTATIONS AND WARRANTIES OF REIT AND OPCO
REIT 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.
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III. CERTAIN COVENANTS OF THE SHAREHOLDERS
The Shareholders hereby covenant and agree with REIT and OPCO as
follows:
3.1 Transfer of Shares. During the Proxy Term the Shareholders will
not (a) sell, tender, transfer, encumber, pledge (except as set forth on Exhibit
A), 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 Proxy. (a) Each Shareholder, by this Agreement, hereby
constitutes and appoints REIT, with full power of substitution, during and for
the Proxy Term, as such Shareholder's true and lawful attorney and irrevocable
proxy, for and in such Shareholder's name, place and stead, to vote each of such
Shares owned by such Shareholder as Shareholder's proxy, 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 Company Takeover
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, including the ability for REIT or its nominees to vote such
Shares directly. Each Shareholder intends the foregoing proxy to be, and it
shall be, irrevocable and coupled with an interest during the Proxy Term and
hereby revokes any proxies previously granted by such Shareholder with respect
to the Shares to the extent inconsistent with the foregoing proxy.
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(b) Each Shareholder hereby further agrees, with respect to any
Shares not voted pursuant to paragraph (a) above, including without limitation
any Shares owned beneficially but not of record by such Shareholder, that during
the Proxy Term, 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, such Shareholder shall vote (or cause to be voted) all Shares
whether or not owned of record or beneficially by such Shareholder except as
specifically requested in writing by REIT in advance, (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 Company
Takeover Proposal 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 or (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 certificate of incorporation 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.
(c) For the purposes of this Agreement, "Proxy Term" means the period
from the date hereof until the earlier of (i) twelve (12) months after the
termination of the Merger Agreement (provided, however, that after the
termination of the Merger Agreement Sections 3.2(a) and 3.2(b) hereof shall
apply only to an aggregate number of Shares equal to ten percent of the number
of shares of the Company Stock outstanding from time to time, and the parties
hereto shall agree in writing which Shares shall no longer be subject to the
provisions of such Sections) and (ii) the Effective Time.
3.3 Further Assurances. During the Proxy 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 REIT or OPCO may reasonably
request.
3.4. No Solicitation. During the Proxy 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 a Company Takeover Proposal,
(ii) enter into any agreement with respect to any Company Takeover 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
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facilitate any inquiries or the making of any proposal that constitutes, or
would reasonably be expected to lead to, any Company Takeover 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 Stop Transfer. Each Shareholder agrees with, and covenants to,
REIT that the Shareholder will not request that the Company register the
transfer (book-entry or otherwise) or any certificate or uncertificated interest
representing any of the Shares. Each Shareholder and the Company further agree
that the Company shall instruct the transfer agent for its Common Stock to
refuse to permit the transfer of the Shares during the Proxy Term except as
permitted by the terms of this Agreement.
3.7 Agreement to Elect Cash. The Shareholders agree that prior to the
Election Deadline they will irrevocably elect to receive with respect to all of
the Shares, pursuant to and in accordance with the provisions of the Merger
Agreement, the maximum amount of cash permitted to be received pursuant to the
Merger Agreement for such Shares.
3.8 Cooperation. Each Shareholder agrees to cooperate with REIT after
the date hereof in determining and investigating whether there exist any
circumstances which could cause REIT 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
REIT 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 REIT as
promptly as practical) which REIT reasonably requests in connection with such
determination and investigation.
ARTICLE IV
STANDSTILL
(a) Each Shareholder hereby covenants and agrees that from and after
the Effective Time hereof neither such Shareholder nor any of the Affiliates
will, without the prior written consent of REIT specifically expressed in a vote
adopted after the Merger by the Board of Directors of REIT (the "Board"),
directly or indirectly, purchase or cause to be purchased or otherwise acquire
(other than pursuant to a stock split, stock dividend or similar transaction or
agree to acquire, or become or agree to become the beneficial owner of, any
additional equity securities, or any securities convertible into or exercisable
or exchangeable for any equity securities (collectively, "Stock") of REIT, OPCO,
or any of their subsidiaries. During the
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first 90 calendar days from and after the date the Merger becomes effective (the
"Effective Time"), each Shareholder will not directly or indirectly sell,
assign, transfer, pledge (except that such Shareholder may pledge shares to a
brokerage firm pursuant to a margin account with customary terms) or otherwise
dispose of, or enter into any put or other contract, option or other arrangement
or undertaking with respect to the direct or indirect sale, assignment, transfer
or other disposition of, any common stock of REIT ("REIT Common Stock") or
common stock of OPCO ("OPCO Common Stock") to be received by such Shareholder in
the Merger. After such 90-day period, the Shareholders will have the benefit of
the rights granted pursuant to the Registration Rights Agreement to be executed
by the Shareholders, REIT and OPCO prior to the Effective Time (the
"Registration Rights Agreement"). Each Shareholder further agrees that after
such 90-day period neither it nor any Affiliates will, without the prior written
consent of the Board specifically expressed in a vote adopted by the Board,
directly or indirectly sell, assign, transfer, pledge (except that such
Shareholder may pledge shares to a brokerage firm pursuant to a margin account
with customary terms) or otherwise dispose of, or enter into any put or other
contract, option or other arrangement or undertaking with respect to the direct
or indirect sale, assignment, transfer or other disposition of, any shares of
Stock, except for (i) transfers made pursuant to the provisions of Section 4(b)
below, (ii) transfers to Affiliates, or to charitable remainder trusts, that
agree in a written agreement with REIT pursuant to which such Transferee agrees
to be bound by all of the terms and conditions of, and makes, as of a time
immediately prior to such transfer, each of the representations and warranties
contained in (applied to such Transferee as if such Affiliate were any
Shareholder for purposes thereof), this Agreement (provided that such
Shareholder shall remain liable under and bound by this Agreement, in its
entirety, with respect to all such transferred Stock, (iii) bona fide pledges to
financial institutions, such as commercial or investment banks, broker/dealers,
insurance companies and finance companies and resales thereof by the pledgees
thereof pursuant to the terms of the applicable pledge agreements, (iv) gifts to
charitable institutions, (v) transfers pursuant to a publicly announced tender
offer for any shares of Stock by any corporation, entity, person or group (other
than any Shareholder or the Affiliates) which the Board has voted to recommend
to holders of any such shares of Stock, (vi) transfers effected pursuant to a
registration statement filed pursuant to a registration rights agreement with
REIT or OPCO and any Shareholder or, after the first anniversary of the
Effective Time, pursuant to Rule 145(d) promulgated under the Securities Act of
1933, as amended (the "Securities Act"), and (vii) open market sales of not more
than 1.0% of the outstanding shares of REIT Common Stock or OPCO Common Stock in
any ninety (90) day period (calculated in the aggregate with respect to all
sales by the Shareholders and the Affiliates, other than sales made pursuant to
any of clauses (i) through (vi) of this Section 4(a)) effected in accordance
with the "brokers' transactions" restrictions of subsections (f) (excluding the
last sentence thereof) and (g) of Rule 144 promulgated under the Securities Act
of 1933, as amended; provided, however, that notwithstanding anything in this
Section 4(a) to the contrary, the Shareholders and their Affiliates shall not in
the aggregate sell (which for this purpose shall include the entering into any
put or other contract, option or other arrangement or undertaking with respect
to the direct or indirect sale, assignment, transfer or other disposition of
Stock), including any Stock sold pursuant to Section 3(b) hereof, more than
1,300,000, 2,000,000,
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2,000,000, 2,500,000 and 2,500,000 shares of REIT Common Stock or OPCO Common
Stock (the "Quarterly Limits") in any of the ninety-day periods which begin on
the 91st, 181st, 271st, 361st and 451st day, respectively, after the Effective
Time and provided further, however, that if in any such ninety-day period (a
"Calculation Period") REIT or OPCO exercise their rights under the provisions of
Section 3 or Section 4 of the Registration Rights Agreement to suspend or defer
the Shareholders' rights to sell Stock for a number of days in such period, then
the Quarterly Limit for each succeeding ninety-day period shall be increased by
the excess, if any, of (A) the Quarterly Limit for the Calculation Period
multiplied by a fraction, the numerator of which is such number of days and the
denominator of which is ninety, over (B) the aggregate number of shares of Stock
sold by the Shareholders and the Affiliates in each ninety day period after the
Calculation Period over the Quarterly Limit (prior to any adjustment) for such
period. For purposes of this Agreement, the "Affiliates" of any Shareholder
shall mean any person or entity who directly or indirectly controls, is
controlled by, or is under common control with any Shareholder, and "transfer"
shall mean and include any sale, assignment, gift, pledge, the imposition of any
other encumbrance or any other disposition or any agreement or obligation to do
any of the foregoing.
(b) If any Shareholder or any Affiliate desires to sell any shares of
Stock (a "Selling Stockholder") (other than pursuant to clauses (ii) through
(vii) of Section 4(a) hereof), the Shareholders will cause the following
requirements to be satisfied:
(i) The Selling Stockholder shall notify REIT in writing of the
proposed sale (the "Notice of Proposed Transfer"). The Notice of Proposed
Transfer shall identify and, to the extent known by the Selling Stockholder,
provide reasonable information concerning the background, business experience
and business affiliations of the proposed transferee (the "Transferee"), the
purchase price or other consideration, if any, the number of shares and type of
Stock to be transferred and the complete terms of the proposed transaction.
(ii) For a period of five (5) business days following the receipt of
the Notice of Proposed Transfer, REIT and/or any substitute designated by REIT
(REIT and/or such substitute designee is hereinafter sometimes called the
"Buyer") shall have the option to purchase all, but not less than all, the Stock
specified in the Notice of Proposed Transfer at the price and upon the terms set
forth in the Notice of Proposed Transfer; provided, however, that if the type of
consideration that was to be paid was non-cash consideration, then the amount
payable by the Buyer for such Stock shall be determined by an independent
investment banker of national reputation chosen by mutual agreement of REIT and
such Selling Stockholder. In the event that Buyer elects to purchase all, but
not less than all, of the Stock specified in the Notice of Proposed Transfer, it
shall give written notice to the Selling Stockholder of its election, in which
case settlement for said Stock shall be made and the Buyer shall purchase such
Stock for such price, in cash within five (5) business days after the date Buyer
sends such notice. In the event that Buyer elects not to purchase all of the
Stock specified in the Notice of Proposed Transfer, the Selling Stockholder may
consummate the proposed transfer of said Stock with the Transferee at any time
during the following thirty (30) days.
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(c) Each Shareholder hereby agrees that, from and after the Effective
Time and prior to the third anniversary of the Effective Time, neither such
Shareholder nor any of the Affiliates will, directly or indirectly, or will
solicit, request, advise, assist or encourage others, directly or indirectly,
to:
(a) form, join in or in any other way participate in a
"partnership, limited partnership, syndicate or other group" within
the meaning of Section 13(d)(3) of the Exchange Act with respect to
any Stock or deposit any Stock in a voting trust or similar
arrangement or subject any Stock to any voting agreement or pooling
arrangement, other than solely with one or more Affiliates with
respect to the Shares;
(b) solicit proxies or written consents of shareholders
with respect to Stock under any circumstances, or make, or in any way
participate in, any "solicitation" of any "proxy" to vote any shares
of Stock, or become a "participant" in any election contest with
respect to REIT or OPCO (as such terms are defined or used in Rules
14a-1 and 14a-11 under the Exchange Act);
(c) seek to call, or to request the call of, a special
meeting of the shareholders of REIT or OPCO or seek to make, or make,
a shareholder proposal at any meeting of the shareholders of REIT or
OPCO;
(d) commence or announce any intention to commence any
tender offer for any Stock, or file with or send to the SEC a
Schedule 13D or any amendments thereto under the Exchange Act with
respect to Stock, except (x) the Schedule 13D, if any, to be filed
with the SEC in connection with the issuance to one or more of the
Shareholders of Paired Shares and Unpaired Shares pursuant to the
Merger Agreement (the "Current Schedule 13D"), and (y) any amendment
to the Current Schedule 13D to reflect changes to the disclosures set
forth therein and exhibits filed therewith, to the extent such
changes result from actions that are not prohibited by or
inconsistent with this Agreement (such permitted amendments and
additional exhibits to the Current Schedule 13D being referred to as
the "Permitted Schedule 13D Amendments");
(e) make a proposal or bid with respect to, announce any
intention or desire to make, or publicly make or disclose, cause to
be made or disclosed publicly, facilitate the making public or public
disclosure of, any proposal or bid with respect to, the acquisition
of any substantial portion of the assets of REIT, OPCO or of the
assets or stock of any of their respective subsidiaries or of all or
any portion of the outstanding Stock (except each Shareholder may
file Permitted Schedule 13D Amendments), or any merger,
consolidation, other business combination, restructuring,
recapitalization, liquidation or other extraordinary transaction
involving REIT, OPCO or any of their respective subsidiaries;
9
(f) otherwise act alone or in concert with others to seek
to control or influence in any manner the management, the Board or
the Board of Directors of OPCO (including the composition thereof) or
the business, operations or affairs of REIT or OPCO;
(g) take any action or form any intention which would
require an amendment to the Current Schedule 13D (other than
amendments containing only the Permitted Schedule 13D Amendments);
(h) arrange, or in any way participate in, any financing
for any transaction referred to in clauses (a) through (g) above
inclusive; or
(i) make public, or cause or facilitate the making public
(including by disclosure to any journalist or other representative of
the media) of, any request, or otherwise seek (in any fashion that
would require public disclosure by REIT, OPCO, any of the
Shareholders or Affiliates), to obtain any waiver or amendment of any
provision of this Agreement, or to take any action restricted hereby.
Notwithstanding the foregoing, any Shareholder and the Affiliates, if
applicable, may make such filings with the SEC pursuant to Section 16(a) of the
Exchange Act to reflect changes in the beneficial ownership of any shares of
Stock owned by Shareholder or any Affiliate (to the extent such changes reflect
action taken by any Shareholder or such Affiliate which is not prohibited by
this Agreement).
Each Shareholder hereby covenants and agrees that such Shareholder
will promptly notify REIT when and if such Shareholder receives or learns of (i)
any oral or written request to such Shareholder or any of the Affiliates to
participate in any of the transactions or actions referred to in paragraphs (a)
through (i) above inclusive or (ii) any oral or written communication from or by
any person or entity (other than REIT or OPCO) with respect to any of the
transactions or actions referred to in paragraphs (a) through (i) above
inclusive, if such person or entity could reasonably be deemed to be capable of
effecting, participating in or materially assisting in such an action or
transaction (through one or more affiliates or otherwise) and such oral or
written communication was of a nature that could reasonably be deemed to
indicate a serious interest in effecting, participating in or materially
assisting in such an action or transaction.
ARTICLE V
OPTIONS TO PURCHASE SHARES
5.1 Grant of Options. Subject to the terms, provisions and conditions
contained in this Agreement, each Shareholder hereby grants to REIT and its
designees an option to
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purchase part or all of the Shares held by such Shareholder at the Exercise
Price (as hereinafter defined) per share (the options granted hereby are
referred to individually as an "Option" and collectively as the "Options").
5.2 Exercisability of Options; Procedures for Exercise of Options.
(a) If the REIT believes in good faith that the receipt by one or
more of the Shareholders of Paired Shares pursuant to the Merger Agreement will
or may cause (X) such Shareholder or any other person to own, or be deemed to
own under the applicable attribution rules of Section 318 (as modified by
Section 856(d)(5)) of the Code, immediately after the Merger Paired Shares of
REIT Common Stock and OPCO Common Stock in excess of the amounts or percentages
of the outstanding Paired Shares of REIT Common Stock and OPCO Common Stock
permitted to be owned thereby by REIT's Certificate of Incorporation or Bylaws,
both as amended through the Effective Time, or (Y) any amount derived or
received by, or allocated to, REIT to fail to qualify as "rents from real
property" by reason of Section 856(d)(2)(B) of the Code (such limitations set
forth in the foregoing clauses (X) and (Y) being referred to herein collectively
as the "Paired Ownership Limitations"), then REIT shall have the right to
exercise one or more of the Options in whole or in part in order to reduce or
eliminate any possibility that the issuance of Paired Shares in the Merger will
cause any of the Paired Ownership Limitations to be exceeded or violated. In
addition, REIT may exercise one or more of the Options if any Shareholder does
not comply with the provisions of Section 3.7 or of Section 3.8. If REIT chooses
to exercise one or more of such Options in whole or in part, it may do so only
by sending a written notice to one or more of the Shareholders from and after
the Election Deadline and prior to the Effective Time stating its intention to
exercise such Option or Options, which notice shall be sent to any such
Shareholder x/x Xxxxxxx X. Xxxxxxx, Xxxxx 0000, Xxxxx Xxxxxxxx Bank Tower, 000
Xxxx Xxxxxx, Xxxx Xxxxx, Xxxxx 00000 and shall include a date and time at which
the closing for any such exercise (the "Option Closing") shall occur, such date
to be not less than one business day and not more than five business days after
the giving of such notice. The sale and delivery and the purchase and acceptance
of the Shares being acquired shall take place at the offices of Xxxxxxx, Procter
& Xxxx LLP at Exchange Place, Boston, Massachusetts, or such other place as
shall be mutually agreed upon by REIT and such Shareholder.
(b) At each Option Closing, REIT or its designee shall pay the
Exercise Price (as determined pursuant to Section 5.3 below) for each Share
being purchased in cash by a cashiers check or federal funds wire transfer to an
account designated by such Shareholder against delivery of any necessary or
appropriate stock certificates and duly executed instruments of transfer to REIT
or its designee.
Each Shareholder represents and warrants to REIT and its designee that upon
payment of the applicable purchase price at each Option Closing, such
Shareholder shall have transferred to REIT or its designee the legal and
beneficial ownership of the Shares being sold at such Option
11
Closing, free and clear of any liens, encumbrances, charges, restrictions or
other adverse claims.
5.3 Exercise Price. The exercise price (the "Exercise Price") shall
equal the Maximum Cash Consideration Per Share, as such term is defined in the
Merger Agreement.
5.4 Escrow. Upon request by REIT, each Shareholder agrees to place
the Shares subject to the Options in escrow with a mutually agreeable escrow
agent until the termination of the Options.
5.5 Term of Options. The Options shall terminate on the earlier of
(i) the termination of the Merger Agreement and (ii) the Effective Time.
VI. MISCELLANEOUS; GENERAL PROVISIONS
6.1 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 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.
6.2 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.
6.3 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.
6.4 Assignment. This Agreement may not be assigned by operation of
law or otherwise.
6.5 Parties in Interest. This Agreement is binding upon, and shall
inure solely to the benefit of, each party hereto 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.
12
6.6 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.
6.7 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 agrees
not to commence any litigation relating thereto except in such courts), waives
any objection to the laying of venue of any such litigation in the Delaware
Courts and agrees not to plead or claim in any Delaware Court that such
litigation brought therein has been brought in any inconvenient forum.
6.8 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.
6.9 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.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have duly executed this Agreement 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: Secretary
14
LA QUINTA INNS, INC.
By: /s/ Xxxx X. Xxxx
----------------------------------
Name: Xxxx X. Xxxx
Title: President and Chief
Executive Officer
15
XXXXXX X. XXXXXX & CO.
By: /s/ X.X. Xxxxxxx, Xx.
----------------------------------
Name: X.X. Xxxxxxx, Xx.
Title: Vice President
XXX X. XXXX, INC.
By: /s/ X.X. Xxxxxxx, Xx.
----------------------------------
Name: X.X. Xxxxxxx, Xx.
Title: Vice President
XXX X. XXXX, INC.
By: /s/ X.X. Xxxxxxx, Xx.
----------------------------------
Name: X.X. Xxxxxxx, Xx.
Title: Vice President
THE BASS MANAGEMENT TRUST
By: /s/ Xxxxx X. Xxxx
----------------------------------
Xxxxx X. Xxxx, Trustee,
by X.X. Xxxxxxx, Attorney-in-fact
16
THE AIRLIE GROUP, L.P.
By: EBD, L.P., General Partner
By: TMT-FW Inc.
By: /s/ X.X. Xxxxxxx, Xx.
----------------------------------
X.X. Xxxxxxx, Xx.
Vice President
XXXXXXX X. XXXXXXX, XX.
/s/ Xxxxxxx X. Xxxxxxx, Xx.
----------------------------------
Xxxxxxx X. Xxxxxxx, Xx.
XXXXX X. XXXX GRANDSON'S TRUST FOR
XXX X. XXXX
By: /s/ Xxxxxxx X. Xxxxxxx, Xx.
----------------------------------
Xxxxxxx X. Xxxxxxx, Xx., Trustee
XXXXX X. XXXX GRANDSON'S TRUST FOR
XXX X. XXXX
By: /s/ Xxxxxxx X. Xxxxxxx, Xx.
----------------------------------
Xxxxxxx X. Xxxxxxx, Xx., Trustee
XXXXX XXXXXXXX
/s/ Xxxxx Xxxxxxxx
----------------------------------
Xxxxx Xxxxxxxx
XXXX X. XXXX
/s/ Xxxx X. Xxxx
----------------------------------
Xxxx X. Xxxx
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HYATT XXXX XXXX SUCCESSOR TRUST
By: Panther City Investment Co., Trustee
By: /s/ X.X. Xxxxxxx Xx.
----------------------------------
X.X. Xxxxxxx Xx.,
Vice President
XXXXXXXX XXXX BASS SUCCESSOR TRUST
By: Panther City Investment Co., Trustee
By: /s/ X.X. Xxxxxxx Xx.
----------------------------------
X.X. Xxxxxxx Xx.,
Vice President
PORTFOLIO C INVESTORS, L.P.
By: Portfolio Associates, Inc.,
General Partner
By: /s/ X.X. Xxxxxxx Xx.
----------------------------------
X.X. Xxxxxxx Xx.,
Vice President
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EXHIBIT A
Number of Shares of
Number of Shares of Company Stock
Owned
Name and Address Company Stock Owned Beneficially But Not of
of Shareholder of Record by Shareholder Record by Shareholder
---------------- ------------------------ -----------------------
Xxxxxx X. Xxxxxx & Co. 0 3,461,280
Xxx X. Xxxx, Inc. 0 4,147,957
Xxx X. Xxxx, Inc. 0 4,147,957
The Bass Management Trust 0 1,190,622
The Airlie Group, L.P. 0 487,500
Xxxxxxx X. Xxxxxxx, Xx. 0 253,125
Xxxxx X. Xxxx Grandson's Trust for
Xxx X. Xxxx 0 806,305
Xxxxx X. Xxxx Grandson's Trust for
Xxx X. Xxxx 0 806,305
Xxxxx Xxxxxxxx 0 339,185
Xxxx X. Xxxx 303,750 0
Hyatt X. Xxxx Successor Trust 0 1,550,733
Xxxxxxxx Xxxx Bass Successor Trust 0 1,550,733
Portfolio C Investors, L.P. 0 3,223,700
All of the above shares, except those owned by Xxxx X. Xxxx, are subject to
liens arising out of margin account borrowings with one or more brokerage firms
on customary terms.
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