EXHIBIT 3
VOTING AGREEMENT
VOTING AGREEMENT, dated as of March 5, 2004 (this "Agreement"), among
BHAC Capital IV, L.L.C., a Delaware limited liability company ("Parent"), H.
Xxxxx Xxxxxxxx ("Stockholder") and Xxxxxxxx Investments Limited Partnership
("Record Holder").
WHEREAS, concurrently herewith, Parent, BHAC Acquisition IV, Inc., a
Delaware corporation and a wholly owned subsidiary of Parent ("Merger Sub"), and
Extended Stay America, Inc., a Delaware corporation (the "Company"), are
entering into an Agreement and Plan of Merger (the "Merger Agreement";
capitalized terms used but not defined herein shall have the meanings set forth
in the Merger Agreement), pursuant to which (and subject to the terms and
conditions set forth therein) Merger Sub will merge with and into the Company
(the "Merger") and each outstanding share of common stock, par value $0.01 per
share, of the Company (the "Common Stock") will be converted into the right to
receive the Merger Consideration;
WHEREAS, Stockholder beneficially owns 9,179,910 Shares (the "Owned
Shares"), the Owned Shares, including any Shares acquired by Stockholder after
the date hereof and prior to the termination hereof, whether upon exercise of
options, warrants, conversion of other convertible securities or otherwise, are
collectively referred to herein as the "Covered Shares";
WHEREAS, in order to induce Parent to enter into the Merger Agreement
and proceed with the Merger, Parent, Stockholder and Record Holder are entering
into this Agreement; and
WHEREAS, Stockholder and Record Holder acknowledge that Parent is
entering into the Merger Agreement in reliance on the representations,
warranties, covenants and other agreements of Stockholder and Record Holder set
forth in this Agreement and would not enter into the Merger Agreement if
Stockholder and Record Holder did not enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Parent, Stockholder and Record Holder hereby agree as follows:
1. Agreement to Vote.
(a) Prior to any termination of this Agreement, subject to Section 7
hereof, Stockholder hereby agrees that it shall, and shall cause the Record
Holder and any other holder of record of any Covered Shares at any meeting of
the stockholders of the Company (whether annual or special and whether or not an
adjourned or postponed meeting), however called, (i) when a meeting is held,
appear at such meeting or otherwise cause the Covered Shares to be counted as
present thereat for the purpose of establishing a quorum, (ii) vote (or caused
to be voted) in person or by proxy all Covered Shares in favor of the Merger and
any other matters necessary for consummation of the Transactions and (iii) vote
(or cause to be voted) all Covered Shares against (A) any proposal for any
recapitalization, reorganization, liquidation, merger, sale
of assets or other business combination between the Company and any other person
(other than the Merger) and (B) any other action that could reasonably be
expected to, impede, interfere with, delay, postpone or adversely affect the
Merger or any of the Transactions, any transactions contemplated by this
Agreement or result in a breach in any material respect of any covenant,
representation or warranty or other obligation or agreement of the Company under
the Merger Agreement.
(b) EACH OF STOCKHOLDER AND RECORD HOLDER HEREBY GRANTS TO, AND
APPOINTS, PARENT, THE CHIEF EXECUTIVE OFFICER OF PARENT AND THE SECRETARY OF
PARENT, IN THEIR RESPECTIVE CAPACITIES AS OFFICERS OF PARENT, AND ANY OTHER
DESIGNEE OF PARENT, EACH OF THEM INDIVIDUALLY, THE STOCKHOLDER'S IRREVOCABLE
(UNTIL THE TERMINATION DATE) PROXY AND ATTORNEY-IN-FACT (WITH FULL POWER OF
SUBSTITUTION) TO VOTE THE COVERED SHARES AS INDICATED IN CLAUSE (a) OF THIS
SECTION 1. EACH OF STOCKHOLDER AND RECORD HOLDER INTENDS THIS PROXY TO BE
IRREVOCABLE (UNTIL THE TERMINATION DATE) AND COUPLED WITH AN INTEREST AND WILL
TAKE SUCH FURTHER ACTION OR EXECUTE SUCH OTHER INSTRUMENTS AS MAY BE NECESSARY
TO EFFECTUATE THE INTENT OF THIS PROXY AND HEREBY REVOKES ANY PROXY PREVIOUSLY
GRANTED BY EACH OF STOCKHOLDER OR RECORD HOLDER WITH RESPECT TO THE COVERED
SHARES.
(c) Except as set forth in clause (a) of this Section 1, Stockholder
shall not be restricted from voting in favor of, against or abstaining with
respect to any matter presented to the stockholders of the Company. In addition,
nothing in this Agreement shall give Parent the right to vote any Covered Shares
in connection with the election of directors.
2. No Inconsistent Agreements. Each of Stockholder and Record Holder
hereby covenants and agrees that, except as contemplated by this Agreement, it
(a) has not entered into, and shall not enter at any time while this Agreement
remains in effect, any voting agreement or voting trust with respect to the
Covered Shares and (b) has not granted, and shall not grant at any time while
this Agreement remains in effect, a proxy or power of attorney with respect to
the Covered Shares, in either case, which is inconsistent with its obligations
pursuant to this Agreement.
3. Termination. This Agreement shall terminate upon the earliest of (a)
the Effective Time, (b) the termination of the Merger Agreement in accordance
with its terms and (c) written notice of termination of this Agreement by Parent
to Stockholder and Record Holder, such date shall be referred to herein as the
"Termination Date".
4. Representations and Warranties.
(a) Representations and Warranties of Parent. Parent hereby represents
and warrants to Stockholder and Record Holder as follows:
(i) Valid Existence. Parent is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has the
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requisite corporate power and authority and all necessary governmental
approvals to own, lease and operate its properties and to carry on its
business as it is now being conducted.
(ii) Authority Relative to This Agreement. Parent has all necessary
corporate power and authority to execute and deliver this Agreement, to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this
Agreement by Parent and the consummation by Parent of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action, and no other corporate proceedings on the part of Parent
are necessary to authorize this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly and validly authorized,
executed and delivered by Parent and, assuming due authorization, execution
and delivery by Stockholder and Record Holder, constitutes a legal, valid
and binding obligation of Parent, enforceable against Parent in accordance
with its terms.
(iii) No Conflicts. Except for the applicable requirements of the
Exchange Act (A) no filing with, and no permit, authorization, consent or
approval of, any state, federal or foreign governmental authority is
necessary on the part of Parent for the execution and delivery of this
Agreement by Parent and the consummation by Parent of the transactions
contemplated hereby and (B) neither the execution and delivery of this
Agreement by Parent nor the consummation by Parent of the transactions
contemplated hereby nor compliance by Parent with any of the provisions
hereof shall (1) conflict with or violate the Certificate of Incorporation
or Bylaws of Parent, (2) result in any breach or violation of, or
constitute a default (or an event which, 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 on any property or asset of Parent pursuant to, any
Contract to which Parent is a party or by which Parent or any property or
asset of Parent is bound or affected or (3) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to Parent or any
of its properties or assets, except in the case of (2) or (3) for
violations, breaches or defaults that would not in the aggregate materially
impair the ability of Parent to perform its obligations hereunder.
(b) Representations and Warranties of Stockholder and Record Holder.
Stockholder and Record Holder hereby, jointly and severally, represent and
warrant to Parent as follows:
(i) Ownership of Securities. Stockholder and Record Holder are the only
beneficial owners of the Covered Shares and Record Holder is the sole
record holder of the Covered Shares, free and clear of Liens (other than
customary bank pledges) and Stockholder and Record Holder have sole voting
power and sole power of disposition with respect to all Covered Shares,
with no restrictions, subject to applicable federal securities laws on
their rights of disposition pertaining thereto (other than as created by
this Agreement). As of the date hereof, Stockholder does not own
beneficially or of record any equity securities of the Company other than
the Covered Shares and 2,836,518 Shares issuable upon the exercise of stock
options, including 2,154,500 Shares issuable upon the exercise of currently
exercisable stock options (collectively, the "Options") and Record Holder
does not own beneficially or of record any equity securities of the
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Company other than the Covered Shares. Stockholder is the sole record and
beneficial owner of all partnership interests of Record Holder, free and
clear of all Liens. Neither Stockholder nor Record Holder has appointed or
granted any proxy which is still in effect with respect to the Covered
Shares.
(ii) Existence, Power; Binding Agreement. Record Holder is a limited
partnership duly incorporated, validly existing and in good standing under
the laws of the jurisdiction of its incorporation and has all requisite
corporate power and authority to execute and deliver this Agreement, to
perform its obligations hereunder and to consummate the transactions
contemplated hereby. Stockholder has full power and authority to execute
and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. This Agreement has been
duly and validly executed and delivered by each of Stockholder and Record
Holder and, assuming due authorization, execution and delivery by Parent,
constitutes a legal, valid and binding obligation of Stockholder and Record
Holder, enforceable against each of Stockholder and Record Holder in
accordance with its terms. If Stockholder is married, and the Covered
Shares constitute community property or otherwise need spousal or other
approval for this Agreement to be legal, valid and binding, this Agreement
has been duly authorized, executed and delivered by, and constitutes the
legal, valid and binding obligation of, Stockholder's spouse, enforceable
in accordance with its terms.
(iii) No Conflicts. Except for the applicable requirements of the
Exchange Act (A) no filing with, and no permit, authorization, consent or
approval of, any state, federal or foreign governmental authority is
necessary on the part of either Stockholder or Record Holder for the
execution and delivery of this Agreement by either Stockholder or Record
Holder and the consummation by either Stockholder or Record Holder of the
transactions contemplated hereby and (B) the execution and delivery of this
Agreement by Stockholder and Record Holder or the consummation by
Stockholder or Record Holder of the transactions contemplated hereby or
compliance by Stockholder or Record Holder with any of the provisions
hereof shall not (1) in case of Record Holder violate, any provision of its
limited partnership agreement or similar organizational documents, (2)
result in any breach or violation of, or constitute a default (or an event
which, 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 on any property or
asset of Stockholder or Record Holder pursuant to, any Contract to which
Stockholder or Record Holder is a party or by which Stockholder or Record
Holder or any property or asset of Stockholder or record Holder is bound or
affected or (3) violate any order, writ, injunction, decree, statute, rule
or regulation applicable to each of Stockholder and Record Holder or any of
its properties or assets, except in the case of (2) or (3) for violations,
breaches or defaults that would not in the aggregate materially impair the
ability of Stockholder or Record Holder to perform its obligations
hereunder.
(iv) Accredited Investor. Each of Stockholder and Record Holder is an
"accredited investor" (as defined under the Securities Act) and a
sophisticated investor, is capable of evaluating the merits and risks of
its investments and has the capacity to protect its own interests.
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5. Certain Covenants of Stockholder. Except in accordance with the
terms of this Agreement, Stockholder and Record Holder hereby covenants and
agrees as follows:
(a) No Solicitation. Prior to any termination of this Agreement,
subject to Section 7 hereof (with respect to Stockholder), each of Stockholder
and Record Holder agrees that neither it nor any of its Representatives shall,
directly or indirectly, solicit (including by way of furnishing information) any
inquiries or the making of any proposal by any person or entity (other than
Parent or any affiliate of Parent) which constitutes, or could reasonably be
expected to lead to, an Acquisition Proposal. If Stockholder or Record Holder
receives a bona fide inquiry or proposal with respect to the sale of Shares,
then Stockholder shall promptly inform Parent of the terms and conditions, if
any, of such inquiry or proposal and the identity of the person making it.
Stockholder and Record Holder will immediately cease and cause to be terminated
any existing activities, discussions or negotiations with any parties conducted
prior to the date of this Agreement with respect to any of the foregoing.
(b) Restriction on Transfer, Proxies and Non-Interference. Except as
set forth in Section 8 hereof, each of Stockholder and Record Holder hereby
agrees, while this Agreement is in effect, and except as contemplated hereby,
not to (i) sell, transfer, pledge, encumber, assign or otherwise dispose of, or
enter into any contract, option or other arrangement or understanding with
respect to the sale, transfer, pledge, encumbrance, assignment or other
disposition of, any of the Covered Shares or Options, (ii) grant any proxies or
powers of attorney, deposit any Covered Shares into a voting trust or enter into
a voting agreement with respect to any Covered Shares or (iii) knowingly take
any action that would make any representation or warranty of Stockholder or
Record Holder contained herein untrue or incorrect or have the effect of
preventing or disabling Stockholder or Record Holder from performing its
obligations under this Agreement.
(c) Each of Stockholder and Record Holder agrees, while this Agreement
is in effect, to promptly notify Parent of the number of any new Shares acquired
by Stockholder or Record Holder, if any, after the date hereof (including, upon
exercise of Options).
6. Further Assurances. From time to time, at the other party's request
and without further consideration, each party hereto shall take such reasonable
further action as may reasonably be necessary or desirable to consummate and
make effective the transactions contemplated by this Agreement.
7. Fiduciary Duties. Notwithstanding anything in this Agreement to the
contrary: (a) Stockholder makes no agreement or understanding herein in any
capacity other than in Stockholder's capacity as a record holder and beneficial
owner of Covered Shares, (b) nothing herein shall be construed to limit or
affect any action or inaction by Stockholder acting in such person's capacity as
a director of the Company and in compliance with Section 6.04 of the Merger
Agreement and (c) Stockholder shall have no liability to Parent or any of its
affiliates under this Agreement or otherwise as a result of any action or
inaction by Stockholder in such person's capacity as a director of the Company
and in compliance with Section 6.04 of the Merger Agreement.
8. Permitted Transfers. Notwithstanding anything in this Agreement to
the contrary, Stockholder may transfer any or all of the Covered Shares, in
accordance with
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provisions of applicable Law, to Stockholder's spouse, ancestors,
descendants or any trust (controlled by Stockholder) for any of their
benefit or to a charitable trust (controlled by Stockholder), or up to
500,000 Covered Shares to a charitable foundation (which transfer shall
not be subject to the following proviso); provided, however, that,
prior to and as a condition to the effectiveness of such transfer, each
person to which any of such Covered Shares or any interest in any of
such Covered Shares is or may be transferred shall have executed and
delivered to Parent a counterpart of this Agreement pursuant to which
such person shall be bound by all of the terms and provisions of this
Agreement, and shall have agreed in writing with Parent to hold such
Covered Shares or interest in such Covered Shares subject to all of the
terms and provisions of this Agreement.
9. No Control. Nothing contained in this Agreement shall give Parent
the right to control or direct the Company or the Company's operations.
10. Amendment. This Agreement may be amended by the parties hereto;
provided, however, that after the adoption of this Agreement and the
Transactions by the stockholders of the Company no amendment shall be made
except as allowed under applicable Law. This Agreement may not be amended except
by an instrument in writing signed by each of the parties hereto.
11. Non-survival of Representations and Warranties. The respective
representations and warranties of Stockholder, Record Holder and Parent
contained herein shall not survive the closing of the transactions contemplated
hereby and by the Merger Agreement.
12. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing in the English language and shall
be deemed duly given (a) on the date of delivery if delivered personally, (b) on
the first business day following the date of dispatch if delivered by a
nationally recognized next-day courier service, (c) on the fifth business day
following the date of mailing if delivered by registered or certified mail
(postage prepaid, return receipt requested) or (d) if sent by facsimile
transmission, when transmitted and receipt is confirmed. All notices hereunder
shall be delivered to the respective parties at the following addresses (or at
such other address for a party as shall be specified in a notice given in
accordance with this Section 12):
if to Parent:
c/o Blackstone Real Estate Partners IV L.P.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxxxx X. Xxxx
and
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c/o Blackstone Capital Partners IV L.P.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxx
with a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx
if to Stockholder and Record Holder:
H. Xxxxx Xxxxxxxx
Xxxxxxxx Holdings Inc.
000 X. Xxx Xxxx Xxxx., Xxxxx 0000
Xxxx Xxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
with a copy to:
Xxxxxxx X. Xxxxxxx
Xxxxxxxx Holdings Inc.
000 X. Xxx Xxxx Xxxx., Xxxxx 0000
Xxxx Xxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
13. Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of Law or public
policy, all other conditions and provisions of this Agreement shall 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 shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the transactions contemplated hereby be consummated as originally
contemplated to the fullest extent possible.
14. Entire Agreement; Assignment. This Agreement (a) constitutes the
entire agreement among the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements and undertakings, both written and
oral, among the parties hereto with respect to the subject matter hereof and (b)
shall not be assigned by operation of law or otherwise, except that Parent may
assign all or any of its rights and obligations hereunder to any direct or
indirect wholly owned subsidiary of Parent; provided, however, that no such
assignment shall relieve the assigning party of its obligations hereunder if
such assignee does not perform such obligations.
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15. Specific Performance. The parties hereto agree that irreparable
damage would occur in the event any provision of this Agreement were not
performed in accordance with the terms hereof and that the parties hereto shall
be entitled to specific performance of the terms hereof, in addition to any
other remedy at law or equity.
16. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Delaware applicable to contracts
executed in and to be performed in that State. All Actions arising out of or
relating to this Agreement shall be heard and determined exclusively in the
Delaware Court of Chancery. The parties hereto hereby (a) submit to the
exclusive jurisdiction of the Delaware Court of Chancery for the purpose of any
Action arising out of or relating to this Agreement brought by any party hereto,
and (b) irrevocably waive, and agree not to assert by way of motion, defense, or
otherwise, in any such Action, any claim that it is not subject personally to
the jurisdiction of the above-named court, that its property is exempt or immune
from attachment or execution, that the Action is brought in an inconvenient
forum, that the venue of the Action is improper, or that this Agreement or the
transactions contemplated hereby may not be enforced in or by the above-named
court. This Agreement does not involve less than $100,000, and the parties
intend that 6 Del.C. ss.2708 shall apply to this Agreement.
17. Headings. The descriptive headings contained in this Agreement are
included for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
18. Counterparts. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterpart, and by the
different parties hereto in separate counterparts, each of which when executed
shall be deemed to be an original but all of which taken together shall
constitute one and the same.
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IN WITNESS WHEREOF, Parent, Stockholder and Record Holder have caused
to be executed or executed this Agreement as of the date first written above.
BHAC CAPITAL IV, L.L.C.
/s/ Xxxxxxxx X. Xxxx
------------------------------
Name: Xxxxxxxx X. Xxxx
Title: Chairman
STOCKHOLDER
/s/ H. Xxxxx Xxxxxxxx
------------------------------
Name: H. Xxxxx Xxxxxxxx
RECORD HOLDER
XXXXXXXX INVESTMENTS LIMITED
PARTNERSHIP
By: Xxxxxxxx Investments, Inc.
its general partner
/s/ Xxxx X. Xxxxxxx
------------------------------
Name: Xxxx X. Xxxxxxx
Title: Vice President
