MUTUAL STANDSTILL AGREEMENT
This MUTUAL STANDSTILL AGREEMENT (this "Agreement") is entered into as
---------
of October 15, 2001, between MADISON CAPITAL MANAGEMENT, LLC, a Delaware limited
liability company ("Madison"), and XXXXXX CAPITAL MANAGEMENT, LLC, a California
-------
limited liability company ("Xxxxxx").
------
RECITALS
--------
A. Pursuant to its Offer to Purchase, dated August 31, 2001 (as
supplemented by its Supplement to Offer to Purchase, dated September 27, 2001,
the "Res I Offer"), Madison Liquidity Investors 114, LLC, a Delaware limited
-----------
liability company and a subsidiary of Madison ("MLI 114") has made an offer to
-------
the limited partners of Marriott Residence Inn Limited Partnership ("Res I") to
-----
purchase up to 13,120 limited partnership units ("Res I Units") of Res I.
-----------
B. Pursuant to its Offer to Purchase, dated September 21, 2001 (the
"Res II Offer"), Madison Liquidity Investors 117, LLC, a Delaware limited
------------
liability company and a subsidiary of Madison ("MLI 117") has made an offer to
-------
the limited partners of Marriott Residence Inn II Limited Partnership ("Res II")
------
to purchase up to 7,000 limited partnership units ("Res II Units") of Res II.
------------
X. Xxxxxx desires to acquire limited partnership units in a limited
partnership and its Affiliate (as defined below) partnerships (collectively,
"XYZ") to be named by Xxxxxx as provided herein.
---
AGREEMENT
---------
NOW, THEREFORE, in consideration of the mutual covenants and agreement
set forth herein, Madison and Xxxxxx hereby agree as follows:
1. Definitions. As used in this Agreement, the following terms have
-----------
the meanings indicated below.
Affiliate. An Affiliate of a specified Person means each Person or
---------
entity that, directly or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, the Person
specified.
Agreement. As defined in the introductory paragraph.
---------
Beneficial Ownership and Derivative Terms. As determined pursuant to
-----------------------------------------
Rule 13d-3 under the Exchange Act and any successor regulation, except that in
calculating Beneficial Ownership, notwithstanding any such rule or regulation,
there shall be given effect to the issuance of such Securities as may be
issuable upon the exercise, conversion or exchange of Rights beneficially owned
by such Person or Group (if immediately exercisable) but not any other Rights.
Exchange Act. The Securities Exchange Act of 1934, as
------------
amended, and the rules and regulations thereunder.
Group. As defined in Section 13(d) of the Exchange Act and
-----
the rules and regulations thereunder.
Limited Partner List. As defined in Section 6(a).
-------------------- ------------
Loss. As defined in Section 6(c).
---- -----------
Madison. As defined in the introductory paragraph.
-------
Madison Group. Madison and each of its Affiliates.
-------------
Madison Term. A period of ninety (90) days beginning on the
------------
date hereof.
Madison XYZ Securities. The XYZ Securities and XYZ Rights
----------------------
beneficially owned from time to time by Madison or any of its Affiliates.
Person. An individual, corporation, limited partnership,
------
general partnership, joint venture, limited liability partnership, limited
liability limited partnership, limited liability company, trust, estate,
unincorporated organization, association or other entity.
Rights. With respect to any member of the Madison Group, XYZ
------
Rights, and with respect to any member of the Xxxxxx Group, Res Rights.
Res Acquisition. As defined in Section 2(a)(i).
--------------- ---------------
Res Rights. Securities of Res I and Res II (which may include
----------
Res Securities) exercisable, convertible or exchangeable for or into Res
Securities (with or without consideration) or that carry any right to subscribe
for or acquire Res Securities.
Res I. As defined in Recital A.
-----
Res I Offer. As defined in Recital A.
-----------
Res I Units. As defined in Recital A.
-----------
Res II. As defined in Recital B.
------
Res II Offer. As defined in Recital B.
------------
Res II Units. As defined in Recital B.
------------
Res Securities. Res I Units and Res II Units.
--------------
2
Securities. With respect to any member of the Madison Group,
----------
XYZ Securities, and with respect to any member of the Xxxxxx Group, Res
Securities.
Securities Act. The Securities Act of 1933, as amended, and
--------------
the rules and regulations thereunder.
Xxxxxx. As defined in the introductory paragraph.
------
Xxxxxx Res Securities. The Res Securities and Res Rights
---------------------
beneficially owned from time to time by Xxxxxx or any of its Affiliates.
Xxxxxx Group. Xxxxxx and each of its Affiliates.
------------
Xxxxxx Term. A period of one (1) year beginning on the date
-----------
hereof.
Tendered Res I Units. As defined in Section 4(a).
-------------------- ------------
Tendered Res II Units. As defined in Section 4(a).
--------------------- ------------
Tendered Units. As defined in Section 4(a).
-------------- ------------
XYZ. As defined in Recital C.
---
XYZ Acquisition. As defined in Section 3(a)(i)
--------------- ---------------
XYZ Rights. Securities of XYZ (which may include XYZ
----------
Securities) exercisable, convertible or exchangeable for or into XYZ Securities
(with or without consideration) or that carry any right to subscribe for or
acquire XYZ Securities.
XYZ Securities. Limited partnership interests or units in
--------------
XYZ.
2. Acquisition of Res Securities or Res Rights.
-------------------------------------------
(a) (i) Except as specifically permitted by this Section 2 or
---------
as specifically consented to in writing by Madison, Xxxxxx shall not, and shall
cause each of its Affiliates not to, directly or indirectly acquire any
beneficial ownership of any Res Securities or Res Rights (a "Res Acquisition")
---------------
during the Xxxxxx Term.
(ii) Xxxxxx shall not be in breach of this Section 2
---------
solely because the Xxxxxx Group becomes the beneficial owners of Res Securities
or Res Rights after and solely because of (A) any action taken by Res I or Res
II (including, without limitation, the repurchase or redemption by Res I or Res
II of Res Securities or Res Rights, the issuance of Res Securities pursuant to
an offer by Res I or Res II to its security holders of rights to subscribe for
Res Securities or the declaration by Res I or Res II of a distribution in
respect of any class of Res Securities payable at the election of such security
holders either in cash or in Res Securities) in respect of which no member of
the Xxxxxx Group shall have taken any action except as permitted to be taken by
holders of Res Securities or Res Rights in their capacities as such (including,
3
without limitation, an election not to tender any Xxxxxx Res Securities pursuant
to any such offer to repurchase, an election to purchase Res Securities or Res
Rights pursuant to any such subscription offer or an election to be paid a
distribution in respect of Xxxxxx Res Securities in Res Securities or Res Rights
instead of cash); or (B) after any other action taken by Res I or Res II to
reduce the number of outstanding Res Securities. Nothing contained in this
Section 2(a)(ii) shall be deemed to limit the terms, provisions or applicability
----------------
of Section 4 below.
---------
(b) Except as specifically consented to in writing by Madison,
during the Xxxxxx Term, Xxxxxx shall not, and shall cause each of its Affiliates
not to, solicit proxies with respect to Res Securities or become a participant
in a solicitation of proxies with respect to Res Securities, in either case
within the meaning of Regulation 14A under the Exchange Act (or any successor
regulation).
(c) Except as specifically consented to in writing by Madison,
during the Xxxxxx Term, Xxxxxx shall not, and shall cause each of its Affiliates
not to, participate in concert with any Group with respect to any Res
Securities.
(d) Except as specifically consented to in writing by Madison,
during the Xxxxxx Term, Xxxxxx shall not, and shall cause each of its Affiliates
not to, deposit any Xxxxxx Res Securities in any voting trust or subject any
Xxxxxx Res Securities to a voting agreement or other arrangement with similar
effect.
(e) Xxxxxx has separately disclosed to Madison the extent and
nature of any beneficial ownership of Res Securities, any right or option to
purchase any Res Securities, or the amount of any Res Securities tendered to
Xxxxxx but not yet accepted by Xxxxxx or its Affiliates as of the date of this
Agreement. Xxxxxx will additionally disclose to Madison, within 24 hours of the
time that Madison requests any such information during the Xxxxxx term, the
extent and nature of any beneficial ownership of Res Securities, any right or
option to purchase any Res Securities, or the amount of any Res Securities
tendered to Xxxxxx but not yet accepted by Xxxxxx or its Affiliates as of the
date of such request.
3. Acquisition of XYZ Securities or XYZ Rights.
-------------------------------------------
(a) Xxxxxx shall, within 24 hours of the execution by both
Xxxxxx and Madison of this Agreement, deliver in writing to Madison the name of
the entity designated in this Agreement as XYZ. Notwithstanding anything herein
to the contrary, XYZ shall be a target of Xxxxxx of which neither Madison nor
any Affiliate of Madison, as of the date of this Agreement, is actively pursuing
or investigating (including, without limitation, Res I and Res II) as a target
for the purchase of such entity's securities or rights or options in such
entity's securities (whether or not any member of the Madison Group currently
owns any securities in such entity, or any rights or other options to purchase
securities in such entity). If Xxxxxx names an entity to be designated as XYZ
that Madison or an Affiliate of Madison actively is pursuing (other than Res I
or Res II), then notwithstanding anything to the contrary in this Section 3,
---------
Madison may during the Madison Term purchase any securities, or rights with
respect to any securities, in XYZ, but only with respect to offers made to
purchase such securities, or rights with respect to such securities, extended
prior to the date hereof, and Madison shall not, with respect to any such
extended offers, amend, terminate or extend such offers, or make any other
material change in
4
such offers, during the Madison Term without the written consent of Xxxxxx.
Madison shall have no obligations to Xxxxxx under this Section 3 if Xxxxxx
---------
designates either Res I or Res II as XYZ.
(b) (i) Except as otherwise provided in this Section 3 or as
---------
specifically consented to in writing by Xxxxxx, Madison shall not, and shall
cause each of its Affiliates not to, directly or indirectly acquire any
beneficial ownership of any XYZ Securities or XYZ Rights (a "XYZ Acquisition")
---------------
during the Madison Term.
(ii) Madison shall not be in breach of this Section 3 solely
---------
because the Madison Group becomes the beneficial owners of XYZ Securities or XYZ
Rights after and solely because of (A) any action taken by XYZ (including,
without limitation, the repurchase or redemption by XYZ of XYZ Securities or XYZ
Rights, the issuance of XYZ Securities pursuant to an offer by XYZ to its
security holders of rights to subscribe for XYZ Securities or the declaration by
XYZ of a dividend in respect of any class of XYZ Securities payable at the
election of such security holders either in cash or in XYZ Securities) in
respect of which no member of the Madison Group shall have taken any action
except as permitted to be taken by holders of XYZ Securities or XYZ Rights in
their capacities as such (including, without limitation, an election not to
tender any Madison XYZ Securities pursuant to any such offer to repurchase, an
election to purchase XYZ Securities or XYZ Rights pursuant to any such
subscription offer or an election to be paid a dividend in respect of Madison
XYZ Securities in XYZ Securities or XYZ Rights instead of cash); or (B) after
any other action taken by XYZ to reduce the number of outstanding Res
Securities.
(c) Except as otherwise provided in Section 3(a) or as specifically
------------
consented to in writing by Xxxxxx, during the Madison Term, Madison shall not,
and shall cause each of its Affiliates not to, solicit proxies with respect to
XYZ Securities or become a participant in a solicitation of proxies with respect
to XYZ Securities, in either case within the meaning of Regulation 14A under the
Exchange Act (or any successor regulation).
(d) Except as otherwise provided in Section 3(a) or as specifically
------------
consented to in writing by Xxxxxx, during the Madison Term, Madison shall not,
and shall cause each of its Affiliates not to, participate in concert with any
Group with respect to XYZ Securities.
(e) Except as otherwise provided in Section 3(a) or as specifically
consented to in writing by Xxxxxx, during the Madison Term, Madison shall not,
and shall cause each of its Affiliates not to, deposit any Madison XYZ
Securities in any voting trust or subject any Madison XYZ Securities to a voting
agreement or other arrangement with similar effect.
(f) Madison will separately disclose to Xxxxxx, within 24 hours of
the time that Xxxxxx provides the name of the entity designated as XYZ pursuant
to Section 3(a), and within 24 hours of the time that Xxxxxx requests any such
------------
information during the Madison term, the extent and nature of any beneficial
ownership of XYZ Securities, any right or option to purchase any XYZ Securities,
or the amount of any XYZ Securities tendered to Madison but not yet accepted by
Madison or its Affiliates as of the date of this Agreement, or in the case of a
subsequent request, as of the date of such request.
5
4. Res I Offer and Res II Offer.
----------------------------
(a) Xxxxxx hereby acknowledges that, (i) pursuant to the Res I Offer,
the Xxxxxx Group has tendered to MLI 114 all Res I Units beneficially owned by
the Xxxxxx Group at any time prior to the expiration of the Res I Offer (the
"Tendered Res I Units") by executing and delivering to MLI 114 an Agreement of
--------------------
Assignment And Transfer For Limited Partnership Interests in Marriott Residence
Inn Limited Partnership with respect to such Res I Units, and (ii) pursuant to
the Res II Offer, the Xxxxxx Group has tendered to MLI 117 all Res II Units
beneficially owned by the Xxxxxx Group at any time prior to the expiration of
the Res II Offer (the "Tendered Res II Units," and together with the Tendered
---------------------
Res I Units, the "Tendered Units") by executing and delivering to MLI 117 an
--------------
Agreement of Assignment And Transfer For Limited Partnership Interests in
Marriott Residence Inn II Limited Partnership with respect to such Res II Units.
(b) Xxxxxx agrees that, with respect to any Tendered Units, no member
of the Xxxxxx Group shall (i) exercise their statutory rights of withdrawal set
forth in Section 14(d)(5) of the Act, (ii) exercise their rights of withdrawal
set forth in 17 CFR (S) 240.14d-7, or (iii) otherwise withdraw any Tendered
Units tendered by the Xxxxxx Group in connection with the Res I Offer or the Res
II Offer. In the event that the Xxxxxx Group fails to comply with this Section
-------
4(b) in any respects, in addition to any other remedy available at law or
----
equity, the obligations of Madison or the Madison Group set forth in Section 3
---------
and Section 5 shall terminate without any other action by any Person, and all
---------
other terms and provisions of this Agreement shall remain in full force and
effect until the expiration of the Xxxxxx Term, including, without limitation,
the obligations of Xxxxxx set forth in Sections 2, 5 and 6.
---------- - -
(c) Notwithstanding the foregoing Section 4(b) of this Agreement, in
------------
the event that Madison (or an Affiliate of Madison): (i) terminates the Res I
Offer or the Res II Offer; (ii) extends the Res I Offer or the Res II Offer
(other than an extension required by the Securities Act, the Exchange Act or any
other applicable laws, including an extension mandated by such laws as a result
of any action permitted to be taken by Madison or an Affiliate of Madison under
this Section 4(c)); or (iii) materially decreases the price with respect to the
------------
Res I Offer or the Res II Offer, the provisions of this Section 4 shall be null
---------
and void in its entirety.
5. Reporting Requirements.
----------------------
(a) Xxxxxx shall give, and shall cause each of its Affiliates to
give, written notice to Madison of any Res Acquisition by the Xxxxxx Group not
later than 10 business days following the date of any such Res Acquisition. Such
notice shall state the date of each such Res Acquisition, the amount and type of
Res Securities or Res Rights involved in each such Res Acquisition and the
identity of the Person acquiring beneficial ownership of such Res Securities or
Res Rights.
(b) Madison shall give, and shall cause each of its Affiliates to
give, written notice to Xxxxxx of any XYZ Acquisition of by the Madison Group
not later than 10 business days following the date of such XYZ Acquisition. Such
notice shall state the date of each such XYZ Acquisition, the amount and type of
XYZ Securities or XYZ Rights involved in each such XYZ
6
Acquisition and the identity of the Person acquiring beneficial ownership of
such XYZ Securities or XYZ Rights.
6. Res II Limited Partner List.
---------------------------
(a) Upon execution of this Agreement, Xxxxxx shall deliver to Madison
the names and addresses (the "Limited Partner List") of the limited partners in
--------------------
Res II, and effective on the date of such delivery, hereby transfers and assigns
to Madison the right to the nonexclusive use for an indefinite term of such
Limited Partner List and the intellectual property rights therein.
(b) In connection with the transfer and assignment of the Limited
Partner List pursuant to Section 6(a), Xxxxxx represents and warrants to Madison
------------
on the date hereof, with the same force and effect on the date Xxxxxx delivers
the Limited Partner List to Madison pursuant to Section 6(a), as follows:
------------
(i) Xxxxxx is a California limited liability company, duly
organized and validly existing and in good standing under the laws of
California.
(ii) Xxxxxx has all requisite limited liability company power and
authority to enter into this Agreement and to perform its obligations hereunder,
and the consummation of this Agreement and performance of such obligations will
not violate, nor be in conflict with, any provision of Xxxxxx'x limited
liability company operating agreement, other governing documents, or any
agreement or instrument to which Xxxxxx is a party or is bound, including,
without limitation, the governing documents of Res I and Res II, or any law,
judgment, decree, order, statute, rule, regulation, writ or injunction
applicable to Xxxxxx.
(iii) The Limited Partner List is a true, complete and correct list
of the names and addresses of the limited partners of Res II as of a date that
is not earlier than January 1, 2001.
(c) Indemnification. To the extent, but only to the extent, consistent
---------------
with applicable law, Xxxxxx hereby agrees to defend, indemnify and save and hold
harmless Madison, for, from and against and shall reimburse Madison for any
actual loss, cost, expense, liability, fine, obligation or damage, including
reasonable fees and expense of experts ("Loss") incurred or suffered by Madison
----
in connection with the breach of any representation or warranty or covenant
contained in this Section 6 by Xxxxxx. The amount of any Loss claimed by
---------
Madison, and the basis for such claim, shall be set forth in a statement
delivered by Madison to Xxxxxx. The amount claimed in such a statement shall be
paid by Xxxxxx to Madison on the later of: (i) 30 days after receipt of such
statement; or (ii) the date that the amount of such Loss finally is settled in a
court of law.
7. Remedies. The parties each acknowledge and agree that in the event of
--------
any breach of this Agreement, or if a breach hereof is threatened, the other
party would be irreparably harmed and could not be made whole by monetary
damages. Accordingly, the parties to this Agreement, in addition to any other
remedy to which they may be entitled hereunder or at law or in equity, shall be
entitled to an injunction, restraining order, specific performance and other
7
forms of equitable relief or money damages or any combination thereof, without
the requirement of posting a bond. The successful party in any action or
proceeding brought to enforce this Agreement shall be entitled to recover the
costs, expenses and fees incurred in any such action or proceeding, including,
without limitation, attorneys' fees and expenses. The parties each agree that in
the event this Agreement, or any part of this Agreement, is found to violate any
state or federal law, or is declared invalid by any regulatory body, the rest of
this Agreement shall remain in full effect and neither party shall have a claim
of any damages against the other party.
8. Termination. Except as otherwise provided in Section 6 above, the
-----------
obligations of Madison hereunder shall terminate at the end of the Madison Term,
and the obligations of Xxxxxx hereunder shall terminate at the end of the Xxxxxx
Term.
9. Notices. All notices, requests, demands and other communications
-------
required or permitted hereunder shall be in writing, shall be deemed to have
been duly given when delivered personally or mailed in the United States by
registered or certified mail, postage prepaid, or sent by telecopy, addressed as
follows:
If to Madison:
-------------
Madison Capital Management, LLC
000 Xxxx Xxxxxx, Xxxxx 000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Xxxxxx:
------------
Xxxxxx Capital Management, LLC
000 Xxxx Xxxxxx
Xxxxx 000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
or to such other person or address or addresses as either party shall specify by
notice in accordance with this Section 9. All notices, requests, demands,
---------
waivers and communications shall be deemed to have been received on the date of
delivery or on the third business day after mailing, except that any change of
address shall be effective only upon actual receipt. Written notice given by
telecopy shall be deemed effective only when received by the party to whom
given.
10. Entire Agreement. This Agreement contains all the terms and conditions
----------------
agreed upon by the parties hereto with respect to the subject matter hereof, and
no other agreements, oral or otherwise, regarding the subject matter hereof
shall have any effect unless in writing and executed by the parties after the
date of this Agreement.
8
11. Applicable Law. This Agreement shall be governed by New York law
--------------
without regard to conflicts of law rules.
12. Headings. The headings in this Agreement are for convenience only
--------
and are not to be considered in interpreting this Agreement.
13. Counterpart Execution. This Agreement may be executed in any number
---------------------
of counterparts, each of which shall be deemed an original but all of which will
constitute a single agreement.
14. Successors; Assignment. This Agreement shall be binding upon and
----------------------
inure to the benefit of the parties hereto and their respective successors and
assigns.
15. Parties in Interest. Nothing in this Agreement, express or implied,
-------------------
is intended to confer upon any person or entity other than the parties hereto
and their permitted successors and assigns any benefits, rights or remedies.
16. Severability. The invalidity or unenforceability of any provision
------------
of this Agreement in any application shall not affect the validity or
enforceability of such provision in any other application or the validity or
enforceability of any other provision.
17. Waivers and Amendments. No waiver of any provision of this
----------------------
Agreement shall be deemed a further or continuing waiver of that provision or a
waiver of any other provision of this Agreement. This Agreement may not be
amended except in a writing signed by both parties.
18. Confidentiality. Madison and Xxxxxx agree to keep the existence,
---------------
and terms and provisions of this Agreement confidential except to the extent
that disclosure to a third party is required by applicable law, judgment,
decree, order, rule, regulation, writ or injunction.
[Remaining Portion of Page Intentionally Left Blank]
9
IN WITNESS WHEREOF, this Agreement has been executed as of the date
first above written.
MADISON
-------
MADISON CAPITAL MANAGEMENT, LLC, a
Delaware limited liability company
By:__________________________________
Xxxxxx X. Xxxxxxxxx,
Managing Director
XXXXXX
------
XXXXXX CAPITAL MANAGEMENT, LLC, a
California limited liability company
By:__________________________________
Xxxxxx Xxxxx, Managing Member
10
