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EXHIBIT 10.1
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
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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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Shareholders Agreement
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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Shareholders Agreement
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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Shareholders Agreement
(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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Shareholders Agreement
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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Shareholders Agreement
(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;
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(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 By-laws, 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 c/o William P. Hallman, Suite 3200, Texas
Commerce Bank Tower, 201 Main Street, Fort Worth, Texas 76102 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 Goodwin, Procter & Hoar 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
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Shareholders Agreement
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.
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Shareholders Agreement
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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Shareholders Agreement
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date first written above.
MEDITRUST CORPORATION
By: /s/ DAVID F. BENSON
----------------------------
Name: David F. Benson
Title: President
MEDITRUST OPERATING COMPANY
By: /s/ MICHAEL J. BOHNEN
----------------------------
Name: Michael J. Bohnen
Title: Secretary
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Shareholders Agreement
LA QUINTA INNS, INC.
By: /s/ GARY L. MEAD
-------------------------
Name: Gary L. Mead
Title: President and Chief
Executive Officer
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Shareholders Agreement
THOMAS M. TAYLOR & CO.
By: /s/ W.P. HALLMAN, JR.
--------------------------------
Name: W.P. Hallman, Jr.
Title: Vice President
SID R. BASS, INC.
By: /s/ W.P. HALLMAN, JR.
--------------------------------
Name: W.P. Hallman, Jr.
Title: Vice President
LEE M. BASS, INC.
By: /s/ W.P. HALLMAN, JR.
--------------------------------
Name: W.P. Hallman, Jr.
Title: Vice President
THE BASS MANAGEMENT TRUST
By: /s/ W.P. HALLMAN, JR.
--------------------------------
Perry R. Bass, Trustee,
by W.P. Hallman, Attorney-in-fact
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Shareholders Agreement
THE AIRLIE GROUP, L.P.
By: EBD, L.P., General Partner
By: TMT-FW Inc.
By: /s/ W.P. HALLMAN, JR.
-----------------------------
W.P. Hallman, Jr.
Vice President
/s/ WILLIAM P. HALLMAN, JR.
----------------------------------
William P. Hallman, Jr.
ANNIE R. BASS GRANDSON'S TRUST FOR
LEE M. BASS
By:/s/ WILLIAM P. HALLMAN, JR.
-------------------------------
William P. Hallman, Jr., Trustee
ANNIE R. BASS GRANDSON'S TRUST FOR
SID R. BASS
By:/s/ WILLIAM P. HALLMAN, JR.
-------------------------------
William P. Hallman, Jr., Trustee
PETER STERLING
/s/ PETER STERLING
----------------------------------
Peter Sterling
GARY L. MEAD
/s/ GARY L. MEAD
----------------------------------
Gary L. Mead
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Shareholders Agreement
HYATT ANNE BASS SUCCESSOR TRUST
By: Panther City Investment Co., Trustee
By:/s/ W.P. HALLMAN, JR.
--------------------------------
W.P. Hallman, Jr.,
Vice President
SAMANTHA SIMS BASS SUCCESSOR TRUST
By: Panther City Investment Co., Trustee
By:/s/ W.P. HALLMAN, JR.
--------------------------------
W.P. Hallman, Jr.,
Vice President
PORTFOLIO C INVESTORS, L.P.
By: Portfolio Associates, Inc.,
General Partner
By:/s/ W.P. HALLMAN, JR.
--------------------------------
W.P. Hallman, Jr.,
Vice President
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Shareholders Agreement
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
- -------------- ------------------------ ---------------------
Thomas M. Taylor & Co. 0 3,461,280
Sid R. Bass, Inc. 0 4,147,957
Lee M. Bass, Inc. 0 4,147,957
The Bass Management Trust 0 1,190,622
The Airlie Group, L.P. 0 487,500
William P. Hallman, Jr. 0 253,125
Annie R. Bass Grandson's Trust for
Lee M. Bass 0 806,305
Annie R. Bass Grandson's Trust for
Sid R. Bass 0 806,305
Peter Sterling 0 339,185
Gary L. Mead 303,750 0
Hyatt M. Bass Successor Trust 0 1,550,733
Samantha Sims 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 Gary L. Mead, are subject to
liens arising out of margin account borrowings with one or more brokerage firms
on customary terms.
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