<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Schedule 13D
Under the Securities Exchange Act of 1934
(Amendment No. ____)*
Vistana, Inc.
________________________________________________________________________________
(Name of Issuer)
Common stock, $.01 par value per share
________________________________________________________________________________
(Title of Class of Securities)
92839P 10 8
________________________________________________________________________________
(CUSIP Number)
Marshall E. Eisenberg
Neal, Gerber & Eisenberg
Two N. LaSalle Street, Suite 2200
Chicago, Illinois 60602
________________________________________________________________________________
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
December 19, 1997
________________________________________________________________________________
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(b)(3) or (4), check the following box [_].
Note: Six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom copies
are to be sent.
* The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
(continued on following pages)
Page 1 of ____ Pages
<PAGE>
- ----------------------- ---------------------
CUSIP NO. 92839P 10 8 13D PAGE 2 OF __ PAGES
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Jeffrey A. Adler, individually and as Trustee of certain trusts listed
on Appendix I hereto
- ------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [_]
(b) [X]
- ------------------------------------------------------------------------------
3 SEC USE ONLY
- ------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
Not Applicable
- ------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e)
[_]
- ------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.A.
- ------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
122,500
SHARES -----------------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 5,975,750
-----------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
122,500
PERSON -----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
WITH
5,975,750
- ------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
6,098,250
- ------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES*
[_]
- ------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
29.0%
- ------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
- ----------------------- ---------------------
CUSIP NO. 92839P 10 8 13D PAGE 3 OF __ PAGES
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Raymond L. Gellein, Jr., individually and as Trustee of certain trusts
listed on Appendix I hereto
- ------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [_]
(b) [X]
- ------------------------------------------------------------------------------
3 SEC USE ONLY
- ------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
Not Applicable
- ------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e)
[_]
- ------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.A.
- ------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
602,285
SHARES -----------------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 5,533,205
-----------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
602,285
PERSON -----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
WITH
5,533,205
- ------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
6,135,490
- ------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES*
[_]
- ------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
29.2%
- ------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
- ----------------------- ---------------------
CUSIP NO. 92839P 10 8 13D PAGE 4 OF __ PAGES
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Lee I. Miller, as Trustee of certain trusts listed on Appendix I hereto
- ------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [_]
(b) [X]
- ------------------------------------------------------------------------------
3 SEC USE ONLY
- ------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
Not Applicable
- ------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e)
[_]
- ------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.A.
- ------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
123,000
SHARES -----------------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY -0-
-----------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
123,000
PERSON -----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
WITH
-0-
- ------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
123,000
- ------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES*
[_]
- ------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
.6%
- ------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
SCHEDULE 13D
- ----------------------- ---------------------
CUSIP NO.92839P 10 8 PAGE 5 OF PAGES
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Catherine G. Male, solely as Trustee of certain trusts listed on
Appendix I hereto
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [X]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
Not Applicable
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [_]
5
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
U.S.A.
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF 85,760
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
-0-
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING 85,760
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
-0-
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
85,760
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES*
12
[_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
13
.4%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
IN
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
- ----------------------- ---------------------
CUSIP NO. 92839P 10 8 13D PAGE 6 OF __ PAGES
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Rija Limited Partnership
- ------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [_]
(b) [X]
- ------------------------------------------------------------------------------
3 SEC USE ONLY
- ------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
00
- ------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e)
[_]
- ------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Nevada
- ------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
-0-
SHARES -----------------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 5,975,750
-----------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
-0-
PERSON -----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
WITH
5,975,750
- ------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,975,750
- ------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES*
[_]
- ------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
28.4%
- ------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
- ----------------------- ---------------------
CUSIP NO. 92839P 10 8 13D PAGE 7 OF __ PAGES
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
NevWest Limited Partnership
- ------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [_]
(b) [X]
- ------------------------------------------------------------------------------
3 SEC USE ONLY
- ------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
00
- ------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e)
[_]
- ------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- ------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
-0-
SHARES -----------------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 2,769,030
-----------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
-0-
PERSON -----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
WITH
2,769,030
- ------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,769,030
- ------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES*
[_]
- ------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
13.2%
- ------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
- ----------------------- ---------------------
CUSIP NO. 92839P 10 8 13D PAGE 8 OF __ PAGES
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
NevEast Limited Partnership
- ------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [_]
(b) [X]
- ------------------------------------------------------------------------------
3 SEC USE ONLY
- ------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
00
- ------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e)
[_]
- ------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- ------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF
-0-
SHARES -----------------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
OWNED BY 2,764,175
-----------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
-0-
PERSON -----------------------------------------------------------
10 SHARED DISPOSITIVE POWER
WITH
2,764,175
- ------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,764,175
- ------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES*
[_]
- ------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
13.2%
- ------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
- ------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
Item 1. Security and Issuer.
This Schedule 13D relates to the common stock, par value $.01 per share
(the "Common Stock"), of Vistana, Inc., a Florida corporation (the "Company").
The principal executive offices of the Company are located at 8801 Vistana
Centre Drive, Orlando, Florida 32821.
Item 2. Identity and Background.
This Schedule 13D is being filed by the following persons (each, a
"Reporting Person" and collectively, the "Reporting Persons"):
1. Jeffrey A. Adler, individually and as Trustee of the trusts listed on
Appendix I attached hereto and incorporated herein by reference. Certain
information regarding Mr. Adler is included in Appendix II.
2. Raymond L. Gellein, Jr., individually and as Trustee of the trusts
listed on Appendix I. Certain information regarding Mr. Gellein is included
in Appendix III attached hereto and is incorporated herein by reference.
3. Lee I. Miller, solely as Trustee of the trusts listed on Appendix I
attached. Certain information regarding Mr. Miller is included in Appendix
II.
4. Catherine G. Male, solely as Trustee of the trusts listed on Appendix I
attached. Ms. Male, a United States citizen, resides at 127 Southwick
Drive, Chagrin Falls, Ohio 44022. She is principally employed at a high
school as an administrative assistant. Ms. Male has not, during the last
five years, been (i) convicted in a criminal proceeding (excluding traffic
violation or similar misdemeanors) or (ii) a party to a civil proceeding of
a judicial or administrative body of competent jurisdiction and as a result
of such proceeding was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any violation with
respect to such laws.
5. Rija Limited Partnership, a Nevada limited partnership ("Rija"), which
is engaged in the business of investing in securities. The principal
business and office address of Rija is 5851 West Charleston Blvd., Suite
1000, Las Vegas, Nevada 89102. Information regarding the general partner of
Rija and the officers, directors and sole stockholder of its general
partner is included in Appendix II attached hereto and incorporated herein
by reference.
6. NevWest Limited Partnership, a Delaware limited partnership
("NevWest"), which is engaged in the business of investing in securities.
The principal business and office address of NevWest is 5851 West
Charleston Blvd., Suite 1000, Las Vegas, Nevada 89102. Certain information
regarding the general partner of NevWest and the officers, directors and
sole stockholder of its general partner is included in Appendix III.
7. NevEast Limited Partnership, a Delaware limited partnership
("NevEast"), which is engaged in the business of investing in securities.
The principal business and office address of NevEast is 5851 West
Charleston Blvd., Suite 1000, Las Vegas, Nevada 89102. Certain information
regarding the
-9-
<PAGE>
general partner of NevEast and the officers, directors and sole stockholder
of its general partner is included in Appendix IV attached hereto and
incorporated herein by reference.
None of the Reporting Persons has, during the last five years, (i) been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or (ii) been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to such laws.
The shares of Common Stock which are the subject of this Schedule 13D
(collectively, the "Subject Shares") are beneficially owned, directly or
indirectly, by either Jeffrey A. Adler, Raymond L. Gellein, Jr., Lee I. Miller,
or Catherine G. Male. All of the Subject Shares were issued prior to the
Company's initial public offering which was completed in February 1997.
Accordingly, prior to the transactions described in Item 3, each of Messrs.
Adler and Gellein were eligible to file a Schedule 13G on or before February 15,
1998 to report their beneficial ownership as of December 31, 1997 of more than
5% of the outstanding shares of Common Stock.
On December 19, 1997, solely for estate planning purposes, each of Messrs.
Adler and Gellein effected certain transfers of the Subject Shares as described
in Item 3 as a result of which they and, by virtue of the agreements described
in Item 6, the other Reporting Persons are required to file this Schedule 13D.
Item 3. Source and Amount of Funds or Other Consideration.
On December 19, 1997, Jeffrey A. Adler, not individually but solely as
Trustee of the Jeffrey A. Adler Trust, contributed 5,975,750 of the Subject
Shares to Rija in exchange for a limited partnership interest therein.
On December 19, 1997, Raymond L. Gellein, Jr., not individually but solely
as Trustee of the Raymond L. Gellein Revocable Trust, contributed, directly or
indirectly, 2,769,030 of the Subject Shares to NevWest in exchange for a limited
partnership interest therein.
On December 19, 1997, Raymond L. Gellein, Jr., not individually but solely
as Trustee of the JGG Holdings Trust, contributed, directly or indirectly,
2,764,175 of the Subject Shares to NevEast in exchange for a limited partnership
interest therein.
-10-
<PAGE>
Item 4. Purpose of Transaction.
As a result of their beneficial ownership of the Subject Shares, Messrs.
Adler and Gellein, together with certain trusts primarily for their benefit and
the benefit of their family members and Mr. Gellein's former spouse and, as a
result of the transactions described in Item 3, Rija, NevWest and NevEast may be
deemed to control the Company. None of the Reporting Persons have any present
plans or proposals which relate to or would result in any of the actions
referred to in clauses (a) through (j) of Item 4 of Schedule 13D. However,
depending on market conditions, the business and prospects of the Company and
other relevant factors and subject to the terms and conditions of the
Shareholders' Agreement, the Registration Rights Agreement, the Shareholder
Option Agreements, the Lock-up Agreements and the Assignment and Assumption
Agreements (each as hereinafter defined), each Reporting Person may (i) purchase
additional shares of Common Stock on such terms and at such times as it
considers desirable, (ii) continue to hold the Subject Shares which it
beneficially owns, (iii) dispose of all or a portion of the Subject Shares which
it beneficially owns or (iv) implement plans or proposals which relate to or
would result in any of the actions referred to in clauses (a) through (j) of
Item 4 of Schedule 13D.
Item 5. Interest in Securities of the Issuer.
(a) As of September 30, 1997, Company had issued and outstanding 21,007,630
shares of Common Stock. Appendix I sets forth the number and percentage of
shares beneficially owned by each Reporting Person as of the date of this
filing.
(b) Subject to the terms of the Shareholders' Agreement, the Registration
Rights Agreement, the Shareholder Option Agreements, the Lock-up Agreements and
the Assignment and Assumption Agreements, each Reporting Person has the sole
voting and sole dispositive power with respect to the Subject Shares
beneficially owned by such Reporting Person as enumerated on Appendix I except
that (i) Mr. Adler may be deemed to share voting and dispositive power with Rija
and (ii) Mr. Gellein may be deemed to share voting and dispositive power with
NevWest and NevEast with respect to the Subject Shares owned by each of them.
(c) Rija, NevEast and NevWest each acquired, either directly or indirectly
the Subject Shares beneficially owned by it on December 19, 1997 in exchange for
limited partnership interests. See Item 3.
(d)-(e) Not applicable.
-11-
<PAGE>
Item 6. Contracts, Arrangements, Understandings or Relationships With Respect
to Securities of the Issuer.
The following is a summary of the material provisions of the following
agreements:
(a) a Shareholders' Agreement, dated as of February 10, 1997 (the
"Shareholders' Agreement"), among the Company and the persons whose names
appear on the signature page of the Shareholders' Agreement;
(b) a Registration Rights Agreement, dated as of February 10, 1997 (the
"Registration Rights Agreement"), among the Company and the persons whose
names appear on the signature page of the Registration Rights Agreement;
(c) the Shareholder Option Agreements (the "Shareholder Option Agreements")
pursuant to which options to purchase a portion of the Subject Shares have
been granted to those persons listed on Appendix V attached hereto and
incorporated herein by reference;
(d) Lock-up Agreements, each dated November 25, 1997 (the "Lock-up
Agreements"), between each of the Principal Shareholders and NationsBanc
Montgomery Securities, Inc. ("Montgomery"); and
(e) Assignment and Assumption Agreements, each dated as of December 18,
1997 (the "Assignment and Assumption Agreements").
This summary is not intended to be complete and reference is made to the (a)
Shareholders' Agreement; (b) the Registration Rights Agreement; (c) the
Shareholder Option Agreements; (d) the Lock-up Agreements; and (e) the
Assignment and Assumption Agreements for a complete description of the
arrangements with respect to the Subject Shares. Capitalized terms not defined
in this Item 6 shall have the meanings ascribed thereto in the above-stated
agreements.
(a) The Shareholders' Agreement.
On February 10, 1997, certain shareholders of the Company, including
Jeffrey A. Adler, not individually but solely as Trustee of the trusts listed on
Appendix I, and Raymond L. Gellein, not individually but solely as Trustee of
the trusts listed on Appendix I (Jeffrey A. Adler, as Trustee, and Raymond L.
Gellein, as Trustee, are sometimes hereinafter referred to collectively as the
"Principal Shareholders") entered into the Shareholders' Agreement. Pursuant to
the Shareholders' Agreement, the Principal Shareholders have agreed to vote the
Subject Shares beneficially owned by them in favor of proxies solicited by the
Board of Directors, unless both of the Principal Shareholders disagree with the
position taken
-12-
<PAGE>
by the Board of Directors. The Shareholders' Agreement contains restrictions on
the disposition of Subject Shares and provides for certain rights of refusal in
connection with the proposed transfer of Subject Shares.
The Shareholders' Agreement will terminate and be of no further force and
effect upon the earliest to occur of (i) the agreement of the Principal
Shareholders to terminate the Shareholders' Agreement; (ii) the tenth
anniversary of the Initial Public Offering (which was completed on February 27,
1997); and (iii) the date upon which one of the Principal Shareholders (treating
all shares of Common Stock beneficially owned by Mr. Gellein as held by one
Principal Shareholder and all of the shares of Common Stock beneficially owned
by Mr. Adler as held by one Principal Shareholder) fails to own 5% of the then
outstanding Common Stock.
Pursuant to the Shareholders' Agreement, the Principal Shareholders, their
respective affiliates which own shares of Common Stock and certain executive
officers and other employees of and a consultant to the Company are entitled,
under certain circumstances, to require the Company to register under the
Securities Act of 1933 (the "Securities Act") shares of Common Stock owned by
them or which they may purchase upon exercise of options granted by the
Principal Shareholders.
(b) The Registration Rights Agreement.
The Company has entered into a Registration Rights Agreement with the
Principal Shareholders and certain executive officers and other employees of the
Company pursuant to which the Company is obligated to register the shares owned
by such persons under the Securities Act at times and in amounts specified
therein.
(c) Shareholder Option Agreements.
The Principal Shareholders have granted certain executive officers and
other employees of and a consultant to the Company (i) immediately exercisable
options to purchase an aggregate of 1,350,000 shares of Common Stock at an
exercise price equal to $12 per share; (ii) an option which vests on February
10, 2001, to purchase an aggregate of 40,000 shares of Common Stock at an
exercise price equal to $12 per share; (iii) an option which vests over a period
of four years commencing on November 18, 1998, to purchase 400,000 shares of
Common Stock at an exercise price equal to $24.62 per share; and (iv) an option,
which vests over a period of four years, to purchase an aggregate of 40,000
shares of Common
-13-
<PAGE>
Stock at an exercise price equal to $23.75 per share./1/ These options will
terminate ten years after the grant date, subject to certain exceptions. The
Jeffrey A. Adler Trust granted one-half of such options and the Raymond L.
Gellein Revocable Trusted and JGG Holdings Trust granted the balance.
(d) Lock-up Agreements.
In connection with issuance by the Company in December 1997 of 2,000,000
shares of Common Stock in an underwritten public offering, each of the Principal
Shareholders agreed, with certain exceptions, not to offer, sell, offer to sell,
contract to sell, or otherwise dispose of any Common Stock, or options or
warrants to acquire Common Stock, for a period of 120 days from November 26,
1997 without the prior written consent of NationsBanc Montgomery Securities,
Inc.
By letters dated December 4, 1997, NationsBanc Montgomery Securities, Inc.
consented to the transfer of the Subject Shares to Rija, NevWest and NevEast.
(e) Assignment and Assumption Agreement
In connection with the transfers of the Subject Shares by the limited
partners of Rija, NevWest and NevEast described in Item 3, each of such limited
partners assigned, and each of Rija, NevWest and NevEast assumed, the respective
rights and obligations of the transferors under the Shareholders' Agreement, the
Registration Rights Agreement, the Shareholder Option Agreements and the Lock-up
Agreements.
Item 7. Material to be Filed as Exhibits.
1. Shareholders' Agreement, dated as of February 10, 1997, among the
Company and the persons whose names appear on the signature page of that
Agreement.
2. Registration Rights Agreement, dated as of February 10, 1997, among
the Company and the persons whose names appear on the signature page of that
Agreement.
3. Form of Shareholder Option Agreement, dated February 10, 1997, among
Raymond L. Gellein, Jr. as Trustee of the Raymond L.
- ----------------
/1/ In this particular Shareholder Option Agreement, the stated exercise price
is listed as $24.25; however, subsequent negotiations resulted in the decrease
of the exercise price to $23.75.
-14-
<PAGE>
Gellein, Jr. Revocable Trust and the JGG Holdings Trust, Jeffrey A. Adler, as
Trustee of the Jeffrey A. Adler Revocable Trust and those persons listed on
Exhibit II.
4. Shareholder Option Agreement, dated July 17, 1997, among Raymond L.
Gellein, Jr. as Trustee of the Raymond L. Gellein, Jr. Revocable Trust and the
JGG Holdings Trust, Jeffrey A. Adler, as Trustee of the Jeffrey A. Adler
Revocable Trust and Alain J.A. Grange.
5. Shareholder Option Agreement, dated November 13, 1997, among Raymond
L. Gellein, Jr. as Trustee of the Raymond L. Gellein, Jr. Revocable Trust and
the JGG Holdings Trust, Jeffrey A. Adler, as Trustee of the Jeffrey A. Adler
Revocable Trust and William J. McLaughlin.
6. Shareholder Option Agreement, dated November 18, 1997 among Raymond L.
Gellein, Jr. as Trustee of the Raymond L. Gellein, Jr. Revocable Trust and the
JGG Holdings Trust, Jeffrey A. Adler, as Trustee of the Jeffrey A. Adler
Revocable Trust and Charles E. Harris.
7. Form of Lock-Up Agreement, dated November 25, 1997, between
NationsBanc Montgomery Securities, Inc. and each of the Principal Shareholders.
8. Form of Assignment and Assumption Agreement, dated as of December 18,
1997.
-15-
<PAGE>
SIGNATURES
----------
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date: December 29, 1997
/s/ Jeffrey A. Adler
--------------------------------------------
JEFFREY A. ADLER,
individually and as Trustee of the following
trusts:
Jeffrey A. Adler Revocable Trust
Jeffrey A. Adler Grantor Annuity Trust #1
Jeffrey A. Adler Grantor Annuity Trust #2
/s/ Raymond L. Gellein, Jr.
--------------------------------------------
RAYMOND L. GELLEIN, JR.,
individually and as Trustee of the following
trusts:
JGG Holdings Trust
Raymond L. Gellein Revocable Trust
Raymond L. Gellein Grantor Retained Annuity Trust
Catherine Male Gift Trust
Janice G. Gellein Grantor Annuity Trust
Cherie Doherty Gift Trust
Susan Faetz Gift Trust
-16-
<PAGE>
/s/ Lee I. Miller
-------------------------------------
LEE I. MILLER,
as Trustee of the following trusts:
ARA Trust
DLA Trust
/s/ Catherine G. Male
--------------------------------------
CATHERINE G. MALE
as Trustee of the following trusts:
Matthew James Gellein Irrevocable Trust
Brett Tyler Gellein Irrevocable Trust
RIJA LIMITED PARTNERSHIP
By: Alexdann Corporation, General
Partner
By: /s/ Lee I. Miller
---------------------------
Title: Vice President
NEVWEST LIMITED PARTNERSHIP
By: Nevgel, Inc., General Partner
By: /s/ Ronald Smith
----------------------------
Title: President
NEVEAST LIMITED PARTNERSHIP
By: NevJan I, Inc., General Partner
By: /s/ Ronald Smith
----------------------------
Title: President
-17-
<PAGE>
APPENDIX I
----------
<TABLE>
<CAPTION>
Shares
Reporting Person Beneficially Owned
- ---------------- ------------------
<S> <C>
1. Rija Limited Partnership................................. 5,975,750
2. Jeffrey A. Adler, individually
and as Trustee of the following Trusts:
a) Individually, shares subject to an
option granted under the Vistana
Stock Plan which is exercisable
within 60 days of the date hereof................... 12,500
b) Jeffrey A. Adler Revocable Trust,
limited partner and sole shareholder
of the corporate general partner of
Rija Limited Partnership............................ 5,975,750
c) Jeffrey A. Adler Grantor Annuity
Trust #1............................................ 50,000
d) Jeffrey A. Adler Grantor Annuity
Trust #2............................................ 60,000
Total Shares Beneficially Owned by Jeffrey
A. Adler, individually and as Trustee......................... 6,098,250
3. Raymond L. Gellein, Jr., individually
and as Trustee of the following Trusts:
a) Individually, shares subject to an
option granted under the Vistana
Stock Plan which is exercisable
within 60 days of the date hereof................... 12,500
b) Raymond L. Gellein, Jr. Revocable
Trust, limited partner and sole
shareholder of the corporate
general partner of NevWest Limited
Partnership......................................... 2,769,030
c) JGG Holdings Trust, a limited partner
and the sole shareholder of one of the
corporate general partners of NevEast
Limited Partnership................................. 2,764,175
</TABLE>
-1-
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
d) Raymond L. Gellein, Jr., Grantor
Retained Annuity Trust.............................. 249,585
e) Catherine Male Gift Trust........................... 20,500
f) Janice G. Gellein Grantor Annuity Trust............. 278,700
g) Cherie Doherty Gift Trust........................... 20,500
h) Susan Faetz Gift Trust.............................. 20,500
Total Shares Beneficially Owned by
Raymond L. Gellein, Jr., individually
and as Trustee................................................ 6,135,490
4. NevWest Limited Partnership.............................. 2,769,030
5. NevEast Limited Partnership.............................. 2,764,175
6. Lee I. Miller, solely as Trustee
a) ARA Trust........................................... 61,500
b) DLA Trust........................................... 61,500
Total Shares Beneficially Owned by
Lee I. Miller, solely as Trustee.............................. 123,000
7. Catherine G. Male, solely as Trustee
a) Matthew James Gellein Irrevocable Trust............... 42,880
b) Brett Tyler Gellein Irrevocable Trust................ 42,880
Total Shares Beneficially Owned by
Catherine G. Male, solely as Trustee.......................... 85,760
</TABLE>
-2-
<PAGE>
APPENDIX II
-----------
The general partner of Rija Limited Partnership, is Alexdann Corporation, a
Nevada corporation.
The principal business and office address of Alexdann Corporation is 5851
West Charleston Blvd., Suite 1000, Las Vegas, Nevada 89102. The principal
business of Alexdann Corporation is acting as general partner of Rija Limited
Partnership. The officers and directors of Alexdann Corporation, each of whom is
a United States citizen, are as follows:
<TABLE>
<CAPTION>
Name Position
- ---- --------
<S> <C>
Richard S. Adler President and Director
Lee I. Miller Vice President and Director
Gordon Stewart Secretary
Ronald Smith Treasurer
Jeffrey A. Adler Director
</TABLE>
All of the issued and outstanding capital stock of Alexdann Corporation is
owned by Jeffrey A. Adler, a citizen of the United States, not individually but
solely as Trustee of the Jeffrey A. Adler Trust.
The present occupation and business address of each of the officers and
directors of Alexdann Corporation and the sole stockholder of Alexdann
Corporation is as follows:
Richard S. Adler is principally employed as secretary of Highland
Group Industries, a manufacturer of automotive after-market products. His
business address is 31200 Solon Road, Suite 1, Solon, Ohio 44139.
Lee I. Miller is an attorney in the law firm of Rudnick & Wolfe. His
business address is 203 North LaSalle Street, Chicago, Illinois 60601.
Gordon Stewart is an attorney in the law firm of Stewart & Associates.
His business address is Chase Manhattan Centre, Suite 1700, 1201 Market
Street, Wilmington, Delaware 19801.
Ronald Smith is principally employed as a partner with the accounting
firm of Bradshaw, Smith & Co. His business address is 5851 West Charleston
Blvd., Las Vegas, Nevada 89102.
Jeffrey A. Adler is principally employed as President, Co-Chief
Executive Officer and serves as a Director of Vistana, Inc., a company
engaged in the
-1-
<PAGE>
development and sale of vacation ownership interests. His business address
is 8801 Vistana Centre Drive, Orlando, Florida 32821.
To the knowledge of Rija Limited Partnership, during the last five years,
neither Alexdann Corporation, its sole stockholder nor any of its officers or
directors (i) has been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or (ii) has been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and as
a result of such proceeding was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any violation with
respect to such laws.
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<PAGE>
APPENDIX III
------------
The general partner of NevWest Limited Partnership, is NevGel, Inc., a
Nevada corporation.
The principal business and office address of NevGel, Inc. is 5851 West
Charleston Blvd., Suite 1000, Las Vegas, Nevada 89102. The principal business of
NevGel, Inc. is acting as general partner of NevWest Limited Partnership, an
investment limited partnership. The officers and directors of NevGel, Inc., each
of whom is a United States citizen, are as follows:
<TABLE>
<CAPTION>
Name Position
- ---- --------
<S> <C>
Gordon Stewart Secretary and Director
Ronald Smith President, Treasurer and Director
Raymond L. Gellein, Jr. Director
</TABLE>
All of the issued and outstanding capital stock of NevGel, Inc. is owned by
Raymond L. Gellein, a citizen of the United States, not individually but solely
as Trustee of the Raymond L. Gellein Revocable Trust.
The present occupation and business address of each of the officers and
directors of NevGel, Inc. and the sole stockholder of NevGel, Inc. is as
follows:
Gordon Stewart is an attorney in the law firm of Stewart & Associates.
His business address is Chase Manhattan Centre, Suite 1700, 1201 Market
Street, Wilmington, Delaware 19801.
Ronald Smith is principally employed as a partner with the accounting
firm of Bradshaw, Smith & Co. His business address is 5851 West Charleston
Blvd., Las Vegas, Nevada 89102.
Raymond L. Gellein, Jr. is principally employed as Chairman of the
Board and Co-Chief Executive Officer, and serves as a Director of Vistana,
Inc., a company engaged in the development and sale of vacation ownership
interests. His business address is 8801 Vistana Centre Drive, Orlando,
Florida 32821.
To the knowledge of NevWest, during the last five years, neither NevGel,
Inc., its sole stockholder nor any of its officers or directors (i) has been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or (ii) has been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining
-1-
<PAGE>
future violations of, or prohibiting or mandating activities subject to, federal
or state securities laws or finding any violation with respect to such laws.
-2-
<PAGE>
APPENDIX IV
-----------
The general partners of NevEast Limited Partnership are NevJan I, Inc. and
NevJan II, Inc, both of which are Nevada corporations.
The principal business and office address of both NevJan I, Inc. and NevJan
II, Inc. is 5851 West Charleston Blvd., Suite 1000, Las Vegas, Nevada 89102. The
principal business of both NevJan I, Inc. and NevJan II, Inc. is acting as
general partners of NevEast Limited Partnership, an investment partnership.
The officers and directors of NevJan I, Inc., each of whom is a United
States citizen, are as follows:
<TABLE>
<CAPTION>
Name Position
- ---- --------
<S> <C>
Gordon Stewart Secretary and Director
Ronald Smith President, Treasurer and Director
Raymond L. Gellein, Jr. Director
</TABLE>
All of the issued and outstanding capital stock of NevJan I, Inc. is owned
by Raymond L. Gellein, a citizen of the United States, not individually but
solely as Trustee of the JGG Holdings Trust.
The officers and directors of NevJan II, Inc., each of whom is a United
States citizen, are as follows:
<TABLE>
<CAPTION>
Name Position
- ---- --------
<S> <C>
Gordon Stewart Secretary and Director
Ronald Smith President, Treasurer and Director
Raymond L. Gellein, Jr. Director
</TABLE>
All of the issued and outstanding capital stock of NevJan II, Inc. is owned
by Janice G. Gellein, a citizen of the United States, not individually but
solely as Trustee of the Janice G. Gellein Revocable Trust dated June 3, 1991.
The present occupation and business address of each of the officers and
directors of and the sole stockholder of NevJan I and NevJan II is as follows:
Gordon Stewart is an attorney in the law firm of Stewart & Associates.
His business address is Chase Manhattan Centre, Suite 1700, 1201 Market
Street, Wilmington, Delaware 19801.
Ronald Smith is principally employed as a partner with the accounting
firm of Bradshaw, Smith & Co. His
-1-
<PAGE>
business address is 5851 West Charleston Blvd., Las Vegas, Nevada 89102.
Raymond L. Gellein, Jr. is principally employed as Chairman of the
Board and Co-Chief Executive Officer, and serves as a Director of Vistana,
Inc., a company engaged in the development and sale of vacation ownership
interests. His business address is 8801 Vistana Centre Drive, Orlando,
Florida 32821.
To the knowledge of NevEast Limited Partnership, during the last five
years, neither NevJan I, Inc., NevJan II, Inc., their sole stockholders nor any
of their officers or directors (i) has been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or (ii) has been a party
to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or finding any
violation with respect to such laws.
-2-
<PAGE>
APPENDIX V
----------
Shareholder Option Agreement dated as of February 10, 1997, among Raymond L.
Gellein, Jr. as Trustee of the Raymond L. Gellein, Jr. Revocable Trust and the
JGG Holdings Trust, Jeffrey A. Adler, as Trustee of the Jeffrey A. Adler
Revocable Trust and Matthew E. Avril.
Shareholder Option Agreement dated as of February 10, 1997, among Raymond L.
Gellein, Jr. as Trustee of the Raymond L. Gellein, Jr. Revocable Trust and the
JGG Holdings Trust, Jeffrey A. Adler, as Trustee of the Jeffrey A. Adler
Revocable Trust and Alain J.A. Grange.
Shareholder Option Agreement dated as of February 10, 1997, among Raymond L.
Gellein, Jr. as Trustee of the Raymond L. Gellein, Jr. Revocable Trust and the
JGG Holdings Trust, Jeffrey A. Adler, as Trustee of the Jeffrey A. Adler
Revocable Trust and Barbara Hollkamp.
Shareholder Option Agreement dated as of February 10, 1997, among Raymond L.
Gellein, Jr. as Trustee of the Raymond L. Gellein, Jr. Revocable Trust and the
JGG Holdings Trust, Jeffrey A. Adler, as Trustee of the Jeffrey A. Adler
Revocable Trust and Carol A. Lytle.
Shareholder Option Agreement dated as of February 10, 1997, among Raymond L.
Gellein, Jr. as Trustee of the Raymond L. Gellein, Jr. Revocable Trust and the
JGG Holdings Trust, Jeffrey A. Adler, as Trustee of the Jeffrey A. Adler
Revocable Trust and James A. McKnight.
Shareholder Option Agreement dated as of February 10, 1997, among Raymond L.
Gellein, Jr. as Trustee of the Raymond L. Gellein, Jr. Revocable Trust and the
JGG Holdings Trust, Jeffrey A. Adler, as Trustee of the Jeffrey A. Adler
Revocable Trust and William J. McLaughlin.
Shareholder Option Agreement dated as of February 10, 1997, among Raymond L.
Gellein, Jr. as Trustee of the Raymond L. Gellein, Jr. Revocable Trust and the
JGG Holdings Trust, Jeffrey A. Adler, as Trustee of the Jeffrey A. Adler
Revocable Trust and John M. Sabin.
Shareholder Option Agreement dated as of February 10, 1997, among Raymond L.
Gellein, Jr. as Trustee of the Raymond L. Gellein, Jr. Revocable Trust and the
JGG Holdings Trust, Jeffrey A. Adler, as Trustee of the Jeffrey A. Adler
Revocable Trust and Susan B. Werth.
Shareholder Option Agreement dated as of November 18, 1997, among Raymond L.
Gellein, Jr. as Trustee of the Raymond L. Gellein, Jr. Revocable Trust and the
JGG Holdings Trust, Jeffrey A. Adler, as
-1-
<PAGE>
Trustee of the Jeffrey A. Adler Revocable Trust and Charles E. Harris.
Shareholder Option Agreement dated as of November 13, 1997, among Raymond L.
Gellein, Jr. as Trustee of the Raymond L. Gellein, Jr. Revocable Trust and the
JGG Holdings Trust, Jeffrey A. Adler, as Trustee of the Jeffrey A. Adler
Revocable Trust and William J. McLaughlin.
Shareholder Option Agreement dated as of July 17, 1997, among Raymond L.
Gellein, Jr. as Trustee of the Raymond L. Gellein, Jr. Revocable Trust and the
JGG Holdings Trust, Jeffrey A. Adler, as Trustee of the Jeffrey A. Adler
Revocable Trust and Alain J.A. Grange.
-2-
<PAGE>
Exhibit 1
SHAREHOLDERS' AGREEMENT
-----------------------
SHAREHOLDERS' AGREEMENT ("Agreement") dated as of February 10, 1997, among
the persons whose signatures appear on the execution pages of this Agreement
(capitalized and other terms used herein and not otherwise defined shall have
the meanings set forth in Section 1 hereof).
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, immediately prior to the completion of the Initial Public
Offering, the parties hereto will own the number of shares (the "Shares") of
Common Stock, or options to acquire the number of shares of Common Stock, set
forth opposite such party's name on Schedule A attached hereto and incorporated
herein by this reference; and
WHEREAS, in order to assure the harmonious management of the affairs of the
Company, each of the parties hereto desires to enter into this Agreement upon
the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises, the mutual covenants,
representations, warranties and agreements set forth in this Agreement, and of
other good and valuable consideration, the receipt, sufficiency and adequacy of
which is hereby acknowledged, the parties hereto, intending legally to be bound,
hereby covenant and agree as follows:
ARTICLE I
Definitions; Etc.
-----------------
1.1 Definitions. Except as otherwise herein expressly provided, the
following terms and phrases shall have the meanings set forth below:
"Adler" means the collective reference to (i) Jeffrey A. Adler; (ii)
the Jeffrey A. Adler Revocable Trust; (iii) the Jeffrey A. Adler Grantor Annuity
Trust #1; (iv) the Jeffrey A. Adler Grantor Annuity Trust #2; (v) the ARA Trust;
(vi) the DLA Trust; and (vii) any Affiliates of Jeffrey A. Adler who or which
acquire Shares pursuant to Section 3.2 of this Agreement.
"Affiliate" means, as to any Person (i) any corporation, partnership,
limited liability company, joint venture, trust or individual directly or
indirectly through one or more intermediaries controlled by or under common
control with such Person, or which controls directly or indirectly through one
or more intermediaries, such Person; (ii) a trust which has as its
<PAGE>
principal income beneficiaries or remaindermen such Person or any direct or
indirect holder of such Person, or members of the immediate family of such
Person or direct or indirect holder of such Person; and (iii) any members of the
immediate family of such Person or a member of the immediate family of any
direct or indirect holder of such Person. For purposes of this definition, (i)
no Person, solely by virtue of his, her or its direct or indirect ownership of
Shares, shall be deemed to be an Affiliate of another Person; (ii) the terms
"control", "controlled" and "common control with" mean the ability, whether by
the direct or indirect ownership of voting securities or other equity interest,
by contract or otherwise, to elect a majority of the directors of a corporation,
to select the managing partner of a partnership, or otherwise to select, or have
the power to remove and then select, a majority of those Persons exercising
governing authority over an entity; and (iii) the term "immediate family" means
spouses (but not former spouses), children, stepchildren and grandchildren,
including relationships arising from legal adoption.
"Agreement" means this Shareholders' Agreement, as originally executed
and as amended, modified, supplemented or restated from time to time, as the
context requires.
"Board of Directors" means the board of directors of the Company.
"Common Stock" means the Common Stock, $0.01 par value, of the
Company, or any other shares of capital stock of the Company into which such
stock shall be reclassified or changed (by operation of law or otherwise). If
the Common Stock has been so reclassified or changed, or if the Company pays a
dividend or makes a distribution on its Common Stock in shares of capital stock,
or subdivides (or combines) its outstanding shares of Common Stock into a
greater (or smaller) number of shares of Common Stock, a share of Common Stock
shall be deemed to be such number of shares of capital stock and amount of other
securities to which a holder of a share of Common Stock outstanding immediately
prior to such reclassification, exchange, dividend, distribution, subdivision or
combination would be entitled.
"Dispose" or "Disposition" (and any derivatives thereof) mean and
refer to (i) a voluntary or involuntary (including in connection with death,
divorce, bankruptcy or otherwise) sale, assignment, transfer, conveyance,
pledge, hypothecation or other disposition of Shares, and (ii) any agreement,
contract or commitment to do any of the foregoing.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Gellein" means the collective reference to (i) Raymond L. Gellein,
Jr.; (ii) the Raymond L. Gellein, Jr. Revocable Trust;
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<PAGE>
(iii) the Raymond L. Gellein, Jr. Grantor Retained Annuity Trust; the Matthew
James Gellein Irrevocable Trust; (v) the Brett Tyler Gellein Irrevocable Trust;
(vi) and any Affiliates of Raymond L. Gellein who or which acquire Shares
pursuant to Section 3.2 of this Agreement.
"Initial Public Offering" means the sale by the Company of
approximately 4,625,000 shares of Common Stock to the public pursuant to an
underwritten offering.
"J. Gellein Trust" means the collective reference to (i) Janice G.
Gellein; (ii) JGG Holdings Trust; (iii) the Janice G. Gellein Grantor Annuity
Trust; (iv) the Catherine Male Gift Trust; (v) the Cherie Doherty Gift Trust;
(vi) the Susan Faetz Gift Trust; and (vii) and any Affiliates of Janice G.
Gellein who or which acquire Shares pursuant to Section 3.2 of this Agreement.
"Lien" means any mortgage or deed of trust, pledge, hypothecation,
assignment, deposit arrangement, security interest, lien, charge, easement
(other than any easement not materially impairing usefulness or marketability),
encumbrance, preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement having substantially the
same economic effect as any of the foregoing).
"Old Agreements" means any and all Stock Restriction and Shareholders'
Agreements (or any similar document or instrument together with all amendments,
restatements, modifications and supplements thereto) entered into between or
among any of the Shareholders relating to any corporation which will be a
subsidiary of the Company after giving effect to the Initial Public Offering,
including, without limitation, Vistana Capital Holdings, Inc., Vistana Capital
Management, Inc., VCH Communications, Inc., VCH Financial Services, Inc., VCH
Trademark, Inc., WE4 Fun, Inc., Vistana International, Inc., Vistana WGV
Holdings, Inc., VCH Administration, Inc., VCH Oaks, Inc., VCM Oaks, Inc., VCH
Sales, Inc., Vacation Management Services, Inc., VCH Consulting, Inc., VCH
Systems, Inc., Vistana OP Investment, Inc., Vistana WGV, Inc. and VCH
Contracting, Inc., each subsidiaries of the Company, among such subsidiary of
the Company and certain of the Shareholders.
"Person" means any individual, partnership, limited liability company,
corporation, trust or other entity.
"Proxy" has the meaning ascribed thereto in the Exchange Act and
Regulation 14A promulgated by the SEC under the Exchange Act.
"SEC" means the Securities and Exchange Commission.
-3-
<PAGE>
"Securities Act" means the Securities Act of 1933, as amended.
"Shareholder" or "Shareholders" means each of the parties hereto,
together with their respective permitted successors and assigns, and any other
Persons, who or which acquire Shares and become parties to this Agreement.
"Shareholder Option Agreements" means those certain agreements dated
as of February 10, 1997 among certain of the Shareholders and certain executives
of the Company.
1.2 Other Defined Terms. The following terms are defined in the Section
of this Agreement directly opposite such terms:
Term Section
---- -------
Acceptance Notice 3.3(e)
Cash Consideration 3.3(a)
Company preamble
Notice Period 3.3(c)
Notification Notice 3.3(f)
Offered Price 3.3(b)
Offered Shares 3.3(b)
Other Shareholders 3.3(b)
Selling Holder 3.3(b)
Shares recitals
Subscribing Shareholders 3.3(c)
Tag-Along Offer 3.3(e)
Tag Closing 3.3(e)
Taggers 3.3(e)
Tagged Shares 3.3(e)
Transferee 3.3(b)
Transfer Notice 3.3(b)
Transferee Acceptance Notice 3.3(e)
Transferee Offer 3.3(b)
Transferee Rejection Notice 3.3(e)
1.3 "Exhibit, Etc." References to an "Exhibit" or to a "Schedule" are,
unless otherwise specified, to one of the Exhibits or Schedules attached to this
Agreement, and references to an "Article" or a "Section" are, unless otherwise
specified, to one of the Articles of Sections of this Agreement.
ARTICLE II
Voting of Shares
----------------
2.1 Certain Voting Requirements. Whenever the Board of Directors solicits
a Proxy, each Shareholder will, during the term of this Agreement and so long as
such Shareholder owns any Shares, or acquires the power to vote any Shares, vote
(or cause to be
-4-
<PAGE>
voted) all of such Shareholder's Shares in accordance with the recommendation of
the Board of Directors in connection with such Proxy solicitation; provided,
however, no Shareholder shall be required to vote (or cause to be voted) such
Shareholder's Shares in accordance with this Section 2.1 in the event that both
Raymond L. Gellein, Jr. and Jeffrey A. Adler disagree with the recommendation of
the Board of Directors in connection with any Proxy solicitation and deliver
written notice to each of the Shareholders to such effect prior to the date
votes are taken on such action. Any Shareholder who or which has voted (or cause
to be voted) such Shareholder's Shares in accordance with the recommendation of
the Board of Directors in connection with a Proxy solicitation prior to
receiving the written notice referred to in the preceding sentence, may rescind
any relevant Proxy theretofore given by such Shareholder.
2.2 Restrictions on Other Agreements. No Shareholder shall grant any
proxy or enter into or agree to be bound by any voting trust with respect to the
Shares nor shall any Shareholder enter into any agreement or arrangements of any
kind with any Person with respect to the Shares on terms inconsistent with the
provisions of this Agreement (whether or not such agreements and arrangements
are with other Shareholders or holders of Common Stock that are not parties to
this Agreement), including, without limitation, agreements or arrangements with
respect to the acquisition, Disposition or voting of Shares.
ARTICLE III
Dispositions of Shares
----------------------
3.1 General Disposition Restriction. Each Shareholder covenants and
agrees that it will not, and will not cause or allow any of its Affiliates to,
Dispose or cause the Disposition of Shares or any interest therein except in
accordance with the terms and conditions of this Article III. Any attempted
Disposition not in accordance with the terms and conditions of this Article III
shall be null and void and of no force or effect.
3.2 Dispositions to Affiliates. Notwithstanding anything to the contrary
contained in this Article III, (i) each of the parties constituting Gellein may
Dispose of all or a portion of its Shares to an Affiliate of Raymond L. Gellein,
Jr.; (ii) each of the parties constituting J. Gellein Trust may Dispose of all
or a portion of its Shares to an Affiliate of Janice G. Gellein; and (iii) each
of the parties constituting Adler may Dispose of all or a portion of its Shares
to an Affiliate of Jeffrey A. Adler; provided, however, that (a) such Shares
shall remain subject to all of the terms and conditions of this Agreement in the
hands of such Affiliate, and (b) such Affiliate shall first deliver to the other
Shareholder(s) a written agreement, reasonably satisfactory in form
-5-
<PAGE>
and substance to the nontransferring Shareholder(s), (x) assuming and agreeing
to be bound by all the terms and conditions of this Agreement and to be a
Shareholder hereunder; (y) providing that such Affiliate will retransfer all of
its right, title and interest in the Shares to the original transferring
Shareholder free and clear of all Liens prior to the time at which it ceases to
be an Affiliate of such transferring Shareholder; and (z) containing a power of
attorney from such Affiliate to the transferring Shareholder granting to such
transferring Shareholder the power, on behalf of such Affiliate, to vote such
Shares for all purposes and to make any election on behalf of such Affiliate
under this Agreement, and agreeing that such Affiliate will be legally bound by
such elections and agreements as if it had made or executed the same. A
Disposition pursuant to this Section 3.2 shall not relieve the transferring
Shareholder of any of its obligations under this Agreement.
3.3 Right of First Refusal/Tag Along Rights.
(a) The provisions of this Section 3.3 shall apply only to a
Transferee Offer, the consideration for which is stated solely in United States
Dollars and which is payable solely in cash or by promissory note payable solely
in cash ("Cash Consideration"). No Shareholder may Dispose of any Shares for
consideration other than Cash Consideration without obtaining the prior written
consent of the other Shareholders, which consent may be given or withheld, with
or without cause, in the sole and absolute discretion of such other
Shareholders. The provisions of this Section 3.3 shall not apply to any Shares
(i) Disposed of by a Shareholder in the Initial Public Offering (or pursuant to
the Underwriters' related over-allotment option), (ii) Disposed of pursuant to
an exercise of an Option granted under a Shareholder Option Agreement, or (iii)
contemplated to be Disposed of pursuant to Section 3.4.
(b) If any Shareholder (hereinafter referred to as a "Selling
Holder") proposes to sell or otherwise Dispose of all or any portion of the
Selling Holder's Shares to a non-Affiliate, the Selling Holder will give notice
(hereinafter referred to as a "Transfer Notice") in writing to the Company and
to the other Shareholders, other than the Shareholders which are Affiliates of
the Selling Holder (such other Shareholders being referred to herein as the
"Other Shareholders"), (i) describing the number of Shares proposed to be
Disposed of (the "Offered Shares"), (ii) specifying the proposed Cash
Consideration therefor (the "Offered Price") or the other consideration
therefor, (iii) irrevocably offering to sell the Offered Shares to the Other
Shareholders at the Offered Price at a closing pursuant to Section 3.3(f), and
(iv) attaching to the Transfer Notice an unconditional, bona fide offer (the
"Transferee Offer") from an identified non-Affiliate (the "Transferee") to
purchase the Offered Shares at the Offered Price (it being understood that the
Transfer
-6-
<PAGE>
Notice shall confirm the identity of the ultimate beneficial owner of the
Transferee).
(c) The Other Shareholders may offer to accept for purchase all, or,
subject to Section 3.3(d), any portion of the Offered Shares (such Other
Shareholders being referred to herein as the "Subscribing Shareholders"), at the
Offered Price, by giving written notice to the Selling Holder within 10 business
days, or 30 business days in the event that the aggregate Offered Price exceeds
$500,000, from the date of the Transfer Notice (the "Notice Period"). In the
event that the Subscribing Shareholders offer to accept for purchase an
aggregate number of Offered Shares that exceeds the total number of Offered
Shares described in the Transfer Notice, then each such Subscribing Shareholder
shall be entitled to purchase a number of Offered Shares that is equal to the
product of (i) the number of Offered Shares, multiplied by (ii) a fraction, the
numerator of which is the number of Offered Shares sought to be purchased by
such Subscribing Shareholder and the denominator of which is the number of
Offered Shares sought to be purchased by all Subscribing Shareholders.
(d) In the event the Subscribing Shareholders do not offer to accept
for purchase all the Offered Shares in the relevant time period described above,
then the Selling Holder shall have the right for 60 days after the expiration of
the Notice Period to sell to the Transferee the Offered Shares for Cash
Consideration equal to or greater than, and on other terms and conditions that
are no more favorable to the Transferee than, as set forth in the Transferee
Offer (which time period shall be extended (x) in order to secure all approvals
of regulatory bodies and similar authorities that are required to effectuate
such transfer, in which case the closing shall be conducted no later than 10
business days after the receipt of all such approvals (it being understood that
the parties shall use their reasonable best efforts to obtain any such approvals
within the time periods contemplated hereby), or (y) for the number of days for
which any Tag-Along Offer is outstanding (it being understood that the extension
referred to in this clause (y) shall terminate on the date of either the
Transferee Acceptance Notice or the Transferee Rejection Notice, if an
Acceptance Notice is given, or on the date which is 10 business days from the
date of the Tag-Along Offer, if no Acceptance Notice is given)).
(e) (i) Notwithstanding anything to the contrary in this Section
3.3, the Selling Holder shall not consummate the Disposition of the Offered
Shares to the Transferee as is otherwise permitted by Section 3.3(d) above
unless the Transferee, as part of the Transferee Offer, has offered to each
Other Shareholder the opportunity to sell to the Transferee a number of
such Other Shareholder's Shares equal to the product of (i) the number of
Shares owned by such Other Shareholder, multiplied by (ii) a fraction, the
numerator of which is the number of Offered Shares and the denominator of
-7-
<PAGE>
which is the number of Shares owned by the Selling Holder (assuming, for
purposes of determining the aggregate number of Shares then owned by an
Other Shareholder or the Selling Holder, that all outstanding options to
acquire Common Stock are not exercised, and that the underlying Common
Stock is not outstanding), for the same Cash Consideration per share and on
the same other terms and conditions as set forth in the Transferee Offer
(the "Tag-Along Offer"); provided, however, that no Tag-Along Offer need be
made if the Offered Shares constitute less than 5% of the outstanding
Common Stock determined on a primary basis in accordance with generally
accepted accounting principles with reference to the Company's Quarterly
Report on Form 10-Q, or 10-K, whichever is more recent (or any successor
forms), for the Company's most recently completed fiscal quarter or year,
as applicable, prior to the date of the Transfer Notice (it being agreed
that Dispositions of Shares by a Selling Holder and its Affiliates during a
six month period to a single purchaser or group of purchasers acting
together or under common control are to be aggregated in determining
whether 5% of the outstanding Common Stock is being sold).
(ii) The Other Shareholders may accept such Tag-Along Offer and
sell to the Transferee any number of Shares up to the maximum amount
allowed by Section 3.3(e)(i)(any such Other Shareholders offering to sell
Shares to the Transferee being herein termed "Taggers", and such Shares
being herein termed "Tagged Shares") by giving written notice (hereinafter
referred to as an "Acceptance Notice") to the Transferee (it being
understood that the Tag-Along Offer shall state the manner by which
communications to the Transferee shall be effected) within 10 business days
from the date of the Tag-Along Offer.
(iii) In the event any of the Taggers accept the Tag-Along Offer
and the Transferee does not agree to purchase the Offered Shares and all
Tagged Shares (which rejection must be by written notice (such notice
referred to herein as the "Transferee Rejection Notice") to the Selling
Holder and all Taggers and made within 10 business days from the end of the
relevant Notice Period), then no Offered Shares or Tagged Shares shall be
sold to the Transferee; provided, however, in the event any of the Taggers
accept the Tag-Along Offer and the Transferee agrees to purchase the
Offered Shares and all Tagged Shares (which acceptance must be by written
notice (hereinafter referred to as the "Transferee Acceptance Notice") to
the Selling Holder and all Taggers and made within 10 business days from
the end of the relevant Notice Period), the closing with respect to the
Offered Shares shall be at the same time as the closing for the Tagged
Shares (such closing being referred to herein as the "Tag Closing") and:
-8-
<PAGE>
(A) Not later than 7 days after the date of the Transferee
Acceptance Notice, the Taggers shall deliver to the Selling Holder (x)
a stock certificate or certificates evidencing the appropriate number
of Tagged Shares, together with an appropriate assignment separate
from the stock certificate duly executed in a proper form to effect
the transfer of such Tagged Shares to the Transferee on the books and
records of the Company and (y) a limited power-of-attorney authorizing
the Selling Holder to effect the sale of the Tagged Shares pursuant to
the terms of the Transferee Offer (the failure of a Tagger to comply
with the provisions of this Section 3.3(e)(iii)(A) shall be deemed to
be a waiver of the Tagger's rights hereunder);
(B) Simultaneously with the Tag Closing, the Selling Holder
shall (x) deliver notice thereof to the Taggers, (y) cause the
Transferee to remit to the Taggers the total sales price of the Tagged
Shares sold pursuant hereto and (z) furnish such other evidence of the
Tag Closing as may be reasonably requested in writing by the Taggers;
and
(C) If, by the Tag Closing, the Selling Holder shall not have
completed the sale to the Transferee of the Tagged Shares and the
Offered Shares, the Selling Holder shall return to the Taggers (x) the
stock certificates and assignments of certificates with respect to the
Tagged Shares and (y) the related limited power-of-attorney, in each
case which the Taggers delivered to the Selling Holder pursuant to
clause (A) above (upon the Taggers' receipt of such materials, all the
restrictions on transfer contained in this Section 3.3 shall again be
in effect).
(f) (i) In the event that the Subscribing Shareholders have offered
to accept for purchase all of the Offered Shares, upon determination of the
manner in which the Offered Shares are to be sold in accordance with
Sections 3.3(c), the Subscribing Shareholders (or a Subscribing Shareholder
on behalf of the Subscribing Shareholders) will give notice (hereinafter
referred to as the "Notification Notice") to the Selling Holder to such
effect and inform the Selling Holder that such Offered Shares shall be
transferred to the Subscribing Shareholder(s) at the Offered Price. Such
Notification Notice shall also specify the place and time of the closing at
which such Selling Holder's Offered Shares shall be transferred. Such
closing shall in no case occur earlier than the 5th business day following
the Notification Notice or later than the 10th business day following the
Notice Period, unless it is necessary to conduct the closing later than
either the 10th business day in order
-9-
<PAGE>
to secure all approvals of regulatory bodies and similar authorities that
are required to effectuate such transfer, in which case the closing shall
be conducted no later than 10 business days after the receipt of all such
approvals (it being understood that the parties shall use their reasonable
best efforts to obtain any such approvals within the time periods
contemplated hereby).
(ii) At the closing, the Subscribing Shareholder(s) to whom the
Selling Holder's Offered Shares are being sold shall deliver the Offered
Price in the form set forth in the Transferee Offer to the Selling Holder.
(iii) At the closing, the Selling Holder shall deliver to the
Subscribing Shareholder(s) to whom the Selling Holder's Offered Shares are
being sold a certificate executed by or on behalf of the Selling Holder
dated as of the closing date and in form and substance satisfactory to the
Subscribing Shareholder(s) to whom the Selling Holder's Offered Shares are
being transferred to the effect that:
(A) The Selling Holder, if other than a natural Person, is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization;
(B) The Selling Holder has full power, authority (or capacity)
and legal right to make and perform its obligations under the
transactions contemplated by this Section 3.3;
(C) The sale of the Offered Shares will not conflict with or
result in a breach or violation of any of the terms or provisions of,
or constitute a default under, or result in the creation or imposition
of any Lien upon any of the Offered Shares pursuant to the terms of,
any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Selling Holder or any of its
Affiliates is a party or by which the Selling Holder or any of its
Affiliates is bound or to which any of the property or assets of the
Selling Holder or any of its Affiliates is subject, nor will such
action result in any violation of the provisions of the certificate of
incorporation or by-laws (or equivalent corporate governing
instruments) of the Selling Holder or any statute or any order, rule
or regulation of any court or governmental agency or body having
jurisdiction over the Selling Holder or any of its Affiliates or any
of their properties.
(D) No consent, approval, authorization, order, registration or
qualification of any third party or any
-10-
<PAGE>
court or governmental agency or body is required for the sale of the
Offered Shares.
(E) There are no legal or governmental proceedings pending to
which the Selling Holder or any of its Affiliates is a party or, to
the Selling Holder's knowledge, threatened, which question the
validity of this Agreement or the sale of the Offered Shares pursuant
to this Section 3.3(f).
(F) Upon payment of the Offered Price, good and valid title to
the Offered Shares, free and clear of all Liens, will be transferred
by the Selling Holder.
(iv) The Selling Holder shall pay, and shall indemnify the
Subscribing Shareholder(s) to whom the Selling Holder's Offered Shares are
being transferred, against, any stamp, transfer or similar tax that is
payable in respect of the transfer of the Selling Holder's Offered Shares
pursuant to any of Sections 3.3(c). The amount of any such tax which has
not been paid by the Selling Holder may be deducted from any amount
otherwise payable to the Selling Holder.
3.4 Dispositions of Shares Pursuant to Registration Statements and Rule
144.
(a) Shares that shall have been registered under the Securities Act
in contemplation of a publicly distributed firm commitment underwriting of a
specified number of Shares, including an estimated price and commission
arrangement, may be Disposed of pursuant to such effective registration
statement if the registration statement with respect to the sale of such Shares
shall have become effective under the Securities Act. Before filing any
registration statement with respect to any contemplated underwritten offering of
Shares pursuant to this Section 3.4(a), the Selling Holder shall notify the
Other Shareholders thereof in writing, providing the Other Shareholders the
details thereof in writing, including the number of shares to be offered, the
minimum purchase price and the expected discount and commissions. The Other
Shareholders shall have 10 days from the receipt of such notice to elect to
purchase for cash all of such Shares from the Selling Holder at the specified
minimum purchase price. In the event the Other Shareholders elect to purchase
all of such Shares, the Selling Holder shall sell such Shares to the Other
Shareholders and the Other Shareholders shall purchase all of such Shares from
the Selling Holder at a closing to be held 30 days after the notice of the
election to purchase. Such notice of the election to purchase shall be
accompanied by a deposit of 5% of the purchase price. In the event the Other
Shareholders do not elect to purchase the Shares or fail to make an election
within the applicable time period, the Seller shall be free to effect the sale
of all of such Shares in accordance with the terms and conditions
-11-
<PAGE>
set forth in its notice provided that such sale is effected at a price less than
the specified minimum purchase price less 10%.
(b) Shares may be sold pursuant to Rule 144 (or any similar provision
which replaces Rule 144) under the Securities Act. Before effecting any sale of
Shares pursuant to this Section 3.4(b), the Selling Holder shall notify the
Other Shareholders thereof in writing, providing the Other Shareholders a copy
of the applicable Form 144 (or the information required by such form) and
specifying the minimum purchase price. The Other Shareholders shall have three
business days from the receipt of such notice to elect to purchase for cash all
or a portion of such Shares from the Selling Holder at such minimum purchase
price. In the event the Other Shareholders elect to purchase all or a portion of
such Shares, the Selling Holder shall sell such Shares to the Other Shareholders
and the Other Shareholders shall purchase such Shares from the Selling Holder at
a closing within six business days after the notice of the election to purchase.
In the event the Other Shareholders do not elect to purchase the Shares or fails
to make an election with the applicable time period, the Selling Holder shall be
free to effect the sale of some or all of such Shares under Rule 144 in
accordance with the terms and conditions set forth in its notice at a price not
less than the minimum purchase price less 10%.
(c) All Shares to be purchased by the Other Shareholders pursuant to
this Section 3.4 shall be allocated among the Other Shareholders as they shall
agree (it being understood that if the Other Shareholders are unable to so
agree, all such allocations among the Other Shareholders shall be made pro rata
basis determined in accordance with each such Other Shareholder's ownership of
Common Stock determined on a fully-diluted basis in accordance with generally
accepted accounting principles with reference to the Company's Quarterly Report
on Form 10-Q, or 10-K, whichever is more recent (or any successor forms), for
the Company's most recently completed fiscal quarter or year, as applicable,
prior to the proposed Disposition).
3.5 Limitation of Rights. Upon exercise of a right specified in either
Section 3.3 or Section 3.4, no further exercise of rights provided for by such
provisions may be initiated until the expiration of all periods of time therein
specified (other than rights granted to a party in connection with either of
such provisions to the extent that proceedings are in progress thereunder).
-12-
<PAGE>
ARTICLE IV
Miscellaneous
-------------
4.1 Endorsement on Certificates. Each of the Shareholders agree that a
legend substantially to the following effect shall be placed on every
certificate evidencing ownership of Shares owned by it:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE TRANSFERRED,
SOLD OR OTHERWISE DISPOSED OF IN THE ABSENCE OF REGISTRATION THEREUNDER OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT. THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS
SUBJECT TO THE CONDITIONS SPECIFIED IN A SHAREHOLDERS' AGREEMENT, DATED AS
OF FEBRUARY 10, 1997 WHICH RESTRICTS THE TRANSFERABILITY HEREOF AND A
REGISTRATION RIGHTS AGREE MENT (COPIES OF WHICH ARE ON FILE WITH THE
SECRETARY OF THE ISSUER HEREOF). ANY TRANSFER IN VIOLATION OF SUCH
RESTRICTIONS SHALL BE NULL, VOID AND OF NO EFFECT WHATSOEVER. NO TRANSFER
OF SUCH SECURITIES WILL BE ON THE BOOKS OF THE ISSUER HEREOF UNLESS
ACCOMPANIED BY EVI DENCE OF COMPLIANCE WITH THE TERMS OF SUCH SHAREHOLDERS'
AGREEMENT."
4.2 Effectiveness; Termination.
(a) This Agreement shall become effective (the "Effective Date")
concurrently with the completion of the Initial Public Offering. The parties
agree that upon the Effective Date, this Agreement supersedes each of the Old
Agreements in their entirety and that the Old Agreements shall have no further
force and effect whatsoever. Until the Effective Date, the Old Agreements shall
continue in effect.
(b) This Agreement shall terminate and be of no force and effect upon
the earliest to occur of (i) the written agreement of all of the Shareholders to
terminate this Agreement; (ii) the tenth anniversary of the Initial Public
Offering; and (iii) date upon which the parties constituting Adler, on the one
hand, or the parties constituting Gellein and J. Gellein Trust, on the other,
fail to own five percent of the outstanding Common Stock, determined on a fully
diluted basis in accordance with generally accepted accounting principles with
reference to the Company's Quarterly Report on Form 10-Q, or 10-K, whichever is
more recent (or any successor forms), for the Company's most recently completed
fiscal quarter or year, as applicable, prior to the date of determination.
-13-
<PAGE>
4.3 Shares Subject to this Agreement. This Agreement shall apply to (a)
the Shares held by the Shareholders on the date hereof; (b) any Shares issued to
any Shareholder as a result of a share dividend or in addition to or upon
exchange for Shares; (c) any Shares issued to any Shareholder pursuant to such
Shareholder's exercise of an option or warrant; (d) any Shares issued to a
Shareholder upon conversion of Shares; and (e) any Shares otherwise purchased,
acquired or issued to any Shareholder. All certificates evidencing Shares
subject to this Agreement shall contain the restrictive legend set forth in
Section 6.1.
4.4 Further Assurances. From time to time after the date hereof, the
parties will, at their expense, and without further consideration, execute and
deliver such other documents and instruments and take such other actions as may
be reasonably requested to effect the purposes and intent of this Agreement.
4.5 Notices. All notices, consents, requests, instructions, acceptances,
approvals or other communications which may be given hereunder shall be in
writing and shall be deemed to have been duly given, made or served upon
delivery, if delivered in person, or on the first business day after sending, if
sent by recognized expedited delivery service, or on the third business day
after mailing, if mailed by registered or certified mail, first class postage
prepaid, a party at the address specified therefor on Schedule A attached
hereto, or to such other address as any party may from time to time designate to
the other in the manner provided in this Section.
4.6 Pronouns and Headings. As used herein, all pronouns shall include the
masculine, feminine, neuter, singular and plural wherever the context and facts
require such construction. The descriptive headings in the sections of this
Agreement are inserted for convenience of reference only and shall not control
or affect the meaning or construction of any of the provisions hereof.
4.7 Severability. If any provision of this Agreement is held by a court
of competent jurisdiction to be invalid, illegal or unenforceable, such
provision shall be severed and enforced to the extent possible or modified in
such a way as to make it enforceable, and the invalidity, illegality or
unenforceability thereof shall not affect the validity, legality or
enforceability of the remaining provisions of this Agreement.
4.8 Modification; Amendment. No modification or amendment of this
Agreement shall be valid unless the same shall be in writing executed by the
Company and the holders of 66-2/3% of the outstanding Shares then held by
Shareholders.
4.9 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Florida.
-14-
<PAGE>
4.10 Third Party Beneficiaries. Nothing herein expressed or implied is
intended or shall be construed to confer upon or give to any Person or entity
(other than the parties hereto) any rights or remedies under or by reason of
this Agreement, provided, however, that the Company shall be a third party
beneficiary of each Shareholder's obligations under Section 2.1 hereof.
4.11 Binding Effect. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective heirs, personal
representatives, and permitted assigns.
4.12 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
4.13 Equitable Relief. The parties hereto acknowledge and agree that in
the event of any breach of Article II or Sections 3.1, 3.2, 3.3 or 3.4 by any
one of them, the other parties would be irreparably harmed and could not be made
whole by monetary damages. Accordingly, the parties hereto agree (i) to waive
the defense in any action for specific performance that a remedy at law would be
adequate, and (ii) that the parties hereto, in addition to any other remedy to
which they may be entitled at law or in equity, shall be entitled to compel
specific performance of Article II or Sections 3.1, 3.2, 3.3 or 3.4 in any
action instituted to enforce it.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
__________________________________________________
Raymond L. Gellein, Jr., Trustee of the Raymond L.
Gellein, Jr. Revocable Trust
__________________________________________________
Raymond L. Gellein, Jr., Trustee of the Raymond L.
Gellein, Jr. Grantor Retained Annuity Trust
__________________________________________________
Raymond L. Gellein, Jr., Trustee of the Matthew
James Gellein Irrevocable Trust
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
-15-
<PAGE>
___________________________________________________
Raymond L. Gellein, Jr., Trustee of the Brett Tyler
Gellein Irrevocable Trust
___________________________________________________
Raymond L. Gellein, Jr., Trustee of JGG Holdings
Trust
___________________________________________________
Raymond L. Gellein, Jr., Trustee of the Janice G.
Gellein Grantor Annuity Trust
___________________________________________________
Raymond L. Gellein, Jr., Trustee of the Catherine
Male Gift Trust
___________________________________________________
Raymond L. Gellein, Jr., Trustee of the Cherie
Doherty Gift Trust
___________________________________________________
Raymond L. Gellein, Jr., Trustee of the Susan Faetz
Gift Trust
___________________________________________________
Jeffrey A. Adler, Trustee of the Jeffrey A. Adler
Revocable Trust
___________________________________________________
Jeffrey A. Adler, Trustee of the Jeffrey A. Adler
Grantor Annuity Trust #1
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
-16-
<PAGE>
___________________________________________________
Jeffrey A. Adler, Trustee of the Jeffrey A. Adler
Grantor Annuity Trust #2
___________________________________________________
Lee I. Miller, Trustee of the ARA Trust
___________________________________________________
Lee I. Miller, Trustee of the DLA Trust
THE UNDERSIGNED EXECUTE THIS
AGREEMENT SOLELY FOR PURPOSES
OF ARTICLE II HEREOF:
______________________________
Raymond L. Gellein, Jr.
______________________________
Jeffrey A. Adler
[SIGNATURES CONTINUED FROM PRECEDING PAGE]
-17-
<PAGE>
SCHEDULE A
----------
No. of
Name and Address/(1)/ Shares
- ---------------- ------
Raymond L. Gellein, Jr. 3,203,550
Revocable Trust
c/o Raymond L. Gellein, Jr.,
Trustee
Raymond L. Gellein, Jr. 254,440
Grantor Retained Annuity
Trust
c/o Raymond L. Gellein, Jr.,
Trustee
Matthew James Gellein 42,880
Irrevocable Trust
c/o Raymond L. Gellein, Jr.,
Trustee
Brett Tyler Gellein 42,880
Irrevocable Trust
c/o Raymond L. Gellein, Jr.,
Trustee
JGG Holdings Trust 3,203,550
c/o Raymond L. Gellein, Jr.,
Trustee
Janice G. Gellein Grantor 278,700
Annuity Trust
c/o Raymond L. Gellein, Jr.,
Trustee
Catherine Male Gift Trust 20,500
c/o Raymond L. Gellein, Jr.,
Trustee
Cherie Doherty Gift Trust 20,500
c/o Raymond L. Gellein, Jr.,
Trustee
Susan Faetz Gift Trust 20,500
c/o Raymond L. Gellein, Jr.,
Trustee
Jeffrey A. Adler Revocable Trust 6,854,500
c/o Jeffrey A. Adler,
Trustee
S-1
<PAGE>
No. of
Name and Address (continued) Shares
---------------------------- ------
Jeffrey A. Adler Grantor Annuity 50,000
Trust #1
c/o Jeffrey A. Adler,
Trustee
Jeffrey A. Adler Grantor Annuity 60,000
Trust #2
c/o Jeffrey A. Adler,
Trustee
ARA Trust 61,500
c/o Lee I. Miller,
Trustee
Suite 1800
203 North LaSalle Street
Chicago, Illinois 60601-1293
DLA Trust 61,500
c/o Lee I. Miller,
Trustee
Suite 1800
203 North LaSalle Street
Chicago, Illinois 60601-1293
----------
14,175,000
==========
- -------------------
/(1)/ Unless otherwise specified, all addresses are 8001 Vistana Centre Drive,
Orlando, Florida 32821.
S-2
<PAGE>
Exhibit 2
REGISTRATION RIGHTS AGREEMENT
-----------------------------
REGISTRATION RIGHTS AGREEMENT (the "Agreement"), dated as of February 10,
1997 among VISTANA, INC., a Florida corporation (together with its permitted
successors and assigns, the "Company"), and the persons whose signatures appear
on the execution pages of this Agreement (the "Holders") (capitalized and other
terms used herein and not otherwise defined shall have the meanings set forth in
Section 1 hereof).
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, immediately prior to the completion of the Initial Public
Offering, the Holders will own the number of shares of Common Stock, or options
to acquire the number of shares of Common Stock, set forth opposite such
Holder's name on Schedule A attached hereto and incorporated herein by this
reference; and
WHEREAS, the Company desires to grant to each of the Holders, and each of
the Holders desires to accept, certain rights relating to the registration of
such Holder's Registrable Shares under the Securities Act.
The parties hereto, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, intending to be bound hereby, agree
as follows:
SECTION 1. Definitions.
As used in this Agreement, the following terms shall have the following
meanings:
Advice: See Section 6 hereof.
Adler means Jeffrey A. Adler and his executors and personal
representatives.
Affiliate means, as to any person (i) any corporation, partnership, limited
liability company, joint venture, trust or individual directly or indirectly
through one or more intermediaries controlled by or under common control with
such person, or which controls directly or indirectly through one or more
intermediaries, such person; (ii) a trust which has as its principal income
beneficiaries or remaindermen such person or any direct or indirect holder of
such person, or members of the immediate family of such person or direct or
indirect holder of such person; and (iii) any members of the immediate family of
such person or a member of the immediate family of any direct or indirect holder
of such person. For purposes of this definition, (i) no person, by virtue of
his, her or its direct or indirect
<PAGE>
ownership of Shares, shall be deemed to be an Affiliate of another person; (ii)
the terms "control", "controlled" and "common control with" mean the ability,
whether by the direct or indirect ownership of voting securities or other equity
interest, by contract or otherwise, to elect a majority of the directors of a
corporation, to select the managing partner of a partnership, or otherwise to
select, or have the power to remove and then select, a majority of those persons
exercising governing authority over an entity; and (iii) the term "immediate
family" means spouses, siblings and lineal descendants of a person.
Business Day means any day that is not a Saturday, a Sunday or a legal
holiday on which banking institutions in the State of Florida are not required
to be open.
Cause, with respect to each Executive, has the meaning ascribed thereto in
the then effective employment agreement, if any, between the Company and such
Executive, as the same may be amended, restated, modified or supplemented.
Change in Control means the occurrence of any one of the following events:
(i) any (A) consolidation or merger of the Company in which the
Company is not the continuing or surviving corporation or which
contemplates that all or substantially all of the business and/ or assets
of the Company shall be controlled by another corporation or (B) a
recapitalization (including an exchange of Company equity securities by the
holders thereof), in either case, in which any "Person" (as such term is
used in Sections 13(d) and 14(d)(2) of the Exchange Act), other than the
Controlling Shareholders, becomes the beneficial owner (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of securities of the
Company representing more than 50% of the combined voting power of the
Company's then outstanding securities ordinarily having the right to vote
in the election of directors;
(ii) any sale, lease, exchange or transfer (in one transaction or
series of related transactions) of all or substantially all of the assets
of the Company and its Affiliates;
(iii) approval by the shareholders of the Company of any plan or
proposal for the liquidation or dissolution of the Company, unless such
plan or proposal is abandoned within 60 days following such approval; or
(iv) any "Person" (as such term is used in Sections 13(d) and
14(d)(2) of the Exchange Act), other than the Controlling Shareholders,
shall become the beneficial
-2-
<PAGE>
owner of securities of the Company representing more than 50% of the
combined voting power of the Company's then outstanding securities
ordinarily having the right to vote in the election of directors.
Claims: See Section 8(a) hereof.
Closing Date means the date upon which the Initial Public Offering is
completed.
Common Stock means the Common Stock, $0.01 par value, of the Company, or
any other shares of capital stock of the Company into which such stock shall be
reclassified or changed (by operation of law or otherwise). If the Common Stock
has been so reclassified or changed, or if the Company pays a dividend or makes
a distribution on its Common Stock in shares of capital stock, or subdivides (or
combines) its outstanding shares of Common Stock into a greater (or smaller)
number of shares of Common Stock, a share of Common Stock shall be deemed to be
such number of shares of capital stock and amount of other securities to which a
holder of a share of Common Stock outstanding immediately prior to such
reclassification, exchange, dividend, distribution, subdivision or combination
would be entitled.
Controlling Shareholders means Gellein, Adler and JGG Holdings Trust, in
each case together with their respective Affiliates, family members, former
spouses (if applicable) and trusts for the benefit of any of the foregoing.
Cutback Registration means any registration in which the managing
underwriter advises the Company that marketing factors require a limitation of
the number of Registrable Shares to be underwritten in such registration.
Delay Period: See Section 2(d) hereof.
Delay Notice: See Section 2(d) hereof.
Delaying Notice: See Section 3(d) hereof.
Demand Effectiveness Period: See Section 3(b) hereof.
Demand Request: See Section 3(a) hereof.
Effectiveness Period: See Section 2(b) hereof.
Exchange Act means the Securities Exchange Act of 1934, as amended.
Executives means (i) each Holder (other than Affiliates of Gellein or
Adler) and such Holder's respective executors and personal representatives and
(ii) any Person to whom an Affiliate
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of Gellein or Adler grants options to acquire Registrable Shares after the date
hereof (it being understood that any such Person must assume this Agreement in
writing in order to obtain the benefits hereof).
Gellein means Raymond L. Gellein, Jr. and his executors and personal
representatives.
Good Reason, with respect to each Executive, has the meaning ascribed
thereto in the then effective employment agreement, if any, between the Company
and such Executive, as the same may be amended, restated, modified or
supplemented.
Holders: See the introductory clauses hereof.
Initial Public Offering means the sale by the Company of approximately
4,625,000 shares of Common Stock to the public pursuant to an underwritten
offering.
Notice of Demand Request: See Section 3(a) hereof.
Permanent Disability, with respect to each Executive, has the meaning
ascribed thereto in the then effective Employment Agreement, if any, between the
Company and such Executive, as the same may be amended, restated, modified or
supplemented. If an Executive does not have an effective Employment Agreement,
then the term "Permanent Disability" means the inability of the Executive to
perform substantially all Executive's duties and responsibilities to the Company
by reason of a physical or mental disability or infirmity for either (i) a
continuous period of six months or (ii) 180 days during any consecutive twelve-
month period. The date of such Permanent Disability shall be (y), in the case
of clause (i) above, the last day of such six-month period or, if later, the day
on which satisfactory medical evidence of such Permanent Disability is obtained
by the Company, or (z) in the case of clause (ii) above, such date as is
determined in good faith by the Company. In the event that any disagreement or
dispute arises between the Company and Executive as to whether the Executive has
incurred a Permanent Disability, then, in any such event, Executive shall submit
to a physical and/or mental examination by a competent and qualified physician
licensed under the laws of the State of Florida who shall be mutually selected
by the Company and Executive, and such physician shall make the determination of
whether Executive suffers from any disability. In the absence of fraud or bad
faith, the determination of such physician as to Executive's condition at such
time shall be final and binding upon both the Company and the Executive. The
entire cost of any such examination shall be borne solely by the Company.
Person means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated
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organization or government or any agency or political subdivision thereof.
Prospectus means the prospectus included in any Registration Statement
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective Registration
Statement in reliance upon Rule 430A), as amended or supplemented by any
prospectus supplement, with respect to the terms of the offering of any portion
of the Registrable Shares covered by such Registration Statement and all other
amendments and supplements to the prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.
Registrable Shares means the shares of Common Stock owned, or acquirable,
by the Holders and their respective Affiliates as more particularly set forth on
Schedule A hereto, until in the case of any such share (i) it has been
effectively registered under Section 5 of the Securities Act and disposed of
pursuant to an effective Registration Statement under the Securities Act; (ii)
it has been transferred other than pursuant to Rule "4(1-1/2)" (or any similar
private transfer exemption) under the Securities Act; (iii) it may be
transferred by a holder without registration pursuant to Rule 144 under the
Securities Act or any successor rule without regard to the volume limitations
contained in such rule; or (iv) it has ceased to be outstanding.
Registration Documents: See Section 8(a) hereof.
Registration Statement means any registration statement of the Company that
covers any of the Registrable Shares pursuant to the provisions of this
Agreement, including the Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits, and
all material incorporated by reference or deemed to be incorporated by reference
in such registration statement.
Requested Registration means a registration demanded pursuant to Section 3
for which the Registration Statement relating thereto has been declared
effective by the SEC and for which no stop-order suspending the effectiveness of
such registration statement has been issued by the SEC within the Demand
Effectiveness Period which prevents the Holders from completing the distribution
of their Registrable Shares included in such Registration Statement.
SEC means the Securities and Exchange Commission.
Securities Act means the Securities Act of 1933, as amended.
Shelf Registration means a registration pursuant to a Registration
Statement which provides for the sale by the
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Registrable Shares included therein from time to time on a delayed or continuous
basis pursuant to Rule 415 under the Securities Act, but shall not provide for
an underwritten registration (unless the Company, in its sole and absolute
discretion otherwise determines).
Underwritten Registration or Underwritten Offering means a registration in
which securities of the Company are sold to or through one or more underwriters,
on a firm commitment basis, for reoffering or sale to the public.
Voluntary Termination, with respect to each Executive, has the meaning
ascribed thereto in then effective employment agreement, if any, between the
Company and such Executive, as the same may be amended, restated, modified or
supplemented.
SECTION 2. Required Shelf Registration.
(a) (i) Within 45 days prior to each of the second and third
anniversaries of the Closing Date, the Company shall give notice to each of
the Executives and their Affiliates who or which are holders of Registrable
Shares informing such parties that, on or shortly after such anniversary of
the Closing Date, the Company intends to file a registration statement for
the purpose of effecting a Shelf Registration for Registrable Shares of the
Executives and their respective Affiliates pursuant to this Section 2(a).
(ii) Each Executive and his or her Affiliates which hold
Registrable Shares may elect to include in such Shelf Registration up to
50% of such Person's Registrable Shares (determined as of the date hereof)
by giving notice to the Company to such effect within 20 days after the
date of the Company's notice referred to in Section 2(a)(i).
(iii) No Shelf Registration statement effected pursuant to this
Section 2(a) shall include an aggregate number of Registrable Shares in
excess of 5% of the outstanding Common Stock, in each case as of December
31, 1998 or December 31, 1999, respectively. In the event that the
Executives and their Affiliates which hold Registrable Shares seek to
include in any such Shelf Registration a number of Registrable Shares in
excess of such limitation, the Company shall register in such Shelf
Registration the Registrable Shares proposed to be sold by the Executives
and their respective Affiliates on a pro rata basis, based upon the number
of Registrable Shares that each such party and their Affiliates originally
sought to include in such Shelf Registration.
(iv) The Company shall not be required to effect any Shelf
Registration pursuant to this Section 2(a)
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unless at least an aggregate of 25,000 Registrable Shares are sought to be
included therein.
(b) (i) Notwithstanding Section 2(a), each Executive shall have the
right to require the Company to effect a Shelf Registration for all of the
Registrable Shares of such Executive and his or her respective Affiliates
in the event of (A) such Executive's death or Permanent Disability; (B) the
termination of such Executive's employment by the Company without Cause
following the Closing Date; (C) a Change in Control; or (D) Executive's
Voluntary Termination of employment by the Company for Good Reason.
(ii) In order to exercise his or her rights under Section 2(b),
an Executive shall deliver notice to the Company to such effect within 12-
months after the occurrence of any of the events described in Section
2(b)(i).
(c) The Company agrees to use its reasonable best efforts to keep each
Registration Statement filed pursuant to this Section 2 continuously effective
and usable for the resale of Registrable Shares for a period ending on the
earlier of (i) one year, two years in the case of a Registration Statement filed
pursuant to Section 2(b), from the date upon which such Registration Statement
was declared effective and (ii) the first date on which all the Registrable
Shares covered by such Shelf Registration have been sold pursuant to such
Registration Statement.
(d) Notwithstanding anything to the contrary contained in this
Agreement, the Company shall not be required to file a Registration Statement or
cause it to be declared effective at a time (x) after completion of a fiscal
year end, but prior to the availability of the year end audited financial
statements, (y) when the Company, in the good faith judgement of its board of
directors shall determine that any offering of Registrable Shares would impede,
delay or otherwise interfere with any pending or contemplated acquisition or
other material transaction involving the Company or (z) when the Company is in
possession of material information which, in the good faith judgment of the
Company's board of directors, if disclosed in a Registration Statement, would be
materially harmful to the interests of the Company and its holders (any such
period in clauses (y) or (z) is referred to as a "Delay Period"). A Delay
Period shall commence on and include the date that the Company gives written
notice (such notice referred to herein as the "Delay Notice") to the Holders
that it is not required to file a Registration Statement or cause it to be
declared effective pursuant to the provisions of this Section 2(d) and shall end
on the date when the Holders are advised in writing by the Company that the
current Delay Period is over (it being understood that the Company shall give
such notice to all Holders promptly upon making the determination that the Delay
Period is
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over); provided; however, that the Company shall not be entitled to Delay
Periods having durations that exceed 120 days in the aggregate during any
calendar year. Each Holder shall cease all disposition efforts with respect to
Registrable Shares held by them immediately upon receipt of a Delay Notice.
(e) The time period for which the Company is required to maintain the
effectiveness of any Registration Statement shall be extended by the aggregate
number of days of all Delay Periods and such time period or the extension
thereof required by the preceding sentence is hereafter referred to as the
"Effectiveness Period."
(f) All registrations under this Section 2 shall be effected by the
Company's filing of a Registration Statement on Form S-2 or S-3 or any similar
short-form Registration Statement. If the Company is not eligible to use Form
S-2 or S-3 or any similar short-form Registration Statement at the time a
Registration Statement is required to be filed pursuant to this Section 2, the
rights of the each Executive hereunder shall be extended until the Company
becomes so eligible.
(g) The Company may, in its sole discretion, include other securities
in such Shelf Registration (whether for the account of the Company or other
Persons or otherwise combine the offering of the Registrable Shares with any
offering of other securities of the Company (whether for the account of the
Company or otherwise).
SECTION 3. Requested Registration.
(a) At any time after the third anniversary of the Closing Date, each
of Gellein and Adler shall have the right to require the Company, by written
request (the "Demand Request"), to effect an Underwritten Registration with
respect to Registrable Shares owned by such individuals, if any, and their
respective Affiliates. The Company will give prompt written notice (the "Notice
of Demand Request") of such demand for an Underwritten Registration to all
Holders and thereupon the Company shall, as expeditiously as reasonably
practicable, file a Registration Statement relating to the registration under
the Securities Act of the Registrable Shares which the Company has been so
requested to register by the demanding Holder and all other Registrable Shares
as to which Holders (other than the demanding Holder) shall have made a written
request to the Company for registration thereof within 30 days after the Notice
of Demand Request, all to the extent necessary to permit the sale or other
disposition in an Underwritten Offering by such Holders of the Registrable
Shares to be so registered; provided; however, that (i) if such registration is
a Cutback Registration, the Company shall register in such registration (A)
first, the Registrable Shares proposed to be sold by Gellein and Adler and their
respective Affiliates on a pro rata basis, based upon the number of Registrable
Shares that each such
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party and their Affiliates originally sought to include in such registration and
(B) second, the Registrable Shares proposed to be sold by each of the Holders
and their respective Affiliates, other than Gellein and Adler and their
respective Affiliates, on a pro rata basis, based upon the number of Registrable
Shares that each such party and their respective Affiliates originally sought to
include in such registration; and (ii) that the Company shall not be obligated
to take any action to effect any such registration, qualification or compliance
pursuant to this Section 4(a) (A) within 90 days (or such other date as may be
agreed between the Company, the Holders, and the managing underwriter of an
Underwritten Offering of Registrable Shares) immediately following the effective
date of any Registration Statement pertaining to such an Underwritten Offering;
(B) if a Requested Registration has become effective under the Securities Act
within the past 360 days; or (C) if the demanding Holder has requested the
registration of a number of Registrable Shares which is less than 5% of the
outstanding Common Stock or greater than 15% of the outstanding Common Stock, in
each case set forth in the Company's Quarterly Report on Form 10-Q (or any
successor form) for the Company's most recently completed fiscal quarter prior
to the Company's receipt of the Demand Request.
(b) The Company agrees to keep each Registration Statement filed
pursuant to this Section 3 continuously effective and usable for the resale of
Registrable Shares for a period of up to 90 days or until all Registrable Shares
included in such Registration Statement have completed the distribution
described in the Registration Statement relating thereto, whichever first occurs
(the "Demand Effectiveness Period"), provided, however, that during such 90-day
period the Company may give notice to all such Holders that the Registration
Statement or the prospectus included therein is no longer usable for offers and
sales of Registrable Shares, in which case the 90-day period will be tolled
until such time as each such Holder and the managing underwriter of such
Underwritten Offering either receives copies of a supplemented or amended
prospectus or is advised in writing by the Company that use of the prospectus
may be resumed (it being understood that in such case the Company shall promptly
comply with its obligations under Section 6(a)).
(c) The Company, if eligible to do so, shall file a Registration
Statement covering the Registrable Shares so requested to be registered on Form
S-2 or S-3 or any similar short-form registration under the Securities Act as
soon as reasonably practicable after the receipt of the Demand Request;
provided, however, that if the managing underwriter of such Underwritten
Offering shall advise the Company in writing that, in its opinion, the use of
another form of Registration Statement is of material importance to the success
of such proposed Underwritten Offering, then such Underwritten Registration
shall be effected on such other form.
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(d) Each of Gellein and Adler shall be entitled to two Requested
Registrations. Notwithstanding anything contained in this Section 3, if (x) the
SEC has issued a stop-order as a result of actions taken by a demanding Holder
or (y) a demanding Holder gives notice (the "Delaying Notice"), at any time
prior to the time the Registration Statement is declared effective or prior to
the last day of Demand Effectiveness Period, that such demanding Holder desires
the Company to either withdraw the Registration Statement with the SEC, if the
Registration Statement has been filed with the SEC, or postpone filing the
Registration Statement, if the Registration Statement has not been filed with
the SEC and the Company is immediately able to file the Registration Statement,
then, in the case of clause (x) herein, the issuance of the stop-order, or, in
the case of clause (y) herein, the Delaying Notice, shall reduce by one the
number of Requested Registrations to which such demanding Holder is entitled.
(e) An Underwritten Registration requested pursuant to this Section 3
shall not be deemed to have been effected unless the Registration Statement
relating thereto and any post-effective amendment required to commence the
Underwritten Offering contemplated thereby has been declared effective by the
SEC and maintained continuously effective for the Demand Effectiveness Period.
(f) The right of any Holder to registration pursuant to this Section 3
shall be conditioned upon inclusion of the Registrable Shares held by the Holder
in the underwriting and the Holder entering into an underwriting agreement, in a
form reasonably acceptable to the Company, with the underwriter or underwriters
selected for such underwriting by the demanding Holder which are reasonably
satisfactory to the Company. The Company shall enter an underwriting agreement
with a managing underwriter or underwriters of an Underwritten Offering
containing representations, warranties, indemnities and agreements customarily
included (but not inconsistent with the agreements contained herein) by an
issuer of common stock in underwriting agreements with respect to offerings of
common stock for the account of, or on behalf of, selling holders. The Company
may include securities for its own account or the account of any other Person in
such registration if the managing underwriter so agrees and if so doing would
not make such registration a Cutback Registration.
SECTION 4. Piggyback Registration.
(a) If, in connection with an Underwritten Offering (other than the
Initial Public Offering), the Company proposes to register under the Securities
Act any of the Company's securities for its account or for the account of any
other Person (other than a registration relating solely to employee stock option
or employee stock purchase plans or pursuant to Form S-4 (or successor form)
under the Securities Act), the Company shall:
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(i) promptly give to each Holder written notice thereof (which
written notice shall include a list of jurisdictions in which the Company
intends to attempt to qualify such securities under or otherwise comply
with the applicable blue sky or other state securities laws); and
(ii) include in such registration (and any related qualification
under or other compliance with blue sky or other state securities laws),
and in the underwriting involved therein, all the Registrable Shares
specified in a written request, made within 15 days from such written
notice from the Company, by any Holder; provided that if such registration
is a Cutback Registration, then (x) if such registration is a primary
registration on behalf of the Company, the Company shall register in such
registration (A) first, the Company securities which the Company proposes
to sell in such registration, and (B) second, Registrable Shares held by
each Holder and such Holder's Affiliates, on a pro rata basis, based upon
the number of Registrable Shares the Holders and their respective
Affiliates originally sought to include in such registration ; provided,
however, that no Executive, together with such Executive's Affiliates,
shall, by virtue of this Section 4(a)(ii)(x)(B), be permitted to include in
any registration statement contemplated by this Section 4, a number of
Registrable Shares which, when aggregated with all other registrations of
Registrable Shares held by such Executive and such Executive's Affiliates,
exceeds the limitations described in Section 2(a) (unless an event
described in Section 2(b)(i) has occurred); (y) if such registration is a
secondary registration on behalf of a holder of Company securities pursuant
to Section 3 hereof, the Company shall register in such registration the
Registrable Shares determined in accordance with clause (i) of the proviso
to Section 3(a) hereof; and (z) if such registration is a secondary
registration on behalf of a holder of Company securities, the Company shall
register in such registration (A) first, the Registrable Shares proposed to
be sold by the holder thereof; and (B) second, Registrable Shares held by
each Holder and such Holder's Affiliates, on a pro rata basis, based upon
the number of Registrable Shares the Holders and their Affiliates
originally sought to include in such registration; provided, however, that
no Executive, together with such Executive's Affiliates, shall, by virtue
of this Section 4(a)(ii)(z)(B), be permitted to include in any registration
statement contemplated by this Section 4, a number of Registrable Shares
which, when aggregated with all other registrations of Registrable Shares
held by such Executive and such Executive's Affiliates, exceeds the
limitations described in Section 2(a) (unless an event described in Section
2(b)(i) has occurred).
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(b) Notwithstanding anything in this Section 4, the Company shall not
be required under Section 4(a)(ii) to include any Registrable Shares in any
registration unless an aggregate of 25,000 or more Registrable Shares are sought
to be included in such registration pursuant to Section 4(a)(ii).
(c) The right of any Holder to registration pursuant to this Section
shall be conditioned upon the inclusion of the Registrable Shares held by the
Holder in the underwriting and the Holder entering into an underwriting
agreement, in a form reasonably acceptable to the Company, with the underwriter
or underwriters selected for such underwriting by the Company, or the Holder
requesting registration, as the case may be.
SECTION 5. Hold-Back Agreements.
(a) Each holder of Registrable Shares agrees, if such holder is
reasonably requested by an underwriter in an Underwritten Offering for the
Company (whether for the account of the Company or otherwise), not to effect any
public sale or distribution of any of the Company's equity securities, including
a sale pursuant to Rule 144 (except as part of such Underwritten Registration),
during the 10-day period prior to, and during the 90-day period beginning on,
the closing date of such Underwritten Offering.
(b) The Company agrees, to the extent not inconsistent with applicable
law, and if and to the extent requested by the managing underwriter of an
Underwritten Registration of Registrable Shares pursuant to Section 3 hereof,
not to effect any public sale or distribution of any of its equity securities or
of any security convertible into or exchangeable or exercisable for any equity
security of the Company (other than any such sale or distribution of such
securities on Form S-4 or in connection with an employee stock option or other
benefit plan) during the 15 days prior to, and for a period of 90 days (or such
longer period as the underwriters of such Underwritten Offering may reasonably
request) beginning on, the effective date of such Registration Statement (except
as part of such registration).
SECTION 6. Registration Procedures.
In connection with the registration obligations of the Company pursuant to
and in accordance with Sections 2, 3 and 4 hereof (and subject to the Company's
rights under Sections 2, 3 and 4), the Company will use its reasonable best
efforts to effect such registration to permit the sale of such Registrable
Shares in accordance with the intended method or methods of disposition thereof,
and pursuant thereto the Company shall as expeditiously as possible:
(a) prepare and file with the SEC a Registration Statement on any form
which the Company shall deem appropriate
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(unless the managing underwriter of an Underwritten Offering shall specify the
form to be used for such Registration Statement), and which form shall be
available for the sale of the Registrable Shares as part of such registration,
and use its reasonable best efforts to cause such Registration Statement to
become effective;
(b) before filing with the SEC any such Registration Statement or
prospectus or any amendments or supplements thereto, the Company shall furnish
to one counsel selected by the holders of a majority of the Registrable Shares
covered by such Registration Statement and counsel for the underwriter, if any,
in connection therewith, drafts of all such documents proposed to be filed and
provide such counsel with a reasonable opportunity for review thereof and
comment thereon, such review to be conducted and such comments to be delivered
with reasonable promptness;
(c) use its reasonable best efforts to keep such Registration
Statement effective for the period required by the applicable provision of this
Agreement;
(d) notify the selling holders of Registrable Shares promptly and (if
requested by any such Person) confirm such notice in writing, (i) when a
Prospectus or any Prospectus supplement or post-effective amendment has been
filed, and, with respect to a Registration Statement or any post-effective
amendment, when the same has become effective, (ii) of any request by the SEC
for amendments or supplements to a Registration Statement or related Prospectus
or for additional information regarding such holder, (iii) of the issuance by
the SEC of any stop order suspending the effectiveness of a Registration
Statement or the initiation of any proceedings for that purpose, (iv) of the
receipt by the Company of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Registrable Shares
for sale in any jurisdiction or the initiation or threatening of any proceeding
for such purpose, and (v) of the happening of any event that requires the making
of any changes in such Registration Statement, Prospectus or documents so that
they will not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading;
(e) except during any Delay Period, upon the occurrence of any event
contemplated by paragraph 6(d)(ii) or 6(d)(v) above, prepare a supplement or
post-effective amendment to each Registration Statement or related Prospectus or
any document incorporated or deemed to be incorporated therein by reference or
file any other required document so that, as thereafter delivered to the
purchasers of the Registrable Shares being sold thereunder, such Prospectus will
not contain an untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading;
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(f) use its best reasonable efforts to obtain the withdrawal of any
order suspending the effectiveness of a Registration Statement, or the lifting
of any suspension of the qualification or exemption from qualification of any of
the Registrable Shares for sale in any jurisdiction in the United States;
(g) if requested by the selling holders, furnish to counsel for the
selling holders of Registrable Shares, without charge, one conformed copy of
each Registration Statement as declared effective by the SEC and of each post
effective amendment thereto, in each case including financial statements and
schedules and all exhibits and reports incorporated or deemed to be incorporated
therein by reference; and such number of copies of the preliminary prospectus,
each amended preliminary prospectus, each final Prospectus and each post
effective amendment or supplement thereto, as the selling holders may reasonably
request in order to facilitate the disposition of the Registrable Shares covered
by each Registration Statement in conformity with the requirements of the
Securities Act;
(h) prior to any public offering of Registrable Shares, register or
qualify such Registrable Shares for offer and sale under the securities or Blue
Sky laws of such jurisdictions in the United States as any selling holder shall
reasonably request in writing; and do any and all other reasonable acts or
things necessary or advisable to enable such holders to consummate the
disposition in such jurisdictions of such Registrable Shares covered by the
Registration Statement; provided, however, that the Company shall in no event be
required to qualify generally to do business as a foreign corporation or as a
dealer in any jurisdiction where it is not at the time so qualified or to
execute or file a general consent to service of process in any such jurisdiction
where it has not theretofore done so or to take any action that would subject it
to general service of process or taxation in any such jurisdiction where it is
not then subject;
(i) cause all Registrable Shares covered by the Registration Statement
to be listed on each securities exchange and included in the over-the-counter
market, if any, on which similar securities issued by the Company are then
listed or traded;
(j) if requested by the managing underwriter or underwriters of any
registration or by the holders of a majority of the Registrable Shares included
in any Registration Statement, subject to approval of counsel to the Company in
its reasonable judgement, promptly incorporate in a prospectus, supplement or
post-effective amendment to the Registration Statement such information
concerning underwriters and the plan of distribution of the Registrable Shares
as such managing underwriter or underwriters or such holders reasonably shall
furnish to the Company in writing and request be included therein, including,
without limitation,
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with respect to the number of Registrable Shares being sold by such holders to
such underwriter or underwriters, the purchase price being paid therefor by such
underwriter or underwriters and with respect to any other terms of the
Underwritten Offering of the Registrable Shares to be sold in such offering; and
make all required filings of such prospectus, supplement or post-effective
amendment as soon as reasonably possible after being notified of the matters to
be incorporated in such prospectus, supplement or post-effective amendment;
(k) make available for inspection by any seller of Registrable Shares,
any underwriter participating in any disposition pursuant to such Registration
Statement, and any attorney, accountant or other agent retained by any such
seller or underwriter (in each case in a manner which minimizes disruption of
the Company's business), all financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company's officers,
directors, employees, attorneys and independent accountants to supply all
information in each case reasonably requested by any such sellers, underwriters,
attorneys, accountants or agents in connection with such Registration Statement,
subject to the right of the Company to limit access to any such information (i)
to the extent that the Company is restricted from providing such information
pursuant to any bona fide confidentiality agreement to which the Company or any
of its subsidiaries or Affiliates is a party and (ii) the Company shall have
delivered to each seller of the Registrable Shares a certificate duly executed
by the chief executive officer of the Company stating that such information does
not contain any material information that has not been publicly disclosed and
which would be required to be disclosed in, or which would materially affect any
information required to be disclosed in, such Registration Statement;
(l) comply with all applicable laws related to such Registration
Statement and offering and sale of securities and all applicable rules and
regulations of governmental authorities in connection therewith (including,
without limitation, the Securities Act and the Exchange Act, and the rules and
regulations promulgated by the SEC) and make generally available to its security
holders as soon as practicable (but in any event not later than fifteen (15)
months after the effectiveness of such Registration Statement) an earnings
statement of the Company and its subsidiaries complying with Section 11(a) of
the Securities Act;
(m) deliver promptly to each Holder participating in a registration
copies of all correspondence between the SEC and the Company, its counsel or
auditors and all memoranda relating to discussions with the SEC or its staff
with respect to the Registration Statement;
-15-
<PAGE>
(n) provide a transfer agent and registrar for all such Registrable
Shares covered by such Registration Statement not later than the effective date
of such Registration Statement;
(o) with respect to an Underwritten Registration only, obtain an
opinion from the Company's counsel and "cold comfort" letters from the Company's
independent public accountants (including one letter when such Registration
Statement goes effective and one at the closing) in customary form and covering
such matters of the type customarily covered by such opinions and "cold comfort"
letters;
(p) make any necessary arrangements with The Depository Trust Company;
(q) cause unlegended stock certificates for the Registrable Shares to
be prepared and printed;
(r) make any necessary filings with the National Association of
Securities Dealers, Inc., or with respect to an Underwritten Registration only,
assist the underwriters to make any necessary filings.
The Company may require each seller of Registrable Shares as to which
any registration is being effected to furnish such information regarding the
distribution of such Registrable Shares and as to such seller as it may from
time to time reasonably request. If any such information with respect to any
seller is not furnished prior to the filing of the Registration Statement, the
Company may exclude such seller's Registrable Shares from such Registration
Statement.
Each holder of Registrable Shares agrees by acquisition of such
Registrable Shares that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 6(d)(ii), 6(d)(iii),
6(d)(iv) or 6(d)(v) hereof or upon notice of the commencement of any Delay
Period, such holder shall forthwith discontinue disposition of such Registrable
Shares covered by such Registration Statement or Prospectus until such holder's
receipt of the copies of the supplemented or amended Prospectus contemplated by
Section 6(e) hereof, or until it is advised in writing (the "Advice") by the
Company that the use of the applicable Prospectus may be resumed, and has
received copies of any amended or supplemented Prospectus or any additional or
supplemental filings which are incorporated, or deemed to be incorporated, by
reference in such Prospectus and, if requested by the Company, such holder shall
deliver to the Company (at the expense of the Company) all copies, other than
permanent file copies then in such holder's possession, of the Prospectus
covering such Registrable Shares at the time of receipt of such request. Each
holder of Registrable Shares further agrees not to utilize any
-16-
<PAGE>
material other than the applicable current Prospectus in connection with the
offering of Registrable Shares pursuant to this Agreement.
SECTION 7. Registration Expenses.
---------------------
Whether or not any Registration Statement becomes effective, the Company
shall pay all costs, fees and expenses incident to the Company's performance of
or compliance with this Agreement including, without limitation, (i) all
registration and filing fees, (ii) fees and expenses of compliance with
securities or Blue Sky laws, (iii) printing expenses (including, without
limitation, expenses of printing of prospectuses if the printing of prospectuses
is requested by the holders of a majority of the Registrable Shares included in
any Registration Statement), (iv) fees and disbursements of counsel for the
Company, (v) fees and disbursements of all independent certified public
accountants of the Company and all other Persons retained by the Company in
connection with the Registration Statement, (vi) to the extent an Underwritten
Registration is involved in accordance with the terms of this Agreement, to the
extent provided in the underwriting agreement, all fees and expenses of
underwriters in connection therewith (excluding discounts and commissions) and
(vii) the reasonable fees and expenses of no more than one counsel for the
holders (as a group) of the Registrable Shares included in such registration.
Notwithstanding the foregoing, any discounts, commissions, underwriting or
advisory fees, brokers' fees or fees of similar securities industry professional
(including any "qualified independent underwriter" retained for the purpose of
Section 3 of Schedule E of the By-laws of the National Association of Securities
Dealers, Inc.) relating to the distribution of the Registrable Shares will be
payable by such holder and the Company will have no obligation to pay any such
amounts.
SECTION 8. Indemnification.
---------------
(a) In connection with any Registration Statement effected or to be
effected pursuant to this Agreement, the Company shall indemnify each holder of
Registrable Shares included in such Registration Statement and each Person who
controls (within the meaning of Section 15 of the Securities Act) such holder of
Registrable Shares from and against all losses, claims, damages, liabilities or
expenses, joint or several, or actions in respect thereof ("Claims") to which
each such indemnified party may become subject, under the Securities Act or
otherwise, insofar as such Claims (or actions in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement or prospectus or any
preliminary prospectus or summary or final prospectus or any amendment or
supplement thereto or any document filed under a state securities or blue sky
law (collectively, "Registration Documents") or insofar as such Claims arise out
of or are based upon the omission or alleged omission to state in any
Registration Document
-17-
<PAGE>
a material fact required to be stated therein or necessary to make the
statements made therein not misleading; provided that the Company shall not be
liable in any such case to the extent such Claim arises out of or is based upon
an untrue statement or alleged untrue statement of a material fact or omission
or alleged omission of a material fact made in any Registration Document in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of such indemnified party specifically for use in the
preparation of such Registration Document.
(b) In connection with any Registration Statement effected or to be
effected pursuant to this Agreement, each holder of Registrable Shares included
in such Registration Statement shall indemnify the Company, its directors,
officers, employees or agents, and each Person who controls (within the meaning
of Section 15 of the Securities Act) the Company from and against all Claims to
which each such indemnified party may become subject under the Securities Act or
otherwise, insofar as such Claims (or actions in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of any
material fact contained in any Registration Document, or insofar as such Claims
arise out of or are based upon the omission or alleged omission to state in any
Registration Document a material fact required to be stated therein or necessary
to make the statements made therein not misleading; provided, however, that such
indemnification or reimbursement shall be payable only if, and to the extent
that, any such Claim arises out of or is based upon an untrue statement or
alleged untrue statement of a material fact or omission or alleged omission of a
material fact made in any Registration Document in reliance upon and in
conformity with written information furnished to the Company by such holder of
Registrable Shares specifically for use in the preparation of such Registration
Document; provided further, however, that no holder of Registrable Shares shall
be liable under this Section 7(b) for any amounts in excess of the dollar amount
of the gross proceeds to be received by such Holder from the sale of its
Registrable Shares pursuant to such registration.
(c) Any Person entitled to indemnification under Section 8(a) or 8(b)
above shall notify promptly the indemnifying party in writing of the
commencement of any Claim if a claim for indemnification in respect thereof is
to be made against an indemnifying party pursuant to this Section 8, but the
omission of such notice shall not relieve the indemnifying party from any
liability which it may have to any indemnified party, except to the extent that
the indemnifying party has been materially prejudiced by such failure to provide
such notice. In case any action is brought against the indemnified party and it
shall notify the indemnifying party in writing of the commencement thereof, the
indemnifying party shall be entitled to participate in, and, to the extent that
it shall wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof with
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<PAGE>
counsel satisfactory to the indemnified party; and, after notice from the
indemnifying party to the indemnified party that it so chooses, the indemnifying
party shall not be liable for any legal or other expenses subsequently incurred
by the indemnified party in connection with the defense thereof other than
reasonable costs of investigation; provided, however, that (i) if the
indemnifying party fails to take reasonable steps necessary to defend diligently
the Claim within twenty (20) days after receiving notice from the indemnified
party that the indemnified party believes it has failed to do so; or (ii) if the
indemnified party who is a defendant in any action or proceeding which is also
brought against the indemnifying party reasonably shall have concluded that
there may be legal defenses available to the indemnified party which are not
available to the indemnifying party; or (iii) if representation of both parties
by the same counsel is otherwise inappropriate under applicable standards of
professional conduct, the indemnified party shall have the right to assume or
continue its own defense as set forth above (but with no more than one firm of
counsel for all indemnified parties in each jurisdiction, except to the extent
any party or parties reasonably shall have concluded that there may be legal
defenses available to such party or parties which are not available to the other
indemnified parties or to the extent representation of all indemnified parties
by the same counsel is otherwise inappropriate under applicable standards of
professional conduct) and the indemnifying party shall be liable for any
reasonable expenses therefor; provided, that no indemnifying party shall be
subject to any liability for any settlement of a Claim made without its consent
(which may not be unreasonably withheld). If the indemnifying party assumes the
defense of any Claim hereunder, such indemnifying party shall not enter into any
settlement without the consent of the indemnified party if such settlement
attributes liability to the indemnified party (which consent may not be
unreasonably withheld).
(d) If for any reason the foregoing indemnity is unavailable, or is
insufficient to hold harmless, an indemnified party, then the indemnifying party
shall contribute to the amount paid or payable by the indemnified party as a
result of any Claim in such proportion as is appropriate to reflect the relative
fault of the indemnifying party and the indemnified party as well as any other
relevant equitable considerations. The relative fault shall be determined by
reference to, among-other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the indemnifying party or by the indemnified
party and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The parties hereto
agree that it would not be just and equitable if contributions pursuant to this
Section 8(d) were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to above in this Section.
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<PAGE>
SECTION 9. Miscellaneous.
-------------
9.1 Termination. This Agreement and the obligations of the Company
hereunder shall terminate on the earliest of (i) the first date on which no
Registrable Shares remain outstanding, and (ii) the close of business on the
last day of the last Effectiveness Period or Demand Effectiveness Period,
whichever is later.
9.2 Rule 144. The Company hereby covenants that, from and after the
Closing date, the Company will file in a timely manner all reports required to
be filed by it under the Securities Act and the Exchange Act and the rules and
regulations adopted by the SEC thereunder (or, if the Company is not required to
file such reports, it will, upon the request of any holder of Registrable
Shares, make publicly available other information so long as necessary to permit
sales under Rule 144 under the Securities Act), and it will take such further
action as any holder of Registrable Shares may reasonably request, all to the
extent required from time to time to enable such holder to sell Registrable
Shares without registration under the Securities Act within the limitation of
the exemptions provided by (i) Rule 144 under the Securities Act, as such Rule
may be amended from time to time, or (ii) any similar rule or regulation
hereafter adopted by the SEC.
9.3 Amendments and Waivers. The provisions of this Agreement, including
the provisions of this Section 9.3 may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not be
given, unless the Company has obtained the written consent of holders
representing a majority of the Registrable Shares. Notwithstanding the
foregoing, (i) the provisions of Section 2 hereof may not be amended, modified
or supplemented, and waivers or consents to departures from the provisions
thereof may not be given, unless the Company has obtained the written consent
representing a majority of the Registrable Shares then held by the Executives
and their respective Affiliates; and (ii) a waiver or consent to depart from the
provisions hereof with respect to a matter which relates exclusively to the
rights of holders of Registrable Shares whose securities are being sold pursuant
to a Registration Statement and that does not directly or indirectly affect the
rights of a holder whose securities are not being sold pursuant to such
Registration Statement may be given by holders of a majority of the Registrable
Shares being sold by such holders.
9.4 Notices. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and shall be deemed given:
when delivered personally; one Business Day after being deposited with a next-
day air courier; five Business Days after being deposited in the mail, postage
prepaid, if mailed; when answered back if telexed and when receipt is
acknowledged, if telecopied, in each case to the Company at 8801 Vistana Centre
Drive, Orlando, Florida 32821 and to each
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<PAGE>
Holder at the address specified for such Holder on Schedule A (or at such other
address for a party as shall be specified by like notice: provided that notices
of a change of address shall be effective only upon receipt thereof).
9.5 Successors and Assigns. This Agreement, other than the provisions of
Section 3, shall inure to the benefit of and be binding upon the successors and
assigns of each of the parties; provided, however, that no party may assign its
rights under this Agreement to any third party (other than an assignment by a
Holder of rights to an Affiliate of such Holder in connection with a transfer of
Registrable Shares to such Affiliate) without the prior written consent of the
Company (which may be given or withheld in the Company's sole and absolute
discretion). The provisions of Section 3 shall not be assignable by Gellein or
Adler.
9.6 Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
9.7 Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
9.8 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF FLORIDA WITHOUT GIVING EFFECT
TO THE PROVISIONS THEREOF GOVERNING CONFLICT OF LAWS PRINCIPLES.
9.9 Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their reasonable best efforts to find and employ an alternative means to achieve
the same or substantially the same result as that contemplated by such term,
provision, covenant or restriction. It is hereby stipulated and declared to be
the intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
9.10 Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and a complete and exclusive statement of
the agreement and understanding of the parties hereto in respect of the subject
matter contained herein. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein, with respect to
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<PAGE>
the registration rights granted by the Company with respect to the Registrable
Shares described on Schedule A. This Agreement supersedes all prior agreements
and understandings between the parties with respect to such subject matter.
9.11 Calculation of Time Periods. Except as otherwise indicated, all
periods of time referred to herein shall include all Saturdays, Sundays and
holidays; provided, that if the date to perform the act or give any notice with
respect to this Agreement shall fall on a day other than a Business Day, such
act or notice may be timely performed or given if performed or given on the next
succeeding Business Day.
9.12 Existing Registration Rights; No Inconsistent Agreements. The Company
represents and warrants that there are no existing agreements with respect to
its securities which are inconsistent with the rights granted to the holders of
Registrable Shares in this Agreement or otherwise conflict with the provisions
hereof and agrees that it will not enter into any agreements which are
inconsistent with or limit or impair the rights granted to the holders of
Registrable Shares prior to the termination of this Agreement. Each Holder
represents and warrants that there are no existing agreements with respect to
such Holder's Registrable Shares which are inconsistent with the rights of such
Holder in this Agreement or otherwise conflict with the provisions hereof and
agrees that such Holder will not enter into any agreements which are
inconsistent with or limit or impair the rights of such Holder prior to the
termination of this Agreement.
9.13 Equitable Relief. Each party hereto specifically acknowledges and
agrees that the remedy at law for any breach of its obligations hereunder will
be inadequate and that, in addition to any other relief available to the non-
breaching parties, the non-breaching parties shall be entitled to temporary and
permanent injunctive relief without the necessity of proving actual damages.
9.14 Attorneys' Fees and Costs. In the event a dispute arises between the
parties hereto and suit is instituted, the prevailing party or parties in such
litigation shall be entitled to recover reasonable attorneys' fees and other
costs and expenses from the non-prevailing party or parties, whether incurred at
the trial level or in any appellate proceeding.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
THE COMPANY:
VISTANA, INC., a Florida corporation
By:________________________________
Name: Raymond L. Gellein, Jr.
Title: Chairman of the Board
By:________________________________
Name: Jeffrey A. Adler
Title: President
THE HOLDERS:
__________________________________________________
Raymond L. Gellein, Jr., Trustee of the Raymond L.
Gellein, Jr. Revocable Trust
__________________________________________________
Raymond L. Gellein, Jr., Trustee of the Raymond L.
Gellein, Jr. Grantor Retained Annuity Trust
__________________________________________________
Raymond L. Gellein, Jr., Trustee of the Matthew
James Gellein Irrevocable Trust
__________________________________________________
Raymond L. Gellein, Jr., Trustee of the Brett
Tyler Gellein Irrevocable Trust
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
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<PAGE>
__________________________________________________
Raymond L. Gellein, Jr., Trustee of JGG Holdings
Trust
__________________________________________________
Raymond L. Gellein, Jr., Trustee of the Janice G.
Gellein Grantor Annuity Trust
__________________________________________________
Raymond L. Gellein, Jr., Trustee of the Catherine
Male Gift Trust
__________________________________________________
Raymond L. Gellein, Jr., Trustee of the Cherie
Doherty Gift Trust
__________________________________________________
Raymond L. Gellein, Jr., Trustee of Susan Faetz
Gift Trust
__________________________________________________
Jeffrey A. Adler, Trustee of the Jeffrey A. Adler
Revocable Trust
__________________________________________________
Jeffrey A. Adler, Trustee of the Jeffrey A. Adler
Grantor Annuity Trust #1
__________________________________________________
Jeffrey A. Adler, Trustee of the Jeffrey A. Adler
Grantor Annuity Trust #2
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
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<PAGE>
__________________________________________________
Lee I. Miller, Trustee of the ARA Trust
__________________________________________________
Lee I. Miller, Trustee of the DLA Trust
__________________________________________________
Matthew E. Avril
__________________________________________________
Susan B. Werth
__________________________________________________
Carol A. Lytle
__________________________________________________
Barbara Hollkamp
__________________________________________________
James A. McKnight
__________________________________________________
William J. McLaughlin
__________________________________________________
Alain J.A. Grange
__________________________________________________
John M. Sabin
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
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<PAGE>
THE UNDERSIGNED EXECUTE THIS
AGREEMENT SOLELY FOR PURPOSES
OF SECTION 3 HEREOF:
______________________________
Raymond L. Gellein, Jr.
______________________________
Jeffrey A. Adler
[SIGNATURES CONTINUED FROM PRECEDING PAGE]
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<PAGE>
SCHEDULE A
----------
Holders
-------
<TABLE>
<CAPTION>
No. of No. of Shares
Name and Address/(1)/ Shares s/t Options
- ------------------------------ --------- -------------
<S> <C> <C>
Raymond L. Gellein, Jr. 3,203,550 -
Revocable Trust
c/o Raymond L. Gellein, Jr.,
Trustee
Raymond L. Gellein, Jr. 254,440 -
Grantor Retained Annuity
Trust
c/o Raymond L. Gellein, Jr.,
Trustee
Matthew James Gellein 42,880 -
Irrevocable Trust
c/o Raymond L. Gellein, Jr.,
Trustee
Brett Tyler Gellein 42,880 -
Irrevocable Trust
c/o Raymond L. Gellein, Jr.,
Trustee
JGG Holdings Trust 3,203,550 -
c/o Raymond L. Gellein, Jr.,
Trustee
Janice G. Gellein Grantor 278,700 -
Annuity Trust
c/o Raymond L. Gellein, Jr.,
Trustee
Catherine Male Gift Trust 20,500 -
c/o Raymond L. Gellein, Jr.,
Trustee
Cherie Doherty Gift Trust 20,500 -
c/o Raymond L. Gellein, Jr.,
Trustee
Susan Faetz Gift Trust 20,500 -
c/o Raymond L. Gellein, Jr.,
Trustee
</TABLE>
S-1
<PAGE>
No. of
Name and Address (continued) Shares
---------------------------- ------
<TABLE>
<CAPTION>
<S> <C> <C>
Jeffrey A. Adler Revocable Trust 6,854,500 -
c/o Jeffrey A. Adler,
Trustee
Jeffrey A. Adler Grantor Annuity 50,000 -
Trust #1
c/o Jeffrey A. Adler,
Trustee
Jeffrey A. Adler Grantor Annuity 60,000 -
Trust #2
c/o Jeffrey A. Adler,
Trustee
ARA Trust 61,500 -
c/o Lee I. Miller,
Trustee
Suite 1800
203 North LaSalle Street
Chicago, Illinois 60601-1293
DLA Trust 61,500 -
c/o Lee I. Miller,
Trustee
Suite 1800
203 North LaSalle Street
Chicago, Illinois 60601-1293
Matthew E. Avril - 400,000
3856 Hunters Isle Drive
Orlando, Florida 32837
Susan B. Werth - 125,000
1725 South Bayshore Drive
Miami, Florida 33133
Carol A. Lytle - 400,000
9017 Crichton Wood Drive
Orlando, Florida 32819
Barbara Hollkamp - 100,000
2916 Sunbittern Court
Windermere, Florida 34786
James A. McKnight - 100,000
1011 Greentree Drive
Winter Park, Florida 32789
</TABLE>
S-2
<PAGE>
No. of
Name and Address (continued) Shares
---------------------------- ------
<TABLE>
<CAPTION>
<S> <C> <C>
William J. McLaughlin - 100,000
9649 Wild Oak Drive
Windermere, Florida 34786
Alain J.A. Grange - 100,000
9020 Classic Court
Orlando, Florida 32819
John M. Sabin - 25,000
14709 Lancraft Court
Darnestown, Maryland 20874
---------- ---------
14,175,000 1,350,000
---------- ---------
</TABLE>
______________________
/(1)/ Unless otherwise specified, all addresses are 8001 Vistana Centre Drive,
Orlando, Florida 32821.
S-3
<PAGE>
Exhibit 3
THE OPTION GRANTED UNDER THIS SHAREHOLDER OPTION AGREEMENT AND ANY SHARES
OF COMMON STOCK WHICH MAY BE ISSUED UPON THE EXERCISE OF SUCH OPTION HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED,
SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS
OR AN EXEMPTION THEREFROM.
SHAREHOLDER OPTION AGREEMENT
----------------------------
SHAREHOLDER OPTION AGREEMENT, dated as of February 10, 1997 (this
"Agreement") among RAYMOND L. GELLEIN, JR., as trustee of the Raymond L.
Gellein, Jr. Revocable Trust (the "Gellein Trust"), JEFFREY A. ADLER, as trustee
of the Jeffrey A. Adler Trust (the "Adler Trust"), RAYMOND L. GELLEIN, JR., as
the trustee of the JGG Holdings Trust (the "J. Gellein Trust;" each of the
foregoing trusts is also sometimes referred to herein individually as a
"Shareholder" and collectively as the "Shareholders"), and 1 (the "Grantee").
(Capitalized terms used herein but not otherwise defined shall have the meanings
set forth in Section 5 hereof.)
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, immediately prior to the completion of the Initial Public
Offering, the Shareholders will own in excess of 51% of outstanding shares of
Common Stock of Vistana, Inc., a Florida corporation (the "Company"); and
WHEREAS, the Shareholders have agreed collectively to grant to Grantee
options to purchase an aggregate of 2 shares of Common Stock owned by the
Shareholders upon the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of $10 and the mutual agreements contained
herein and certain other agreements being concurrently executed by the Company
and Grantee, the receipt, adequacy and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. The Option.
1.1 Grant of Option. Upon the terms and subject to the conditions
contained herein, each Shareholder hereby grants to Grantee the right and option
(the "Option") to purchase from such Shareholder the number of shares of Common
Stock set forth on attached Schedule A (the "Option Shares"). The Option may be
<PAGE>
exercised at any time during the Term (as hereinafter defined) in whole or from
time to time in part, provided that if the Option is exercised in part, Grantee
shall be obligated to purchase a pro rata portion of the Option Shares held by
each Shareholder, and each Shareholder shall be obligated to sell to Grantee its
pro rata share of the Option Shares subject to such exercise. The Option shall
be exercisable with respect to full shares of Common Stock only.
1.2 Term of Option. Except as provided below, Grantee may exercise the
Option from and after the closing of the Initial Public Offering (the "Effective
Date") until the earliest to occur of the following events (the "Term"):
(a) two years after the date of the death or Permanent Disability of
Grantee;
(b) if Grantee is employed by the Company as of the Effective Date,
two years after the date upon which the Company terminates Grantee's
employment by the Company other than for Cause;
(c) if Grantee is employed by the Company as of the Effective Date, 30
days after the date upon which the Company terminates Grantee's employment
by the Company for Cause;
(d) if Grantee is employed by the Company as of the Effective Date,
two years after the date upon which Grantee effects a Voluntary Termination
of Grantee's employment by the Company; and
(e) the tenth anniversary of the date hereof.
1.3 Exercise Price. The exercise price (the "Exercise Price") for each
Option Share shall be the price per share of Common Stock to the public in the
Initial Public Offering, subject to adjustment as provided in Section 1.6.
1.4 Procedure for Exercise. In the event Grantee desires to exercise the
Option, whether in whole or in part, Grantee shall deliver concurrent written
notices to each Shareholder (a) setting forth Grantee's desire to exercise the
Option, (b) specifying the number of shares of Common Stock to be purchased from
each Shareholder and (c) designating a date upon which Grantee desires to
consummate the exercise of the Option, which date shall not be less than 3 nor
more than 10 days after the delivery of such notice (the later of such date and
the date upon which all Federal and State securities laws relating to the
issuance and sale of the Option Shares and any applicable listing requirements
of any national securities exchange or other market system have been complied
with is referred to as an "Option Closing Date"). The Shareholders may require
the Grantee, or other person exercising
-2-
<PAGE>
the Option in accordance with the provisions of Section 1.7, to furnish or
execute such other documents as the Shareholders or their counsel shall deem
reasonably necessary to evidence such exercise or to comply with or satisfy the
requirements of the Securities Act or any other applicable law.
1.5 Consummation of Exercise.
(a) On each Option Closing Date,
(i) Grantee shall deliver to each Shareholder the Exercise Price
for the Option Shares to be purchased from such Shareholder by wire
transfer of immediately available funds or by delivery of a certified or
cashier's check payable to the order of such Shareholder; and
(ii) Each Shareholder shall deliver to Grantee one or more
certificates evidencing the Option Shares to be purchased hereunder at such
closing, together with a duly executed stock power transferring such Option
Shares to Grantee on the books and records of the Company.
(b) Notwithstanding the foregoing, if: (i) the Common Stock is readily
tradeable on a national securities exchange or other market system at the time
the Option is exercised in whole or in part and (ii) the relevant Option Shares
have been or will, pursuant to the Registration Rights Agreement or otherwise,
be duly registered under the Securities Act and any applicable State securities
laws, or exempt from registration thereunder, and any applicable listing
requirements of any national securities exchange or other market system have
been or will, pursuant to the Registration Rights Agreement or otherwise, be
complied with, in each case, as reasonably determined by counsel for the
Shareholders, payment may also be made by delivery of the written notice
described in Section 1.4, together with a copy of irrevocable instructions to a
broker to sell the number of shares of Common Stock specified in the exercise
notice and to: (x) deliver to each Shareholder the Option Price with respect to
the Option Shares being purchased by Grantee from such Shareholder, (y) remit
the remaining proceeds from the sale of such Option Shares, less the amount of
any applicable foreign, Federal, State or local withholding taxes attributable
to the transactions described herein, to Grantee, and (z) remit any amounts
withheld pursuant to clause (y) to the Company. The written notice and
irrevocable instructions shall be of no force or effect if counsel for the
Shareholders determines that the transactions described in this paragraph will
not comply with all applicable Federal and State securities laws and the
applicable listing requirements of any national securities exchange or other
market system.
(c) Grantee agrees that the Company may take such actions as are
necessary to comply with the wage withholding
-3-
<PAGE>
provisions of any applicable foreign, Federal, State or local income tax laws in
connection with each Option exercise.
1.6 Adjustments to Option. In the event of any merger or consolidation of
the Company, any recapitalization, reorganization or sale of all or
substantially all of the assets or properties of the Company or any other
transaction or series of transactions (including, without limitation, stock
dividends), which would have a dilutive effect upon the Option or the Option
Shares, the Option, and the terms and provisions thereof, shall be adjusted in a
fair and equitable manner by the Shareholders, whose determination shall be
conclusive and binding on Grantee. The Shareholders shall promptly notify
Grantee in writing of any such adjustments, the reason therefor and the
calculation thereof.
1.7 Option Not Transferable; No Rights As a Shareholder.
(a) (i) Except as set forth in Section 1.7(a)(ii), the Option, or any
portion thereof, may not be sold, pledged, assigned, transferred or
otherwise disposed of in any manner other than by will or the laws of
descent and distribution and shall not be subject to execution, attachment
or similar process.
(ii) Notwithstanding anything to the contrary contained in this
Section 1.7, Grantee may transfer all or a portion of the Option to an
Affiliate of Grantee; provided, however, that (A) the Option shall remain
subject to all of the terms and conditions of this Agreement in the hands
of such Affiliate, and (B) such Affiliate shall first deliver to the
Shareholders a written agreement assuming and agreeing to be bound by all
the terms and conditions of this Agreement and to be a "Grantee" hereunder
to the extent of the portion of the Option so transferred.
(iii) During Grantee's lifetime, the Option may only be exercised
by Grantee, an Affiliate of Grantee who or which is the holder of all or a
portion of the Option or by a legally authorized representative. In the
event that the Option shall be exercised by a person other than Grantee,
such person shall furnish to the Shareholders evidence satisfactory to them
of such person's right to exercise the Option.
(b) Neither Grantee nor any Affiliate of Grantee who or which is the
holder of all or a portion of the Option shall have any rights as a shareholder
of the Company until Grantee or such Affiliate shall have properly exercised the
Option, in whole or in part, and certificates evidencing the appropriate number
of Option Shares are properly delivered to Grantee or such Affiliate. Except as
provided in Section 1.6, no adjustment shall be made hereunder for dividends or
other rights for which the record date is prior to the issuance of such
certificates.
-4-
<PAGE>
2. Representations and Warranties of Shareholders. Each of the
Shareholders severally and not jointly represents and warrants to Grantee as
follows:
2.1 Authority. Each Shareholder has all necessary power and authority to
execute and deliver this Agreement and to sell, assign, transfer and deliver to
Grantee, pursuant to the terms and conditions of this Agreement, the Option
Shares to be received by such Shareholder in connection herewith. At the
Effective Date, each Shareholder will have sole voting power and sole power of
disposition of such Shareholder's Option Shares, with no restrictions on such
Shareholder's voting rights or rights of disposition pertaining thereto, except
for restrictions imposed by applicable Federal and State securities laws and
except as provided in the Shareholders' Agreement, dated as of the date hereof,
among the Shareholders and the Company and the Underwriting Agreement to be
executed by such Shareholder, among others, in connection with the Initial
Public Offering. At each closing referred to in Section 1.5, each Shareholder
will convey good and valid title to the relevant Option Shares owned by such
Shareholder, free and clear of any and all liens, claims, pledges, security
interests and other encumbrances of any kind whatsoever.
2.2 Authorization/Enforceability. This Agreement has been duly
authorized, executed and delivered by each Shareholder and constitutes a valid
and legally binding obligation of such Shareholder, enforceable against such
Shareholder in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws now or hereafter in effect relating to or
affecting the rights or remedies of creditors, general principles of equity
(whether considered in an action at law or in equity) and the discretion of the
court before which any proceeding therefor may be brought.
2.3 Non-Contravention. Neither the execution and delivery of this
Agreement nor the performance by each Shareholder of its respective obligations
hereunder will conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, its trust agreement, any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which such Shareholder is a party or by which such Shareholder or
its assets (including, without limitation, Option Shares) is bound, or any
statute, order, rule or regulation of any governmental authority applicable to
such Shareholder or its assets.
2.4 Consents/Approvals. No consent, approval, authorization, order,
registration or qualification of or with any governmental authority or other
person or entity is required in connection with the execution or delivery or,
except for filings which may be
-5-
<PAGE>
required under applicable Federal and State securities laws, performance of this
Agreement by each Shareholder.
3. Representations and Warranties of Grantee. Grantee hereby represents
and warrants to the Shareholders as follows:
3.1 Capacity/Enforceability. Grantee has the legal capacity to enter into
and perform Grantee's obligations under this Agreement. This Agreement has been
duly executed and delivered by Grantee and constitutes a valid and legally
binding obligation of Grantee, enforceable against Grantee in accordance with
its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other similar
laws now or hereafter in effect relating to or affecting the rights or remedies
of creditors, general principles of equity (whether considered in an action at
law or in equity) and the discretion of the court before which any proceeding
therefor may be brought.
3.2 Non-Contravention. Neither the execution and delivery of this
Agreement nor the performance by Grantee of Grantee's obligations hereunder will
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which Grantee is a
party or by which Grantee or Grantee's assets is bound, or any statute, order,
rule or regulation of any governmental authority applicable to Grantee or
Grantee's assets.
3.3 Consents/Approvals. No consent, approval, authorization, order,
registration or qualification of or with any governmental authority or other
person or entity is required in connection with the execution or delivery or,
except for filings which may be required under applicable Federal and State
securities laws, performance of this Agreement by Grantee.
3.4 Investment Intent.
(a) Grantee is an "accredited investor" (as defined in Rule 501(a) of
Regulation D under the Securities Act) and is acquiring the Option, and
will acquire any Option Shares hereunder, for Grantee's own account and
with no intention of distributing or selling such securities, except in
accordance with applicable Federal and State securities laws. Grantee
understands that neither the Option nor the Option Shares has been
registered under the Securities Act by reason of their contemplated
issuance in transaction(s) exempt from the registration and prospectus
delivery requirements of the Securities Act pursuant to Section 4(2)
thereof. The reliance of the Shareholders on such exemption from
registration is predicated in part on the representations and warranties of
Grantee hereunder.
-6-
<PAGE>
(b) Grantee agrees that Grantee will not sell or otherwise dispose of
the Option or any of the Option Shares unless such sale or other
disposition is permitted hereunder and under the Registration Rights
Agreement, has been registered or is exempt from registration under the
Securities Act and has been registered or qualified or is exempt from
registration or qualification under applicable State securities laws.
(c) Grantee understands that a restrictive legend consistent with the
foregoing has been or will be placed on the certificates evidencing the
Option Shares, and related stop transfer instructions will be noted in the
transfer records of the Company and/or its transfer agent for the Common
Stock.
(d) Grantee hereby acknowledges that disposition of the Option and the
Option Shares is restricted by applicable law and by the terms of this
Agreement and the Registration Rights Agreement, and Grantee may, unless
permitted hereunder and thereunder, be required to bear the economic risk
of Grantee's investment in the Option Shares (assuming exercise of the
Option) indefinitely.
4. Covenants.
4.1 Right to Compel Disposition.
(a) Notwithstanding anything in this Agreement to the contrary, upon a
proposed disposition by the Shareholders, acting as a group, of all or
substantially all the shares of Common Stock beneficially owned by them (as
determined in accordance with Rule 13d-3 of the Securities Exchange Act of 1934,
as amended) to one or more third party purchasers who or which are not
Affiliates of any of the Shareholders (collectively, "Transferee"), by way of
merger or sale, in a single transaction or a series of related transactions
(other than one or more underwritten public offerings), the Shareholders shall
have the right and option to deem the Option exercised (except that the Exercise
Price shall not be payable other than pursuant to this paragraph) and dispose of
the Option Shares on behalf of Grantee, and Grantee's Affiliates, if any, who or
which hold all or a portion of the Option, to such Transferee for the same
consideration per share of Common Stock and otherwise on the same terms and
conditions upon which the Shareholders effect the disposition of their shares of
Common Stock. Grantee, and Grantee's Affiliates, if any, who or which hold all
or a portion of the Option, shall, in connection with such a disposition, be
entitled to receive an amount equal to the total sales price of the Option
Shares, less the sum of the Exercise Price thereof and any applicable foreign,
Federal, State or local withholding taxes attributable to the transactions
described in this Section 4.1(a) (it being understood that cash consideration
-7-
<PAGE>
and any other type of consideration (valued in accordance with the methodology
used for the disposition as a whole) in the foregoing amounts shall be retained
on a pro rata basis). Grantee agrees that the Company may take such actions as
are necessary to comply with the wage withholding provisions of any applicable
foreign, Federal, State or local income tax laws in connection with the above-
described transactions.
(b) In the event that the Shareholders desire to exercise their rights
pursuant to Section 4.1(a), they shall deliver to Grantee, and Grantee's
Affiliates, if any, who or which hold all or a portion of the Option, written
notice setting forth the consideration per share of Common Stock to be paid by
such Transferee and the other terms and conditions of such proposed disposition.
(c) Promptly after the consummation of the disposition of Option
Shares pursuant to this Section 4.1 (but in no event later than three business
days following receipt by the Shareholders of consideration from the
Transferee), the Shareholders shall (i) deliver notice thereof to Grantee, and
Grantee's Affiliates, if any, who or which hold all or a portion of the Option,
(ii) remit to Grantee, and Grantee's Affiliates, if any, who or which hold all
or a portion of the Option, the total sales price of the Option Shares disposed
of pursuant hereto less the sum of the Exercise Price thereof and any applicable
foreign, Federal, State or local withholding taxes, and (iii) furnish such other
evidence of the completion and time of completion of such disposition and the
terms thereof as may be reasonably requested in writing by Grantee.
(d) If, within 120 days after the Shareholders' delivery of the notice
required pursuant to Section 4.1(b), the Shareholders have not completed the
disposition of all or substantially all of their shares of Common Stock and the
Option Shares in accordance herewith (which period shall be extended in order to
secure all approvals of regulatory bodies and similar authorities that are
required to effectuate such disposition, in which case the closing shall be
conducted no later than 10 business days after the receipt of all such approvals
(it being understood that the parties shall use their reasonable best efforts to
obtain any such approvals within the time periods contemplated hereby)), the
deemed exercise described in Section 4.1(a) shall of no force or effect and the
provisions of Sections 4.1(a) and 4.2(a) shall again apply.
(e) Grantee agrees to execute and deliver to the Shareholders and/or
the Transferee any and all documents and other instruments reasonably necessary
to effect the disposition of the Option or the Option Shares pursuant to this
Section.
(f) From and after Grantee's receipt of the notice contemplated by
Section 4.1(b), Grantee may not exercise the Option
-8-
<PAGE>
unless the provisions of Section 4.1(d) shall have become applicable.
4.2 Right of Inclusion.
(a) If (i) a Shareholder (considering the Gellein Trust and the J.
Gellein Trust as a single Shareholder for purposes of this Section 4.2), which,
at the time, owns an aggregate of at least 20% of the outstanding shares of
Common Stock, proposes to sell more than 50% of its shares of Common Stock in a
single transaction or a series of related transactions (other than one or more
underwritten public offerings) to a Transferee, and (ii) the Shareholders do not
elect to exercise their rights, if any, under Section 4.1, then such Shareholder
shall deliver to Grantee, and Grantee's Affiliates who or which hold all or a
portion of the Option, a written notice setting forth the consideration per
share of Common Stock to be paid by such Transferee and the other terms and
conditions of such proposed disposition. Grantee, and Grantee's Affiliates, if
any, who or which hold all or a portion of the Option, shall be entitled to
participate in such proposed disposition by requiring Shareholder to cause
Transferee to purchase that number of Option Shares equal to the Included Shares
and to receive, in connection with such proposed disposition, an amount equal to
the total sales price of the Included Shares, less the sum of the Exercise Price
thereof and any applicable foreign, Federal, State or local withholding taxes
attributable to the transactions described in Section 4.2(a).
(b) If Grantee, or any of Grantee's Affiliates described above, elects
so to participate, Grantee and any such Affiliate shall so notify the relevant
Shareholder within five business days after receipt of such Shareholder's
notice. Grantee's election shall constitute a deemed exercise of the Option
with respect to the Included Shares and authorization for the Shareholder to
dispose of the Included Shares on behalf of Grantee and any such Affiliate to
Transferee for the same consideration per Share and otherwise on the same terms
and conditions upon which the Shareholder effects the disposition of its shares
of Common Stock. Grantee agrees that the Company may take such actions as are
necessary to comply with the wage withholding provisions of any applicable
foreign, Federal, State or local income tax laws in connection with the
transactions described in this Section 4.2(a).
(c) Promptly after the consummation of the disposition of the Included
Shares pursuant to this Section 4.2 (but in no event later than three business
days following receipt by the Shareholder of consideration from the Transferee),
such Shareholder shall (i) deliver notice thereof to Grantee and any of such
Grantee's Affiliates participating in such disposition, (ii) remit to Grantee
and any of such Grantee's Affiliates participation in such disposition the total
sales price of the Included Shares disposed of pursuant hereto, less the sum of
the Exercise Price
-9-
<PAGE>
thereof and any applicable foreign, Federal, State or local withholding taxes
(it being understood that cash consideration and any other type of consideration
(valued in accordance with the methodology used for the disposition as a whole)
in the foregoing amounts shall be retained on a pro rata basis), and (iii)
furnish such other evidence of the completion and time of completion of such
disposition and the terms thereof as may be reasonably requested in writing by
Grantee.
(d) If, within 120 days after the Shareholder's delivery of the notice
required pursuant to Section 4.2(a), such Shareholder has not completed the
disposition of more than 50% of its shares of Common Stock in accordance
herewith (which period shall be extended in order to secure all approvals of
regulatory bodies and similar authorities that are required to effectuate such
disposition, in which case the closing shall be conducted no later than 10
business days after the receipt of all such approvals (it being understood that
the parties shall use their reasonable best efforts to obtain any such approvals
within the time periods contemplated hereby)), the deemed exercise, if any,
referred to in Section 4.2(b) shall be of no force or effect and the provisions
of Sections 4.1(a) and 4.2(a) shall again apply.
(e) Grantee agrees to execute and deliver to the Shareholders and/or
the Transferee any and all documents and other instruments reasonably necessary
to effect the disposition of the Option or the Option Shares pursuant to this
Section.
(f) From and after Grantee's delivery of notice pursuant to Section
4.2(b), Grantee may not exercise the Option in respect of the Included Shares
(other than as set forth in Section 4.2(b)) unless the provisions of Section
4.2(d) shall have become applicable.
4.3 Legend. Until the Option Shares no longer constitute Registrable
Shares (as defined in the Registration Rights Agreement), each certificate
representing Option Shares shall be imprinted with substantially the following
legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE TRANSFERRED, SOLD OR
OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND ANY
OTHER APPLICABLE STATE SECURITIES LAWS OR UNLESS AN EXEMPTION FROM
REGISTRATION IS AVAILABLE.
Each certificate representing Option Shares shall also be imprinted with
any other legend required pursuant to applicable State corporation or securities
laws or any other agreements among
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<PAGE>
the parties, including, without limitation, the Registration Rights Agreement.
5. Definitions.
5.1 Certain Definitions. For purposes of this Agreement, the terms and
phrases set forth below shall have the following meanings:
"Affiliate" means, as to any person (i) any corporation, partnership,
limited liability company, joint venture, trust or individual directly or
indirectly through one or more intermediaries controlled by or under common
control with such person, or which controls directly or indirectly through one
or more intermediaries, such person (it being understood that in the case of
Grantee, such an entity must be wholly-owned by Grantee and the persons in
respect of Grantee, if any, described in clauses (ii) and (iii) of this
definition); (ii) a trust which has as its principal income beneficiaries or
remaindermen such person or any direct or indirect holder of such person, or
members of the immediate family of such person or direct or indirect holder of
such person; and (iii) any members of the immediate family of such person or a
member of the immediate family of any direct or indirect holder of such person.
For purposes of this definition, (i) no person, by virtue of his, her or its
direct or indirect ownership of shares of Common Stock, shall be deemed to be an
Affiliate of another person; (ii) the terms "control", "controlled" and "common
control with" mean the ability, whether by the direct or indirect ownership of
voting securities or other equity interest, by contract or otherwise, to elect a
majority of the directors of a corporation, to select the managing partner of a
partnership, or otherwise to select, or have the power to remove and then
select, a majority of those persons exercising governing authority over an
entity; and (iii) the term "immediate family" means spouses, siblings and lineal
descendants of a person.
"Cause", with respect to Grantee, has the meaning ascribed thereto in
the then effective employment agreement, if any, between the Company and
Grantee, as the same may be amended, restated, modified or supplemented.
"Included Shares" means a number of Option Shares held by a
Shareholder equal to the product of (i) the number of Option Shares which
Grantee is entitled to purchase from such Shareholder pursuant to the terms of
this Agreement, multiplied by (ii) a fraction, the numerator of which is the
number of shares of Common Stock which the Shareholder and its Affiliates
propose to dispose of in such transaction or transactions, and the denominator
of which is all shares of Common Stock owned beneficially or of record by such
Shareholder and its Affiliates at such time determined on a fully-diluted basis
in accordance with generally accepted accounting principles.
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<PAGE>
"Initial Public Offering" means the sale by the Company of
approximately 4,625,000 shares of Common Stock to the public pursuant to an
underwritten offering.
"Permanent Disability", with respect to Grantee has the meaning
ascribed thereto in the then effective employment agreement, if any, between the
Company and Grantee, as the same may be amended, restated, modified or
supplemented. If a Grantee does not have an effective Employment Agreement,
then the term "Permanent Disability" means the inability of the Grantee to
perform substantially all Grantee's duties and responsibilities to the Company
by reason of a physical or mental disability or infirmity for either (i) a
continuous period of six months or (ii) 180 days during any consecutive twelve-
month period. The date of such Permanent Disability shall be (y), in the case
of clause (i) above, the last day of such six-month period or, if later, the day
on which satisfactory medical evidence of such Permanent Disability is obtained
by the Company, or (z) in the case of clause (ii) above, such date as is
determined in good faith by the Company. In the event that any disagreement or
dispute arises between the Company and Grantee as to whether the Grantee has
incurred a Permanent Disability, then, in any such event, Grantee shall submit
to a physical and/or mental examination by a competent and qualified physician
licensed under the laws of the State of Florida who shall be mutually selected
by the Company and Grantee, and such physician shall make the determination of
whether Grantee suffers from any disability. In the absence of fraud or bad
faith, the determination of such physician as to Grantee's condition at such
time shall be final and binding upon both the Company and the Grantee.
"Registration Rights Agreement" shall mean the Registration Rights
Agreement, dated as of the date hereof, among the Company, Grantee and the other
parties listed on the signature pages thereof.
"Voluntary Termination" shall mean the voluntary termination by
Grantee of Grantee's employment by the Company by voluntary resignation or any
other means (other than (i) death or Permanent Disability or (ii) simultaneous
with or following termination for Cause or an event which if known to the
Company at the time of such voluntary termination by Grantee would constitute
Cause).
5.2 Other Defined Terms. Each of the following terms is defined in the
Section of this Agreement set forth opposite such term:
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<TABLE>
<CAPTION>
Term Section
---- -------
<S> <C>
Company preamble
Effective Date 1.2
Exercise Price 1.3
Grantee preamble
Option 1.1
Option Closing Date 1.4
Option Shares 1.1
Securities Act legend
Shareholder preamble
Term 1.2
Territory 4.4(a)
Transferee 4.1(a)
</TABLE>
6. Miscellaneous Provisions.
6.1 Binding Effect. This Agreement and all the terms and provisions
hereof shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors, heirs, personal or legal representatives
and permitted assigns and no other person or entity shall have any rights
hereunder, other than the Company, which shall be a beneficiary of Grantee's
agreements concerning withholding taxes set forth in Sections 1.5(c), 4.1(a) and
4.2(b).
6.2 Entire Agreement. This Agreement contains the entire understanding
among the parties with respect to the subject matter hereof and supersedes any
prior agreements or understandings among them with respect thereto.
6.3 Amendments; Waivers. This Agreement may not be modified except by a
written agreement signed by the parties hereto, and no provision hereof or
breach thereof may be waived except in a writing executed by the party waiving
such party's rights. The waiver of any term hereof or the breach thereof in any
instance shall not be deemed to be a waiver of such term or breach in any other
instance or of any other term or breach.
6.4 Survival. The representations and warranties contained herein or
made pursuant hereto shall survive the execution and delivery of this Agreement
and the issuance of the Option Shares.
6.5 Governing Law. The construction and interpretation of this Agreement
shall be governed in all respects by the laws of the State of Florida (without
regard to its conflict of laws principles).
6.6 No Implied Employment Contract. Nothing contained in this Agreement
shall be construed to be a contract of employment between the Company and
Grantee.
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<PAGE>
6.7 Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement or the application
thereof shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the minimal extent of such prohibition or invalidity
without invalidating the remainder of such provision or the remaining provisions
of this Agreement or the application of such provision to other parties or
circumstances.
6.8 Notices. All communications among the parties shall be in writing
and shall be deemed to have been duly given as of the date of hand delivery or
three days after mailing via certified or registered mail, return receipt
requested, proper postage prepaid, to the addresses specified for each party on
attached Schedule A or such other address as a party shall from time to time
specify in a notice delivered in accordance with this Section 6.8.
6.9 Headings. The descriptive headings of the respective Sections and
Subsections of this Agreement are inserted for convenience of reference only and
shall not be deemed to modify or affect the construction of the provisions which
follow them.
6.10 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be an original, but all of which shall
constitute one and the same instrument.
6.11 Trustee Exculpation. The execution of this Agreement by the trustees
of the Gellein Trust, Adler Trust and J. Gellein Trust is by such trustees, not
individually, but solely in their capacities as trustees, and nothing contained
herein shall be deemed to impose any personal liability on such trustees
individually.
6.12 Consent of Spouse; Insertion in Will. Grantee agrees to obtain the
consent and approval of Grantee's spouse, by the execution hereof by such
spouse, to all of the terms and provisions of this Agreement. Grantee agrees to
insert in Grantee's last will and testament or other similar instrument, or
execute a codicil thereto, directing and authorizing Grantee's personal
representatives to fulfill and comply with the provisions of this Agreement.
6.13 Effectiveness. This Agreement and the rights granted to Grantee
hereunder shall become effective at the Effective Date; provided, however, that
if the Effective Date does not occur prior to June 30, 1997, this Agreement
shall be of no further force or effect.
6.14 Several Obligations. The obligations of the Shareholders hereunder
are several and not joint.
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<PAGE>
6.15 Equitable Relief. Each party hereto specifically acknowledges and
agrees that the remedy at law for any breach of its obligations hereunder will
be inadequate and that, in addition to any other relief available to the non-
breaching parties, the non-breaching parties shall be entitled to temporary and
permanent injunctive relief without the necessity of proving actual damages.
6.16 Attorneys' Fees and Costs. In the event a dispute arises between the
parties hereto and suit is instituted, the prevailing party or parties in such
litigation shall be entitled to recover reasonable attorneys' fees and other
costs and expenses from the non-prevailing party or parties, whether incurred at
the trial level or in any appellate proceeding.
IN WITNESS WHEREOF, the parties have executed this Agreement, as of the
date first above written.
SHAREHOLDERS:
------------
RAYMOND L. GELLEIN, JR. REVOCABLE
TRUST
By:
----------------------------
Raymond L. Gellein, Jr.
Trustee
JEFFREY A. ADLER TRUST
By:
----------------------------
Jeffrey A. Adler
Trustee
JGG HOLDINGS TRUST
By:
----------------------------
Raymond L. Gellein, Jr.
Trustee
Grantee:
-------
-----------------------------------
Name: 3
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<PAGE>
CONSENT OF SPOUSE
-----------------
The undersigned, the spouse of the Grantee referred to in the attached
Shareholders Option Agreement, hereby consents to the execution of the
Shareholders Option Agreement and the consummation of the transactions
contemplated thereby by the Grantee, and hereby waives any and all rights the
undersigned may have in and to the property and subject matter of the
Shareholders Option Agreement by virtue of such spouse's marital relationship
with the Grantee.
________________________________
Name: 4
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<PAGE>
SCHEDULE A
----------
Shareholder, Option and Grantee Information
-------------------------------------------
No. of Shares Subject
Name and Address to Grant of Option
- ---------------- ------------------
Raymond L. Gellein, Jr. 5
Revocable Trust
c/o Raymond L. Gellein, Jr.,
Trustee
8801 Vistana Centre Drive
Orlando, Florida 32821
JGG Holdings Trust 6
c/o Raymond L. Gellein, Jr.,
Trustee
8801 Vistana Centre Drive
Orlando, Florida 32821
Jeffrey A. Adler Revocable Trust 7
c/o Jeffrey A. Adler,
Trustee
8801 Vistana Centre Drive
Orlando, Florida 32821 _______
8
==
Grantee Name and Address
- ------------------------
9
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<PAGE>
Exhibit 4
THE OPTION GRANTED UNDER THIS SHAREHOLDER OPTION AGREEMENT AND ANY SHARES
OF COMMON STOCK WHICH MAY BE ISSUED UPON THE EXERCISE OF SUCH OPTION HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED,
SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS
OR AN EXEMPTION THEREFROM.
SHAREHOLDER OPTION AGREEMENT
SHAREHOLDER OPTION AGREEMENT, dated as of July 17, 1997 (this "Agreement")
among RAYMOND L. GELLEIN, JR., as trustee of the Raymond L. Gellein, Jr.
Revocable Trust (the "Gellein Trust"), JEFFREY A. ADLER, as trustee of the
Jeffrey A. Adler Trust (the "Adler Trust"), RAYMOND L. GELLEIN, JR., as the
trustee of the JGG Holdings Trust (the "J. Gellein Trust;" each of the foregoing
trusts is also sometimes referred to herein individually as a "Shareholder" and
collectively as the "Shareholders"), and ALAIN J.A. GRANGE ("Grantee").
(Capitalized terms used herein but not otherwise defined shall have the meanings
set forth in Section 5 hereof.)
W I T N E S S E T H:
WHEREAS, the Shareholders have agreed collectively to grant to Grantee
options to purchase an aggregate of 40,000 shares of Common Stock owned by the
Shareholders upon the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of $10 and the mutual agreements contained
herein and certain other agreements being concurrently executed by Vistana,
Inc., a Florida corporation (the "Company"), and Grantee, the receipt, adequacy
and sufficiency of which are hereby acknowledged, the parties hereto, intending
to be legally bound, hereby agree as follows:
1. The Option.
1.1 Grant of Option. Upon the terms and subject to the conditions
contained herein, each Shareholder hereby grants to Grantee the right and option
(the "Option") to purchase from such Shareholder the number of shares of Common
Stock set forth on attached Schedule A (the "Option Shares"). The Option may be
exercised at any time during the Term (as hereinafter defined) in whole or from
time to time in part, provided that if the Option is exercised in part, Grantee
shall be obligated to purchase a
<PAGE>
pro rata portion of the Option Shares held by each Shareholder, and each
Shareholder shall be obligated to sell to Grantee its pro rata share of the
Option Shares subject to such exercise. The Option shall be exercisable with
respect to full shares of Common Stock only.
1.2 Vesting of Option. Grantee may not exercise the Option until it has
become vested. The Option shall vest, if at all, in its entirety upon the
earliest to occur of the following events (the "Vesting Date"):
(a) the date of the death or Permanent Disability of Grantee;
(b) the date upon which the Company terminates Grantee's employment by
the Company for any reason;
(c) the date upon which Grantee terminates Grantee's employment by the
Company as a result of a Voluntary Termination for Good Reason;
(d) the date upon which a Change in Control is consummated; and
(e) February 10, 2001;
provided, however, that if prior to February 10, 2001, Grantee terminates
Grantee's employment by the Company for any reason, the Option shall be
forfeited by Grantee, and this Agreement shall immediately thereafter cease to
have any force or effect.
1.3 Term of Option. Grantee may exercise the Option from and after the
Vesting Date until the earliest to occur of the following events (the "Term"):
(a) two years after the date of the death or Permanent Disability of
Grantee;
(b) two years after the date upon which the Company terminates
Grantee's employment by the Company other than for Cause;
(c) 30 days after the date upon which the Company terminates Grantee's
employment by the Company for Cause;
(d) two years after the date upon which Grantee effects a Voluntary
Termination of Grantee's employment by the Company; and
(e) the tenth anniversary of the date hereof.
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1.4 Exercise Price. The exercise price (the "Exercise Price") for each
Option Share shall be $12 per share, subject to adjustment as provided in
Section 1.7.
1.5 Procedure for Exercise. In the event Grantee desires to exercise the
Option, whether in whole or in part, Grantee shall deliver concurrent written
notices to each Shareholder (a) setting forth Grantee's desire to exercise the
Option, (b) specifying the number of shares of Common Stock to be purchased from
each Shareholder and (c) designating a date upon which Grantee desires to
consummate the exercise of the Option, which date shall not be less than 3 nor
more than 10 days after the delivery of such notice (the later of such date and
the date upon which all Federal and State securities laws relating to the
issuance and sale of the Option Shares and any applicable listing requirements
of any national securities exchange or other market system have been complied
with is referred to as an "Option Closing Date"). The Shareholders may require
the Grantee, or other person exercising the Option in accordance with the
provisions of Section 1.8, to furnish or execute such other documents as the
Shareholders or their counsel shall deem reasonably necessary to evidence such
exercise or to comply with or satisfy the requirements of the Securities Act or
any other applicable law.
1.6 Consummation of Exercise.
(a) On each Option Closing Date,
(i) Grantee shall deliver to each Shareholder the Exercise Price
for the Option Shares to be purchased from such Shareholder by wire
transfer of immediately available funds or by delivery of a certified or
cashier's check payable to the order of such Shareholder; and
(ii) Each Shareholder shall deliver to Grantee one or more
certificates evidencing the Option Shares to be purchased hereunder at such
closing, together with a duly executed stock power transferring such Option
Shares to Grantee on the books and records of the Company.
(b) Notwithstanding the foregoing, if: (i) the Common Stock is readily
tradeable on a national securities exchange or other market system at the time
the Option is exercised in whole or in part and (ii) the relevant Option Shares
have been or will, pursuant to the Registration Rights Agreement or otherwise,
be duly registered under the Securities Act and any applicable State securities
laws, or exempt from registration thereunder, and any applicable listing
requirements of any national securities exchange or other market system have
been or will, pursuant to the Registration Rights Agreement or otherwise, be
complied with, in each case, as reasonably determined by counsel for the
Shareholders, payment may also be made by delivery of the written
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notice described in Section 1.5, together with a copy of irrevocable
instructions to a broker to sell the number of shares of Common Stock specified
in the exercise notice and to: (x) deliver to each Shareholder the Option Price
with respect to the Option Shares being purchased by Grantee from such
Shareholder, (y) remit the remaining proceeds from the sale of such Option
Shares, less the amount of any applicable foreign, Federal, State or local
withholding taxes attributable to the transactions described herein, to Grantee,
and (z) remit any amounts withheld pursuant to clause (y) to the Company. The
written notice and irrevocable instructions shall be of no force or effect if
counsel for the Shareholders determines that the transactions described in this
paragraph will not comply with all applicable Federal and State securities laws
and the applicable listing requirements of any national securities exchange or
other market system.
(c) Grantee agrees that the Company may take such actions as are
necessary to comply with the wage withholding provisions of any applicable
foreign, Federal, State or local income tax laws in connection with each Option
exercise.
1.7 Adjustments to Option. In the event of any merger or consolidation of
the Company, any recapitalization, reorganization or sale of all or
substantially all of the assets or properties of the Company or any other
transaction or series of transactions (including, without limitation, stock
dividends), which would have a dilutive effect upon the Option or the Option
Shares, the Option, and the terms and provisions thereof, shall be adjusted in a
fair and equitable manner by the Shareholders, whose determination shall be
conclusive and binding on Grantee. The Shareholders shall promptly notify
Grantee in writing of any such adjustments, the reason therefor and the
calculation thereof.
1.8 Option Not Transferable; No Rights As a Shareholder.
---------------------------------------------------
(a) (i) Except as set forth in Section 1.8(a)(ii), the Option, or
any portion thereof, may not be sold, pledged, assigned, transferred or
otherwise disposed of in any manner other than by will or the laws of
descent and distribution and shall not be subject to execution, attachment
or similar process.
(ii) Notwithstanding anything to the contrary contained in this
Section 1.8, Grantee may transfer all or a portion of the Option to an
Affiliate of Grantee; provided, however, that (A) the Option shall remain
subject to all of the terms and conditions of this Agreement in the hands
of such Affiliate, and (B) such Affiliate shall first deliver to the
Shareholders a written agreement assuming and agreeing to be bound by all
the terms and conditions of this Agreement and to be a "Grantee" hereunder
to the extent of the portion of the Option so transferred.
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(iii) During Grantee's lifetime, the Option may only be
exercised by Grantee, an Affiliate of Grantee who or which is the holder of
all or a portion of the Option or by a legally authorized representative.
In the event that the Option shall be exercised by a person other than
Grantee, such person shall furnish to the Shareholders evidence
satisfactory to them of such person's right to exercise the Option.
(b) Neither Grantee nor any Affiliate of Grantee who or which is the
holder of all or a portion of the Option shall have any rights as a shareholder
of the Company until Grantee or such Affiliate shall have properly exercised the
Option, in whole or in part, and certificates evidencing the appropriate number
of Option Shares are properly delivered to Grantee or such Affiliate. Except as
provided in Section 1.7, no adjustment shall be made hereunder for dividends or
other rights for which the record date is prior to the issuance of such
certificates.
2. Representations and Warranties of Shareholders. Each of the
Shareholders severally and not jointly represents and warrants to Grantee as
follows:
2.1 Authority. Each Shareholder has all necessary power and authority to
execute and deliver this Agreement and to sell, assign, transfer and deliver to
Grantee, pursuant to the terms and conditions of this Agreement, the Option
Shares to be received by such Shareholder in connection herewith. Each
Shareholder has sole voting power and sole power of disposition of such
Shareholder's Option Shares, with no restrictions on such Shareholder's voting
rights or rights of disposition pertaining thereto, except for restrictions
imposed by applicable Federal and State securities laws and except as provided
in the Shareholders' Agreement, dated February 10, 1997, among the Shareholders
and the Company and the Underwriting Agreement executed by such Shareholder,
among others, in connection with the Initial Public Offering. At each closing
referred to in Section 1.6, each Shareholder will convey good and valid title to
the relevant Option Shares owned by such Shareholder, free and clear of any and
all liens, claims, pledges, security interests and other encumbrances of any
kind whatsoever.
2.2 Authorization/Enforceability. This Agreement has been duly
authorized, executed and delivered by each Shareholder and constitutes a valid
and legally binding obligation of such Shareholder, enforceable against such
Shareholder in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws now or hereafter in effect relating to or
affecting the rights or remedies of creditors, general principles of equity
(whether considered in an action at law or in equity) and the discretion of the
court before which any proceeding therefor may be brought.
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<PAGE>
2.3 Non-Contravention. Neither the execution and delivery of this
Agreement nor the performance by each Shareholder of its respective obligations
hereunder will conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, its trust agreement, any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which such Shareholder is a party or by which such Shareholder or
its assets (including, without limitation, Option Shares) is bound, or any
statute, order, rule or regulation of any governmental authority applicable to
such Shareholder or its assets.
2.4 Consents/Approvals. No consent, approval, authorization, order,
registration or qualification of or with any governmental authority or other
person or entity is required in connection with the execution or delivery or,
except for filings which may be required under applicable Federal and State
securities laws, performance of this Agreement by each Shareholder.
3. Representations and Warranties of Grantee. Grantee hereby represents
and warrants to the Shareholders as follows:
3.1 Capacity/Enforceability. Grantee has the legal capacity to enter into
and perform Grantee's obligations under this Agreement. This Agreement has been
duly executed and delivered by Grantee and constitutes a valid and legally
binding obligation of Grantee, enforceable against Grantee in accordance with
its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other similar
laws now or hereafter in effect relating to or affecting the rights or remedies
of creditors, general principles of equity (whether considered in an action at
law or in equity) and the discretion of the court before which any proceeding
therefor may be brought.
3.2 Non-Contravention. Neither the execution and delivery of this
Agreement nor the performance by Grantee of Grantee's obligations hereunder will
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which Grantee is a
party or by which Grantee or Grantee's assets is bound, or any statute, order,
rule or regulation of any governmental authority applicable to Grantee or
Grantee's assets.
3.3 Consents/Approvals. No consent, approval, authorization, order,
registration or qualification of or with any governmental authority or other
person or entity is required in connection with the execution or delivery or,
except for filings which may be required under applicable Federal and State
securities laws, performance of this Agreement by Grantee.
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<PAGE>
3.4 Investment Intent.
-----------------
(a) Grantee is an "accredited investor" (as defined in Rule 501(a) of
Regulation D under the Securities Act) and is acquiring the Option, and
will acquire any Option Shares hereunder, for Grantee's own account and
with no intention of distributing or selling such securities, except in
accordance with applicable Federal and State securities laws. Grantee
understands that neither the Option nor the Option Shares has been
registered under the Securities Act by reason of their contemplated
issuance in transaction(s) exempt from the registration and prospectus
delivery requirements of the Securities Act pursuant to Section 4(2)
thereof. The reliance of the Shareholders on such exemption from
registration is predicated in part on the representations and warranties of
Grantee hereunder.
(b) Grantee agrees that Grantee will not sell or otherwise dispose of
the Option or any of the Option Shares unless such sale or other
disposition is permitted hereunder and under the Registration Rights
Agreement, has been registered or is exempt from registration under the
Securities Act and has been registered or qualified or is exempt from
registration or qualification under applicable State securities laws.
(c) Grantee understands that a restrictive legend consistent with the
foregoing has been or will be placed on the certificates evidencing the
Option Shares, and related stop transfer instructions will be noted in the
transfer records of the Company and/or its transfer agent for the Common
Stock.
(d) Grantee hereby acknowledges that disposition of the Option and the
Option Shares is restricted by applicable law and by the terms of this
Agreement and the Registration Rights Agreement, and Grantee may, unless
permitted hereunder and thereunder, be required to bear the economic risk
of Grantee's investment in the Option Shares (assuming exercise of the
Option) indefinitely.
4. Covenants.
---------
4.1 Right to Compel Disposition.
---------------------------
(a) Notwithstanding anything in this Agreement to the contrary, upon a
proposed disposition by the Shareholders, acting as a group, of all or
substantially all the shares of Common Stock beneficially owned by them (as
determined in accordance with Rule 13d-3 of the Exchange Act, as amended) to one
or more third party purchasers who or which are not Affiliates of any of the
Shareholders (collectively, "Transferee"), by way of merger or
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<PAGE>
sale, in a single transaction or a series of related transactions (other than
one or more underwritten public offerings), the Shareholders shall have the
right and option to deem the Option exercised (except that the Exercise Price
shall not be payable other than pursuant to this paragraph) and dispose of the
Option Shares on behalf of Grantee, and Grantee's Affiliates, if any, who or
which hold all or a portion of the Option, to such Transferee for the same
consideration per share of Common Stock and otherwise on the same terms and
conditions upon which the Shareholders effect the disposition of their shares of
Common Stock. Grantee, and Grantee's Affiliates, if any, who or which hold all
or a portion of the Option, shall, in connection with such a disposition, be
entitled to receive an amount equal to the total sales price of the Option
Shares, less the sum of the Exercise Price thereof and any applicable foreign,
Federal, State or local withholding taxes attributable to the transactions
described in this Section 4.1(a) (it being understood that cash consideration
and any other type of consideration (valued in accordance with the methodology
used for the disposition as a whole) in the foregoing amounts shall be retained
on a pro rata basis). Grantee agrees that the Company may take such actions as
are necessary to comply with the wage withholding provisions of any applicable
foreign, Federal, State or local income tax laws in connection with the above-
described transactions.
(b) In the event that the Shareholders desire to exercise their rights
pursuant to Section 4.1(a), they shall deliver to Grantee, and Grantee's
Affiliates, if any, who or which hold all or a portion of the Option, written
notice setting forth the consideration per share of Common Stock to be paid by
such Transferee and the other terms and conditions of such proposed disposition.
(c) Promptly after the consummation of the disposition of Option
Shares pursuant to this Section 4.1 (but in no event later than three business
days following receipt by the Shareholders of consideration from the
Transferee), the Shareholders shall (i) deliver notice thereof to Grantee, and
Grantee's Affiliates, if any, who or which hold all or a portion of the Option,
(ii) remit to Grantee, and Grantee's Affiliates, if any, who or which hold all
or a portion of the Option, the total sales price of the Option Shares disposed
of pursuant hereto less the sum of the Exercise Price thereof and any applicable
foreign, Federal, State or local withholding taxes, and (iii) furnish such other
evidence of the completion and time of completion of such disposition and the
terms thereof as may be reasonably requested in writing by Grantee.
(d) If, within 120 days after the Shareholders' delivery of the notice
required pursuant to Section 4.1(b), the Shareholders have not completed the
disposition of all or substantially all of their shares of Common Stock and the
Option Shares in accordance
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<PAGE>
herewith (which period shall be extended in order to secure all approvals of
regulatory bodies and similar authorities that are required to effectuate such
disposition, in which case the closing shall be conducted no later than 10
business days after the receipt of all such approvals (it being understood that
the parties shall use their reasonable best efforts to obtain any such approvals
within the time periods contemplated hereby)), the deemed exercise described in
Section 4.1(a) shall be of no force or effect and the provisions of Sections
4.1(a) and 4.2(a) shall again apply.
(e) Grantee agrees to execute and deliver to the Shareholders and/or
the Transferee any and all documents and other instruments reasonably necessary
to effect the disposition of the Option or the Option Shares pursuant to this
Section.
(f) From and after Grantee's receipt of the notice contemplated by
Section 4.1(b), Grantee may not exercise the Option unless the provisions of
Section 4.1(d) shall have become applicable.
4.2 Right of Inclusion.
------------------
(a) If (i) a Shareholder (considering the Gellein Trust and the J.
Gellein Trust as a single Shareholder for purposes of this Section 4.2), which,
at the time, owns an aggregate of at least 20% of the outstanding shares of
Common Stock, proposes to sell more than 50% of its shares of Common Stock in a
single transaction or a series of related transactions (other than one or more
underwritten public offerings) to a Transferee, and (ii) the Shareholders do not
elect to exercise their rights, if any, under Section 4.1, then such Shareholder
shall deliver to Grantee, and Grantee's Affiliates who or which hold all or a
portion of the Option, a written notice setting forth the consideration per
share of Common Stock to be paid by such Transferee and the other terms and
conditions of such proposed disposition. Grantee, and Grantee's Affiliates, if
any, who or which hold all or a portion of the Option, shall be entitled to
participate in such proposed disposition by requiring Shareholder to cause
Transferee to purchase that number of Option Shares equal to the Included Shares
and to receive, in connection with such proposed disposition, an amount equal to
the total sales price of the Included Shares, less the sum of the Exercise Price
thereof and any applicable foreign, Federal, State or local withholding taxes
attributable to the transactions described in Section 4.2(a).
(b) If Grantee, or any of Grantee's Affiliates described above, elects
so to participate, Grantee and any such Affiliate shall so notify the relevant
Shareholder within five business days after receipt of such Shareholder's
notice. Grantee's election shall constitute a deemed exercise of the Option
with respect to the Included Shares and authorization for the Shareholder to
dispose of the Included Shares on behalf of Grantee and any such
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<PAGE>
Affiliate to Transferee for the same consideration per Share and otherwise on
the same terms and conditions upon which the Shareholder effects the disposition
of its shares of Common Stock. Grantee agrees that the Company may take such
actions as are necessary to comply with the wage withholding provisions of any
applicable foreign, Federal, State or local income tax laws in connection with
the transactions described in this Section 4.2(a).
(c) Promptly after the consummation of the disposition of the Included
Shares pursuant to this Section 4.2 (but in no event later than three business
days following receipt by the Shareholder of consideration from the Transferee),
such Shareholder shall (i) deliver notice thereof to Grantee and any of such
Grantee's Affiliates participating in such disposition, (ii) remit to Grantee
and any of such Grantee's Affiliates participation in such disposition the total
sales price of the Included Shares disposed of pursuant hereto, less the sum of
the Exercise Price thereof and any applicable foreign, Federal, State or local
withholding taxes (it being understood that cash consideration and any other
type of consideration (valued in accordance with the methodology used for the
disposition as a whole) in the foregoing amounts shall be retained on a pro rata
basis), and (iii) furnish such other evidence of the completion and time of
completion of such disposition and the terms thereof as may be reasonably
requested in writing by Grantee.
(d) If, within 120 days after the Shareholder's delivery of the notice
required pursuant to Section 4.2(a), such Shareholder has not completed the
disposition of more than 50% of its shares of Common Stock in accordance
herewith (which period shall be extended in order to secure all approvals of
regulatory bodies and similar authorities that are required to effectuate such
disposition, in which case the closing shall be conducted no later than 10
business days after the receipt of all such approvals (it being understood that
the parties shall use their reasonable best efforts to obtain any such approvals
within the time periods contemplated hereby)), the deemed exercise, if any,
referred to in Section 4.2(b) shall be of no force or effect and the provisions
of Sections 4.1(a) and 4.2(a) shall again apply.
(e) Grantee agrees to execute and deliver to the Shareholders and/or
the Transferee any and all documents and other instruments reasonably necessary
to effect the disposition of the Option or the Option Shares pursuant to this
Section.
(f) From and after Grantee's delivery of notice pursuant to Section
4.2(b), Grantee may not exercise the Option in respect of the Included Shares
(other than as set forth in Section 4.2(b)) unless the provisions of Section
4.2(d) shall have become applicable.
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4.3 Legend. Until the Option Shares no longer constitute Registrable
Shares (as defined in the Registration Rights Agreement), each certificate
representing Option Shares shall be imprinted with substantially the following
legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE TRANSFERRED, SOLD OR
OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND ANY
OTHER APPLICABLE STATE SECURITIES LAWS OR UNLESS AN EXEMPTION FROM
REGISTRATION IS AVAILABLE.
Each certificate representing Option Shares shall also be imprinted with
any other legend required pursuant to applicable State corporation or securities
laws or any other agreements among the parties, including, without limitation,
the Registration Rights Agreement.
5. Definitions.
5.1 Certain Definitions. For purposes of this Agreement, the terms and
phrases set forth below shall have the following meanings:
"Affiliate" means, as to any person (i) any corporation, partnership,
limited liability company, joint venture, trust or individual directly or
indirectly through one or more intermediaries controlled by or under common
control with such person, or which controls directly or indirectly through one
or more intermediaries, such person (it being understood that in the case of
Grantee, such an entity must be wholly-owned by Grantee and the persons in
respect of Grantee, if any, described in clauses (ii) and (iii) of this
definition); (ii) a trust which has as its principal income beneficiaries or
remaindermen such person or any direct or indirect holder of such person, or
members of the immediate family of such person or direct or indirect holder of
such person; and (iii) any members of the immediate family of such person or a
member of the immediate family of any direct or indirect holder of such person.
For purposes of this definition, (i) no person, by virtue of his, her or its
direct or indirect ownership of shares of Common Stock, shall be deemed to be an
Affiliate of another person; (ii) the terms "control", "controlled" and "common
control with" mean the ability, whether by the direct or indirect ownership of
voting securities or other equity interest, by contract or otherwise, to elect a
majority of the directors of a corporation, to select the managing partner of a
partnership, or otherwise to select, or have the power to remove and then
select, a majority of those persons exercising governing authority over an
entity; and (iii) the term "immediate family" means spouses, siblings and lineal
descendants of a person.
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<PAGE>
"Cause", with respect to Grantee, has the meaning ascribed thereto in
the then effective employment agreement, if any, between the Company and
Grantee, as the same may be amended, restated, modified or supplemented.
"Change in Control" means the occurrence of any one of the following
events:
(i) any (A) consolidation or merger of the Company in which the
Company is not the continuing or surviving corporation or which
contemplates that all or substantially all of the business and/or assets of
the Company shall be controlled by another corporation or (B) a
recapitalization (including an exchange of Company equity securities by the
holders thereof), in either case, in which any "Person" (as such term is
used in Sections 13(d) and 14(d)(2) of the Exchange Act), other than the
Controlling Shareholders, becomes the beneficial owner (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of securities of the
Company representing more than 50% of the combined voting power of the
Company's then outstanding securities ordinarily having the right to vote
in the election of directors;
(ii) any sale, lease, exchange or transfer (in one transaction or
series of related transactions) of all or substantially all of the assets
of the Company and its Affiliates;
(iii) approval by the shareholders of the Company of any plan
or proposal for the liquidation or dissolution of the Company, unless such
plan or proposal is abandoned within 60 days following such approval; or
(iv) any "Person" (as such term is used in Sections 13(d) and
14(d)(2) of the Exchange Act), other than the Controlling Shareholders,
shall become the beneficial owner of securities of the Company representing
more than 50% of the combined voting power of the Company's then
outstanding securities ordinarily having the right to vote in the election
of directors.
"Controlling Shareholders" means the Shareholders, together with their
respective Affiliates, family members, former spouses (if applicable) and trusts
for the benefit of any of the foregoing.
"Employment Agreement" means the Employment Agreement, dated as of
February 10, 1997, between the Company and Grantee, as such agreement shall be
amended, modified, supplemented or restated from time to time.
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"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Good Reason" has the meaning ascribed thereto in the Employment
Agreement. If Grantee does not have an effective Employment Agreement, then the
term shall mean the material alteration, reduction or diminution in Grantee's
duties or responsibilities or relocation from the Company's office located in
Orlando, Florida, without the express written consent of Grantee, unless any of
such events are substantially corrected within 30 days following written
notification by Grantee to the Company that Grantee intends to effect a
Voluntary Termination as a result of such event.
"Included Shares" means a number of Option Shares held by a
Shareholder equal to the product of (i) the number of Option Shares which
Grantee is entitled to purchase from such Shareholder pursuant to the terms of
this Agreement, multiplied by (ii) a fraction, the numerator of which is the
number of shares of Common Stock which the Shareholder and its Affiliates
propose to dispose of in such transaction or transactions, and the denominator
of which is all shares of Common Stock owned beneficially or of record by such
Shareholder and its Affiliates at such time determined on a fully-diluted basis
in accordance with generally accepted accounting principles.
"Initial Public Offering" means the sale by the Company of 4,625,000
shares of Common Stock to the public pursuant to an underwritten offering which
was effective February 27, 1997.
"Permanent Disability", with respect to Grantee has the meaning
ascribed thereto in the Employment Agreement. If Grantee does not have an
effective Employment Agreement, then the term "Permanent Disability" means the
inability of the Grantee to perform substantially all Grantee's duties and
responsibilities to the Company by reason of a physical or mental disability or
infirmity for either (i) a continuous period of six months or (ii) 180 days
during any consecutive twelve-month period. The date of such Permanent
Disability shall be (y), in the case of clause (i) above, the last day of such
six-month period or, if later, the day on which satisfactory medical evidence of
such Permanent Disability is obtained by the Company, or (z) in the case of
clause (ii) above, such date as is determined in good faith by the Company. In
the event that any disagreement or dispute arises between the Company and
Grantee as to whether the Grantee has incurred a Permanent Disability, then, in
any such event, Grantee shall submit to a physical and/or mental examination by
a competent and qualified physician licensed under the laws of the State of
Florida who shall be mutually selected by the Company and Grantee, and such
physician shall make the determination of whether Grantee suffers from any
disability. In the absence of fraud or bad faith, the determination of such
physician as to Grantee's condition at such
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<PAGE>
time shall be final and binding upon both the Company and the Grantee.
"Registration Rights Agreement" shall mean the Registration Rights
Agreement, dated as of the date hereof, among the Company, Grantee and the other
parties listed on the signature pages thereof.
"Voluntary Termination" shall mean the voluntary termination by
Grantee of Grantee's employment by the Company by voluntary resignation or any
other means (other than (i) death or Permanent Disability or (ii) simultaneous
with or following termination for Cause or an event which if known to the
Company at the time of such voluntary termination by Grantee would constitute
Cause).
5.2 Other Defined Terms. Each of the following terms is defined in the
Section of this Agreement set forth opposite such term:
<TABLE>
<CAPTION>
Term Section
---- -------
<S> <C>
Company preamble
Exercise Price 1.4
Grantee preamble
Option 1.1
Option Closing Date 1.5
Option Shares 1.1
Securities Act legend
Shareholder preamble
Term 1.3
Territory 4.4(a)
Transferee 4.1(a)
Vesting Date 1.2
</TABLE>
6. Miscellaneous Provisions.
6.1 Binding Effect. This Agreement and all the terms and provisions
hereof shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors, heirs, personal or legal representatives
and permitted assigns and no other person or entity shall have any rights
hereunder, other than the Company, which shall be a beneficiary of Grantee's
agreements concerning withholding taxes set forth in Sections 1.6(c), 4.1(a) and
4.2(b).
6.2 Entire Agreement. This Agreement contains the entire understanding
among the parties with respect to the subject matter hereof and supersedes any
prior agreements or understandings among them with respect thereto.
-14-
<PAGE>
6.3 Amendments; Waivers. This Agreement may not be modified except by a
written agreement signed by the parties hereto, and no provision hereof or
breach thereof may be waived except in a writing executed by the party waiving
such party's rights. The waiver of any term hereof or the breach thereof in any
instance shall not be deemed to be a waiver of such term or breach in any other
instance or of any other term or breach.
6.4 Survival. The representations and warranties contained herein or
made pursuant hereto shall survive the execution and delivery of this Agreement
and the issuance of the Option Shares.
6.5 Governing Law. The construction and interpretation of this Agreement
shall be governed in all respects by the laws of the State of Florida (without
regard to its conflict of laws principles).
6.6 No Implied Employment Contract. Nothing contained in this Agreement
shall be construed to be a contract of employment between the Company and
Grantee.
6.7 Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement or the application
thereof shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the minimal extent of such prohibition or invalidity
without invalidating the remainder of such provision or the remaining provisions
of this Agreement or the application of such provision to other parties or
circumstances.
6.8 Notices. All communications among the parties shall be in writing
and shall be deemed to have been duly given as of the date of hand delivery or
three days after mailing via certified or registered mail, return receipt
requested, proper postage prepaid, to the addresses specified for each party on
attached Schedule A or such other address as a party shall from time to time
specify in a notice delivered in accordance with this Section 6.8.
6.9 Headings. The descriptive headings of the respective Sections and
Subsections of this Agreement are inserted for convenience of reference only and
shall not be deemed to modify or affect the construction of the provisions which
follow them.
6.10 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be an original, but all of which shall
constitute one and the same instrument.
6.11 Trustee Exculpation. The execution of this Agreement by the trustees
of the Gellein Trust, Adler Trust and J. Gellein Trust is by such trustees, not
individually, but solely in their capacities as trustees, and nothing contained
herein shall be
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<PAGE>
deemed to impose any personal liability on such trustees individually.
6.12 Consent of Spouse; Insertion in Will. Grantee agrees to obtain the
consent and approval of Grantee's spouse, by the execution hereof by such
spouse, to all of the terms and provisions of this Agreement. Grantee agrees to
insert in Grantee's last will and testament or other similar instrument, or
execute a codicil thereto, directing and authorizing Grantee's personal
representatives to fulfill and comply with the provisions of this Agreement.
6.13 Several Obligations. The obligations of the Shareholders hereunder
are several and not joint.
6.14 Equitable Relief. Each party hereto specifically acknowledges and
agrees that the remedy at law for any breach of its obligations hereunder will
be inadequate and that, in addition to any other relief available to the non-
breaching parties, the non-breaching parties shall be entitled to temporary and
permanent injunctive relief without the necessity of proving actual damages.
6.15 Attorneys' Fees and Costs. In the event a dispute arises between the
parties hereto and suit is instituted, the prevailing party or parties in such
litigation shall be entitled to recover reasonable attorneys' fees and other
costs and expenses from the non-prevailing party or parties, whether incurred at
the trial level or in any appellate proceeding.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement, as of the
date first above written.
SHAREHOLDERS:
------------
RAYMOND L. GELLEIN, JR. REVOCABLE
TRUST
By:
------------------------------
Raymond L. Gellein, Jr.
Trustee
JEFFREY A. ADLER TRUST
By:
------------------------------
Jeffrey A. Adler
Trustee
JGG HOLDINGS TRUST
By:
------------------------------
Raymond L. Gellein, Jr.
Trustee
GRANTEE:
-------
---------------------------------
Alain J.A. Grange
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<PAGE>
CONSENT OF SPOUSE
-----------------
The undersigned, the spouse of Grantee referred to in the attached
Shareholders Option Agreement, hereby consents to the execution of the
Shareholders Option Agreement and the consummation of the transactions
contemplated thereby by Grantee, and hereby waives any and all rights the
undersigned may have in and to the property and subject matter of the
Shareholders Option Agreement by virtue of such spouse's marital relationship
with Grantee.
________________________________
Angela Grange
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<PAGE>
SCHEDULE A
----------
Shareholder, Option and Grantee Information
-------------------------------------------
No. of Shares Subject
Name and Address to Grant of Option
- ---------------- ------------------
Raymond L. Gellein, Jr. 10,000
Revocable Trust
c/o Raymond L. Gellein, Jr.,
Trustee
8801 Vistana Centre Drive
Orlando, Florida 32821
JGG Holdings Trust 10,000
c/o Raymond L. Gellein, Jr.,
Trustee
8801 Vistana Centre Drive
Orlando, Florida 32821
Jeffrey A. Adler Revocable Trust 20,000
c/o Jeffrey A. Adler,
Trustee
8801 Vistana Centre Drive
Orlando, Florida 32821 ______
40,000
======
Grantee Name and Address
- ------------------------
Alain J.A. Grange
9020 Classic Court
Orlando, Florida 32819
-19-
<PAGE>
Exhibit 5
THE OPTION GRANTED UNDER THIS SHAREHOLDER OPTION AGREEMENT AND ANY SHARES
OF COMMON STOCK WHICH MAY BE ISSUED UPON THE EXERCISE OF SUCH OPTION HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED,
SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS
OR AN EXEMPTION THEREFROM.
SHAREHOLDER OPTION AGREEMENT
----------------------------
SHAREHOLDER OPTION AGREEMENT, dated as of November 13, 1997 (this
"Agreement") among RAYMOND L. GELLEIN, JR., as trustee of the Raymond L.
Gellein, Jr. Revocable Trust (the "Gellein Trust"), JEFFREY A. ADLER, as trustee
of the Jeffrey A. Adler Trust (the "Adler Trust"), RAYMOND L. GELLEIN, JR., as
the trustee of the JGG Holdings Trust (the "J. Gellein Trust;" each of the
foregoing trusts is also sometimes referred to herein individually as a
"Shareholder" and collectively as the "Shareholders"), and WILLIAM J. MCLAUGHLIN
("Grantee"). (Capitalized terms used herein but not otherwise defined shall
have the meanings set forth in Section 5 hereof.)
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Shareholders have agreed collectively to grant to Grantee
options to purchase an aggregate of 40,000 shares of Common Stock owned by the
Shareholders upon the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of $10 and the mutual agreements contained
herein and certain other agreements being concurrently executed by Vistana,
Inc., a Florida corporation (the "Company"), and Grantee, the receipt, adequacy
and sufficiency of which are hereby acknowledged, the parties hereto, intending
to be legally bound, hereby agree as follows:
1. The Option.
1.1 Grant of Option. Upon the terms and subject to the conditions
contained herein, each Shareholder hereby grants to Grantee the right and option
(the "Option") to purchase from such Shareholder the number of shares of Common
Stock set forth on attached Schedule A (the "Option Shares"). The Option may be
exercised at any time during the Term (as hereinafter defined) in whole or from
time to time in part, provided that if the Option is exercised in part, Grantee
shall be obligated to purchase a
<PAGE>
pro rata portion of the Option Shares held by each Shareholder, and each
Shareholder shall be obligated to sell to Grantee its pro rata share of the
Option Shares subject to such exercise. The Option shall be exercisable with
respect to full shares of Common Stock only.
1.2 Vesting of Option. Grantee may exercise the Option in whole or in part
only to the extent the Option has become vested.
(a) Except as set forth in Section 1.2(b), the Option shall vest, if
at all, in the following portions on the following dates (each, a "Vesting
Date"):
(i) 25% on February 27, 1998;
(ii) 50% on February 27, 1999;
(iii)75% on February 27, 2000; and
(iv) 100% on February 27, 2001.
(b) Notwithstanding Section 1.2(a), the Option shall vest in its
entirety upon the earliest to occur of the following events:
(i) the date of the death or Permanent Disability of Grantee;
(ii) the date upon which the Company terminates Grantee's
employment by the Company for any reason;
(iii)the date upon which a Change in Control is consummated; and
(iv) the date upon which Grantee terminates Grantee's employment
by the Company as a result of a Voluntary Termination for Good
Reason.
Each date or dates on which all or a portion of the Option becomes vested
is hereinafter referred to as a "Vesting Date."
Notwithstanding anything to the contrary contained in this Section 1.2, in
the event that, prior to February 27, 2001, Grantee terminates Grantee's
employment by the Company for any reason, the unvested portion of the Option
shall be forfeited by Grantee.
1.3 Term of Option. Grantee may exercise the vested portion of the Option
from and after the applicable Vesting Date until the earliest to occur of the
following events (the "Term"):
(a) two years after the date of the death or Permanent Disability of
Grantee;
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<PAGE>
(b) two years after the date upon which the Company terminates
Grantee's employment by the Company other than for Cause;
(c) 30 days after the date upon which the Company terminates Grantee's
employment by the Company for Cause;
(d) two years after the date upon which Grantee effects a Voluntary
Termination of Grantee's employment by the Company; and
(e) the tenth anniversary of the date hereof.
1.4 Exercise Price. The exercise price (the "Exercise Price") for each
Option Share shall be $24.25 per share, subject to adjustment as provided in
Section 1.7.
1.5 Procedure for Exercise. In the event Grantee desires to exercise the
Option, whether in whole or in part, Grantee shall deliver concurrent written
notices to each Shareholder (a) setting forth Grantee's desire to exercise the
Option, (b) specifying the number of shares of Common Stock to be purchased from
each Shareholder and (c) designating a date upon which Grantee desires to
consummate the exercise of the Option, which date shall not be less than 3 nor
more than 10 days after the delivery of such notice (the later of such date and
the date upon which all Federal and State securities laws relating to the
issuance and sale of the Option Shares and any applicable listing requirements
of any national securities exchange or other market system have been complied
with is referred to as an "Option Closing Date"). The Shareholders may require
the Grantee, or other person exercising the Option in accordance with the
provisions of Section 1.8, to furnish or execute such other documents as the
Shareholders or their counsel shall deem reasonably necessary to evidence such
exercise or to comply with or satisfy the requirements of the Securities Act or
any other applicable law.
1.6 Consummation of Exercise.
(a) On each Option Closing Date,
(i) Grantee shall deliver to each Shareholder the Exercise Price
for the Option Shares to be purchased from such Shareholder by wire
transfer of immediately available funds or by delivery of a certified or
cashier's check payable to the order of such Shareholder; and
(ii) Each Shareholder shall deliver to Grantee one or more
certificates evidencing the Option Shares to be purchased hereunder at such
closing, together with a duly executed stock power transferring such Option
Shares to Grantee on the books and records of the Company.
-3-
<PAGE>
(b) Notwithstanding the foregoing, if: (i) the Common Stock is readily
tradeable on a national securities exchange or other market system at the time
the Option is exercised in whole or in part and (ii) the relevant Option Shares
have been or will, pursuant to the Registration Rights Agreement or otherwise,
be duly registered under the Securities Act and any applicable State securities
laws, or exempt from registration thereunder, and any applicable listing
requirements of any national securities exchange or other market system have
been or will, pursuant to the Registration Rights Agreement or otherwise, be
complied with, in each case, as reasonably determined by counsel for the
Shareholders, payment may also be made by delivery of the written notice
described in Section 1.5, together with a copy of irrevocable instructions to a
broker to sell the number of shares of Common Stock specified in the exercise
notice and to: (x) deliver to each Shareholder the Option Price with respect to
the Option Shares being purchased by Grantee from such Shareholder, (y) remit
the remaining proceeds from the sale of such Option Shares, less the amount of
any applicable foreign, Federal, State or local withholding taxes attributable
to the transactions described herein, to Grantee, and (z) remit any amounts
withheld pursuant to clause (y) to the Company. The written notice and
irrevocable instructions shall be of no force or effect if counsel for the
Shareholders determines that the transactions described in this paragraph will
not comply with all applicable Federal and State securities laws and the
applicable listing requirements of any national securities exchange or other
market system.
(c) Grantee agrees that the Company may take such actions as are
necessary to comply with the wage withholding provisions of any applicable
foreign, Federal, State or local income tax laws in connection with each Option
exercise.
1.7 Adjustments to Option. In the event of any merger or consolidation of
the Company, any recapitalization, reorganization or sale of all or
substantially all of the assets or properties of the Company or any other
transaction or series of transactions (including, without limitation, stock
dividends), which would have a dilutive effect upon the Option or the Option
Shares, the Option, and the terms and provisions thereof, shall be adjusted in a
fair and equitable manner by the Shareholders, whose determination shall be
conclusive and binding on Grantee. The Shareholders shall promptly notify
Grantee in writing of any such adjustments, the reason therefor and the
calculation thereof.
1.8 Option Not Transferable; No Rights As a Shareholder.
(a) (i) Except as set forth in Section 1.8(a)(ii), the Option, or
any portion thereof, may not be sold, pledged, assigned, transferred or
otherwise disposed of in any manner other than by will or the laws of
descent and distribution and
-4-
<PAGE>
shall not be subject to execution, attachment or similar process.
(ii) Notwithstanding anything to the contrary contained in this
Section 1.8, Grantee may transfer all or a portion of the Option to an
Affiliate of Grantee; provided, however, that (A) the Option shall remain
subject to all of the terms and conditions of this Agreement in the hands
of such Affiliate, and (B) such Affiliate shall first deliver to the
Shareholders a written agreement assuming and agreeing to be bound by all
the terms and conditions of this Agreement and to be a "Grantee" hereunder
to the extent of the portion of the Option so transferred.
(iii) During Grantee's lifetime, the Option may only be
exercised by Grantee, an Affiliate of Grantee who or which is the holder of
all or a portion of the Option or by a legally authorized representative.
In the event that the Option shall be exercised by a person other than
Grantee, such person shall furnish to the Shareholders evidence
satisfactory to them of such person's right to exercise the Option.
(b) Neither Grantee nor any Affiliate of Grantee who or which is the
holder of all or a portion of the Option shall have any rights as a shareholder
of the Company until Grantee or such Affiliate shall have properly exercised the
Option, in whole or in part, and certificates evidencing the appropriate number
of Option Shares are properly delivered to Grantee or such Affiliate. Except as
provided in Section 1.7, no adjustment shall be made hereunder for dividends or
other rights for which the record date is prior to the issuance of such
certificates.
2. Representations and Warranties of Shareholders. Each of the
Shareholders severally and not jointly represents and warrants to Grantee as
follows:
2.1 Authority. Each Shareholder has all necessary power and authority to
execute and deliver this Agreement and to sell, assign, transfer and deliver to
Grantee, pursuant to the terms and conditions of this Agreement, the Option
Shares to be received by such Shareholder in connection herewith. Each
Shareholder has sole voting power and sole power of disposition of such
Shareholder's Option Shares, with no restrictions on such Shareholder's voting
rights or rights of disposition pertaining thereto, except for restrictions
imposed by applicable Federal and State securities laws and except as provided
in the Shareholders' Agreement, dated February 10, 1997, among the Shareholders
and the Company and the Underwriting Agreement executed by such Shareholder,
among others, in connection with the Initial Public Offering. At each closing
referred to in Section 1.6, each Shareholder will convey good and valid title to
the relevant Option Shares owned by such
-5-
<PAGE>
Shareholder, free and clear of any and all liens, claims, pledges, security
interests and other encumbrances of any kind whatsoever.
2.2 Authorization/Enforceability. This Agreement has been duly
authorized, executed and delivered by each Shareholder and constitutes a valid
and legally binding obligation of such Shareholder, enforceable against such
Shareholder in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws now or hereafter in effect relating to or
affecting the rights or remedies of creditors, general principles of equity
(whether considered in an action at law or in equity) and the discretion of the
court before which any proceeding therefor may be brought.
2.3 Non-Contravention. Neither the execution and delivery of this
Agreement nor the performance by each Shareholder of its respective obligations
hereunder will conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, its trust agreement, any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which such Shareholder is a party or by which such Shareholder or
its assets (including, without limitation, Option Shares) is bound, or any
statute, order, rule or regulation of any governmental authority applicable to
such Shareholder or its assets.
2.4 Consents/Approvals. No consent, approval, authorization, order,
registration or qualification of or with any governmental authority or other
person or entity is required in connection with the execution or delivery or,
except for filings which may be required under applicable Federal and State
securities laws, performance of this Agreement by each Shareholder.
3. Representations and Warranties of Grantee. Grantee hereby represents
and warrants to the Shareholders as follows:
3.1 Capacity/Enforceability. Grantee has the legal capacity to enter into
and perform Grantee's obligations under this Agreement. This Agreement has been
duly executed and delivered by Grantee and constitutes a valid and legally
binding obligation of Grantee, enforceable against Grantee in accordance with
its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other similar
laws now or hereafter in effect relating to or affecting the rights or remedies
of creditors, general principles of equity (whether considered in an action at
law or in equity) and the discretion of the court before which any proceeding
therefor may be brought.
3.2 Non-Contravention. Neither the execution and delivery of this
Agreement nor the performance by Grantee of Grantee's
-6-
<PAGE>
obligations hereunder will conflict with or result in a breach or violation of
any of the terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to
which Grantee is a party or by which Grantee or Grantee's assets is bound, or
any statute, order, rule or regulation of any governmental authority applicable
to Grantee or Grantee's assets.
3.3 Consents/Approvals. No consent, approval, authorization, order,
registration or qualification of or with any governmental authority or other
person or entity is required in connection with the execution or delivery or,
except for filings which may be required under applicable Federal and State
securities laws, performance of this Agreement by Grantee.
3.4 Investment Intent.
(a) Grantee is an "accredited investor" (as defined in Rule 501(a) of
Regulation D under the Securities Act) and is acquiring the Option, and
will acquire any Option Shares hereunder, for Grantee's own account and
with no intention of distributing or selling such securities, except in
accordance with applicable Federal and State securities laws. Grantee
understands that neither the Option nor the Option Shares has been
registered under the Securities Act by reason of their contemplated
issuance in transaction(s) exempt from the registration and prospectus
delivery requirements of the Securities Act pursuant to Section 4(2)
thereof. The reliance of the Shareholders on such exemption from
registration is predicated in part on the representations and warranties of
Grantee hereunder.
(b) Grantee agrees that Grantee will not sell or otherwise dispose of
the Option or any of the Option Shares unless such sale or other
disposition is permitted hereunder and under the Registration Rights
Agreement, has been registered or is exempt from registration under the
Securities Act and has been registered or qualified or is exempt from
registration or qualification under applicable State securities laws.
(c) Grantee understands that a restrictive legend consistent with the
foregoing has been or will be placed on the certificates evidencing the
Option Shares, and related stop transfer instructions will be noted in the
transfer records of the Company and/or its transfer agent for the Common
Stock.
(d) Grantee hereby acknowledges that disposition of the Option and the
Option Shares is restricted by applicable law and by the terms of this
Agreement and the Registration Rights Agreement, and Grantee may, unless
permitted hereunder and
-7-
<PAGE>
thereunder, be required to bear the economic risk of Grantee's investment
in the Option Shares (assuming exercise of the Option) indefinitely.
4. Covenants.
4.1 Right to Compel Disposition.
(a) Notwithstanding anything in this Agreement to the contrary, upon a
proposed disposition by the Shareholders, acting as a group, of all or
substantially all the shares of Common Stock beneficially owned by them (as
determined in accordance with Rule 13d-3 of the Exchange Act) to one or more
third party purchasers who or which are not Affiliates of any of the
Shareholders (collectively, "Transferee"), by way of merger or sale, in a single
transaction or a series of related transactions (other than one or more
underwritten public offerings), the Shareholders shall have the right and option
to deem the Option exercised (except that the Exercise Price shall not be
payable other than pursuant to this paragraph) and dispose of the Option Shares
on behalf of Grantee, and Grantee's Affiliates, if any, who or which hold all or
a portion of the Option, to such Transferee for the same consideration per share
of Common Stock and otherwise on the same terms and conditions upon which the
Shareholders effect the disposition of their shares of Common Stock. Grantee,
and Grantee's Affiliates, if any, who or which hold all or a portion of the
Option, shall, in connection with such a disposition, be entitled to receive an
amount equal to the total sales price of the Option Shares, less the sum of the
Exercise Price thereof and any applicable foreign, Federal, State or local
withholding taxes attributable to the transactions described in this Section
4.1(a) (it being understood that cash consideration and any other type of
consideration (valued in accordance with the methodology used for the
disposition as a whole) in the foregoing amounts shall be retained on a pro rata
basis). Grantee agrees that the Company may take such actions as are necessary
to comply with the wage withholding provisions of any applicable foreign,
Federal, State or local income tax laws in connection with the above-described
transactions.
(b) In the event that the Shareholders desire to exercise their rights
pursuant to Section 4.1(a), they shall deliver to Grantee, and Grantee's
Affiliates, if any, who or which hold all or a portion of the Option, written
notice setting forth the consideration per share of Common Stock to be paid by
such Transferee and the other terms and conditions of such proposed disposition.
(c) Promptly after the consummation of the disposition of Option
Shares pursuant to this Section 4.1 (but in no event later than three business
days following receipt by the Shareholders of consideration from the
Transferee), the
-8-
<PAGE>
Shareholders shall (i) deliver notice thereof to Grantee, and Grantee's
Affiliates, if any, who or which hold all or a portion of the Option, (ii) remit
to Grantee, and Grantee's Affiliates, if any, who or which hold all or a portion
of the Option, the total sales price of the Option Shares disposed of pursuant
hereto less the sum of the Exercise Price thereof and any applicable foreign,
Federal, State or local withholding taxes, and (iii) furnish such other evidence
of the completion and time of completion of such disposition and the terms
thereof as may be reasonably requested in writing by Grantee.
(d) If, within 120 days after the Shareholders' delivery of the notice
required pursuant to Section 4.1(b), the Shareholders have not completed the
disposition of all or substantially all of their shares of Common Stock and the
Option Shares in accordance herewith (which period shall be extended in order to
secure all approvals of regulatory bodies and similar authorities that are
required to effectuate such disposition, in which case the closing shall be
conducted no later than 10 business days after the receipt of all such approvals
(it being understood that the parties shall use their reasonable best efforts to
obtain any such approvals within the time periods contemplated hereby)), the
deemed exercise described in Section 4.1(a) shall be of no force or effect and
the provisions of Sections 4.1(a) and 4.2(a) shall again apply.
(e) Grantee agrees to execute and deliver to the Shareholders and/or
the Transferee any and all documents and other instruments reasonably necessary
to effect the disposition of the Option or the Option Shares pursuant to this
Section.
(f) From and after Grantee's receipt of the notice contemplated by
Section 4.1(b), Grantee may not exercise the Option unless the provisions of
Section 4.1(d) shall have become applicable.
4.2 Right of Inclusion.
(a) If (i) a Shareholder (considering the Gellein Trust and the J.
Gellein Trust as a single Shareholder for purposes of this Section 4.2), which,
at the time, owns an aggregate of at least 20% of the outstanding shares of
Common Stock, proposes to sell more than 50% of its shares of Common Stock in a
single transaction or a series of related transactions (other than one or more
underwritten public offerings) to a Transferee, and (ii) the Shareholders do not
elect to exercise their rights, if any, under Section 4.1, then such Shareholder
shall deliver to Grantee, and Grantee's Affiliates who or which hold all or a
portion of the Option, a written notice setting forth the consideration per
share of Common Stock to be paid by such Transferee and the other terms and
conditions of such proposed disposition. Grantee, and Grantee's Affiliates, if
any, who or which hold all or a portion of the Option, shall be entitled to
participate in such proposed
-9-
<PAGE>
disposition by requiring Shareholder to cause Transferee to purchase that number
of Option Shares equal to the Included Shares and to receive, in connection with
such proposed disposition, an amount equal to the total sales price of the
Included Shares, less the sum of the Exercise Price thereof and any applicable
foreign, Federal, State or local withholding taxes attributable to the
transactions described in Section 4.2(a).
(b) If Grantee, or any of Grantee's Affiliates described above, elects
so to participate, Grantee and any such Affiliate shall so notify the relevant
Shareholder within five business days after receipt of such Shareholder's
notice. Grantee's election shall constitute a deemed exercise of the Option
with respect to the Included Shares and authorization for the Shareholder to
dispose of the Included Shares on behalf of Grantee and any such Affiliate to
Transferee for the same consideration per Share and otherwise on the same terms
and conditions upon which the Shareholder effects the disposition of its shares
of Common Stock. Grantee agrees that the Company may take such actions as are
necessary to comply with the wage withholding provisions of any applicable
foreign, Federal, State or local income tax laws in connection with the
transactions described in this Section 4.2(a).
(c) Promptly after the consummation of the disposition of the Included
Shares pursuant to this Section 4.2 (but in no event later than three business
days following receipt by the Shareholder of consideration from the Transferee),
such Shareholder shall (i) deliver notice thereof to Grantee and any of such
Grantee's Affiliates participating in such disposition, (ii) remit to Grantee
and any of such Grantee's Affiliates participation in such disposition the total
sales price of the Included Shares disposed of pursuant hereto, less the sum of
the Exercise Price thereof and any applicable foreign, Federal, State or local
withholding taxes (it being understood that cash consideration and any other
type of consideration (valued in accordance with the methodology used for the
disposition as a whole) in the foregoing amounts shall be retained on a pro rata
basis), and (iii) furnish such other evidence of the completion and time of
completion of such disposition and the terms thereof as may be reasonably
requested in writing by Grantee.
(d) If, within 120 days after the Shareholder's delivery of the notice
required pursuant to Section 4.2(a), such Shareholder has not completed the
disposition of more than 50% of its shares of Common Stock in accordance
herewith (which period shall be extended in order to secure all approvals of
regulatory bodies and similar authorities that are required to effectuate such
disposition, in which case the closing shall be conducted no later than 10
business days after the receipt of all such approvals (it being understood that
the parties shall use their reasonable best efforts to obtain any such approvals
within the time periods contemplated hereby)), the deemed exercise, if any,
referred to in Section 4.2(b) shall be
-10-
<PAGE>
of no force or effect and the provisions of Sections 4.1(a) and 4.2(a) shall
again apply.
(e) Grantee agrees to execute and deliver to the Shareholders and/or
the Transferee any and all documents and other instruments reasonably necessary
to effect the disposition of the Option or the Option Shares pursuant to this
Section.
(f) From and after Grantee's delivery of notice pursuant to Section
4.2(b), Grantee may not exercise the Option in respect of the Included Shares
(other than as set forth in Section 4.2(b)) unless the provisions of Section
4.2(d) shall have become applicable.
4.3 Legend. Until the Option Shares no longer constitute Registrable
Shares (as defined in the Registration Rights Agreement), each certificate
representing Option Shares shall be imprinted with substantially the following
legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE TRANSFERRED, SOLD OR
OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND ANY
OTHER APPLICABLE STATE SECURITIES LAWS OR UNLESS AN EXEMPTION FROM
REGISTRATION IS AVAILABLE.
Each certificate representing Option Shares shall also be imprinted with
any other legend required pursuant to applicable State corporation or securities
laws or any other agreements among the parties, including, without limitation,
the Registration Rights Agreement.
5. Definitions.
5.1 Certain Definitions. For purposes of this Agreement, the terms and
phrases set forth below shall have the following meanings:
"Affiliate" means, as to any person (i) any corporation, partnership,
limited liability company, joint venture, trust or individual directly or
indirectly through one or more intermediaries controlled by or under common
control with such person, or which controls directly or indirectly through one
or more intermediaries, such person (it being understood that in the case of
Grantee, such an entity must be wholly-owned by Grantee and the persons in
respect of Grantee, if any, described in clauses (ii) and (iii) of this
definition); (ii) a trust which has as its principal income beneficiaries or
remaindermen such person or any direct or indirect holder of such person, or
members of the immediate family of such person or direct or indirect holder of
-11-
<PAGE>
such person; and (iii) any members of the immediate family of such person or a
member of the immediate family of any direct or indirect holder of such person.
For purposes of this definition, (i) no person, by virtue of his, her or its
direct or indirect ownership of shares of Common Stock, shall be deemed to be an
Affiliate of another person; (ii) the terms "control", "controlled" and "common
control with" mean the ability, whether by the direct or indirect ownership of
voting securities or other equity interest, by contract or otherwise, to elect a
majority of the directors of a corporation, to select the managing partner of a
partnership, or otherwise to select, or have the power to remove and then
select, a majority of those persons exercising governing authority over an
entity; and (iii) the term "immediate family" means spouses, siblings and lineal
descendants of a person.
"Cause", with respect to Grantee, has the meaning ascribed thereto in
the then effective employment agreement, if any, between the Company and
Grantee, as the same may be amended, restated, modified or supplemented.
"Change in Control" means the occurrence of any one of the following
events:
(i) any (A) consolidation or merger of the Company in which
the Company is not the continuing or surviving corporation or which
contemplates that all or substantially all of the business and/or assets of
the Company shall be controlled by another corporation or (B) a
recapitalization (including an exchange of Company equity securities by the
holders thereof), in either case, in which any "Person" (as such term is
used in Sections 13(d) and 14(d)(2) of the Exchange Act), other than the
Controlling Shareholders, becomes the beneficial owner (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of securities of the
Company representing more than 50% of the combined voting power of the
Company's then outstanding securities ordinarily having the right to vote
in the election of directors;
(ii) any sale, lease, exchange or transfer (in one transaction
or series of related transactions) of all or substantially all of the
assets of the Company and its Affiliates;
(iii) approval by the shareholders of the Company of any plan or
proposal for the liquidation or dissolution of the Company, unless such
plan or proposal is abandoned within 60 days following such approval; or
(iv) any "Person" (as such term is used in Sections 13(d) and
14(d)(2) of the Exchange Act), other than the Controlling Shareholders,
shall become the beneficial
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<PAGE>
owner of securities of the Company representing more than 50% of the
combined voting power of the Company's then outstanding securities
ordinarily having the right to vote in the election of directors.
"Controlling Shareholders" means the Shareholders, together with their
respective Affiliates, family members, former spouses (if applicable) and trusts
for the benefit of any of the foregoing.
"Employment Agreement" means the Employment Agreement, dated as of
February 10, 1997, between the Company and Grantee, as such agreement shall be
amended, modified, supplemented or restated from time to time.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Good Reason" has the meaning ascribed thereto in the Employment
Agreement. If Grantee does not have an effective Employment Agreement, then the
term shall mean the material alteration, reduction or diminution in Grantee's
duties or responsibilities or relocation from the Company's office located in
Orlando, Florida, without the express written consent of Grantee, unless any of
such events are substantially corrected within 30 days following written
notification by Grantee to the Company that Grantee intends to effect a
Voluntary Termination as a result of such event.
"Included Shares" means a number of Option Shares held by a
Shareholder equal to the product of (i) the number of Option Shares which
Grantee is entitled to purchase from such Shareholder pursuant to the terms of
this Agreement, multiplied by (ii) a fraction, the numerator of which is the
number of shares of Common Stock which the Shareholder and its Affiliates
propose to dispose of in such transaction or transactions, and the denominator
of which is all shares of Common Stock owned beneficially or of record by such
Shareholder and its Affiliates at such time determined on a fully-diluted basis
in accordance with generally accepted accounting principles.
"Initial Public Offering" means the sale by the Company of 4,625,000
shares of Common Stock to the public pursuant to an underwritten offering which
was effective February 27, 1997.
"Permanent Disability", with respect to Grantee has the meaning
ascribed thereto in the Employment Agreement. If Grantee does not have an
effective Employment Agreement, then the term "Permanent Disability" means the
inability of the Grantee to perform substantially all Grantee's duties and
responsibilities to the Company by reason of a physical or mental disability or
infirmity for either (i) a continuous period of six months or (ii)
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<PAGE>
180 days during any consecutive twelve-month period. The date of such Permanent
Disability shall be (y), in the case of clause (i) above, the last day of such
six-month period or, if later, the day on which satisfactory medical evidence of
such Permanent Disability is obtained by the Company, or (z) in the case of
clause (ii) above, such date as is determined in good faith by the Company. In
the event that any disagreement or dispute arises between the Company and
Grantee as to whether the Grantee has incurred a Permanent Disability, then, in
any such event, Grantee shall submit to a physical and/or mental examination by
a competent and qualified physician licensed under the laws of the State of
Florida who shall be mutually selected by the Company and Grantee, and such
physician shall make the determination of whether Grantee suffers from any
disability. In the absence of fraud or bad faith, the determination of such
physician as to Grantee's condition at such time shall be final and binding upon
both the Company and the Grantee.
"Registration Rights Agreement" shall mean the Registration Rights
Agreement, dated as of the date hereof, among the Company, Grantee and the other
parties listed on the signature pages thereof.
"Voluntary Termination" shall mean the voluntary termination by Grantee
of Grantee's employment by the Company by voluntary resignation or any other
means (other than (i) death or Permanent Disability or (ii) simultaneous with or
following termination for Cause or an event which if known to the Company at the
time of such voluntary termination by Grantee would constitute Cause).
5.2 Other Defined Terms. Each of the following terms is defined in the
Section of this Agreement set forth opposite such term:
<TABLE>
<CAPTION>
Term Section
---- -------
<S> <C>
Company preamble
Exercise Price 1.4
Grantee preamble
Option 1.1
Option Closing Date 1.5
Option Shares 1.1
Securities Act legend
Shareholder preamble
Term 1.3
Territory 4.4(a)
Transferee 4.1(a)
Vesting Date 1.2
</TABLE>
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<PAGE>
6. Miscellaneous Provisions.
6.1 Binding Effect. This Agreement and all the terms and provisions
hereof shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors, heirs, personal or legal representatives
and permitted assigns and no other person or entity shall have any rights
hereunder, other than the Company, which shall be a beneficiary of Grantee's
agreements concerning withholding taxes set forth in Sections 1.6(c), 4.1(a) and
4.2(b).
6.2 Entire Agreement. This Agreement contains the entire understanding
among the parties with respect to the subject matter hereof and supersedes any
prior agreements or understandings among them with respect thereto.
6.3 Amendments; Waivers. This Agreement may not be modified except by a
written agreement signed by the parties hereto, and no provision hereof or
breach thereof may be waived except in a writing executed by the party waiving
such party's rights. The waiver of any term hereof or the breach thereof in any
instance shall not be deemed to be a waiver of such term or breach in any other
instance or of any other term or breach.
6.4 Survival. The representations and warranties contained herein or made
pursuant hereto shall survive the execution and delivery of this Agreement and
the issuance of the Option Shares.
6.5 Governing Law. The construction and interpretation of this Agreement
shall be governed in all respects by the laws of the State of Florida (without
regard to its conflict of laws principles).
6.6 No Implied Employment Contract. Nothing contained in this Agreement
shall be construed to be a contract of employment between the Company and
Grantee.
6.7 Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement or the application
thereof shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the minimal extent of such prohibition or invalidity
without invalidating the remainder of such provision or the remaining provisions
of this Agreement or the application of such provision to other parties or
circumstances.
6.8 Notices. All communications among the parties shall be in writing and
shall be deemed to have been duly given as of the date of hand delivery or three
days after mailing via certified or registered mail, return receipt requested,
proper postage prepaid, to the addresses specified for each party on attached
Schedule A or
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<PAGE>
such other address as a party shall from time to time specify in a notice
delivered in accordance with this Section 6.8.
6.9 Headings. The descriptive headings of the respective Sections and
Subsections of this Agreement are inserted for convenience of reference only and
shall not be deemed to modify or affect the construction of the provisions which
follow them.
6.10 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be an original, but all of which shall
constitute one and the same instrument.
6.11 Trustee Exculpation. The execution of this Agreement by the trustees
of the Gellein Trust, Adler Trust and J. Gellein Trust is by such trustees, not
individually, but solely in their capacities as trustees, and nothing contained
herein shall be deemed to impose any personal liability on such trustees
individually.
6.12 Consent of Spouse; Insertion in Will. Grantee agrees to obtain the
consent and approval of Grantee's spouse, by the execution hereof by such
spouse, to all of the terms and provisions of this Agreement. Grantee agrees to
insert in Grantee's last will and testament or other similar instrument, or
execute a codicil thereto, directing and authorizing Grantee's personal
representatives to fulfill and comply with the provisions of this Agreement.
6.13 Several Obligations. The obligations of the Shareholders hereunder
are several and not joint.
6.14 Equitable Relief. Each party hereto specifically acknowledges and
agrees that the remedy at law for any breach of its obligations hereunder will
be inadequate and that, in addition to any other relief available to the non-
breaching parties, the non-breaching parties shall be entitled to temporary and
permanent injunctive relief without the necessity of proving actual damages.
6.15 Attorneys' Fees and Costs. In the event a dispute arises between the
parties hereto and suit is instituted, the prevailing party or parties in such
litigation shall be entitled to recover reasonable attorneys' fees and other
costs and expenses from the non-prevailing party or parties, whether incurred at
the trial level or in any appellate proceeding.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement, as of the
date first above written.
SHAREHOLDERS:
RAYMOND L. GELLEIN, JR. REVOCABLE
TRUST
By:
---------------------------
Raymond L. Gellein, Jr.
Trustee
JEFFREY A. ADLER TRUST
By:
---------------------------
Jeffrey A. Adler
Trustee
JGG HOLDINGS TRUST
By:
---------------------------
Raymond L. Gellein, Jr.
Trustee
GRANTEE:
---------------------------------
William J. McLaughlin
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<PAGE>
SCHEDULE A
Shareholder, Option and Grantee Information
No. of Shares Subject
Name and Address to Grant of Option
- ---------------- ---------------------
Raymond L. Gellein, Jr. 10,000
Revocable Trust
c/o Raymond L. Gellein, Jr.,
Trustee
8801 Vistana Centre Drive
Orlando, Florida 32821
JGG Holdings Trust 10,000
c/o Raymond L. Gellein, Jr.,
Trustee
8801 Vistana Centre Drive
Orlando, Florida 32821
Jeffrey A. Adler Revocable Trust 20,000
c/o Jeffrey A. Adler,
Trustee
8801 Vistana Centre Drive
Orlando, Florida 32821 ______
40,000
======
Grantee Name and Address
- ------------------------
William McLaughlin
9649 Wild Oak Drive
Windermere, Florida 34786
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<PAGE>
Exhibit 6
THE OPTION GRANTED UNDER THIS SHAREHOLDER OPTION AGREEMENT AND ANY SHARES
OF COMMON STOCK WHICH MAY BE ISSUED UPON THE EXERCISE OF SUCH OPTION HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED,
SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS
OR AN EXEMPTION THEREFROM.
SHAREHOLDER OPTION AGREEMENT
----------------------------
SHAREHOLDER OPTION AGREEMENT, dated as of November 18, 1997 (this
"Agreement") among RAYMOND L. GELLEIN, JR., as trustee of the Raymond L.
Gellein, Jr. Revocable Trust (the "Gellein Trust"), JEFFREY A. ADLER, as trustee
of the Jeffrey A. Adler Trust (the "Adler Trust"), RAYMOND L. GELLEIN, JR., as
the trustee of the JGG Holdings Trust (the "J. Gellein Trust;" each of the
foregoing trusts is also sometimes referred to herein individually as a
"Shareholder" and collectively as the "Shareholders"), and CHARLES E. HARRIS
(the "Grantee"). (Capitalized terms used herein but not otherwise defined shall
have the meanings set forth in Section 5 hereof.)
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Shareholders own in excess of 51% of outstanding shares of
Common Stock of Vistana, Inc., a Florida corporation (the "Company"); and
WHEREAS, the Shareholders have agreed collectively to grant to Grantee
options to purchase an aggregate of 400,000 shares of Common Stock owned by the
Shareholders upon the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of $10 and the mutual agreements contained
herein and certain other agreements being concurrently executed by the Company
and Grantee, the receipt, adequacy and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, hereby agree as
follows:
1. The Option.
----------
1.1 Grant of Option; Vesting.
------------------------
(a) Upon the terms and subject to the conditions contained herein,
each Shareholder hereby grants to Grantee the right and option (the "Option") to
purchase from such Shareholder
<PAGE>
the number of shares of Common Stock set forth on attached Schedule A (the
"Option Shares"). The Option may be exercised at any time during the Term (as
hereinafter defined) in whole or from time to time in part only to the extent
vested, provided that if the Option is exercised in part, Grantee shall be
obligated to purchase a pro rata portion of the Option Shares held by each
Shareholder, and each Shareholder shall be obligated to sell to Grantee its pro
rata share of the Option Shares subject to such exercise. The Option shall be
exercisable with respect to full shares of Common Stock only.
(b) The Option shall become vested with respect to 25% of the shares
covered by the Option 12 months after the Effective Date and shall become vested
with respect to the remaining shares pro rata in arrears on a monthly basis over
a period of 36 months beginning on the first day of the month which is 12 months
after the Effective Date. The right of the Optionee to exercise the Option as
to any unexercised, vested portion shall continue for the entire Term.
(c) Notwithstanding any other provision of this Agreement to the
contrary, upon a Change in Control of the Company the Option shall become 100%
vested and immediately exercisable.
1.2 Term of Option. Except as provided below, the Option shall be valid
from the date of this Agreement (the "Effective Date") until the earliest to
occur of the following events (the "Term"):
(a) two years after the date of the death or Permanent Disability of
Grantee;
(b) if Grantee is employed by the Company as of the Effective Date,
two years after the date upon which the Company terminates Grantee's
employment by the Company other than for Cause;
(c) if Grantee is employed by the Company as of the Effective Date, 30
days after the date upon which the Company terminates Grantee's employment
by the Company for Cause;
(d) if Grantee is employed by the Company as of the Effective Date,
two years after the date upon which Grantee effects a Voluntary Termination
of Grantee's employment by the Company; and
(e) the tenth anniversary of the date hereof.
1.3 Exercise Price. The exercise price (the "Exercise Price") for each
Option Share shall be $24-5/8 per share. The Exercise Price shall be subject to
adjustment as provided in Section 1.6.
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<PAGE>
1.4 Procedure for Exercise. In the event Grantee desires to exercise the
Option, whether in whole or in part, Grantee shall deliver concurrent written
notices to each Shareholder (a) setting forth Grantee's desire to exercise the
Option, (b) specifying the number of shares of Common Stock to be purchased from
each Shareholder and (c) designating a date upon which Grantee desires to
consummate the exercise of the Option, which date shall not be less than 3 nor
more than 10 days after the delivery of such notice (the later of such date and
the date upon which all Federal and State securities laws relating to the
issuance and sale of the Option Shares and any applicable listing requirements
of any national securities exchange or other market system have been complied
with is referred to as an "Option Closing Date"). The Shareholders may require
the Grantee, or other person exercising the Option in accordance with the
provisions of Section 1.7, to furnish or execute such other documents as the
Shareholders or their counsel shall deem reasonably necessary to evidence such
exercise or to comply with or satisfy the requirements of the Securities Act or
any other applicable law.
1.5 Consummation of Exercise.
------------------------
(a) On each Option Closing Date,
(i) Grantee shall deliver to each Shareholder the Exercise Price
for the Option Shares to be purchased from such Shareholder by wire
transfer of immediately available funds or by delivery of a certified or
cashier's check payable to the order of such Shareholder; and
(ii) Each Shareholder shall deliver to Grantee one or more
certificates evidencing the Option Shares to be purchased hereunder at such
closing, together with a duly executed stock power transferring such Option
Shares to Grantee on the books and records of the Company.
(b) Notwithstanding the foregoing, if: (i) the Common Stock is readily
tradeable on a national securities exchange or other market system at the time
the Option is exercised in whole or in part and (ii) the relevant Option Shares
have been or will, pursuant to the Registration Rights Agreement or otherwise,
be duly registered under the Securities Act and any applicable State securities
laws, or exempt from registration thereunder, and any applicable listing
requirements of any national securities exchange or other market system have
been or will, pursuant to the Registration Rights Agreement or otherwise, be
complied with, in each case, as reasonably determined by counsel for the
Shareholders, payment may also be made by delivery of the written notice
described in Section 1.4, together with a copy of irrevocable instructions to a
broker to sell the number of shares of Common Stock specified in the exercise
notice and to: (x) deliver to each Shareholder the Option Price with respect to
the
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<PAGE>
Option Shares being purchased by Grantee from such Shareholder, (y) remit the
remaining proceeds from the sale of such Option Shares, less the amount of any
applicable foreign, Federal, State or local withholding taxes attributable to
the transactions described herein, to Grantee, and (z) remit any amounts
withheld pursuant to clause (y) to the Company. The written notice and
irrevocable instructions shall be of no force or effect if counsel for the
Shareholders determines that the transactions described in this paragraph will
not comply with all applicable Federal and State securities laws and the
applicable listing requirements of any national securities exchange or other
market system.
(c) Grantee agrees that the Company may take such actions as are
necessary to comply with the wage withholding provisions of any applicable
foreign, Federal, State or local income tax laws in connection with each Option
exercise.
1.6 Adjustments to Option. In the event of any merger or consolidation of
the Company, any recapitalization, reorganization or sale of all or
substantially all of the assets or properties of the Company or any other
transaction or series of transactions (including, without limitation, stock
dividends), which would have a dilutive effect upon the Option or the Option
Shares, the Option, and the terms and provisions thereof, shall be adjusted in a
fair and equitable manner by the Shareholders, whose determination shall be
conclusive and binding on Grantee. The Shareholders shall promptly notify
Grantee in writing of any such adjustments, the reason therefor and the
calculation thereof.
1.7 Option Not Transferable; No Rights As a Shareholder.
---------------------------------------------------
(a) (i) Except as set forth in Section 1.7(a)(ii), the Option, or
any portion thereof, may not be sold, pledged, assigned, transferred or
otherwise disposed of in any manner other than by will or the laws of
descent and distribution and shall not be subject to execution, attachment
or similar process.
(ii) Notwithstanding anything to the contrary contained in this
Section 1.7, Grantee may transfer all or a portion of the Option to an
Affiliate of Grantee; provided, however, that (A) the Option shall remain
subject to all of the terms and conditions of this Agreement in the hands
of such Affiliate, and (B) such Affiliate shall first deliver to the
Shareholders a written agreement assuming and agreeing to be bound by all
the terms and conditions of this Agreement and to be a "Grantee" hereunder
to the extent of the portion of the Option so transferred.
(iii) During Grantee's lifetime, the Option may only be exercised
by Grantee, an Affiliate of Grantee who or which is the holder of all or a
portion of the Option or by a
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<PAGE>
legally authorized representative. In the event that the Option shall be
exercised by a person other than Grantee, such person shall furnish to the
Shareholders evidence satisfactory to them of such person's right to
exercise the Option.
(b) Neither Grantee nor any Affiliate of Grantee who or which is the
holder of all or a portion of the Option shall have any rights as a shareholder
of the Company until Grantee or such Affiliate shall have properly exercised the
Option, in whole or in part, and certificates evidencing the appropriate number
of Option Shares are properly delivered to Grantee or such Affiliate. Except as
provided in Section 1.6, no adjustment shall be made hereunder for dividends or
other rights for which the record date is prior to the issuance of such
certificates.
2. Representations and Warranties of Shareholders. Each of the
Shareholders severally and not jointly represents and warrants to Grantee as
follows:
2.1 Authority. Each Shareholder has all necessary power and authority to
execute and deliver this Agreement and to sell, assign, transfer and deliver to
Grantee, pursuant to the terms and conditions of this Agreement, the Option
Shares to be received by such Shareholder in connection herewith. At the
Effective Date, each Shareholder will have sole voting power and sole power of
disposition of such Shareholder's Option Shares, with no restrictions on such
Shareholder's voting rights or rights of disposition pertaining thereto, except
for restrictions imposed by applicable Federal and State securities laws and
except as provided in the Shareholders' Agreement, dated as of the date hereof,
among the Shareholders and the Company and the Underwriting Agreement to be
executed by such Shareholder, among others, in connection with the Initial
Public Offering. At each closing referred to in Section 1.5, each Shareholder
will convey good and valid title to the relevant Option Shares owned by such
Shareholder, free and clear of any and all liens, claims, pledges, security
interests and other encumbrances of any kind whatsoever.
2.2 Authorization/Enforceability. This Agreement has been duly
authorized, executed and delivered by each Shareholder and constitutes a valid
and legally binding obligation of such Shareholder, enforceable against such
Shareholder in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws now or hereafter in effect relating to or
affecting the rights or remedies of creditors, general principles of equity
(whether considered in an action at law or in equity) and the discretion of the
court before which any proceeding therefor may be brought.
2.3 Non-Contravention. Neither the execution and delivery of this
Agreement nor the performance by each Shareholder of its
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<PAGE>
respective obligations hereunder will conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default under,
its trust agreement, any indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which such Shareholder is a party or by which
such Shareholder or its assets (including, without limitation, Option Shares) is
bound, or any statute, order, rule or regulation of any governmental authority
applicable to such Shareholder or its assets.
2.4 Consents/Approvals. No consent, approval, authorization, order,
registration or qualification of or with any governmental authority or other
person or entity is required in connection with the execution or delivery or,
except for filings which may be required under applicable Federal and State
securities laws, performance of this Agreement by each Shareholder.
3. Representations and Warranties of Grantee. Grantee hereby represents
and warrants to the Shareholders as follows:
3.1 Capacity/Enforceability. Grantee has the legal capacity to enter into
and perform Grantee's obligations under this Agreement. This Agreement has been
duly executed and delivered by Grantee and constitutes a valid and legally
binding obligation of Grantee, enforceable against Grantee in accordance with
its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other similar
laws now or hereafter in effect relating to or affecting the rights or remedies
of creditors, general principles of equity (whether considered in an action at
law or in equity) and the discretion of the court before which any proceeding
therefor may be brought.
3.2 Non-Contravention. Neither the execution and delivery of this
Agreement nor the performance by Grantee of Grantee's obligations hereunder will
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which Grantee is a
party or by which Grantee or Grantee's assets is bound, or any statute, order,
rule or regulation of any governmental authority applicable to Grantee or
Grantee's assets.
3.3 Consents/Approvals. No consent, approval, authorization, order,
registration or qualification of or with any governmental authority or other
person or entity is required in connection with the execution or delivery or,
except for filings which may be required under applicable Federal and State
securities laws, performance of this Agreement by Grantee.
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<PAGE>
3.4 Investment Intent.
-----------------
(a) Grantee is an "accredited investor" (as defined in Rule 501(a) of
Regulation D under the Securities Act) and is acquiring the Option, and
will acquire any Option Shares hereunder, for Grantee's own account and
with no intention of distributing or selling such securities, except in
accordance with applicable Federal and State securities laws. Grantee
understands that neither the Option nor the Option Shares has been
registered under the Securities Act by reason of their contemplated
issuance in transaction(s) exempt from the registration and prospectus
delivery requirements of the Securities Act pursuant to Section 4(2)
thereof. The reliance of the Shareholders on such exemption from
registration is predicated in part on the representations and warranties of
Grantee hereunder.
(b) Grantee agrees that Grantee will not sell or otherwise dispose of
the Option or any of the Option Shares unless such sale or other
disposition is permitted hereunder and under the Registration Rights
Agreement, has been registered or is exempt from registration under the
Securities Act and has been registered or qualified or is exempt from
registration or qualification under applicable State securities laws.
(c) Grantee understands that a restrictive legend consistent with the
foregoing has been or will be placed on the certificates evidencing the
Option Shares, and related stop transfer instructions will be noted in the
transfer records of the Company and/or its transfer agent for the Common
Stock.
(d) Grantee hereby acknowledges that disposition of the Option and the
Option Shares is restricted by applicable law and by the terms of this
Agreement and the Registration Rights Agreement, and Grantee may, unless
permitted hereunder and thereunder, be required to bear the economic risk
of Grantee's investment in the Option Shares (assuming exercise of the
Option) indefinitely.
4. Covenants.
---------
4.1 Right to Compel Disposition.
---------------------------
(a) Notwithstanding anything in this Agreement to the contrary, upon a
proposed disposition by the Shareholders, acting as a group, of all or
substantially all the shares of Common Stock beneficially owned by them (as
determined in accordance with Rule 13d-3 of the Securities Exchange Act of 1934,
as amended) to one or more third party purchasers who or which are not
Affiliates of any of the Shareholders (collectively, "Transferee"), by way of
-7-
<PAGE>
merger or sale, in a single transaction or a series of related transactions
(other than one or more underwritten public offerings), the Shareholders shall
have the right and option to deem the Option exercised (except that the Exercise
Price shall not be payable other than pursuant to this paragraph) and dispose of
the Option Shares on behalf of Grantee, and Grantee's Affiliates, if any, who or
which hold all or a portion of the Option, to such Transferee for the same
consideration per share of Common Stock and otherwise on the same terms and
conditions upon which the Shareholders effect the disposition of their shares of
Common Stock. Grantee, and Grantee's Affiliates, if any, who or which hold all
or a portion of the Option, shall, in connection with such a disposition, be
entitled to receive an amount equal to the total sales price of the Option
Shares, less the sum of the Exercise Price thereof and any applicable foreign,
Federal, State or local withholding taxes attributable to the transactions
described in this Section 4.1(a) (it being understood that cash consideration
and any other type of consideration (valued in accordance with the methodology
used for the disposition as a whole) in the foregoing amounts shall be retained
on a pro rata basis). Grantee agrees that the Company may take such actions as
are necessary to comply with the wage withholding provisions of any applicable
foreign, Federal, State or local income tax laws in connection with the above-
described transactions.
(b) In the event that the Shareholders desire to exercise their rights
pursuant to Section 4.1(a), they shall deliver to Grantee, and Grantee's
Affiliates, if any, who or which hold all or a portion of the Option, written
notice setting forth the consideration per share of Common Stock to be paid by
such Transferee and the other terms and conditions of such proposed disposition.
(c) Promptly after the consummation of the disposition of Option
Shares pursuant to this Section 4.1 (but in no event later than three business
days following receipt by the Shareholders of consideration from the
Transferee), the Shareholders shall (i) deliver notice thereof to Grantee, and
Grantee's Affiliates, if any, who or which hold all or a portion of the Option,
(ii) remit to Grantee, and Grantee's Affiliates, if any, who or which hold all
or a portion of the Option, the total sales price of the Option Shares disposed
of pursuant hereto less the sum of the Exercise Price thereof and any applicable
foreign, Federal, State or local withholding taxes, and (iii) furnish such other
evidence of the completion and time of completion of such disposition and the
terms thereof as may be reasonably requested in writing by Grantee.
(d) If, within 120 days after the Shareholders' delivery of the notice
required pursuant to Section 4.1(b), the Shareholders have not completed the
disposition of all or substantially all of their shares of Common Stock and the
Option Shares in accordance
-8-
<PAGE>
herewith (which period shall be extended in order to secure all approvals of
regulatory bodies and similar authorities that are required to effectuate such
disposition, in which case the closing shall be conducted no later than 10
business days after the receipt of all such approvals (it being understood that
the parties shall use their reasonable best efforts to obtain any such approvals
within the time periods contemplated hereby)), the deemed exercise described in
Section 4.1(a) shall of no force or effect and the provisions of Sections 4.1(a)
and 4.2(a) shall again apply.
(e) Grantee agrees to execute and deliver to the Shareholders and/or
the Transferee any and all documents and other instruments reasonably necessary
to effect the disposition of the Option or the Option Shares pursuant to this
Section.
(f) From and after Grantee's receipt of the notice contemplated by
Section 4.1(b), Grantee may not exercise the Option unless the provisions of
Section 4.1(d) shall have become applicable.
4.2 Right of Inclusion.
------------------
(a) If (i) a Shareholder (considering the Gellein Trust and the J.
Gellein Trust as a single Shareholder for purposes of this Section 4.2), which,
at the time, owns an aggregate of at least 20% of the outstanding shares of
Common Stock, proposes to sell more than 50% of its shares of Common Stock in a
single transaction or a series of related transactions (other than one or more
underwritten public offerings) to a Transferee, and (ii) the Shareholders do not
elect to exercise their rights, if any, under Section 4.1, then such Shareholder
shall deliver to Grantee, and Grantee's Affiliates who or which hold all or a
portion of the Option, a written notice setting forth the consideration per
share of Common Stock to be paid by such Transferee and the other terms and
conditions of such proposed disposition. Grantee, and Grantee's Affiliates, if
any, who or which hold all or a portion of the Option, shall be entitled to
participate in such proposed disposition by requiring Shareholder to cause
Transferee to purchase that number of Option Shares equal to the Included Shares
and to receive, in connection with such proposed disposition, an amount equal to
the total sales price of the Included Shares, less the sum of the Exercise Price
thereof and any applicable foreign, Federal, State or local withholding taxes
attributable to the transactions described in Section 4.2(a).
(b) If Grantee, or any of Grantee's Affiliates described above, elects
so to participate, Grantee and any such Affiliate shall so notify the relevant
Shareholder within five business days after receipt of such Shareholder's
notice. Grantee's election shall constitute a deemed exercise of the Option
with respect to the Included Shares and authorization for the Shareholder to
dispose of the Included Shares on behalf of Grantee and any such
-9-
<PAGE>
Affiliate to Transferee for the same consideration per Share and otherwise on
the same terms and conditions upon which the Shareholder effects the disposition
of its shares of Common Stock. Grantee agrees that the Company may take such
actions as are necessary to comply with the wage withholding provisions of any
applicable foreign, Federal, State or local income tax laws in connection with
the transactions described in this Section 4.2(a).
(c) Promptly after the consummation of the disposition of the Included
Shares pursuant to this Section 4.2 (but in no event later than three business
days following receipt by the Shareholder of consideration from the Transferee),
such Shareholder shall (i) deliver notice thereof to Grantee and any of such
Grantee's Affiliates participating in such disposition, (ii) remit to Grantee
and any of such Grantee's Affiliates participation in such disposition the total
sales price of the Included Shares disposed of pursuant hereto, less the sum of
the Exercise Price thereof and any applicable foreign, Federal, State or local
withholding taxes (it being understood that cash consideration and any other
type of consideration (valued in accordance with the methodology used for the
disposition as a whole) in the foregoing amounts shall be retained on a pro rata
basis), and (iii) furnish such other evidence of the completion and time of
completion of such disposition and the terms thereof as may be reasonably
requested in writing by Grantee.
(d) If, within 120 days after the Shareholder's delivery of the notice
required pursuant to Section 4.2(a), such Shareholder has not completed the
disposition of more than 50% of its shares of Common Stock in accordance
herewith (which period shall be extended in order to secure all approvals of
regulatory bodies and similar authorities that are required to effectuate such
disposition, in which case the closing shall be conducted no later than 10
business days after the receipt of all such approvals (it being understood that
the parties shall use their reasonable best efforts to obtain any such approvals
within the time periods contemplated hereby)), the deemed exercise, if any,
referred to in Section 4.2(b) shall be of no force or effect and the provisions
of Sections 4.1(a) and 4.2(a) shall again apply.
(e) Grantee agrees to execute and deliver to the Shareholders and/or
the Transferee any and all documents and other instruments reasonably necessary
to effect the disposition of the Option or the Option Shares pursuant to this
Section.
(f) From and after Grantee's delivery of notice pursuant to Section
4.2(b), Grantee may not exercise the Option in respect of the Included Shares
(other than as set forth in Section 4.2(b)) unless the provisions of Section
4.2(d) shall have become applicable.
-10-
<PAGE>
4.3 Legend. Until the Option Shares no longer constitute Registrable
Shares (as defined in the Registration Rights Agreement), each certificate
representing Option Shares shall be imprinted with substantially the following
legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY
APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE TRANSFERRED, SOLD OR
OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND ANY
OTHER APPLICABLE STATE SECURITIES LAWS OR UNLESS AN EXEMPTION FROM
REGISTRATION IS AVAILABLE.
Each certificate representing Option Shares shall also be imprinted with
any other legend required pursuant to applicable State corporation or securities
laws or any other agreements among the parties, including, without limitation,
the Registration Rights Agreement.
5. Definitions.
-----------
5.1 Certain Definitions. For purposes of this Agreement, the terms and
phrases set forth below shall have the following meanings:
"Affiliate" means, as to any person (i) any corporation, partnership,
limited liability company, joint venture, trust or individual directly or
indirectly through one or more intermediaries controlled by or under common
control with such person, or which controls directly or indirectly through one
or more intermediaries, such person (it being understood that in the case of
Grantee, such an entity must be wholly-owned by Grantee and the persons in
respect of Grantee, if any, described in clauses (ii) and (iii) of this
definition); (ii) a trust which has as its principal income beneficiaries or
remaindermen such person or any direct or indirect holder of such person, or
members of the immediate family of such person or direct or indirect holder of
such person; and (iii) any members of the immediate family of such person or a
member of the immediate family of any direct or indirect holder of such person.
For purposes of this definition, (i) no person, by virtue of his, her or its
direct or indirect ownership of shares of Common Stock, shall be deemed to be an
Affiliate of another person; (ii) the terms "control", "controlled" and "common
control with" mean the ability, whether by the direct or indirect ownership of
voting securities or other equity interest, by contract or otherwise, to elect a
majority of the directors of a corporation, to select the managing partner of a
partnership, or otherwise to select, or have the power to remove and then
select, a majority of those persons exercising governing authority over an
entity; and (iii) the term "immediate family" means spouses, siblings and lineal
descendants of a person.
-11-
<PAGE>
"Cause", with respect to Grantee, has the meaning ascribed thereto in
the then effective employment agreement, if any, between the Company and
Grantee, as the same may be amended, restated, modified or supplemented.
"Change in Control" means the occurrence of any one of the following
-----------------
events:
(a) any (A) consolidation or merger of the Company in which the
Company is not the continuing or surviving corporation or which
contemplates that all or substantially all of the business and/ or assets
of the Company shall be controlled by another corporation or (B) a
recapitalization (including an exchange of Company equity securities by the
holders thereof), in either case, in which any "Person" (as such term is
used in Sections 13(d) and (14(d)(2) of the Exchange Act), other than the
Shareholders, becomes the beneficial owner (within the meaning of Rule 13d-
3 promulgated under the Exchange Act) of securities of the Company
representing more than 50% of the combined voting power of the Company's
then outstanding securities ordinarily having the right to vote in the
election of directors;
(b) any sale, lease, exchange or transfer (in one transaction or
series of related transactions) of all or substantially all of the assets
of the Company and its subsidiaries or Affiliates;
(c) approval by the shareholders of the Company of any plan or
proposal for the liquidation or dissolution of the Company, unless such
plan or proposal is abandoned within 60 days following such approval; or
(d) any "Person" (as such term is used in Sections 13(d) and 14(d)(2)
of the Exchange Act), other than the Share holders, shall become the
beneficial owner of securities of the Company representing more than 50% of
the combined voting power of the Company's then outstanding securities
ordinarily having the right to vote in the election of directors.
"Included Shares" means a number of Option Shares held by a
Shareholder equal to the product of (i) the number of Option Shares which
Grantee is entitled to purchase from such Shareholder pursuant to the terms of
this Agreement, multiplied by (ii) a fraction, the numerator of which is the
number of shares of Common Stock which the Shareholder and its Affiliates
propose to dispose of in such transaction or transactions, and the denominator
of which is all shares of Common Stock owned beneficially or of record by such
Shareholder and its Affiliates at such time determined on a fully-diluted basis
in accordance with generally accepted accounting principles.
-12-
<PAGE>
"Permanent Disability", with respect to Grantee has the meaning
ascribed thereto in the then effective employment agreement, if any, between the
Company and Grantee, as the same may be amended, restated, modified or
supplemented. If a Grantee does not have an effective Employment Agreement,
then the term "Permanent Disability" means the inability of the Grantee to
perform substantially all Grantee's duties and responsibilities to the Company
by reason of a physical or mental disability or infirmity for either (i) a
continuous period of six months or (ii) 180 days during any consecutive twelve-
month period. The date of such Permanent Disability shall be (y), in the case
of clause (i) above, the last day of such six-month period or, if later, the day
on which satisfactory medical evidence of such Permanent Disability is obtained
by the Company, or (z) in the case of clause (ii) above, such date as is
determined in good faith by the Company. In the event that any disagreement or
dispute arises between the Company and Grantee as to whether the Grantee has
incurred a Permanent Disability, then, in any such event, Grantee shall submit
to a physical and/or mental examination by a competent and qualified physician
licensed under the laws of the State of Florida who shall be mutually selected
by the Company and Grantee, and such physician shall make the determination of
whether Grantee suffers from any disability. In the absence of fraud or bad
faith, the determination of such physician as to Grantee's condition at such
time shall be final and binding upon both the Company and the Grantee.
"Registration Rights Agreement" shall mean the Registration Rights
Agreement, dated as of the date hereof, among the Company, Grantee and the other
parties listed on the signature pages thereof.
"Voluntary Termination" shall mean the voluntary termination by
Grantee of Grantee's employment by the Company by voluntary resignation or any
other means (other than (i) death or Permanent Disability or (ii) simultaneous
with or following termination for Cause or an event which if known to the
Company at the time of such voluntary termination by Grantee would constitute
Cause).
5.2 Other Defined Terms. Each of the following terms is defined in the
Section of this Agreement set forth opposite such term:
-13-
<PAGE>
<TABLE>
<CAPTION>
Term Section
---- -----------
<S> <C>
Company preamble
Effective Date 1.2
Effective Date 1.2
Exercise Price 1.3
Grantee preamble
Option 1.1
Option Closing Date 1.4
Option Shares 1.1
Securities Act legend
Shareholder preamble
Term 1.2
Territory 4.4(a)
Transferee 4.1(a)
</TABLE>
6. Miscellaneous Provisions.
6.1 Binding Effect. This Agreement and all the terms and provisions
hereof shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors, heirs, personal or legal representatives
and permitted assigns and no other person or entity shall have any rights
hereunder, other than the Company, which shall be a beneficiary of Grantee's
agreements concerning withholding taxes set forth in Sections 1.5(c), 4.1(a) and
4.2(b).
6.2 Entire Agreement. This Agreement contains the entire understanding
among the parties with respect to the subject matter hereof and supersedes any
prior agreements or understandings among them with respect thereto.
6.3 Amendments; Waivers. This Agreement may not be modified except by a
written agreement signed by the parties hereto, and no provision hereof or
breach thereof may be waived except in a writing executed by the party waiving
such party's rights. The waiver of any term hereof or the breach thereof in any
instance shall not be deemed to be a waiver of such term or breach in any other
instance or of any other term or breach.
6.4 Survival. The representations and warranties contained herein or
made pursuant hereto shall survive the execution and delivery of this Agreement
and the issuance of the Option Shares.
6.5 Governing Law. The construction and interpretation of this Agreement
shall be governed in all respects by the laws of the State of Florida (without
regard to its conflict of laws principles).
6.6 No Implied Employment Contract. Nothing contained in this Agreement
shall be construed to be a contract of employment between the Company and
Grantee.
-14-
<PAGE>
6.7 Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement or the application
thereof shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the minimal extent of such prohibition or invalidity
without invalidating the remainder of such provision or the remaining provisions
of this Agreement or the application of such provision to other parties or
circumstances.
6.8 Notices. All communications among the parties shall be in writing
and shall be deemed to have been duly given as of the date of hand delivery or
three days after mailing via certified or registered mail, return receipt
requested, proper postage prepaid, to the addresses specified for each party on
attached Schedule A or such other address as a party shall from time to time
specify in a notice delivered in accordance with this Section 6.8.
6.9 Headings. The descriptive headings of the respective Sections and
Subsections of this Agreement are inserted for convenience of reference only and
shall not be deemed to modify or affect the construction of the provisions which
follow them.
6.10 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be an original, but all of which shall
constitute one and the same instrument.
6.11 Trustee Exculpation. The execution of this Agreement by the trustees
of the Gellein Trust, Adler Trust and J. Gellein Trust is by such trustees, not
individually, but solely in their capacities as trustees, and nothing contained
herein shall be deemed to impose any personal liability on such trustees
individually.
6.12 Consent of Spouse; Insertion in Will. Grantee agrees to obtain the
consent and approval of Grantee's spouse, by the execution hereof by such
spouse, to all of the terms and provisions of this Agreement. Grantee agrees to
insert in Grantee's last will and testament or other similar instrument, or
execute a codicil thereto, directing and authorizing Grantee's personal
representatives to fulfill and comply with the provisions of this Agreement.
6.13 Effectiveness. This Agreement and the rights granted to Grantee
hereunder shall become effective at the Effective Date.
6.14 Several Obligations. The obligations of the Shareholders hereunder
are several and not joint.
6.15 Equitable Relief. Each party hereto specifically acknowledges and
agrees that the remedy at law for any breach of its obligations hereunder will
be inadequate and that, in addition
-15-
<PAGE>
to any other relief available to the non-breaching parties, the non-breaching
parties shall be entitled to temporary and permanent injunctive relief without
the necessity of proving actual damages.
6.16 Attorneys' Fees and Costs. In the event a dispute arises between the
parties hereto and suit is instituted, the prevailing party or parties in such
litigation shall be entitled to recover reasonable attorneys' fees and other
costs and expenses from the non-prevailing party or parties, whether incurred at
the trial level or in any appellate proceeding.
IN WITNESS WHEREOF, the parties have executed this Agreement, as of the
date first above written.
SHAREHOLDERS:
------------
RAYMOND L. GELLEIN, JR. REVOCABLE
TRUST
By: ------------------------
Raymond L. Gellein, Jr.
Trustee
JEFFREY A. ADLER TRUST
By: ----------------------
Jeffrey A. Adler
Trustee
JGG HOLDINGS TRUST
By: -----------------------
Raymond L. Gellein, Jr.
Trustee
Grantee:
-------
----------------------------------------
Name: Charles E. Harris
-16-
<PAGE>
CONSENT OF SPOUSE
-----------------
The undersigned, the spouse of the Grantee referred to in the attached
Shareholders Option Agreement, hereby consents to the execution of the
Shareholders Option Agreement and the consummation of the transactions
contemplated thereby by the Grantee, and hereby waives any and all rights the
undersigned may have in and to the property and subject matter of the
Shareholders Option Agreement by virtue of such spouse's marital relationship
with the Grantee.
________________________________
Name: Jeanne D. Harris
-17-
<PAGE>
SCHEDULE A
----------
Shareholder, Option and Grantee Information
-------------------------------------------
<TABLE>
<CAPTION>
No. of Shares Subject
Name and Address to Grant of Option
- ---------------- ----------------------
<S> <C>
Raymond L. Gellein, Jr. 100,000
Revocable Trust
c/o Raymond L. Gellein, Jr.,
Trustee
8801 Vistana Centre Drive
Orlando, Florida 32821
JGG Holdings Trust 100,000
c/o Raymond L. Gellein, Jr.,
Trustee
8801 Vistana Centre Drive
Orlando, Florida 32821
Jeffrey A. Adler Revocable Trust 200,000
c/o Jeffrey A. Adler,
Trustee
8801 Vistana Centre Drive
Orlando, Florida 32821 _______
400,000
=======
Grantee Name and Address
- ------------------------
Charles E. Harris
3339 Northglenn Drive
Orlando, Florida 32806
</TABLE>
A-1
<PAGE>
Exhibit 7
November 25, 1997
NationsBanc Montgomery Securities, Inc.
Montgomery Securities
600 Montgomery Street
San Francisco, California 94111
RE: Vistana, Inc. (the "Company")
-----------------------------
Ladies & Gentlemen:
The undersigned is an owner of record or beneficially of certain shares of
Common Stock of the Company ("Common Stock") or securities convertible into or
exchangeable or exercisable for Common Stock. The Company proposes to carry out
a public offering of Common Stock (the "Offering") for which you will act as the
underwriter. The undersigned recognizes that the Offering will be of benefit to
the undersigned and will benefit the Company by, among other things, raising
additional capital for its operations. The undersigned acknowledges that you are
relying on the representations and agreements of the undersigned contained in
this letter in carrying out the Offering and in entering into underwriting
arrangements with the Company with respect to the Offering.
In consideration of the foregoing, the undersigned hereby agrees that the
undersigned will not, without the prior written consent of NationsBanc
Montgomery Securities, Inc. (which consent may be withheld in its sole
discretion), directly or indirectly, sell, offer, contract or grant any option
to sell (including without limitation any short sale), pledge, transfer,
establish an open "put equivalent position" within the meaning of Rule 16a-1(h)
under the Securities Exchange Act of 1934, or otherwise dispose of any shares of
Common Stock, options or warrants to acquire shares of Common Stock, or
securities exchangeable or exercisable for or convertible into shares of Common
Stock currently or hereafter owned either of record or beneficially (as defined
in Rule 13d-3 under Securities Exchange Act of 1934, as amended) by the
undersigned, or publicly announce the undersigned's intention to do any of the
foregoing (collectively for purposes of this paragraph, "Sales"), for a period
commencing on the date hereof and continuing through the close of trading on the
date 120 days after the date of the Prospectus; provided, however, that sales to
family members in connection with bona fide estate planning of the undersigned
and transfers to or from any grantor retained annuity trusts shall be allowed
without the prior written consent of NationsBanc Montgomery Securities, Inc.
(provided advance written notice is provided to NationsBanc Montgomery
Securities, Inc.) and provided further that such transferees shall be bound by
this agreement and shall agree not to make any Sales for the remainder of such
120 day period without the prior written consent of NationsBanc Montgomery
<PAGE>
Securities, Inc. The undersigned also agrees and consents to the entry of stop
transfer instructions with the Company's transfer agent and registrar against
the transfer of shares of Common Stock or securities convertible into or
exchangeable or exercisable for Common Stock held by the undersigned except in
compliance with the foregoing restrictions.
With respect to the Offering only, the undersigned waives any registration
rights relating to registration under the Securities Act of any Common Stock
owned either of record or beneficially by the undersigned, including any rights
to receive notice of the Offering.
This agreement is irrevocable and will be binding on the undersigned and
the respective successors, heirs, personal representatives and assigns of the
undersigned.
- --------------------------
Printed Name of Holder
By:
-----------------------
Signature
- --------------------------
Printed Names of Person Signing
(and indicate capacity of person signing if
signing as custodian, trustee or on behalf
of an entity)
<PAGE>
Exhibit 8
ASSIGNMENT AND ASSUMPTION AGREEMENT
-----------------------------------
Assignment and Assumption Agreement (the "Agreement"), dated as of December
18, 1997, between Rija Limited Partnership, a Nevada limited partnership (the
"Assignee"), and Jeffrey A. Adler, Trustee of Jeffrey A. Adler Trust a/k/a
Jeffrey A. Adler Revocable Trust (the "Assignor").
R E C I T A L S:
---------------
WHEREAS, concurrently herewith, Assignor is transferring to Assignee
5,975,750 shares (the "Shares") of common stock, $.01 par value per share, of
Vistana, Inc., a Florida corporation (the "Company");
WHEREAS, Assignor and certain other shareholders of the Company have
provided for the voting and transfer of their shares of common stock of the
Company, including without limitation the Shares, pursuant to that certain
Shareholders' Agreement dated as of February 10, 1997 (the "Shareholders'
Agreement");
WHEREAS, the Company has granted to Assignor certain registration rights
pursuant to that certain Registration Rights Agreement dated as of February 10,
1997 (the "Registration Rights Agreement"), among the Company, Assignor and the
other parties thereto;
WHEREAS, Assignor has agreed to certain restrictions regarding the transfer
of the Shares pursuant to that certain letter dated November 25, 1997, from
Assignor to NationsBanc Montgomery Securities, Inc. ("NationsBanc") (such
letter, together with any other lock-up letters from Assignor to Nationsbanc,
the "Lock-Up Agreements");
WHEREAS, Assignor has granted to certain employees and former employees of
the Company and its subsidiaries and affiliates options to acquire certain of
the Shares pursuant to those certain Shareholder Option Agreements described on
Schedule A, attached hereto and by this reference made a part hereof (the
"Option Agreements" and, together with the Shareholders' Agreement, the
Registration Rights Agreement and the Lock-Up Agreements, the "Agreements"); and
WHEREAS, Assignor desires to assign to Assignee all of Assignor's rights
under the Agreements (other than the rights of Jeffrey A. Adler under Section 3
of the Registration Rights Agreement) and Assignee desires to assume the
obligations of Assignor under the Agreements as provided herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements contained herein, and for other
<PAGE>
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Assignment. Assignor hereby assigns, transfers and conveys to Assignee
all of Assignor's right, title and interest in, to and under the Agreements
(other than the rights of Jeffrey A. Adler under Section 3 of the Registration
Rights Agreement).
2. Assumption by Assignee. Assignee hereby assumes and agrees to perform
all of the obligations of Assignor under the Agreements.
3. Binding Effect. This Agreement shall inure to the benefit of, and be
binding upon, the parties hereto and their respective successors and assigns.
4. Trustee Liability. This Agreement, to the extent executed by any person
or entity in his or its capacity as trustee of a trust, is executed by such
person or entity solely as such trustee and not in an individual capacity. The
execution by such person or entity of this Agreement in his or its capacity as
trustee shall not create any liability on, or require the performance of any
covenant by, any such trustee individually nor subject the individual property
of such trustee to any liability.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
date first written above.
ASSIGNOR:
------------------------------------
Jeffrey A. Adler, Trustee of Jeffrey
A. Adler Trust
ASSIGNEE:
RIJA LIMITED PARTNERSHIP, a Nevada
limited partnership
By: Alexdann Corporation, a Nevada
corporation, its general
partner
By:
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Its:
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SCHEDULE A
SHAREHOLDER OPTION AGREEMENTS
Shareholder Option Agreement dated as of February 10, 1997, among
Assignor, Matthew E. Avril and the other parties thereto.
Shareholder Option Agreement dated as of February 10, 1997, among
Assignor, Alain J.A. Grange and the other parties thereto.
Shareholder Option Agreement dated as of February 10, 1997, among
Assignor, Barbara Hollkamp and the other parties thereto.
Shareholder Option Agreement dated as of February 10, 1997, among
Assignor, Carol A. Lytle and the other parties thereto.
Shareholder Option Agreement dated as of February 10, 1997, among
Assignor, James A. McKnight and the other parties thereto.
Shareholder Option Agreement dated as of February 10, 1997, among
Assignor, William J. McLaughlin and the other parties thereto.
Shareholder Option Agreement dated as of February 10, 1997, among
Assignor, John M. Sabin and the other parties thereto.
Shareholder Option Agreement dated as of February 10, 1997, among
Assignor, Susan B. Werth and the other parties thereto.
Shareholder Option Agreement dated as of November 18, 1997, among
Assignor, Charles E. Harris and the other parties thereto.
Shareholder Option Agreement dated as of November 13, 1997, among
Assignor, William J. McLaughlin and the other parties thereto.
Shareholder Option Agreement dated as of July 17, 1997, among
Assignor, Alain J.A. Grange and the other parties thereto.
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