UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1)*
Vistana, Inc.
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, $0.01 par value per share
- --------------------------------------------------------------------------------
(Title of Class of Securities)
92839P108
- --------------------------------------------------------------------------------
(CUSIP Number)
Martin L. Edelman
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
(212) 856-7000
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
July 18, 1999
- --------------------------------------------------------------------------------
(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 Sections 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check
the following box / /.
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Section 240.13d-7(b) 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).
858445.3
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<TABLE>
<CAPTION>
CUSIP No. 92839P108 SCHEDULE 13D
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<S> <C>
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
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 (See Instructions)
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
98,700
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 6,015,758
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 98,700
PERSON WITH
10 SHARED DISPOSITIVE POWER
6,015,758
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
6,114,458
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES (See Instructions) / /
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
28.4%
14 TYPE OF REPORTING PERSON (See Instructions)
IN
</TABLE>
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<TABLE>
<CAPTION>
CUSIP No. 92839P108 SCHEDULE 13D
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<S> <C>
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Raymond L. Gellein, Jr.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / /
(b) /X/
3 SEC USE ONLY
4 SOURCE OF FUNDS (See Instructions)
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
30,208
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 5,662,716
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 30,208
PERSON WITH
10 SHARED DISPOSITIVE POWER
5,662,716
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,692,924
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES (See Instructions) /X/
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
26.4%
14 TYPE OF REPORTING PERSON (See Instructions)
IN
</TABLE>
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<TABLE>
<CAPTION>
CUSIP No. 92839P108 SCHEDULE 13D
- --------------------
<S> <C>
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Raymond L. Gellein, Sr., 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 (See Instructions)
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
458,774
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 0
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 458,774
PERSON WITH
10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
458,774
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES (See Instructions) /X/
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
2.1%
14 TYPE OF REPORTING PERSON (See Instructions)
IN
</TABLE>
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<TABLE>
<CAPTION>
CUSIP No. 92839P108 SCHEDULE 13D
- --------------------
<S> <C>
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
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 (See Instructions)
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
123,000
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 0
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 123,000
PERSON WITH
10 SHARED DISPOSITIVE POWER
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 (See Instructions) / /
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.6%
14 TYPE OF REPORTING PERSON (See Instructions)
IN
</TABLE>
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<TABLE>
<CAPTION>
CUSIP No. 92839P108 SCHEDULE 13D
- --------------------
<S> <C>
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Catherine G. Male, solely 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 (See Instructions)
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
85,760
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 0
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 85,760
PERSON WITH
10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
85,760
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES (See Instructions) / /
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.4%
14 TYPE OF REPORTING PERSON (See Instructions)
IN
</TABLE>
858445.3
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<TABLE>
<CAPTION>
CUSIP No. 92839P108 SCHEDULE 13D
- --------------------
<S> <C>
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
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 (See Instructions)
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
Nevada
7 SOLE VOTING POWER
0
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 6,015,758
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 0
PERSON WITH
10 SHARED DISPOSITIVE POWER
6,015,758
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
6,015,758
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES (See Instructions) / /
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
27.9%
14 TYPE OF REPORTING PERSON (See Instructions)
PN
</TABLE>
858445.3
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<TABLE>
<CAPTION>
CUSIP No. 92839P108 SCHEDULE 13D
- --------------------
<S> <C>
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
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 (See Instructions)
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
Delaware
7 SOLE VOTING POWER
0
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 2,797,764
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 0
PERSON WITH
10 SHARED DISPOSITIVE POWER
2,797,764
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,797,764
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES (See Instructions) / /
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13.0%
14 TYPE OF REPORTING PERSON (See Instructions)
PN
</TABLE>
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<TABLE>
<CAPTION>
CUSIP No. 92839P108 SCHEDULE 13D
- --------------------
<S> <C>
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
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 (See Instructions)
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
Delaware
7 SOLE VOTING POWER
0
NUMBER OF
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 2,864,952
OWNED BY
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 0
PERSON WITH
10 SHARED DISPOSITIVE POWER
2,864,952
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,864,952
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES (See Instructions) / /
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13.3%
14 TYPE OF REPORTING PERSON (See Instructions)
PN
</TABLE>
858445.3
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CUSIP No. 92839P108 SCHEDULE 13D
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This statement amends and supplements the Schedule 13D,
dated December 19, 1997 (the "Schedule 13D"), which was originally filed with
the Securities and Exchange Commission (the "SEC") on December 30, 1996 with
respect to the ownership of common stock, par value $0.01 per share ("Common
Stock"), of Vistana, Inc., a Florida corporation (the "Company").
Item 2. Identity and Background
Item 2 is hereby amended and supplemented by adding the following:
The following person is added to the list of persons
identified as "Reporting Persons" under Item 2 of the original Schedule 13D:
1. Raymond L. Gellein, Sr., as Trustee of the trusts listed
on Appendix I attached hereto. Mr. Gellein, Sr., a United States citizen,
resides at 547 North Riverside, St. Clair, Michigan 48079. Mr. Gellein, Sr. is
retired. Mr. Gellein, Sr. has not, during the past five years, been (i)
convicted in a criminal proceeding (excluding traffic violations 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.
Item 4. Purpose of Transaction
Item 4 is hereby amended and supplemented by adding the following:
On July 18, 1999, the Company and Starwood Hotels & Resorts
Worldwide, Inc., a Maryland corporation, and its wholly-owned subsidiary, Fire
Acquisition Corp., a Florida corporation (collectively, "Starwood"), executed a
definitive Agreement and Plan of Merger providing for the acquisition of the
Company by Starwood pursuant to a merger of the Company with and into Fire
Acquisition Corp. (the "Merger"). Concurrently with the signing of the Merger
Agreement, Mr. Adler, together with certain trusts primarily for his benefit and
the benefit of his family members and RIJA (the "Adler Shareholders"), entered
into a Shareholders Agreement with Starwood (the "1999 Adler Shareholders
Agreement"), pursuant to which the Adler Shareholders have agreed to vote (or
cause to be voted) all of the shares of Common Stock that they beneficially own
or have voting control over in favor of the Merger, the approval of the Merger
Agreement and the approval of the terms thereof and each of the other
transactions contemplated by the Merger Agreement. Similarly, concurrently with
the signing of the Merger Agreement, Mr. Gellein, together with certain trusts
primarily for his benefit and the benefit of his family members and Mr.
Gellein's former spouse and NevWest and NevEast (the "Gellein Shareholders"),
entered into a Shareholders Agreement with Starwood (the "1999 Gellein
Shareholders Agreement" and together with the 1999 Adler Shareholders Agreement,
the "1999 Shareholders Agreements"), pursuant to which the Gellein Shareholders
have agreed to vote (or cause to be voted) all of the shares of Common Stock
that they beneficially own or have voting control over in favor of the Merger,
the approval of the Merger Agreement and the approval of the terms thereof and
each of the other transactions contemplated by the Merger Agreement. In
addition, pursuant to the 1999 Shareholders
858445.3
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CUSIP No. 92839P108 SCHEDULE 13D
- --------------------
Agreements, the Adler Shareholders and the Gellein Shareholders have granted to
Starwood an irrevocable proxy to vote all of the shares of Common Stock that
they are entitled to vote at any meeting of shareholders of the Company relating
to the Merger and their agreement to vote in favor of the Merger. Further,
pursuant to the 1999 Shareholders Agreements, on July 18, 1999, the Adler
Shareholders and the Gellein Shareholders executed and delivered to the Company
written consents approving the Merger Agreement and the Merger. As a result, the
required stockholder approval of the Merger under Florida law has been obtained.
Item 5. Interest in the Securities of the Issuer.
Item 5 is hereby amended and restated as follows:
(a) As of June 30, 1999, the Company had 21,567,377 shares
of Common Stock issued and outstanding. 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 1999 Shareholders
Agreements, the Shareholders' Agreement (as modified by the letter agreement
described in the fifth paragraph under Item 6 below), the Registration Rights
Agreement, the Shareholder Option Agreements (as supplemented by the letter
agreements between certain of the Adler Shareholders and the Gellein
Shareholders and Starwood described in the sixth paragraph under Item 6 below),
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 (as such term in defined in the Schedule 13D) 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) Not applicable.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships
With Respect to Securities of the Issuer.
Item 6 is hereby amended and supplemented by adding the following:
1999 Shareholders Agreements
The following is a summary of the material provisions of
the 1999 Shareholders Agreements, consisting of the 1999 Adler Shareholders
Agreement (as defined in Item 4 above) and the 1999 Gellein Shareholders
Agreement (as defined in Item 4 above). This summary is not intended to be
complete and reference is made to the 1999 Adler Shareholders Agreement and the
1999 Gellein
858445.3
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CUSIP No. 92839P108 SCHEDULE 13D
- --------------------
Shareholders Agreement for a complete description of the arrangements with
respect to the Subject Shares. Because the 1999 Adler Shareholders Agreement and
the 1999 Gellein Shareholders Agreement contain the same terms and provisions
and differ only with respect to the parties thereto, the following summary
describes each of the 1999 Shareholders Agreements.
On July 18, 1999, the Adler Shareholders entered into the
1999 Adler Shareholders Agreement with Starwood and the Gellein Shareholders
entered into the 1999 Gellein Shareholders Agreement with Starwood. Pursuant to
the 1999 Shareholders Agreements, the Adler Shareholders and the Gellein
Shareholders have each agreed to vote (or cause to be voted) all of the shares
of Common Stock that they beneficially own or have voting control over in favor
of the Merger (described in Item 4 above), the approval of the Merger Agreement
(described in Item 4 above) and the approval of the terms thereof and each of
the other transactions contemplated by the Merger Agreement. In addition,
pursuant to the 1999 Shareholders Agreements, the Adler Shareholders and the
Gellein Shareholders have granted to Starwood an irrevocable proxy to vote all
of the shares of Common Stock that they are entitled to vote at any meeting of
shareholders of the Company relating to the Merger and their agreement set forth
in the immediately preceding sentence.
The 1999 Shareholders Agreements prohibit transfers of the
Subject Shares by the Adler Shareholders and the Gellein Shareholders to persons
other than Starwood and certain other permitted transferees, which include
family members and other persons in connection with estate planning objectives,
prior to the consummation of the Merger. The 1999 Shareholders Agreements also
impose on certain of the Adler Shareholders and certain of the Gellein
Shareholders certain restrictions on transfers of Starwood stock after the
Merger, as well as certain indemnification obligations and events of forfeiture
of shares of Starwood stock.
The 1999 Shareholders Agreements will terminate and be of
no further force and effect upon a valid termination of the Merger Agreement.
Pursuant to a separate letter agreement, the Adler
Shareholders and the Gellein Shareholders have agreed that, to the extent that
any term, provision or agreement set forth in the 1999 Shareholders Agreements
conflicts with a term, provision or agreement set forth in the Shareholders
Agreement entered into on February 10, 1997, the term, provision or agreement
set forth in the 1999 Shareholders Agreements shall control.
Pursuant to separate letter agreements, certain of the
Adler Shareholders and the Gellein Shareholders who are parties to the
Shareholder Option Agreements have agreed with Starwood and the Company that
they will comply with the terms of the Shareholder Option Agreements and will
not amend the Shareholder Option Agreements without the prior written consent of
Starwood and the Company.
Item 7. Materials to be Filed as Exhibits.
Exhibit 99.1 -- Shareholders Agreement, dated as of July
18, 1999, among Starwood Hotels & Resorts
Worldwide, Inc., a Maryland corporation,
Fire Acquisition Corp., a Florida
corporation, Jeffrey A. Adler, Rija
Limited
858445.3
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CUSIP No. 92839P108 SCHEDULE 13D
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Partnership, a Nevada limited
partnership, the Jeffrey A. Adler Grantor
Annuity Trust #1, the Jeffrey A. Adler
Grantor Annuity Trust #2, the ARA Trust
and the DLA Trust.
Exhibit 99.2 -- Shareholders Agreement, dated as of July
18, 1999, among Starwood Hotels & Resorts
Worldwide, Inc., a Maryland corporation,
Fire Acquisition Corp., a Florida
corporation, Raymond L. Gellein, Jr.,
NevEast Limited Partnership, a Delaware
limited partnership, NevWest Limited
Partnership, a Delaware limited
partnership, the Raymond L. Gellein, Jr.
Grantor Retained Annuity Trust, the
Matthew James Gellein Irrevocable Trust,
the Brett Tyler Gellein Irrevocable
Trust, the Janice G. Gellein Grantor
Annuity Trust, the Catherine Male Gift
Trust, the Cherie Doherty Gift Trust and
the Susan Faetz Gift Trust.
858445.3
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CUSIP No. 92839P108 SCHEDULE 13D
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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.
Dated: July 23, 1999
/s/ Jeffrey A. Adler
---------------------------------------------
Jeffrey A. Adler
Individually and as Trustee of the following trusts:
Jeffrey A. Adler Grantor Annuity Trust #1
Jeffrey A. Adler Grantor Annuity Trust #2
/s/ Raymond L. Gellein, Jr.
---------------------------------------------
Raymond L. Gellein, Jr.
/s/ Raymond L. Gellein, Sr.
---------------------------------------------
Raymond L. Gellein, Sr.
as Trustee of the following trusts:
Raymond L. Gellein, Jr. Grantor Retained
Annuity Trust
Catherine Male Gift Trust
Janice G. Gellein Grantor Annuity Trust
Cherie Doherty Gift Trust
Susan Faetz Gift Trust
/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
858445.3
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CUSIP No. 92839P108 SCHEDULE 13D
- --------------------
RIJA LIMITED PARTNERSHIP
By: Alexdann Corporation, General Partner
By: /s/ Ronald Smith
-------------------------------------
Ronald Smith
Treasurer
NEVWEST LIMITED PARTNERSHIP
By: Nevgel, Inc., General Partner
By: /s/ Ronald Smith
-------------------------------------
Ronald Smith
President
NEVEAST LIMITED PARTNERSHIP
By: NevJan I, Inc., General Partner
By: /s/ Ronald Smith
-------------------------------------
Ronald Smith
President
858445.3
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<TABLE>
<CAPTION>
CUSIP No. 92839P108 SCHEDULE 13D
- --------------------
APPENDIX I
Shares Percentage of
Reporting Person Beneficially Owned Total Outstanding
- ---------------- ------------------ -----------------
<S> <C> <C>
1. Rija Limited Partnership..................................................... 6,015,758 27.9%
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........ 30,208 0.1%
b) Jeffrey A. Adler Revocable Trust, limited partner and sole shareholder
of the corporate general partner of Rija Limited Partnership.............. 6,015,758 27.9%
c) Jeffrey A. Adler Grantor Annuity Trust #1................................. 31,133 0.1%
d) Jeffrey A. Adler Grantor Annuity Trust #2................................. 37,359 0.2%
Total Shares Beneficially Owned by Jeffrey A. Adler,
individually and as Trustee...................................................... 6,114,458 28.4%
3. Raymond L. Gellein, Jr.
a) Individually, shares subject to an option granted under the Vistana Stock
Plan which is exercisable within 60 days of the date hereof............... 30,208 0.1%
b) Raymond L. Gellein, Jr. Revocable Trust, limited partner and sole
shareholder of the corporate general partner of NevWest
Limited Partnership....................................................... 2,797,764 13.0%
c) JGG Holdings Trust, a limited partner and the sole shareholder of
one of the corporate general partners of NevEast Limited Partnership...... 2,864,952 13.3%
Total Shares Beneficially Owned by Raymond L. Gellein, Jr........................ 5,692,924 26.4%
4. Raymond L. Gellein, Sr., solely as Trustee
a) Raymond L. Gellein, Jr., Grantor Retained Annuity Trust................... 220,101 1.0%
b) Catherine Male Gift Trust................................................. 20,500 0.09%
c) Janice G. Gellein Grantor Annuity Trust................................... 177,173 0.8%
d) Cherie Doherty Gift Trust................................................. 20,500 0.09%
e) Susan Faetz Gift Trust.................................................... 20,500 0.09%
Total Shares Beneficially Owned by Raymond L. Gellein, Sr.,
solely as Trustee................................................................ 458,774 2.1%
5. NevWest Limited Partnership.................................................. 2,797,764 13.0%
6. NevEast Limited Partnership.................................................. 2,864,952 13.3%
</TABLE>
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<TABLE>
<CAPTION>
CUSIP No. 92839P108 SCHEDULE 13D
- --------------------
<S> <C> <C>
7. Lee I. Miller, solely as Trustee
a) ARA Trust................................................................. 61,500 0.3%
b) DLA Trust................................................................. 61,500 0.3%
Total Shares Beneficially Owned by Lee I. Miller,
solely as Trustee................................................................ 123,000 0.6%
8. Catherine G. Male, solely as Trustee
a) Matthew James Gellein Irrevocable Trust................................... 42,880 0.2%
b) Brett Tyler Gellein Irrevocable Trust..................................... 42,880 0.2%
Total Shares Beneficially Owned by Catherine G. Male,
solely as Trustee................................................................ 85,760 0.4%
</TABLE>
858445.3
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CUSIP No. 92839P108 SCHEDULE 13D
- --------------------
Exhibit Index
-------------
Exhibit 99.1 -- Shareholders Agreement, dated as of July 18, 1999,
among Starwood Hotels & Resorts Worldwide, Inc., a
Maryland corporation, Fire Acquisition Corp., a
Florida corporation, Jeffrey A. Adler, Rija Limited
Partnership, a Nevada limited partnership, the
Jeffrey A. Adler Grantor Annuity Trust #1, the
Jeffrey A. Adler Grantor Annuity Trust #2, the ARA
Trust and the DLA Trust.
Exhibit 99.2 -- Shareholders Agreement, dated as of July 18, 1999,
among Starwood Hotels & Resorts Worldwide, Inc., a
Maryland corporation, Fire Acquisition Corp., a
Florida corporation, Raymond L. Gellein, Jr.,
NevEast Limited Partnership, a Delaware limited
partnership, NevWest Limited Partnership, a
Delaware limited partnership, the Raymond L.
Gellein, Jr. Grantor Retained Annuity Trust, the
Matthew James Gellein Irrevocable Trust, the Brett
Tyler Gellein Irrevocable Trust, the Janice G.
Gellein Grantor Annuity Trust, the Catherine Male
Gift Trust, the Cherie Doherty Gift Trust and the
Susan Faetz Gift Trust.
858445.3
Page 18
Exhibit 99.1
Execution Copy
SHAREHOLDERS AGREEMENT
SHAREHOLDERS AGREEMENT (this "Agreement"), dated as of July 18,
1999, among Starwood Hotels & Resorts Worldwide, Inc., a Maryland corporation
("Parent"), Fire Acquisition Corp., a Florida corporation and a wholly-owned
subsidiary of Parent ("Sub"), Jeffrey A. Adler ("Adler"), Rija Limited
Partnership, a Nevada limited partnership ("Rija"), the Jeffrey A. Adler Grantor
Annuity Trust #1 ("Annuity Trust #1"), the Jeffrey A. Adler Grantor Annuity
Trust #2 ("Annuity Trust #2"), the ARA Trust ("ARA Trust") and the DLA Trust
("DLA Trust" and, together with Annuity Trust #1, Annuity Trust #2 and ARA
Trust, the "Trusts") (Adler, Rija and the Trusts are collectively referred to
herein as the "Shareholders" and individually referred to herein as a
"Shareholder"); provided, however, that the obligations of Annuity Trust #1,
Annuity Trust #2, ARA Trust and DLA Trust shall be limited to those set forth in
Sections 1, 3, 4, 5, 7 and 8 of this Agreement.
WHEREAS Parent, Sub and Vistana, Inc. a Florida corporation (the
"Company"), propose to enter into an Agreement and Plan of Merger dated as of
even date herewith (as the same may be amended or supplemented, the "Merger
Agreement") providing for the merger of the Company into Sub pursuant to which
each issued and outstanding share of common stock, par value $.01 per share, of
the Company (the "Company Common Stock"), not owned by Parent, the Company or
their respective wholly-owned subsidiaries will be converted into (i) the
Exchange Ratio (as defined in the Merger Agreement) of Units (as defined in the
Merger Agreement) plus (ii) $5.00 in cash;
WHEREAS the Shareholders own in the aggregate 6,207,250 shares of
Company Common Stock (the "Owned Shares");
WHEREAS the Shareholders have each executed a written consent to
the Merger and the Merger Agreement pursuant to Section 607.0704 of the Florida
Business Corporation Act;
WHEREAS certain of the Shareholders have granted to certain
employees and former employees of the Company or its affiliates options to
acquire an aggregate of 915,000 (the "Option Shares") of the Owned Shares
pursuant to those certain Shareholder Option Agreements described on Annex A
hereto (the "Option Agreements"); and
WHEREAS as a condition to their willingness to enter
into the Merger Agreement, Parent and Sub have requested that the Shareholders
enter into this Agreement.
<PAGE>
NOW, THEREFORE, to induce Parent and Sub to enter into, and in
consideration of their entering into, the Merger Agreement, and in consideration
of the premises and the representations, warranties and agreements contained
herein, the parties agree as follows:
1. Representations and Warranties of the Shareholders. The
Shareholders hereby jointly and severally represent and warrant to Parent and
Sub as follows:
(a) Authority. Each Shareholder has all requisite power and
authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement by each Shareholder, and the consummation of the transactions
contemplated hereby, has been duly authorized by all necessary action on
the part of each Shareholder. This Agreement has been duly executed and
delivered by each Shareholder and, assuming the due authorization,
execution and delivery by each of Parent and Sub, constitutes a valid
and binding obligation of each Shareholder enforceable in accordance
with its terms, except to the extent enforceability may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting
creditors' rights generally or by general principles governing the
availability of equitable remedies. The execution and delivery of this
Agreement does not, and the consummation of the transactions
contemplated hereby and compliance with the terms hereof will not,
conflict with, or result in any violation of or default (with or without
notice or lapse of time or both) under any provision of any trust
agreement, partnership agreement, loan or credit agreement, note, bond,
mortgage, indenture, lease or other agreement, instrument, permit,
concession, franchise, license, judgment, order, notice, decree,
statute, law, ordinance, rule or regulation applicable to any of the
Shareholders or to any of the property or assets of any of the
Shareholders. Except for consents, approvals, authorizations and filings
as may be required under (A) the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, the Securities Exchange Act of
1934, as amended, the Securities Act of 1933, as amended, or (B) federal
and state land development, mortgage servicing and telemarketing laws,
state time share laws, state securities laws applicable to the sale or
offer of VOIs (as defined in the Merger Agreement), and seller of travel
or travel agency laws, no consent, approval, order or authorization of,
or registration, declaration or filing with, any court, administrative
agency or commission or other governmental authority or instrumentality,
domestic, foreign or supranational, is required by or with respect to
any Shareholder in connection with the execution and delivery of this
Agreement or the consummation by any Shareholder of the transactions
contemplated hereby.
(b) The Owned Shares. The Shareholders have good and valid title
to the Owned Shares, free and clear of any claims, liens, encumbrances,
pledges and security interests whatsoever, except for the certain
obligations to transfer the Option Shares pursuant to the Option
Agreements and certain obligations pursuant to a certain Shareholders'
Agreement dated as of February 10, 1997 (the "Shareholders' Agreement").
The Shareholders own no shares of Company Common Stock or other shares
of capital stock of the Company, other than the Owned Shares. Except for
this Agreement, no proxies or
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powers of attorney have been granted with respect to the Owned Shares
that will remain in effect after the execution of this Agreement. Except
for this Agreement and the Shareholders' Agreement, which the parties
hereto have agreed pursuant to a separate letter agreement, dated the
date hereof, shall be superseded by this Agreement (to the extent the
terms thereof conflict with the terms hereof) until, and terminate at,
the Effective Time, no voting arrangement (including voting agreement or
voting trust) affecting the Owned Shares shall remain in effect after
the execution of this Agreement.
(c) The Company. To the knowledge of the Shareholders, the
representations and warranties of the Company (i) set forth in Sections
3.8, 3.10, 3.11 and 3.16 of the Merger Agreement are true and correct
and (ii) set forth in Sections 3.5, 3.7 and 3.13 of the Merger Agreement
are true and correct.
2. Representations and Warranties of Parent and Sub. Parent and
Sub hereby represent and warrant to the Shareholders as follows:
(a) Authority. Each of Parent and Sub has all requisite corporate
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement by Parent and Sub, and the consummation of the transactions
contemplated hereby, have been duly authorized by all necessary
corporate action on the part of Parent and Sub. This Agreement has been
duly executed and delivered by Parent and Sub and, assuming the due
authorization, execution and delivery by each of the Shareholders,
constitutes a valid and binding obligation of Parent and Sub enforceable
in accordance with its terms, except to the extent enforceability may be
limited by bankruptcy, insolvency, moratorium or other similar laws
affecting creditors' rights generally or by general principles governing
the availability of equitable remedies. The execution and delivery of
this Agreement does not, and the consummation of the transactions
contemplated hereby and compliance with the terms hereof will not,
conflict with, or result in any violation of or default (with or without
notice or lapse of time or both) under any provision of any charter,
by-law, loan or credit agreement, note, bond, mortgage, indenture, lease
or other agreement, instrument, permit, concession, franchise, license,
judgment, order, notice, decree, statute, law, ordinance, rule or
regulation applicable to any of Parent or Sub or to any of the property
or assets of any of Parent or Sub. Except for consents, approvals,
authorizations and filings as may be required under (A) the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, the
Securities Exchange Act of 1934, as amended, the Securities Act of 1933,
as amended, or (B) federal and state land development, mortgage
servicing and telemarketing laws, state time share laws, state
securities laws applicable to the sale or offer of VOIs, and seller of
travel or travel agency laws, no consent, approval, order or
authorization of, or registration, declaration or filing with, any
court, administrative agency or commission or other governmental
authority or instrumentality, domestic, foreign or supranational, is
required by or with respect to any Shareholder in
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<PAGE>
connection with the execution and delivery of this Agreement or the
consummation by either Parent or Sub of the transactions contemplated
hereby.
3. Covenants of the Shareholders; Irrevocable Proxy. Until the
earlier of (i) the Effective Time (as defined in the Merger Agreement) or (ii)
the valid termination of this Agreement pursuant to Section 7, the Shareholders
agree as follows:
(a) At any meeting of shareholders of the Company called to vote
upon the Merger and the Merger Agreement or at any adjournment thereof
or in any other circumstances upon which a vote, consent or other
approval with respect to the Merger and the Merger Agreement is sought,
the Shareholders shall vote (or cause to be voted) all shares of Company
Common Stock they own or have voting control over in favor of the
Merger, the approval of the Merger Agreement and the approval of the
terms thereof and each of the other transactions contemplated by the
Merger Agreement.
(b) At any meeting of shareholders of the Company or at any
adjournment thereof or in any other circumstances upon which the
Shareholders' vote, consent or other approval is sought, the
Shareholders shall vote (or cause to be voted) all shares of Company
Common Stock owned by them against (i) any merger agreement or merger
(other than the Merger Agreement and the Merger), consolidation,
combination, sale of substantial assets, reorganization,
recapitalization, dissolution, liquidation or winding up of or by the
Company or any other Takeover Proposal (as defined in the Merger
Agreement), (ii) any amendment of the Company's Articles of
Incorporation or Amended and Restated By-Laws or other proposal or
transaction involving the Company or any of its subsidiaries, which
amendment or other proposal or transaction would in any manner impede,
frustrate, prevent or nullify the Merger, the Merger Agreement or any of
the other transactions contemplated by the Merger Agreement, or (iii)
any action or agreement which would result in a breach of any
representation, warranty or covenant of the Company set forth in the
Merger Agreement.
(c) The Shareholders agree not to (i) Transfer or Otherwise
Dispose (as hereinafter defined) of, or enter into any Arrangement with
respect thereto, the Owned Shares to any person other than Sub or Sub's
designee (except for the transfer of any of the Option Shares pursuant
to the Option Agreements), or (ii) except for this Agreement, enter into
any voting arrangement, whether by proxy, voting agreement, voting trust
or otherwise. Notwithstanding the foregoing, nothing contained in this
Agreement shall be deemed to restrict or prohibit the ability of each
Shareholder to transfer his shares to members of his immediate family or
trusts or other entities in connection with estate planning objectives,
provided that such transferee agrees in writing to be bound by the terms
of this Agreement as though such transferee were a Shareholder, and that
notice and a copy of such agreement are provided to Parent prior to such
transfer. For purposes of this Agreement, "Transfer or Otherwise
Dispose" means any sale, exchange, redemption, assignment, gift, grant
of a security interest, pledge or other encumbrance, or
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<PAGE>
the establishment of any voting trust or other agreement or arrangement
with respect to the transfer of voting rights or any other beneficial
interests in the Company Common Stock, the creation of any other claim
thereto or any other transfer or disposition whatsoever (including
involuntary sales, exchanges, transfers or other dispositions as a
result of a Takeover Proposal or otherwise, and whether or not for cash
or other consideration) affecting the right, title, interest or
possession in, to or of the Company Common Stock.
(d) The Shareholders shall not, nor shall they authorize or
permit any financial advisor, attorney or other adviser, representative
or agent of any Shareholder to, (i) solicit, initiate or encourage the
submission of, any Takeover Proposal, (ii) enter into any agreement with
respect to or approve or recommend any Takeover Proposal or (iii)
participate in any discussions or negotiations regarding, or furnish to
any person any information with respect to, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes,
or may reasonably be expected to lead to, any Takeover Proposal.
(e) Each Shareholder promptly (but in no event later than 24
hours) shall advise Parent orally and in writing of (i) any Takeover
Proposal or any inquiry or any communication with respect to or which
could lead to any Takeover Proposal which such Shareholder shall have
been approached or solicited by any person with respect to, (ii) the
material terms of such Takeover Proposal (including a copy of any
written proposal) and (iii) the identity of the person or persons making
any such Takeover Proposal, inquiry or communication.
(f) The Shareholders hereby irrevocably appoint Parent as the
attorney and proxy of the Shareholders, with full power of substitution,
to vote all Owned Shares (other than Option Shares transferred pursuant
to the terms of the Option Agreements) that the Shareholders are
entitled to vote at any meeting of shareholders of the Company (whether
annual or special and whether or not an adjourned or postponed meeting)
as set forth in Section 3(a); provided that in any such vote pursuant to
such proxy, Parent shall not have the right (and such proxy shall not
confer the right) to vote to modify or amend the Merger Agreement to
reduce the rights or benefits of the Company or any shareholders of the
Company under the Merger Agreement or to reduce the obligations of
Parent thereunder. THIS PROXY AND POWER OF ATTORNEY IS IRREVOCABLE AND
COUPLED WITH AN INTEREST. Each Shareholder hereby revokes, effective
upon the execution and delivery of this Agreement, all other proxies and
powers of attorney with respect to Owned Shares that such Shareholder
may have heretofore appointed or granted, and no subsequent proxy or
power of attorney (except in furtherance of the Shareholders'
obligations under Section 3(a)) shall be given or written consent
executed (and if given or executed, shall not be effective) by any
Shareholder with respect thereto so long as this
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<PAGE>
Agreement remains in effect. Each Shareholder shall forward to the
Parent and Sub any proxy cards that such Shareholder receives with
respect to the Merger.
(g) Subject to the terms of the letter agreement referenced in
Section 1(b), the Shareholders agree to take all action necessary to
suspend or terminate all covenants, agreements and arrangements of the
Shareholders contained in the Shareholders' Agreement.
4. Further Assurances. Each Shareholder will, from time to time,
execute and deliver, or cause to be executed and delivered, such additional or
further transfers, assignments, endorsements, consents and other instruments as
Parent or Sub may reasonably request for the purpose of effectively carrying out
the transactions contemplated by this Agreement.
5. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
without the prior written consent of the other parties, except that Sub may
assign, in its sole discretion, any or all of its rights, interests and
obligations hereunder to Parent or to any direct or indirect wholly-owned
subsidiary of Parent. Subject to the preceding sentence, this Agreement will be
binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and assigns and, in the case of any Shareholder that
is an individual, the heirs, executors and administrators of such Shareholder.
6. Indemnification.
(a) Shareholders' Indemnification of Parent and Sub. Subject to
Section 6(f) below, the Adler Group (as defined below) shall defend,
indemnify and hold harmless Parent and Sub and their respective
successors and assigns, against and in respect of any and all
assessments, claims, demands, losses, damages, expenses (including
without limitation, the reasonable fees and disbursements of legal
counsel), liabilities and judgments (collectively, "Losses and
Expenses") resulting from any inaccuracy in or breach of any warranty or
representation, or any nonfulfillment of any agreement on the part of
any Shareholder under this Agreement; provided, however, that (i) the
Adler Group's aggregate liability for any inaccuracy in or breach of any
representation or warranty contained in Section 1(a), (b) or (c)(i)
shall be limited to $20,000,000, and (ii) the Adler Group's aggregate
liability for any inaccuracy in or breach of any representation or
warranty contained in Section 1(c)(ii) shall be limited to $30,000,000;
provided, that in no event shall the Adler Group's aggregate liability
for any inaccuracy in or breach of any representation or warranty in
Sections 1(a), (b) or (c) exceed $30,000,000; provided, further, that
the Adler Group shall only be liable under the foregoing clauses (i) and
(ii) if the aggregate Losses and Expenses incurred by Parent and Sub and
their respective successors and assigns exceed $2,500,000 in the
aggregate, and only for the amount of such Losses and Expenses that
exceeds $2,500,000; provided, further, that the Adler
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<PAGE>
Group shall not be liable for any inaccuracies in or breaches of any
representations or warranties contained in Section 1(c) unless the
Effective Time has occurred.
(b) Parent's Indemnification of the Shareholders. Parent shall
defend, indemnify and hold harmless the Shareholders against and in
respect of any and all assessments, claims, demands, losses, damages,
expenses (including without limitation, the reasonable fees and
disbursements of legal counsel), liabilities and judgments resulting
from any misrepresentation, any inaccuracy in or breach of any warranty
or representation, or any nonfulfillment of any agreement on the part of
Parent or Sub under this Agreement.
(c) Notice of Claims. If any Claim (as hereinafter defined) is
instituted or asserted by any person in respect to which any party to
this Agreement is entitled to indemnification pursuant to this
Agreement, the indemnified party, after receipt by it of written notice
of the commencement or assertion of such Claim, shall promptly cause a
written notice of such Claim to be made to the party required to furnish
such indemnity; provided that failure to give such notice shall not (a)
relieve the indemnifying party of its indemnification obligations
hereunder, unless such failure to provide notice shall have prejudiced
the rights of the indemnifying party, or (b) result in any liability of
the indemnified party to the indemnifying party, except, in the case of
clause (b), to the extent of damages and costs caused by such failure to
so notify. For purposes of this Section 6, "Claim(s)" shall mean any
legal proceeding(s), claim(s), or demand(s) instituted or asserted by
any person in respect to which any party to this Agreement is entitled
to indemnification pursuant to this Agreement, and "Defense" shall mean
the investigation, defense, settlement, or other disposition of any
Claim.
(d) Defense of Claims. Subject to the next sentence, the
indemnifying party shall have the right, at its option and expense, to
assume any Defense of any Claim, provided that within ten (10) days of
receiving the notice with respect to such Claim pursuant to the above
notice provision (or within such shorter period of time as an answer to
or other responsive action may be required), the indemnifying party, by
notice delivered to the indemnified party, elects to assume such Defense
and each indemnifying party acknowledges its obligation hereunder to
indemnify the indemnified party with respect to such Claim.
Notwithstanding the foregoing, the indemnifying party shall not have the
right to assume the Defense of any Claim if (i) representation of both
the indemnified party and indemnifying party by the same counsel might
be prohibited by rules or regulations governing the professional conduct
of such counsel due to actual or potential differing interests between
them; (ii) the indemnified party determines in good faith that there is
a substantial likelihood that such Claim may materially and adversely
affect it or its affiliates other than as a result of monetary damages
imposed thereon; or (iii) the indemnified party determines in good faith
that the indemnifying party has insufficient financial resources to
satisfy any monetary damages reasonably likely to result from such
Claim.
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<PAGE>
If the indemnifying party has assumed the Defense of a Claim in
accordance with the first paragraph of this Section 6(d), then the
following shall apply: (i) except as provided in clause (v) below the
indemnified party shall have the right to participate and assist in, but
not control, the Defense of such Claim and to employ its own counsel in
connection therewith; (ii) except as provided in clause (v) below the
indemnifying party shall not be liable to the indemnified party for the
fees or expenses of the indemnified party's counsel or other expenses
incurred by the indemnified party in connection with participating in
the Defense of such Claim, except that the indemnifying party shall be
liable for any such fees and expenses incurred prior to the time that
the indemnifying party assumed such Defense or except to the extent such
participation was requested by the indemnifying party; (iii) counsel
used by the indemnifying party in connection with the Defense of such
Claim shall be reasonably satisfactory to the indemnified party; (iv)
except as provided in clause (v) below, the indemnifying party shall
have no liability with respect to any compromise or settlement of such
Claim effected without its consent, which consent shall not be
unreasonably withheld; (v) if the indemnifying party shall fail or omit
diligently to prosecute the Defense of such Claim, then (A) the
indemnified party shall have the right to control the Defense of such
Claim, (B) the indemnifying party shall be liable to the indemnified
party for the fees and expenses of the indemnified party's counsel and
other expenses incurred by the indemnified party in connection with the
Defense of such Claim and (C) the indemnifying party shall be liable for
any settlement of such Claim effected by the indemnified party; and (vi)
the indemnifying party shall not effect any compromise or settlement of
such Claim without the consent of the indemnified party, which consent
shall not be unreasonably withheld, unless such compromise or settlement
includes a full release of the indemnified party, neither the
indemnified party's business nor its name nor the business or name of
any of its affiliates will be damaged or adversely affected by such
settlement, and such settlement is limited strictly to monetary damages.
If the indemnifying party does not assume the Defense of a Claim
(whether because it elects not to or has no right to) the following
shall apply: (i) the indemnifying party shall have the right, at its
sole cost and expense, to participate in, but not control, the Defense
of such Claim and to employ its own counsel in connection therewith; and
(ii) the indemnifying party shall have no liability with respect to any
compromise or settlement of such Claims effected without its consent,
which shall not be unreasonably withheld.
(e) Satisfaction of Indemnification Obligation. The Adler Group
shall satisfy any indemnification obligation to Parent and Sub through
the payment of cash or the surrender of Units to Parent. If any member
of the Adler Group elects to satisfy any obligation by the surrender of
Units, such Units shall be valued at the Market Price (as hereinafter
defined) of a Unit on the date of surrender of such Units. For purposes
of this Agreement, the "Market Price" of a Unit on any date means the
average of the Average Prices (as hereinafter defined) for the 20
consecutive New York Stock Exchange trading
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days immediately preceding such date. The "Average Price" for any date
means the average of the daily high and low prices per Unit as reported
on the New York Stock Exchange Composite Transactions reporting system
(as published in The Wall Street Journal or, if not published therein,
in another authoritative source mutually selected by the Company and
Parent).
(f) Notification of Certain Matters. If, prior to the Effective
Time, one or more of the Shareholders provides written notice to Parent
of any fact or event which the notice states has caused or may cause any
representation or warranty contained in Section 1(c) to be untrue or
inaccurate in any material respect (an "Update Notice") and Parent
elects to close the Merger notwithstanding such notice, then,
notwithstanding anything to the contrary herein, the Adler Group shall
not be liable pursuant to this Section 6 or otherwise for any
inaccuracies in or breaches of any representations or warranties
contained in Section 1(c) caused by the fact or event so described in
such Update Notice; provided, however, that 50% of the amount of any
Losses and Expenses resulting from any such inaccuracies or breaches
shall be counted in determining whether the amount of aggregate Losses
and Expenses exceeds the $2,500,000 threshold as provided in the third
proviso to Section 6(a).
7. Termination. This Agreement shall terminate only upon a valid
termination of the Merger Agreement pursuant to its terms.
8. General Provisions.
(a) Survival of Representations. All representations, warranties,
covenants and agreements made by the parties to this Agreement shall
survive the closing hereunder notwithstanding any investigation at any
time made by or on behalf of any party hereto; provided, however, that
(i) the representations and warranties contained in Sections 1(a), (b),
(c)(i) and 2(a) shall terminate 1 year from the date of the Effective
Time and (ii) the representations and warranties contained in Section
1(c)(ii) shall terminate at the earlier of (x) March 31, 2001 and (y)
the date of delivery by Parent's independent accountants of an audit
report on Parent's December 31, 2000 financial statements.
(b) Specific Performance. The parties agree that irreparable
damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall
be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions of this
Agreement in any court within the United States, this being in addition
to any other remedy to which they are entitled at law or in equity.
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(c) Expenses. All costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such expense.
(d) Amendments. This Agreement may not be amended except by an
instrument in writing signed by each of the parties hereto.
(e) Notice. All notices or other communications required or
permitted hereunder shall be in writing and shall be deemed given or
delivered (i) when delivered personally, (ii) if transmitted by fax when
confirmation of transmission is received, or (iii) if sent by registered
or certified mail, return receipt requested, or by private courier when
received; and shall be addressed as follows:
(i) if to Parent or Sub, to:
Starwood Hotels & Resorts Worldwide, Inc.
777 Westchester Avenue
White Plains, New York 10604
Attention: Thomas C. Janson, Jr.
Facsimile: (914) 640-8250
with a copy to:
Sidley & Austin
875 Third Avenue
New York, New York 10022
Attention: Scott M. Freeman
Facsimile: (212) 906-2021
(ii) if to the Shareholders, to:
Jeffrey A. Adler
3125 Hassi Point
Longwood, Florida 32779
Facsimile: (407) 333-2196
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with a copy to:
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
Attention: Martin L. Edelman
Facsimile: (212) 856-7808
or to such other address as such party may indicate by a notice
delivered to the other parties hereto.
(e) Interpretation. When a reference is made in this Agreement to
Sections, such reference shall be to a Section to this Agreement unless
otherwise indicated. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Wherever the words "include",
"includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation".
(f) Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one or more of the counter
parties have been signed by each of the parties and delivered to the
other party, it being understood that each party need not sign the same
counterpart.
(g) Entire Agreement; No Third-Party Beneficiaries. This
Agreement together with all other agreements executed by the parties
hereto on the date hereof (including the documents and instruments
referred to herein), except the letter agreement referenced in Section
1(b) or as otherwise provided in the Merger Agreement (i) constitutes
the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to
the subject matter hereof and (ii) is not intended to confer upon any
person other than the parties hereto any rights or remedies hereunder.
(h) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without
regard to any applicable conflicts of law.
(i) Waivers. Any term or provision of this Agreement may be
waived, or the time for its performance may be extended, by the party or
parties entitled to the benefit thereof. Any such waiver shall be
validly and sufficiently given for the purposes of this Agreement if, as
to any party, it is in writing signed by an authorized representative of
such party. The failure of any party hereto to enforce at any time any
provision of this Agreement shall not be construed to be a waiver of
such provision, nor in any way to affect the validity of this Agreement
or any part hereof or the right of any party thereafter
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to enforce each and every such provision. No waiver of any breach of
this Agreement shall be held to constitute a waiver of any other or
subsequent breach.
9. Adler's Capacity. The parties hereto agree and acknowledge
that Adler does not make any agreement or understanding in his capacity as a
director or officer of the Company. Adler has entered into this Agreement solely
in his capacity as the record holder and beneficial owner of the Owned Shares
and nothing herein shall expand, limit or affect any actions taken by Adler in
his capacity as an officer or director of the Company.
10. Limitation on Transfer of Units.
(a) Adler and Rija (the "Adler Group") agree that they will not
sell, transfer, assign or otherwise dispose of, hypothecate or otherwise
encumber (voluntarily or involuntarily) (any such sale, transfer,
assignment, disposition, hypothecation or encumbrance being referred to
as a "transfer") any of the Units they receive in the Merger, except
that:
(i) the foregoing restrictions on transfer will lapse with
respect to twenty percent (20%) of the Units the Adler
Group receives in the Merger six months after the
Effective Time;
(ii) the foregoing restrictions on transfer will lapse with
respect to an additional twenty percent (20%) of the
Units the Adler Group receives in the Merger twelve
months after the Effective Time;
(iii) the foregoing restrictions on transfer will lapse
with respect to an additional thirty percent (30%) of the
Units the Adler Group receives in the Merger eighteen
months after the Effective Time; and
(iv) the foregoing restrictions on transfer will lapse with
respect to the remaining balance of the Units the Adler
Group receives in the Merger twenty-four months after the
Effective Time.
The transfer restrictions contained in this clause (a) shall terminate
immediately upon the valid termination of Adler's employment after the
Effective Time without Cause or for Good Reason (as such terms are
defined in the Employment Agreement, dated as of July 18, 1999 between
Adler and the Company). Notwithstanding the transfer restrictions set
forth in this clause (a), nothing set forth herein shall prohibit any
member of the Adler Group from transferring Units (including selling
Units pursuant to the terms of such Option Agreements and using the
proceeds from such sale to satisfy any obligation under such Option
Agreements) in order to fulfill its obligations under the Option
Agreements.
-12-
<PAGE>
(b) Each member of the Adler Group agrees that each stock
certificate representing Units issued to any member of the Adler Group
shall bear, among others, the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED
ONLY IN ACCORDANCE WITH THE TERMS OF A SHAREHOLDERS AGREEMENT
DATED JULY 18, 1999 BETWEEN THE REGISTERED HOLDER HEREOF AND
STARWOOD HOTELS & RESORTS WORLDWIDE, INC., A COPY OF WHICH
AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES OF STARWOOD HOTELS
& RESORTS WORLDWIDE, INC."
11. Forfeiture. If Adler's employment with the Company is
terminated for any reason other than (i) by the Company without Cause, (ii) by
Adler for Good Reason or (iii) as a result of Adler's death or Permanent
Disability, during the period commencing on the Effective Date and ending on the
day immediately prior to the first anniversary of the Effective Date, then the
Adler Group shall surrender and forfeit (and immediately deliver to the Company
for cancellation) a number of Units equal to the Forfeiture Number (as
hereinafter defined). If Adler's employment with the Company is terminated for
any reason other than (i) without Cause, (ii) by Adler for Good Reason or (iii)
as a result of Adler's death or Permanent Disability, during the period
commencing on the first anniversary of the Effective Date and ending on the day
immediately prior to the second anniversary of the Effective Date, then the
Adler Group shall surrender and forfeit (and immediately deliver to the Company
for cancellation) a number of Units equal to the product of (i) the Forfeiture
Number and (ii) one-half. For purposes of this Agreement, the "Forfeiture
Number" shall mean a number equal to (i) $10,000,000 divided by (ii) the Market
Price of a Unit on the Effective Date and the terms "Cause," "Good Reason" and
"Permanent Disability" shall have the meanings ascribed to them in the form of
Employment Agreement by and between Adler and the Company attached to Section
6.3(g) of the Parent Letter delivered in connection with the Merger Agreement.
12. Confidential Information and Ownership of Property.
(a) During the period commencing on the Effective Date and ending
on the sixth anniversary of the Effective Date (the "Restricted Term"), Adler
agrees to use all Confidential Information (as defined in the Employment
Agreement) solely in connection with the performance of services for or on
behalf of the Company. Adler shall not, during the Restricted Term, in any
manner, either directly or indirectly, (i) disseminate, disclose, use or
communicate any Confidential Information to any person or entity, regardless of
whether such Confidential Information is considered to be confidential by third
parties, or (ii) otherwise directly or indirectly misuse any Confidential
Information; provided, however, that (y) none of the provisions of this Section
12 shall apply to disclosures made for valid business purposes of the Company
and (z) Adler shall not be obligated to treat as confidential any Confidential
Information that (I) was publicly known at the time of disclosure to Adler; (II)
becomes publicly
-13-
<PAGE>
known or available thereafter other than by means in violation of this Agreement
or any other duty owed to the Company, Parent or any Affiliate (as defined in
the Employment Agreement) of the Company or Parent by any person or entity.
Notwithstanding the foregoing, Adler shall be permitted to disclose Confidential
Information to the extent required to enforce Adler's rights hereunder in any
litigation arising under, or pertaining to, this Agreement provided that Adler
shall give prior written notice to the Company of any such disclosure so that
the Company may have an opportunity to protect the confidentiality of such
Confidential Information in such litigation.
(b) Adler agrees that all works of authorship developed,
authored, written, created or contributed to during the Restricted Term for the
benefit of the Company, whether solely or jointly with others, shall be
considered works-made-for-hire. Adler agrees that such works shall be the sole
and exclusive property of the Company (or Parent or the appropriate Affiliate of
the Company or Parent) and that all right, title and interest therein or
thereto, including all intellectual property rights existing or obtained in
connection therewith, shall likewise be the sole and exclusive property of the
Company (or Parent or the appropriate Affiliate of the Company or Parent). Adler
agrees further that, in the event that any work is not considered to be
work-made-for-hire by operation of law, Adler will immediately, and without
further compensation, assign all of Adler's right, title and interest therein to
the Company (or Parent or the designated Affiliate), its successors and assigns.
At the request and expense of the Company, Adler agrees to perform in a timely
manner such further acts as may be necessary or desirable to transfer, defend or
perfect the Company's ownership of such work and all rights incident thereto.
13. Covenant Not to Compete. Unless the Company's Board of
Directors determines that any of the following conduct is in the Company's best
interests, during the Restricted Term, Adler shall not:
(a) directly or indirectly for himself or for any other person or
entity engage, whether as owner, investor, creditor, consultant, partner,
shareholder, director, financial backer, agent, employee or otherwise, in the
business, enterprise or employment of owning, operating, marketing or selling a
time-share, vacation plan, vacation ownership or interval ownership project
within the Territory (as defined in the Employment Agreement); or
(b) directly or indirectly for himself or for any other person or
entity sell, or otherwise procure purchasers for, any time-share, vacation plan,
vacation ownership or interval ownership project within the Territory; or
(c) have any business (as owner, investor, creditor, consultant,
partner, debtor or otherwise) or be employed in any capacity by a person or
entity that is engaged, directly or indirectly, in (i) operating, or providing
sales, marketing or development services to, a time-share, vacation plan,
vacation ownership or interval ownership project within the Territory, or (ii)
an activity formed or entered into for the primary purpose of engaging in a
time-share, vacation plan, vacation ownership or interval ownership business
within the Territory; or
-14-
<PAGE>
(d) directly or indirectly for himself or for any other person or
entity become employed in any capacity by or otherwise render services in any
capacity to any national enterprise having time-share, vacation plan, vacation
ownership or interval ownership activities, including, without limitation, Walt
Disney Company, Hilton Hotels Corporation, Hyatt Corporation, Four Seasons
Hotels and Resorts, Inc., Marriott International, Inc., Inter-Continental Hotels
and Resorts, Inc., Promus Hotels, Inc., Fairfield Communities, Inc., Sunterra
Corporation or Bass PLC or any of their respective Affiliates; or
(e) directly or indirectly for himself or for any other person or
entity pursue or consummate or otherwise interfere with any Existing Project (as
defined in the Employment Agreement); or
(f) (i) directly or indirectly, for himself or any other person
or entity, pursue, consummate or otherwise interfere with any Prospective
Project (as defined in the Employment Agreement) or (ii) directly or indirectly
for himself or for any other person or entity become employed in any capacity by
or otherwise render services in any capacity to any other person or entity
(other than the Company, Parent and any Affiliate of the Company or Parent)
described in clause (ii) of the definition of Prospective Project.
Notwithstanding the foregoing, Adler may purchase stock as a
stockholder in any publicly traded company, including any company engaged in the
time-share or vacation ownership business; provided, however, that Adler may not
own (individually or collectively with Adler's family members, trusts for the
benefit of Adler's family members and affiliates of Adler) more than 5% of any
company.
In light of the substantial consideration provided to Adler in
connection with the transactions contemplated by this Agreement and the Merger
Agreement, Adler hereby specifically acknowledges and agrees that the provisions
of this Section 13 (including, without limitation, its time and geographic
limits), as well as the provisions of Sections 12 and 14, are reasonable and
appropriate, and that Adler will not claim to the contrary in any action brought
by the Company to enforce such any of such provisions.
14. Covenant Against Solicitation of Employees. During the
Restricted Term, Adler shall not employ employees or agents or former employees
or agents of the Company, Parent or any Affiliate of the Company or Parent or,
directly or indirectly, solicit or otherwise encourage the employment of
employees or agents or former employees or agents of the Company, Parent or any
Affiliate of the Company or Parent; provided, however, that this restriction
shall not apply to Adler's secretaries or personal assistants or to former
employees or agents who, as of the date of termination of Adler's employment by
the Company, have not worked for any of the Company, Parent or any Affiliate of
the Company or Parent during the twelve preceding months.
-15-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first written above.
STARWOOD HOTELS & RESORTS
WORLDWIDE, INC.
By: /s/ Russell Sternlicht
------------------------------------
Name: Russell Sternlicht
Title: Senior Vice President
FIRE ACQUISITION CORP.
By: /s/ Russell Sternlicht
------------------------------------
Name: Russell Sternlicht
Title:
JEFFREY A. ADLER
/s/ Jeffrey A. Adler
-----------------------------------
RIJA LIMITED PARTNERSHIP
By: /s/ Ronald L. Smith
-------------------------------------
Name: Ronald Smith
Title: Treasurer of Alexdann
Corporation, General Partner
-16-
<PAGE>
*THE JEFFREY A. ADLER GRANTOR ANNUITY
TRUST #1
By: /s/ Jeffrey A. Adler
-------------------------------------
Name: Jeffrey A. Adler
Title: Trustee
*THE JEFFREY A. ADLER GRANTOR ANNUITY
TRUST #2
By: /s/ Jeffrey A. Adler
-------------------------------------
Name: Jeffrey A. Adler
Title: Trustee
*THE ARA TRUST
By: /s/ Lee I. Miller
-------------------------------------
Name: Lee I. Miller
Title: Trustee
*THE DLA TRUST
By: /s/ Lee I. Miller
-------------------------------------
Name: Lee I. Miller
Title: Trustee
-17-
<PAGE>
- -----------
* (Agreed solely for purposes of Sections 1, 3, 4, 5, 7 and 8).
-18-
Exhibit 99.2
Execution Copy
SHAREHOLDERS AGREEMENT
SHAREHOLDERS AGREEMENT (this "Agreement"), dated as of July 18,
1999, among Starwood Hotels & Resorts Worldwide, Inc., a Maryland corporation
("Parent"), Fire Acquisition Corp., a Florida corporation and a wholly-owned
subsidiary of Parent ("Sub"), Raymond L. Gellein, Jr. ("Gellein"), NevEast
Limited Partnership, a Delaware limited partnership ("NevEast"), NevWest Limited
Partnership, a Delaware limited partnership ("NevWest"), the Raymond L. Gellein,
Jr. Grantor Retained Annuity Trust ("RLG Annuity Trust"), the Matthew James
Gellein Irrevocable Trust ("MJG Trust"), the Brett Tyler Gellein Irrevocable
Trust ("BTG Trust"), the Janice G. Gellein Grantor Annuity Trust ("JGG Annuity
Trust"), the Catherine Male Gift Trust ("Male Trust"), the Cherie Doherty Gift
Trust ("Doherty Trust") and the Susan Faetz Gift Trust ("Faetz Trust" and,
together with RLG Annuity Trust, MJG Trust, BTG Trust, JGG Annuity Trust, Male
Trust and Doherty Trust, the "Trusts") (Gellein, NevEast, NevWest and the Trusts
are collectively referred to herein as the "Shareholders" and individually
referred to herein as a "Shareholder"); provided, however, that the obligations
of the Trusts shall be limited to those set forth in Sections 1, 3, 4, 5, 7 and
8 of this Agreement.
WHEREAS Parent, Sub and Vistana, Inc., a Florida corporation (the
"Company"), propose to enter into an Agreement and Plan of Merger dated as of
even date herewith (as the same may be amended or supplemented, the "Merger
Agreement") providing for the merger of the Company into Sub pursuant to which
each issued and outstanding share of common stock, par value $.01 per share, of
the Company (the "Company Common Stock"), not owned by Parent, the Company or
their respective wholly-owned subsidiaries will be converted into (i) the
Exchange Ratio (as defined in the Merger Agreement) of Units (as defined in the
Merger Agreement) plus (ii) $5.00 in cash;
WHEREAS the Shareholders own in the aggregate 6,207,250 shares of
Company Common Stock (the "Owned Shares");
WHEREAS the Shareholders have each executed a written consent to
the Merger and the Merger Agreement pursuant to Section 607.0704 of the Florida
Business Corporation Act;
WHEREAS certain of the Shareholders have granted to certain
employees and former employees of the Company or its affiliates options to
acquire an aggregate of 915,000 (the "Option Shares") of the Owned Shares
pursuant to those certain Shareholder Option Agreements described on Annex A
hereto (the "Option Agreements"); and
WHEREAS as a condition to their willingness to enter
into the Merger Agreement, Parent and Sub have requested that the Shareholders
enter into this Agreement.
<PAGE>
NOW, THEREFORE, to induce Parent and Sub to enter into, and in
consideration of their entering into, the Merger Agreement, and in consideration
of the premises and the representations, warranties and agreements contained
herein, the parties agree as follows:
1. Representations and Warranties of the Shareholders. The
Shareholders hereby jointly and severally represent and warrant to Parent and
Sub as follows:
(a) Authority. Each Shareholder has all requisite power and
authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement by each Shareholder, and the consummation of the transactions
contemplated hereby, has been duly authorized by all necessary action on
the part of each Shareholder. This Agreement has been duly executed and
delivered by each Shareholder and, assuming the due authorization,
execution and delivery by each of Parent and Sub, constitutes a valid
and binding obligation of each Shareholder enforceable in accordance
with its terms, except to the extent enforceability may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting
creditors' rights generally or by general principles governing the
availability of equitable remedies. The execution and delivery of this
Agreement does not, and the consummation of the transactions
contemplated hereby and compliance with the terms hereof will not,
conflict with, or result in any violation of or default (with or without
notice or lapse of time or both) under any provision of any trust
agreement, partnership agreement, loan or credit agreement, note, bond,
mortgage, indenture, lease or other agreement, instrument, permit,
concession, franchise, license, judgment, order, notice, decree,
statute, law, ordinance, rule or regulation applicable to any of the
Shareholders or to any of the property or assets of any of the
Shareholders. Except for consents, approvals, authorizations and filings
as may be required under (A) the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, the Securities Exchange Act of
1934, as amended, the Securities Act of 1933, as amended, or (B) federal
and state land development, mortgage servicing and telemarketing laws,
state time share laws, state securities laws applicable to the sale or
offer of VOIs (as defined in the Merger Agreement), and seller of travel
or travel agency laws, no consent, approval, order or authorization of,
or registration, declaration or filing with, any court, administrative
agency or commission or other governmental authority or instrumentality,
domestic, foreign or supranational, is required by or with respect to
any Shareholder in connection with the execution and delivery of this
Agreement or the consummation by any Shareholder of the transactions
contemplated hereby.
(b) The Owned Shares. The Shareholders have good and valid title
to the Owned Shares, free and clear of any claims, liens, encumbrances,
pledges and security interests whatsoever, except for the certain
obligations to transfer the Option Shares pursuant to the Option
Agreements and certain obligations pursuant to a certain Shareholders'
Agreement dated as of February 10, 1997 (the "Shareholders' Agreement").
The Shareholders own no shares of Company Common Stock or other shares
of capital stock of the Company, other than the Owned Shares. Except for
this Agreement, no proxies or
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<PAGE>
powers of attorney have been granted with respect to the Owned Shares
that will remain in effect after the execution of this Agreement. Except
for this Agreement and the Shareholders' Agreement, which the parties
hereto have agreed pursuant to a separate letter agreement, dated the
date hereof, shall be superseded by this Agreement (to the extent the
terms thereof conflict with the terms hereof) until, and terminate at,
the Effective Time, no voting arrangement (including voting agreement or
voting trust) affecting the Owned Shares shall remain in effect after
the execution of this Agreement.
(c) The Company. To the knowledge of the Shareholders, the
representations and warranties of the Company (i) set forth in Sections
3.8, 3.10, 3.11 and 3.16 of the Merger Agreement are true and correct
and (ii) set forth in Sections 3.5, 3.7 and 3.13 of the Merger Agreement
are true and correct.
2. Representations and Warranties of Parent and Sub. Parent and
Sub hereby represent and warrant to the Shareholders as follows:
(a) Authority. Each of Parent and Sub has all requisite corporate
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement by Parent and Sub, and the consummation of the transactions
contemplated hereby, have been duly authorized by all necessary
corporate action on the part of Parent and Sub. This Agreement has been
duly executed and delivered by Parent and Sub and, assuming the due
authorization, execution and delivery by each of the Shareholders,
constitutes a valid and binding obligation of Parent and Sub enforceable
in accordance with its terms, except to the extent enforceability may be
limited by bankruptcy, insolvency, moratorium or other similar laws
affecting creditors' rights generally or by general principles governing
the availability of equitable remedies. The execution and delivery of
this Agreement does not, and the consummation of the transactions
contemplated hereby and compliance with the terms hereof will not,
conflict with, or result in any violation of or default (with or without
notice or lapse of time or both) under any provision of any charter,
by-law, loan or credit agreement, note, bond, mortgage, indenture, lease
or other agreement, instrument, permit, concession, franchise, license,
judgment, order, notice, decree, statute, law, ordinance, rule or
regulation applicable to any of Parent or Sub or to any of the property
or assets of any of Parent or Sub. Except for consents, approvals,
authorizations and filings as may be required under (A) the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, the
Securities Exchange Act of 1934, as amended, the Securities Act of 1933,
as amended, or (B) federal and state land development, mortgage
servicing and telemarketing laws, state time share laws, state
securities laws applicable to the sale or offer of VOIs, and seller of
travel or travel agency laws, no consent, approval, order or
authorization of, or registration, declaration or filing with, any
court, administrative agency or commission or other governmental
authority or instrumentality, domestic, foreign or supranational, is
required by or with respect to any Shareholder in
-3-
<PAGE>
connection with the execution and delivery of this Agreement or the
consummation by either Parent or Sub of the transactions contemplated
hereby.
3. Covenants of the Shareholders; Irrevocable Proxy. Until the
earlier of (i) the Effective Time (as defined in the Merger Agreement) or (ii)
the valid termination of this Agreement pursuant to Section 7, the Shareholders
agree as follows:
(a) At any meeting of shareholders of the Company called to vote
upon the Merger and the Merger Agreement or at any adjournment thereof
or in any other circumstances upon which a vote, consent or other
approval with respect to the Merger and the Merger Agreement is sought,
the Shareholders shall vote (or cause to be voted) all shares of Company
Common Stock they own or have voting control over in favor of the
Merger, the approval of the Merger Agreement and the approval of the
terms thereof and each of the other transactions contemplated by the
Merger Agreement.
(b) At any meeting of shareholders of the Company or at any
adjournment thereof or in any other circumstances upon which the
Shareholders' vote, consent or other approval is sought, the
Shareholders shall vote (or cause to be voted) all shares of Company
Common Stock owned by them against (i) any merger agreement or merger
(other than the Merger Agreement and the Merger), consolidation,
combination, sale of substantial assets, reorganization,
recapitalization, dissolution, liquidation or winding up of or by the
Company or any other Takeover Proposal (as defined in the Merger
Agreement), (ii) any amendment of the Company's Articles of
Incorporation or Amended and Restated By-Laws or other proposal or
transaction involving the Company or any of its subsidiaries, which
amendment or other proposal or transaction would in any manner impede,
frustrate, prevent or nullify the Merger, the Merger Agreement or any of
the other transactions contemplated by the Merger Agreement, or (iii)
any action or agreement which would result in a breach of any
representation, warranty or covenant of the Company set forth in the
Merger Agreement.
(c) The Shareholders agree not to (i) Transfer or Otherwise
Dispose (as hereinafter defined) of, or enter into any Arrangement with
respect thereto, the Owned Shares to any person other than Sub or Sub's
designee (except for the transfer of any of the Option Shares pursuant
to the Option Agreements), or (ii) except for this Agreement, enter into
any voting arrangement, whether by proxy, voting agreement, voting trust
or otherwise. Notwithstanding the foregoing, nothing contained in this
Agreement shall be deemed to restrict or prohibit the ability of each
Shareholder to transfer his shares to members of his immediate family or
trusts or other entities in connection with estate planning objectives,
provided that such transferee agrees in writing to be bound by the terms
of this Agreement as though such transferee were a Shareholder, and that
notice and a copy of such agreement are provided to Parent prior to such
transfer. For purposes of this Agreement, "Transfer or Otherwise
Dispose" means any sale, exchange, redemption, assignment, gift, grant
of a security interest, pledge or other encumbrance, or
-4-
<PAGE>
the establishment of any voting trust or other agreement or arrangement
with respect to the transfer of voting rights or any other beneficial
interests in the Company Common Stock, the creation of any other claim
thereto or any other transfer or disposition whatsoever (including
involuntary sales, exchanges, transfers or other dispositions as a
result of a Takeover Proposal or otherwise, and whether or not for cash
or other consideration) affecting the right, title, interest or
possession in, to or of the Company Common Stock.
(d) The Shareholders shall not, nor shall they authorize or
permit any financial advisor, attorney or other adviser, representative
or agent of any Shareholder to, (i) solicit, initiate or encourage the
submission of, any Takeover Proposal, (ii) enter into any agreement with
respect to or approve or recommend any Takeover Proposal or (iii)
participate in any discussions or negotiations regarding, or furnish to
any person any information with respect to, or take any other action to
facilitate any inquiries or the making of any proposal that constitutes,
or may reasonably be expected to lead to, any Takeover Proposal.
(e) Each Shareholder promptly (but in no event later than 24
hours) shall advise Parent orally and in writing of (i) any Takeover
Proposal or any inquiry or any communication with respect to or which
could lead to any Takeover Proposal which such Shareholder shall have
been approached or solicited by any person with respect to, (ii) the
material terms of such Takeover Proposal (including a copy of any
written proposal) and (iii) the identity of the person or persons making
any such Takeover Proposal, inquiry or communication.
(f) The Shareholders hereby irrevocably appoint Parent as the
attorney and proxy of the Shareholders, with full power of substitution,
to vote all Owned Shares (other than Option Shares transferred pursuant
to the terms of the Option Agreements) that the Shareholders are
entitled to vote at any meeting of shareholders of the Company (whether
annual or special and whether or not an adjourned or postponed meeting)
as set forth in Section 3(a); provided that in any such vote pursuant to
such proxy, Parent shall not have the right (and such proxy shall not
confer the right) to vote to modify or amend the Merger Agreement to
reduce the rights or benefits of the Company or any shareholders of the
Company under the Merger Agreement or to reduce the obligations of
Parent thereunder. THIS PROXY AND POWER OF ATTORNEY IS IRREVOCABLE AND
COUPLED WITH AN INTEREST. Each Shareholder hereby revokes, effective
upon the execution and delivery of this Agreement, all other proxies and
powers of attorney with respect to Owned Shares that such Shareholder
may have heretofore appointed or granted, and no subsequent proxy or
power of attorney (except in furtherance of the Shareholders'
obligations under Section 3(a)) shall be given or written consent
executed (and if given or executed, shall not be effective) by any
Shareholder with respect thereto so long as this
-5-
<PAGE>
Agreement remains in effect. Each Shareholder shall forward to the
Parent and Sub any proxy cards that such Shareholder receives with
respect to the Merger.
(g) Subject to the terms of the letter agreement referenced in
Section 1(b), the Shareholders agree to take all action necessary to
suspend or terminate all covenants, agreements and arrangements of the
Shareholders contained in the Shareholders' Agreement.
4. Further Assurances. Each Shareholder will, from time to time,
execute and deliver, or cause to be executed and delivered, such additional or
further transfers, assignments, endorsements, consents and other instruments as
Parent or Sub may reasonably request for the purpose of effectively carrying out
the transactions contemplated by this Agreement.
5. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
without the prior written consent of the other parties, except that Sub may
assign, in its sole discretion, any or all of its rights, interests and
obligations hereunder to Parent or to any direct or indirect wholly-owned
subsidiary of Parent. Subject to the preceding sentence, this Agreement will be
binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and assigns and, in the case of any Shareholder that
is an individual, the heirs, executors and administrators of such Shareholder.
6. Indemnification.
(a) Shareholders' Indemnification of Parent and Sub. Subject to
Section 6(f) below, the Gellein Group (as defined below) shall defend,
indemnify and hold harmless Parent and Sub and their respective
successors and assigns, against and in respect of any and all
assessments, claims, demands, losses, damages, expenses (including
without limitation, the reasonable fees and disbursements of legal
counsel), liabilities and judgments (collectively, "Losses and
Expenses") resulting from any inaccuracy in or breach of any warranty or
representation, or any nonfulfillment of any agreement on the part of
any Shareholder under this Agreement; provided, however, that (i) the
Gellein Group's aggregate liability for any inaccuracy in or breach of
any representation or warranty contained in Section 1(a), (b) or (c)(i)
shall be limited to $20,000,000, and (ii) the Gellein Group's aggregate
liability for any inaccuracy in or breach of any representation or
warranty contained in Section 1(c)(ii) shall be limited to $30,000,000;
provided, that in no event shall the Gellein Group's aggregate liability
for any inaccuracy in or breach of any representation or warranty in
Sections 1(a), (b) or (c) exceed $30,000,000; provided, further, that
the Gellein Group shall only be liable under the foregoing clauses (i)
and (ii) if the aggregate Losses and Expenses incurred by Parent and Sub
and their respective successors and assigns exceed $2,500,000 in the
aggregate, and only for the amount of such Losses and Expenses that
exceeds $2,500,000; provided, further, that the Gellein Group shall not
be liable for any inaccuracies in or breaches of
-6-
<PAGE>
any representations or warranties contained in Section 1(c) unless the
Effective Time has occurred.
(b) Parent's Indemnification of the Shareholders. Parent shall
defend, indemnify and hold harmless the Shareholders against and in
respect of any and all assessments, claims, demands, losses, damages,
expenses (including without limitation, the reasonable fees and
disbursements of legal counsel), liabilities and judgments resulting
from any misrepresentation, any inaccuracy in or breach of any warranty
or representation, or any nonfulfillment of any agreement on the part of
Parent or Sub under this Agreement.
(c) Notice of Claims. If any Claim (as hereinafter defined) is
instituted or asserted by any person in respect to which any party to
this Agreement is entitled to indemnification pursuant to this
Agreement, the indemnified party, after receipt by it of written notice
of the commencement or assertion of such Claim, shall promptly cause a
written notice of such Claim to be made to the party required to furnish
such indemnity; provided that failure to give such notice shall not (a)
relieve the indemnifying party of its indemnification obligations
hereunder, unless such failure to provide notice shall have prejudiced
the rights of the indemnifying party, or (b) result in any liability of
the indemnified party to the indemnifying party, except, in the case of
clause (b), to the extent of damages and costs caused by such failure to
so notify. For purposes of this Section 6, "Claim(s)" shall mean any
legal proceeding(s), claim(s), or demand(s) instituted or asserted by
any person in respect to which any party to this Agreement is entitled
to indemnification pursuant to this Agreement, and "Defense" shall mean
the investigation, defense, settlement, or other disposition of any
Claim.
(d) Defense of Claims. Subject to the next sentence, the
indemnifying party shall have the right, at its option and expense, to
assume any Defense of any Claim, provided that within ten (10) days of
receiving the notice with respect to such Claim pursuant to the above
notice provision (or within such shorter period of time as an answer to
or other responsive action may be required), the indemnifying party, by
notice delivered to the indemnified party, elects to assume such Defense
and each indemnifying party acknowledges its obligation hereunder to
indemnify the indemnified party with respect to such Claim.
Notwithstanding the foregoing, the indemnifying party shall not have the
right to assume the Defense of any Claim if (i) representation of both
the indemnified party and indemnifying party by the same counsel might
be prohibited by rules or regulations governing the professional conduct
of such counsel due to actual or potential differing interests between
them; (ii) the indemnified party determines in good faith that there is
a substantial likelihood that such Claim may materially and adversely
affect it or its affiliates other than as a result of monetary damages
imposed thereon; or (iii) the indemnified party determines in good faith
that the indemnifying party has insufficient financial resources to
satisfy any monetary damages reasonably likely to result from such
Claim.
-7-
<PAGE>
If the indemnifying party has assumed the Defense of a Claim in
accordance with the first paragraph of this Section 6(d), then the
following shall apply: (i) except as provided in clause (v) below the
indemnified party shall have the right to participate and assist in, but
not control, the Defense of such Claim and to employ its own counsel in
connection therewith; (ii) except as provided in clause (v) below the
indemnifying party shall not be liable to the indemnified party for the
fees or expenses of the indemnified party's counsel or other expenses
incurred by the indemnified party in connection with participating in
the Defense of such Claim, except that the indemnifying party shall be
liable for any such fees and expenses incurred prior to the time that
the indemnifying party assumed such Defense or except to the extent such
participation was requested by the indemnifying party; (iii) counsel
used by the indemnifying party in connection with the Defense of such
Claim shall be reasonably satisfactory to the indemnified party; (iv)
except as provided in clause (v) below, the indemnifying party shall
have no liability with respect to any compromise or settlement of such
Claim effected without its consent, which consent shall not be
unreasonably withheld; (v) if the indemnifying party shall fail or omit
diligently to prosecute the Defense of such Claim, then (A) the
indemnified party shall have the right to control the Defense of such
Claim, (B) the indemnifying party shall be liable to the indemnified
party for the fees and expenses of the indemnified party's counsel and
other expenses incurred by the indemnified party in connection with the
Defense of such Claim and (C) the indemnifying party shall be liable for
any settlement of such Claim effected by the indemnified party; and (vi)
the indemnifying party shall not effect any compromise or settlement of
such Claim without the consent of the indemnified party, which consent
shall not be unreasonably withheld, unless such compromise or settlement
includes a full release of the indemnified party, neither the
indemnified party's business nor its name nor the business or name of
any of its affiliates will be damaged or adversely affected by such
settlement, and such settlement is limited strictly to monetary damages.
If the indemnifying party does not assume the Defense of a Claim
(whether because it elects not to or has no right to) the following
shall apply: (i) the indemnifying party shall have the right, at its
sole cost and expense, to participate in, but not control, the Defense
of such Claim and to employ its own counsel in connection therewith; and
(ii) the indemnifying party shall have no liability with respect to any
compromise or settlement of such Claims effected without its consent,
which shall not be unreasonably withheld.
(e) Satisfaction of Indemnification Obligation. The Gellein Group
shall satisfy any indemnification obligation to Parent and Sub through
the payment of cash or the surrender of Units to Parent. If any member
of the Gellein Group elects to satisfy any obligation by the surrender
of Units, such Units shall be valued at the Market Price (as hereinafter
defined) of a Unit on the date of surrender of such Units. For purposes
of this Agreement, the "Market Price" of a Unit on any date means the
average of the Average Prices (as hereinafter defined) for the 20
consecutive New York Stock Exchange trading
-8-
<PAGE>
days immediately preceding such date. The "Average Price" for any date
means the average of the daily high and low prices per Unit as reported
on the New York Stock Exchange Composite Transactions reporting system
(as published in The Wall Street Journal or, if not published therein,
in another authoritative source mutually selected by the Company and
Parent).
(f) Notification of Certain Matters. If, prior to the Effective
Time, one or more of the Shareholders provides written notice to Parent
of any fact or event which the notice states has caused or may cause any
representation or warranty contained in Section 1(c) to be untrue or
inaccurate in any material respect (an "Update Notice") and Parent
elects to close the Merger notwithstanding such notice, then,
notwithstanding anything to the contrary herein, the Gellein Group shall
not be liable pursuant to this Section 6 or otherwise for any
inaccuracies in or breaches of any representations or warranties
contained in Section 1(c) caused by the fact or event so described in
such Update Notice; provided, however, that 50% of the amount of any
Losses and Expenses resulting from any such inaccuracies or breaches
shall be counted in determining whether the amount of aggregate Losses
and Expenses exceeds the $2,500,000 threshold as provided in the third
proviso to Section 6(a).
7. Termination. This Agreement shall terminate only upon a valid
termination of the Merger Agreement pursuant to its terms.
8. General Provisions.
(a) Survival of Representations. All representations, warranties,
covenants and agreements made by the parties to this Agreement shall
survive the closing hereunder notwithstanding any investigation at any
time made by or on behalf of any party hereto; provided, however, that
(i) the representations and warranties contained in Sections 1(a), (b),
(c)(i) and 2(a) shall terminate 1 year from the date of the Effective
Time and (ii) the representations and warranties contained in Section
1(c)(ii) shall terminate at the earlier of (x) March 31, 2001 and (y)
the date of delivery by Parent's independent accountants of an audit
report on Parent's December 31, 2000 financial statements.
(b) Specific Performance. The parties agree that irreparable
damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall
be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions of this
Agreement in any court within the United States, this being in addition
to any other remedy to which they are entitled at law or in equity.
-9-
<PAGE>
(c) Expenses. All costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such expense.
(d) Amendments. This Agreement may not be amended except by an
instrument in writing signed by each of the parties hereto.
(e) Notice. All notices or other communications required or
permitted hereunder shall be in writing and shall be deemed given or
delivered (i) when delivered personally, (ii) if transmitted by fax when
confirmation of transmission is received, or (iii) if sent by registered
or certified mail, return receipt requested, or by private courier when
received; and shall be addressed as follows:
(i) if to Parent or Sub, to:
Starwood Hotels & Resorts Worldwide, Inc.
777 Westchester Avenue
White Plains, New York 10604
Attention: Thomas C. Janson, Jr.
Facsimile: (914) 640-8250
with a copy to:
Sidley & Austin
875 Third Avenue
New York, New York 10022
Attention: Scott M. Freeman
Facsimile: (212) 906-2021
(ii) if to the Shareholders, to:
Raymond L. Gellein, Jr.
642 Interlacher Avenue
Winter Park, Florida 32789
Facsimile: (407) 647-1741
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<PAGE>
with a copy to:
Battle Fowler LLP
75 East 55th Street
New York, New York 10022
Attention: Martin L. Edelman
Facsimile: (212) 856-7808
or to such other address as such party may indicate by a notice
delivered to the other parties hereto.
(e) Interpretation. When a reference is made in this Agreement to
Sections, such reference shall be to a Section to this Agreement unless
otherwise indicated. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Wherever the words "include",
"includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation".
(f) Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one or more of the counter
parties have been signed by each of the parties and delivered to the
other party, it being understood that each party need not sign the same
counterpart.
(g) Entire Agreement; No Third-Party Beneficiaries. This
Agreement together with all other agreements executed by the parties
hereto on the date hereof (including the documents and instruments
referred to herein), except the letter agreement referenced in Section
1(b) or as otherwise provided in the Merger Agreement (i) constitutes
the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to
the subject matter hereof and (ii) is not intended to confer upon any
person other than the parties hereto any rights or remedies hereunder.
(h) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without
regard to any applicable conflicts of law.
(i) Waivers. Any term or provision of this Agreement may be
waived, or the time for its performance may be extended, by the party or
parties entitled to the benefit thereof. Any such waiver shall be
validly and sufficiently given for the purposes of this Agreement if, as
to any party, it is in writing signed by an authorized representative of
such party. The failure of any party hereto to enforce at any time any
provision of this Agreement shall not be construed to be a waiver of
such provision, nor in any way to affect the validity of this Agreement
or any part hereof or the right of any party thereafter
-11-
<PAGE>
to enforce each and every such provision. No waiver of any breach of
this Agreement shall be held to constitute a waiver of any other or
subsequent breach.
9. Gellein's Capacity. The parties hereto agree and acknowledge
that Gellein does not make any agreement or understanding in his capacity as a
director or officer of the Company. Gellein has entered into this Agreement
solely in his capacity as the record holder and beneficial owner of the Owned
Shares and nothing herein shall expand, limit or affect any actions taken by
Gellein in his capacity as an officer or director of the Company.
10. Limitation on Transfer of Units.
(a) Gellein, NevEast and NevWest (the "Gellein Group") agree that
they will not sell, transfer, assign or otherwise dispose of,
hypothecate or otherwise encumber (voluntarily or involuntarily) (any
such sale, transfer, assignment, disposition, hypothecation or
encumbrance being referred to as a "transfer") any of the Units they
receive in the Merger, except that:
(i) the foregoing restrictions on transfer will lapse with
respect to twenty percent (20%) of the Units the Gellein
Group receives in the Merger six months after the
Effective Time;
(ii) the foregoing restrictions on transfer will lapse with
respect to an additional twenty percent (20%) of the
Units the Gellein Group receives in the Merger twelve
months after the Effective Time;
(iii) the foregoing restrictions on transfer will lapse
with respect to an additional thirty percent (30%) of the
Units the Gellein Group receives in the Merger eighteen
months after the Effective Time; and
(iv) the foregoing restrictions on transfer will lapse with
respect to the remaining balance of the Units the Gellein
Group receives in the Merger twenty-four months after the
Effective Time.
The transfer restrictions contained in this clause (a) shall terminate
immediately upon the valid termination of Gellein's employment after the
Effective Time without Cause or for Good Reason (as such terms are
defined in the Employment Agreement, dated as of July 18, 1999 between
Gellein and the Company). Notwithstanding the transfer restrictions set
forth in this clause (a), nothing set forth herein shall prohibit any
member of the Gellein Group from transferring Units (including selling
Units pursuant to the terms of such Option Agreements and using the
proceeds from such sale to satisfy any obligation under such Option
Agreements) in order to fulfill its obligations under the Option
Agreements.
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<PAGE>
(b) Each member of the Gellein Group agrees that each stock
certificate representing Units issued to any member of the Gellein Group
shall bear, among others, the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED
ONLY IN ACCORDANCE WITH THE TERMS OF A SHAREHOLDERS AGREEMENT
DATED JULY 18, 1999 BETWEEN THE REGISTERED HOLDER HEREOF AND
STARWOOD HOTELS & RESORTS WORLDWIDE, INC., A COPY OF WHICH
AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES OF STARWOOD HOTELS
& RESORTS WORLDWIDE, INC."
11. Forfeiture. If Gellein's employment with the Company is
terminated for any reason other than (i) by the Company without Cause, (ii) by
Gellein for Good Reason or (iii) as a result of Gellein's death or Permanent
Disability, during the period commencing on the Effective Date and ending on the
day immediately prior to the first anniversary of the Effective Date, then the
Gellein Group shall surrender and forfeit (and immediately deliver to the
Company for cancellation) a number of Units equal to the Forfeiture Number (as
hereinafter defined). If Gellein's employment with the Company is terminated for
any reason other than (i) without Cause, (ii) by Gellein for Good Reason or
(iii) as a result of Gellein's death or Permanent Disability, during the period
commencing on the first anniversary of the Effective Date and ending on the day
immediately prior to the second anniversary of the Effective Date, then the
Gellein Group shall surrender and forfeit (and immediately deliver to the
Company for cancellation) a number of Units equal to the product of (i) the
Forfeiture Number and (ii) one-half. For purposes of this Agreement, the
"Forfeiture Number" shall mean a number equal to (i) $10,000,000 divided by (ii)
the Market Price of a Unit on the Effective Date and the terms "Cause," "Good
Reason" and "Permanent Disability" shall have the meanings ascribed to them in
the form of Employment Agreement by and between Gellein and the Company attached
to Section 6.3(g) of the Parent Letter delivered in connection with the Merger
Agreement.
12. Confidential Information and Ownership of Property.
(a) During the period commencing on the Effective Date and ending
on the sixth anniversary of the Effective Date (the "Restricted Term"), Gellein
agrees to use all Confidential Information (as defined in the Employment
Agreement) solely in connection with the performance of services for or on
behalf of the Company. Gellein shall not, during the Restricted Term, in any
manner, either directly or indirectly, (i) disseminate, disclose, use or
communicate any Confidential Information to any person or entity, regardless of
whether such Confidential Information is considered to be confidential by third
parties, or (ii) otherwise directly or indirectly misuse any Confidential
Information; provided, however, that (y) none of the provisions of this Section
12 shall apply to disclosures made for valid business purposes of the Company
and (z) Gellein shall not be obligated to treat as confidential any Confidential
Information that (I) was publicly known at the time of disclosure to Gellein;
(II) becomes
-13-
<PAGE>
publicly known or available thereafter other than by means in violation of this
Agreement or any other duty owed to the Company, Parent or any Affiliate (as
defined in the Employment Agreement) of the Company or Parent by any person or
entity. Notwithstanding the foregoing, Gellein shall be permitted to disclose
Confidential Information to the extent required to enforce Gellein's rights
hereunder in any litigation arising under, or pertaining to, this Agreement
provided that Gellein shall give prior written notice to the Company of any such
disclosure so that the Company may have an opportunity to protect the
confidentiality of such Confidential Information in such litigation.
(b) Gellein agrees that all works of authorship developed,
authored, written, created or contributed to during the Restricted Term for the
benefit of the Company, whether solely or jointly with others, shall be
considered works-made-for-hire. Gellein agrees that such works shall be the sole
and exclusive property of the Company (or Parent or the appropriate Affiliate of
the Company or Parent) and that all right, title and interest therein or
thereto, including all intellectual property rights existing or obtained in
connection therewith, shall likewise be the sole and exclusive property of the
Company (or Parent or the appropriate Affiliate of the Company or Parent).
Gellein agrees further that, in the event that any work is not considered to be
work-made-for-hire by operation of law, Gellein will immediately, and without
further compensation, assign all of Gellein's right, title and interest therein
to the Company (or Parent or the designated Affiliate), its successors and
assigns. At the request and expense of the Company, Gellein agrees to perform in
a timely manner such further acts as may be necessary or desirable to transfer,
defend or perfect the Company's ownership of such work and all rights incident
thereto.
13. Covenant Not to Compete. Unless the Company's Board of
Directors determines that any of the following conduct is in the Company's best
interests, during the Restricted Term, Gellein shall not:
(a) directly or indirectly for himself or for any other person or
entity engage, whether as owner, investor, creditor, consultant, partner,
shareholder, director, financial backer, agent, employee or otherwise, in the
business, enterprise or employment of owning, operating, marketing or selling a
time-share, vacation plan, vacation ownership or interval ownership project
within the Territory (as defined in the Employment Agreement); or
(b) directly or indirectly for himself or for any other person or
entity sell, or otherwise procure purchasers for, any time-share, vacation plan,
vacation ownership or interval ownership project within the Territory; or
(c) have any business (as owner, investor, creditor, consultant,
partner, debtor or otherwise) or be employed in any capacity by a person or
entity that is engaged, directly or indirectly, in (i) operating, or providing
sales, marketing or development services to, a time-share, vacation plan,
vacation ownership or interval ownership project within the Territory, or (ii)
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<PAGE>
an activity formed or entered into for the primary purpose of engaging in a
time-share, vacation plan, vacation ownership or interval ownership business
within the Territory; or
(d) directly or indirectly for himself or for any other person or
entity become employed in any capacity by or otherwise render services in any
capacity to any national enterprise having time-share, vacation plan, vacation
ownership or interval ownership activities, including, without limitation, Walt
Disney Company, Hilton Hotels Corporation, Hyatt Corporation, Four Seasons
Hotels and Resorts, Inc., Marriott International, Inc., Inter-Continental Hotels
and Resorts, Inc., Promus Hotels, Inc., Fairfield Communities, Inc., Sunterra
Corporation or Bass PLC or any of their respective Affiliates; or
(e) directly or indirectly for himself or for any other person or
entity pursue or consummate or otherwise interfere with any Existing Project (as
defined in the Employment Agreement); or
(f) (i) directly or indirectly, for himself or any other person
or entity, pursue, consummate or otherwise interfere with any Prospective
Project (as defined in the Employment Agreement) or (ii) directly or indirectly
for himself or for any other person or entity become employed in any capacity by
or otherwise render services in any capacity to any other person or entity
(other than the Company, Parent and any Affiliate of the Company or Parent)
described in clause (ii) of the definition of Prospective Project.
Notwithstanding the foregoing, Gellein may purchase stock as a
stockholder in any publicly traded company, including any company engaged in the
time-share or vacation ownership business; provided, however, that Gellein may
not own (individually or collectively with Gellein's family members, trusts for
the benefit of Gellein's family members and affiliates of Gellein) more than 5%
of any company.
In light of the substantial consideration provided to Gellein in
connection with the transactions contemplated by this Agreement and the Merger
Agreement, Gellein hereby specifically acknowledges and agrees that the
provisions of this Section 13 (including, without limitation, its time and
geographic limits), as well as the provisions of Sections 12 and 14, are
reasonable and appropriate, and that Gellein will not claim to the contrary in
any action brought by the Company to enforce such any of such provisions.
14. Covenant Against Solicitation of Employees. During the
Restricted Term, Gellein shall not employ employees or agents or former
employees or agents of the Company, Parent or any Affiliate of the Company or
Parent or, directly or indirectly, solicit or otherwise encourage the employment
of employees or agents or former employees or agents of the Company, Parent or
any Affiliate of the Company or Parent; provided, however, that this restriction
shall not apply to Gellein's secretaries or personal assistants or to former
employees or agents who, as of the date of termination of Gellein's employment
by the Company, have not
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worked for any of the Company, Parent or any Affiliate of the Company or Parent
during the twelve preceding months.
-16-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first written above.
STARWOOD HOTELS & RESORTS
WORLDWIDE, INC.
By: /s/ Russell Sternlicht
-----------------------------------
Name: Russell Sternlicht
Title: Senior Vice President
FIRE ACQUISITION CORP.
By: /s/ Russell Sternlicht
-----------------------------------
Name: Russell Sternlicht
Title:
RAYMOND L. GELLEIN, JR.
/s/ Raymond L. Gellein, Jr.
-----------------------------------
NEVEAST LIMITED PARTNERSHIP
By: /s/ Ronald L. Smith
-----------------------------------
Name: Ronald Smith
Title: President of NevJan I, Inc.,
General Partner
NEVWEST LIMITED PARTNERSHIP
By: /s/ Ronald L. Smith
-----------------------------------
Name: Ronald Smith
Title: President of NevGel, Inc.,
General Partner
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<PAGE>
*THE RAYMOND L. GELLEIN, JR. GRANTOR
RETAINED ANNUITY TRUST
By: /s/ Raymond L. Gellein, Sr.
-------------------------------------
Name: Raymond L. Gellein, Sr.
Title: Trustee
*THE MATTHEW JAMES GELLEIN
IRREVOCABLE TRUST
By: /s/ Catherine G. Male
-------------------------------------
Name: Catherine G. Male
Title: Trustee
*THE BRETT TYLER GELLEIN IRREVOCABLE
TRUST
By: /s/ Catherine G. Male
-------------------------------------
Name: Catherine G. Male
Title: Trustee
*THE JANICE G. GELLEIN GRANTOR
ANNUITY TRUST
By: /s/ Raymond L. Gellein, Sr.
-------------------------------------
Name: Raymond L. Gellein, Sr.
Title: Trustee
*THE CATHERINE MALE GIFT TRUST
By: /s/ Raymond L. Gellein, Sr.
-------------------------------------
Name: Raymond L. Gellein, Sr.
Title: Trustee
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- -----------
* (Agreed solely for purposes of Sections 1, 3, 4, 5, 7 and 8).
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*THE CHERIE DOHERTY GIFT TRUST
By: /s/ Raymond L. Gellein, Sr.
-----------------------------------
Name: Raymond L. Gellein, Sr.
Title: Trustee
*THE SUSAN FAETZ GIFT TRUST
By: /s/ Raymond L. Gellein, Sr.
-----------------------------------
Name: Raymond L. Gellein, Sr.
Title: Trustee
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- -----------
* (Agreed solely for purposes of Sections 1, 3, 4, 5, 7 and 8).
-22-
