Exhibit (c)(2)
STOCKHOLDERS AGREEMENT
THIS STOCKHOLDERS AGREEMENT (the "Agreement") is dated as of January 6,
1999, by and among Marriott International, Inc., a Delaware corporation
("Marriott"), MI Subsidiary I, Inc., a Delaware corporation and a direct,
wholly-owned subsidiary of Marriott ("Acquisition") and each of the other
parties signatory hereto (individually, a "Stockholder" and collectively, the
"Stockholders").
WHEREAS, concurrently herewith, Marriott, Acquisition and XxxxxXxxx
Corporation, a Maryland corporation ("ExecuStay"), are entering into a Merger
Agreement, a form of which is appended hereto as Exhibit I (as such agreement
may hereafter be amended from time to time, the "Merger Agreement"), pursuant to
which ExecuStay will be merged with and into Acquisition (the "Merger").
Capitalized terms used and not defined herein have the respective meanings
assigned to them in the Merger Agreement;
WHEREAS, concurrently herewith, certain other stockholders of ExecuStay are
entering into two agreements with Marriott and Acquisition (the "Other
Stockholders Agreements"), concerning certain matters connected with the Merger
and their ExecuStay Shares (defined below);
WHEREAS, each of the Stockholders Beneficially Owns (as defined herein) the
number of shares, par value $0.01 per share, of common stock (the "Common
Stock") of ExecuStay (the "ExecuStay Shares") set forth opposite such
Stockholder's name on Schedule A hereto;
WHEREAS, the Merger Agreement contemplates that, in anticipation of
consummation of the Merger, one share of Class A Preferred Stock, par value
$0.01 per share, of ExecuStay ("Class A Shares") will be issued to each
Stockholder in exchange (the "Exchange") for each ExecuStay Share held by such
Stockholder (as used herein, the term "Shares" refers to the ExecuStay Shares
prior to the Exchange and the Class A Shares after the Exchange);
WHEREAS, Marriott has agreed that each Stockholder shall receive shares of
Marriott common stock, par value $0.01 per share ("Marriott Stock"), in the
Merger, in respect of their Shares, and each such Stockholder desires to receive
such Marriott Stock; and
WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, Marriott has required that the Stockholders agree, and the
Stockholders have agreed, to enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual promises,
representations, warranties, covenants and agreements contained herein, the
parties hereby agree as follows:
1. Agreement to Vote; Irrevocable Proxy.
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(a) Each Stockholder hereby agrees that during the period commencing
at the Tender Offer Purchase Time and continuing until the first to occur of the
Closing and the
termination of the Merger Agreement in accordance with its terms, at any meeting
of the holders of the Shares, however called, or in connection with any written
consent of the holders of Shares, such Stockholder shall vote (or cause to be
voted) the Shares held of record or Beneficially Owned (as defined herein) by
such Stockholder, whether owned on the date hereof or hereafter acquired, (i) in
favor of approval of the Merger Agreement, all transactions contemplated
thereby, and any actions required in furtherance thereof and hereof (including
election of such directors of ExecuStay as Marriott is entitled to designate
pursuant to the Merger Agreement); (ii) against any action or agreement that is
intended, or could reasonably be expected, to impede, interfere with, or prevent
the Merger or result in a breach in any respect of any covenant, representation
or warranty or any other obligation or agreement of ExecuStay or any of its
subsidiaries under the Merger Agreement, the Other Stockholders Agreements or
this Agreement; and (iii) except as specifically requested in writing in advance
by Marriott or Acquisition, against the following actions (other than the
Exchange, the Merger and the transactions contemplated by the Merger Agreement,
the Other Stockholders Agreements and this Agreement): (A) any extraordinary
corporate transaction, such as a merger, consolidation or other business
combination involving ExecuStay or any of its subsidiaries or affiliates; (B) a
sale, lease, transfer or disposition by ExecuStay or any of its subsidiaries of
any assets outside the ordinary course of business or any assets which in the
aggregate are material to ExecuStay and its subsidiaries taken as a whole, or a
reorganization, recapitalization, dissolution or liquidation of ExecuStay or any
of its subsidiaries or affiliates; (C)(1) any change in the management of
ExecuStay or in a majority of the persons who constitute the board of directors
of ExecuStay; (2) any change in the present capitalization of ExecuStay or any
amendment of XxxxxXxxx'x charter or By-Laws; (3) any other material change in
XxxxxXxxx'x or any of its subsidiaries' corporate structure or business; or (4)
any other action that, in the case of each of the matters referred to in clauses
(C)(1), (2) or (3), is intended, or could reasonably be expected, to impede,
interfere with, delay, postpone or materially adversely affect the Exchange, the
Merger or the transactions contemplated by this Agreement, the Other
Stockholders Agreements and the Merger Agreement. No Stockholder shall enter
into any agreement or understanding with any Person (as defined herein) the
effect of which would be inconsistent with or violative of the provisions and
agreements contained in Section 1 or 2 hereof.
(b) By his execution hereof and in order to secure his obligations
hereunder, each Stockholder hereby grants to, and appoints, Acquisition and
Xxxxxxx X. Xxxxxxx and Xxxxxx Xxxx, in their respective capacities as officers
of Acquisition, and any individual who shall hereafter succeed to any such
office of Acquisition, and any other designee of Acquisition, and each of them
individually, such Stockholder's true and lawful irrevocable (until the
Termination Date) proxy and attorney-in-fact (with full power of substitution)
to vote the Shares, or grant a consent or approval in respect of such Shares, as
indicated in Section 1(a) above, provided, however, that this proxy shall not
take effect until purchase of the Shares by Acquisition at the Tender Offer
Purchase Time. Each Stockholder intends this proxy to be irrevocable (from the
Tender Offer Purchase Time until the Termination Date) and coupled with an
interest and will take such further action and execute such other instruments as
may be necessary to effectuate the intent of this proxy and hereby represents
that any proxy heretofore given in respect of his Shares is not irrevocable, and
hereby revokes any proxy previously granted by such Stockholder with respect to
the Shares. Each Stockholder understands and acknowledges that Acquisition is
entering into the Merger Agreement in reliance on his execution and delivery of
this irrevocable
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proxy. Each Stockholder hereby affirms that this irrevocable proxy is given in
connection with the execution of this Agreement and the Merger Agreement, and
further affirms that this irrevocable proxy is coupled with an interest in this
Agreement for the term stated herein and may under no circumstances be revoked.
Such Stockholder hereby ratifies and confirms all that this irrevocable proxy
may lawfully do or cause to be done by virtue hereof. This proxy is executed and
intended to be irrevocable in accordance with the provisions of Section 2-507(d)
of the Maryland General Corporation Law. This proxy shall terminate
automatically on the termination of the Merger Agreement.
2. Other Covenants, Representations and Warranties. Each Stockholder
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hereby represents and warrants to Marriott and Acquisition as of the date hereof
and as of the Closing as follows:
(a) Ownership of Shares. Such Stockholder is the record and
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Beneficial Owner of the number of Shares set forth opposite such Stockholder's
name on Schedule A hereto. On the date hereof, the Shares set forth opposite
such Stockholder's name on Schedule A hereto constitute all of the Shares owned
of record or Beneficially Owned by such Stockholder. Such Stockholder owns such
Shares free and clear of all liens, claims, charges, security interests,
mortgages or other encumbrances, and such Shares are subject to no rights of
first refusal, put rights, other rights to purchase or encumber such Shares, or
to any agreements other than this Agreement as to the encumbrance or disposition
of such Shares. Such Shares are duly and validly issued, fully paid and non-
assessable. Such Stockholder has sole voting power and sole power to issue
instruction with respect to the matters set forth in Section 1 hereof, sole
power of disposition, sole power of conversion, sole power to demand appraisal
rights and sole power to agree to all of the matters set forth in this
Agreement, in each case with respect to all of the Shares set forth opposite
such Stockholder's name on Schedule A hereto, with no limitations,
qualifications or restrictions on such rights.
(b) Power; Binding Agreement. Such Stockholder has the legal
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capacity, power and authority to enter into and perform all of such
Stockholder's obligations under this Agreement. The execution, delivery and
performance of this Agreement by such Stockholder will not violate any other
agreement to which such Stockholder is a party including, without limitation,
any voting agreement, shareholder agreement or voting trust. This Agreement has
been duly and validly executed and delivered by such Stockholder and constitutes
a valid and binding agreement of such Stockholder, enforceable against such
Stockholder in accordance with its terms, except as such enforceability may be
limited by any applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights generally, and
except as the availability of equitable remedies may be limited by the
application of general principles of equity (regardless of whether such
equitable principles are applied in a proceeding at law or in equity). There is
no beneficiary or holder of a voting trust certificate or other interest of any
trust of which such Stockholder is trustee who is not a party to this Agreement
and whose consent is required for the execution and delivery of this Agreement
or the consummation by such Stockholder of the transactions contemplated hereby.
If such Stockholder is married and such Stockholder's Shares constitute
community property, this Agreement has been duly authorized, executed and
delivered by, and constitute a valid and binding agreement of, such
Stockholder's spouse, enforceable against such person in accordance with its
terms, except
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as such enforceability may be limited by any applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally, and except as the availability of equitable
remedies may be limited by the application of general principles of equity
(regardless of whether such equitable principles are applied in a proceeding at
law or in equity).
(c) No Conflicts. (i) Except for filings, permits, authorizations,
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consents and approvals as may be required under and other applicable
requirements of the HSR Act, no filing with, and no permit, authorization,
consent or approval of, any state or federal public body or authority is
necessary for the execution of this Agreement by such Stockholder and the
consummation by such Stockholder of the transactions contemplated hereby and
(ii) none of the execution or delivery of this Agreement by such Stockholder,
the consummation by such Stockholder of the transactions contemplated hereby or
compliance by such Stockholder with any of the provisions hereof shall (A)
result in a violation or breach of, or constitute (with or without notice or
lapse of time or both) a default (or give rise to any third party right of
termination, cancellation, material modification or acceleration) under any of
the terms, conditions or provisions of any note, bond, mortgage, indenture,
license, contract, commitment, arrangement, understanding, agreement or other
instrument or obligation of any kind to which such Stockholder is a party or by
which such Stockholder or, to the best of such Stockholder's knowledge, any of
such Stockholder's properties or assets may be bound, or (B) violate any order,
writ, injunction, decree, judgment, order, statute, rule or regulation
applicable to such Stockholder or any of such Stockholder's properties or
assets. This Agreement hereby supersedes all prior agreements to which such
Stockholder is a party with respect to such Stockholder's Shares, including
without limitation any registration rights agreement with respect to any of such
Stockholder's Shares.
(d) No Finder's Fees. No broker, investment banker, financial adviser or
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other person is entitled to any broker's, finder's, financial adviser's or other
similar fee or commission in connection with the transactions contemplated by
the Merger Agreement based upon arrangements made by or on behalf of such
Stockholder.
(e) Other Potential Acquirers. Such Stockholder (i) shall immediately
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cease any existing discussions or negotiations, if any, with any parties
conducted heretofore with respect to any acquisition of all or any material
portion of the assets of, or any equity interest in, ExecuStay or any of its
subsidiaries or any business combination with ExecuStay or any of its
subsidiaries, in his or her capacity as such, and (ii) from and after the date
hereof until termination of the Merger Agreement, unless and until ExecuStay is
permitted to take such actions under Section 5.4 of the Merger Agreement, shall
not, in such capacity, directly or indirectly, initiate, solicit or knowingly
encourage (including by way of furnishing non-public information or assistance),
or take any other action to facilitate knowingly, any inquiries or the making of
any proposal that constitutes, or may reasonably be expected to lead to, any
such transaction or acquisition, or agree to or endorse any such transaction or
acquisition, or authorize or permit any of such Stockholder's agents to do so,
and such Stockholder shall promptly notify Marriott or Acquisition of any
proposal and shall provide a copy of any such written proposal and a summary of
any oral proposal to Marriott or Acquisition immediately after receipt thereof
(and shall specify
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the material terms and conditions of such proposal and identify the person
making such proposal) and thereafter keep Marriott or Acquisition advised of any
development with respect thereto.
(f) Restriction on Transfer, Proxies and Non-Interference. Such
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Stockholder shall not, directly or indirectly: (i) tender his Shares in the
Offer (as defined in the preamble to the Merger Agreement) or any other tender
offer for ExecuStay Shares; (ii) except as contemplated by this Agreement, the
Other Stockholders Agreements or the Merger Agreement, otherwise offer for sale,
sell, transfer, tender, pledge, encumber, assign or otherwise dispose of, or
enter into any contract, option or other arrangement or understanding with
respect to or consent to the offer for sale, sale, transfer, tender, pledge,
encumbrance, assignment or other disposition of, any or all of such
Stockholder's Shares or any interest therein; (iii) grant any proxies or powers
of attorney, deposit any Shares into a voting trust or enter into a voting
agreement with respect to any Shares; or (iv) take any action that would make
any representation or warranty of such Stockholder contained herein untrue or
incorrect or have the effect of preventing or disabling such Stockholder from
performing such Stockholder's obligations under this Agreement.
(g) Investment Intention.
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(i) Such Stockholder confirms that Marriott and Acquisition
have made available to such Stockholder, and his representatives and agents, (A)
information about Marriott, (B) the opportunity to ask questions of the officers
and employees of Marriott and (C) the opportunity to acquire such additional
information about the business and financial condition of Marriott as such
Stockholder has requested, and such information has been received.
(ii) The shares of Marriott Stock to be issued to such
Stockholder in connection with the Merger will be acquired for investment and
not with a view to distribution of such shares within the meaning of Section
2(11) of the Securities Act.
(iii) Such Stockholder does not have in mind the sale or other
disposition of shares of Marriott Stock at some fixed time in the future (such
as the expiration of the holding period for capital gains tax treatment) or upon
the occurrence or nonoccurrence of any particular events.
(iv) Such Stockholder is an "accredited investor" within the
meaning of Section 2(a)(15) of the Securities Act.
(h) Employee Waivers. Such Stockholder will (a) cooperate with Parent
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and Acquisition in obtaining waivers, in form and substance reasonably
satisfactory to Parent and Acquisition, of all terms of the Company Option Plan
and all terms of outstanding Company Stock Options, which terms could prevent,
restrict or impair the ability of Parent, Acquisition and the Company to
effectuate fully the provisions of Section 2.14 of the Merger Agreement, and (b)
use reasonable efforts to cause its Compensation Committee to interpret the
Company Option Plan so as to enable the Company, Parent and Acquisition to
effectuate fully the provisions of Section 2.14 of the Merger Agreement.
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(i) Reliance by Marriott and Acquisition. Such Stockholder
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understands and acknowledges that Marriott and Acquisition are relying upon the
foregoing representations by the Stockholder, and on the Stockholder's execution
and delivery of this Agreement (i) in entering into the Merger Agreement and
(ii) in issuing the Marriott Stock in connection with the Merger without
registration under the Securities Act or qualification under any state
securities laws (collectively, "Blue Sky Laws"). Each Stockholder agrees that
the Marriott Stock will not be transferred until such time as the Form S-3
(defined below) is declared effective by the SEC.
3. Further Assurances; Merger Agreement Compliance. From time to time, at
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Marriott's or Acquisition's request and without further consideration, each
Stockholder agrees to execute and deliver such additional documents and take all
such further lawful action as may be necessary or desirable to consummate and
make effective, and to cause the Company to consummate and make effective, in
the most expeditious manner practicable, the transactions contemplated by this
Agreement, the Other Stockholders Agreements and the Merger Agreement. Each
Stockholder further agrees not to take any action, or omit to take an action,
which would, or would be reasonably likely to, result in a breach by the Company
of any of the provisions of the Merger Agreement.
4. Stop Transfer; Form of Legend.
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(a) Each Stockholder agrees with, and covenants to, Marriott that
such Stockholder shall not request that ExecuStay register the transfer (book-
entry or otherwise) of any certificate or uncertificated interest representing
any of such Stockholder's Shares, unless such transfer is made in compliance
with this Agreement. In the event of a stock dividend or distribution, or any
change in the Common Stock, the Class A Shares or the Class B Shares by reason
of any stock dividend, split-up, recapitalization, combination, exchange of
shares or the like, the term "Shares" shall be deemed to refer to and include
the Shares as well as all such stock dividends and distributions and any shares
into which or for which any or all of the Shares may be changed or exchanged.
(b) All certificates representing any of such Stockholder's Shares
shall contain the following legend:
"The securities represented by this certificate are subject to certain
restrictions on transfer and other terms of a Stockholders Agreement,
dated as of January 6, 1999, among Marriott International, Inc., MI
Subsidiary I, Inc. and the parties listed on the signatures pages
thereto, a copy of which is on file in the principal office of
Marriott International, Inc."
5. Stock Issuance and Registration.
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(a) In accordance with the provisions of Section 2.1 of the Merger
Agreement, immediately prior to the Merger, ExecuStay will, in the Exchange,
issue to the Stockholders on a share-for-share basis, Class A Shares in exchange
for Common Stock held of record or Beneficially Owned by them. In the Merger,
each Stockholder shall receive, in respect of each
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Class A Share held of record or Beneficially Owned by such Stockholder, shares
of Marriott Stock in an amount determined by the "Class A Exchange Ratio" as
defined in Section 2.9(b) of the Merger Agreement.
(b) Marriott shall, no later than the First Registration Date (as
defined below), file with the SEC and thereafter use its reasonable efforts to
cause to be declared effective, a registration statement on Form S-3 or an
equivalent successor form (the "Form S-3") relating to the offer and sale from
time to time by the Stockholders of shares of Marriott Stock held by them that
are Registrable Securities. As used herein, the "First Registration Date" means
the later of (i) 30 days following the Closing Time, or (ii) April 30, 1999,
provided, however, that if on such date Marriott is not eligible to use Form S-3
for registration of the resale of Registrable Securities as provided herein,
then the First Registration Date shall be the earliest date after April 30, 1999
on which Marriott becomes eligible to use Form S-3 in connection with such
resale registration. Subject to the limitations contained herein, Marriott shall
use its reasonable efforts to keep the Form S-3 continuously effective in order
to permit the prospectus forming part thereof to be usable by the Stockholders
for a period of one year from the Closing Time, or for such shorter period that
will terminate when all Registrable Securities covered by the Form S-3 have been
sold pursuant to the Form S-3 or cease to be outstanding or otherwise to be
Registrable Securities.
(c) Marriott further agrees, if necessary, to supplement or amend the
Form S-3, as required by Section 6 below, and to furnish to Stockholders holding
Registrable Securities copies of any such supplement or amendment promptly after
its being used or filed with the SEC.
(d) Marriott agrees to use its reasonable efforts to ensure that (i)
the Form S-3 and any amendments thereof, at the time each such Form S-3 or
amendment thereof becomes effective, and any prospectus forming a part thereof
and any supplement thereto complies in all material respects with the Securities
Act and the rules and regulations thereunder, (ii) the Form S-3 and any
amendment thereto does not, when it becomes effective, contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading and
(iii) any prospectus forming part of the Form S-3, and any supplement to such
prospectus (as amended or supplemented from time to time)(each, as of the date
thereof), does not include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements, in light of the
circumstances under which they were made, not misleading; provided that clauses
(ii) and (iii) of this paragraph shall not apply to any information provided by
a Stockholder.
(e) No Stockholder may use the Form S-3 unless he provides Marriott
with the information required by Section 8 of this Agreement on a timely basis.
Notwithstanding any other provision herein or in the Merger Agreement, (i)
Marriott shall have no obligation under Sections 5 or 6 hereof with respect to
any shares of Marriott Stock that are (x) not Registrable Securities or (y) held
of record or Beneficially Owned by a Stockholder who has not performed his
obligations under, or otherwise has breached, violated or is in default under,
the Agreement or the Merger Agreement, and (ii) all obligations of Marriott
under Sections 5 and 6 hereof automatically shall terminate and be of no further
force or effect in the event that the Merger Agreement is terminated or the
Offer or the Merger is not consummated.
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(f) Notwithstanding any other provision herein, Marriott may delay
filing the Form S-3, may withhold efforts to cause the Form S-3 to become
effective, and may advise holders of Registrable Securities to suspend use of
the prospectus that is part of the Form S-3, for limited periods of time if and
to the extent that Marriott reasonably determines in good faith that any such
action is necessary in order for Marriott to comply with its disclosure
obligations under Section 5(d) hereof. In the event that Marriott advises the
holders of registered Registrable Securities that Marriott considers it
appropriate to suspend the use of the prospectus, such holders shall suspend any
further sales of their registered securities until Marriott advises them that
the Form S-3 has been amended or that such sales may be resumed.
6. Registration Procedures.
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(a) Marriott shall prepare and file a Form S-3, within the relevant time
period specified in Section 5(a), and use its reasonable efforts to cause such
Form S-3 to become effective and remain effective in accordance with Section 5
hereof.
(b) Marriott shall prepare and file such amendments and post-effective
amendments to the Form S-3 as may be necessary under applicable law to keep such
Form S-3 effective for the applicable period; and cause each prospectus that is
part of the Form S-3 to be supplemented by any required prospectus supplement,
and as so supplemented to be filed with the SEC pursuant to applicable
requirements of the Securities Act and the rules and regulations thereunder.
(c) Marriott shall use its reasonable efforts to register or qualify the
Registrable Securities under all applicable Blue Sky Laws as any Stockholder
holding Registrable Securities covered by the Form S-3 shall reasonably request;
provided, however, that Marriott shall not be required to (i) qualify as a
foreign corporation or as a dealer in securities in any jurisdiction where it
would not otherwise be required to qualify but for this Section 6(c), or (ii)
take any action which would subject it to general service of process or taxation
in any such jurisdiction where it is not then so subject.
(d) Marriott shall furnish to each Stockholder of Registrable Securities,
without charge, as many copies of each prospectus and any amendment thereof or
supplement thereto as such Stockholder may reasonably request.
(e) Marriott shall cooperate with the selling Stockholders of Registrable
Securities to facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold and not bearing any restrictive
legends.
(f) Marriott shall cause all Registrable Securities covered by the Form S-
3 to be listed on the NYSE.
7. Transfer Restrictions on Marriott Stock.
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(a) No Stockholder shall directly or indirectly offer for sale, sell,
transfer, tender, pledge, encumber, assign or otherwise dispose of, or enter
into any contract, option or other arrangement or understanding with respect to
or consent to the offer for sale, sale, transfer, tender, pledge, encumbrance or
other disposition of, or exercise any discretionary powers to
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distribute, any or all of the Marriott Stock owned by it or any interest
therein; provided, however, that the transfer restrictions set forth in this
Section 7 shall not apply: (a) as of the Effective Time, to one-third of the
shares of the Marriott Stock held of record or Beneficially Owned by such
Stockholder on the Effective Time (the "Effective Time Shares"); (b) as of the
first anniversary of the Effective Time, to an additional one-third of the
Effective Time Shares; and (c) as of the second anniversary of the Effective
Time, to the remaining one-third of the Effective Time Shares. All certificates
representing any of the Stockholders' shares of Marriott Stock shall contain the
legend set forth in Section 4(b) hereof.
(b) Notwithstanding anything herein to the contrary, with respect to
Effective Time Shares held by a Stockholder, the transfer restrictions set forth
in Section 7(a) hereof shall expire and be of no further force or effect in the
event of, and immediately upon, a termination by Acquisition of such
Stockholder's employment without cause.
8. Condition Precedent. It shall be a condition precedent to the
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obligations of Marriott to take any action pursuant hereto that the Stockholders
shall furnish to Marriott such information regarding them, the Registrable
Securities held by them and the intended method of disposition of such
Registrable Securities as Marriott shall reasonably request and as shall be
required in connection with the action to be taken by Marriott.
9. Expenses of Registration. All expenses incurred in connection with any
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registrations pursuant to Section 5 hereof, including without limitation all
registration and qualification fees, printers' and accounting fees, reasonable
fees and disbursements of counsel for Marriott, shall be borne by Marriott,
except for (a) fees and disbursements of counsel for the selling Stockholders,
and (b) any underwriting or brokers' discounts or similar transaction fees,
which shall be borne by the selling Stockholders.
10. Indemnification.
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(a) Marriott agrees to indemnify and hold harmless each Stockholder
and each person, if any, who controls such Stockholder within the meaning of the
Securities Act (the "Holder Indemnified Parties"), against any losses, claims,
damages or liabilities, joint or several, to which any Holder Indemnified Party
may become subject, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based on any Misstatement
(defined below) in the Form S-3 or any amendments thereof or supplements
thereto. Marriott will reimburse each such Holder Indemnified Party for any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action.
Notwithstanding anything to the contrary contained in this Section 10(a), the
indemnity agreement contained in this paragraph 10(a) shall not (i) apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of Marriott (which consent
shall not be unreasonably withheld); (ii) apply to any such case for any such
loss, claim, damage, liability, or action to the extent that it arises out of or
is based upon a Misstatement made in reliance upon and in conformity with
written information furnished expressly for use in connection with such
registration by any such Holder Indemnified Party.
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(b) Each Stockholder agrees to indemnify and hold harmless Marriott,
each of its directors, each of its officers who have signed the Form S-3, and
each person, if any, who controls Marriott within the meaning of the Securities
Act, and each agent (the "Marriott Indemnified Parties") against any losses,
claims, damages or liabilities to which any Marriott Indemnified Party may
become subject, insofar as such losses, claims, damages or liabilities (or
actions in respect thereto) (i) arise out of or are based upon any Misstatement
in the Form S-3 and any amendments thereof or supplements thereto made in
reliance upon and in conformity with written information furnished expressly for
use in connection with such registration by any such Holder Indemnified Party.
Each such Stockholder will reimburse any legal or other expenses reasonably
incurred by such Marriott Indemnified Party in connection with investigating or
defending any such loss, claim, damage, liability or action. Notwithstanding
anything to the contrary contained in this Section 10(b), the indemnity
agreement contained in this Section 10(b) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of such Stockholder (which consent
shall not be unreasonably withheld).
(c) If the indemnification provided for in this Section 10 is
unavailable to an indemnified party under Section 10(a) or Section 10(b) above
(other than by reason of exceptions provided in those Sections) in respect of
any losses, claims, damages or liabilities referred to in such Sections, then
each applicable indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages or liabilities in such proportion as
is appropriate to reflect the relative benefit and relative fault as well as any
other equitable considerations. The amount paid or payable by a party as a
result of the losses, claims, damages, or liabilities referred to above shall be
deemed to include, subject to the limitations set forth in Section 10(d), any
legal or other fees or expenses reasonably incurred by such party in connection
with investigating or defending any action or claim. The relative benefit shall
be determined by the allocation of proceeds from such Form S-3. The relative
fault of the indemnified party on the one hand and of the indemnifying party on
the other shall be determined by reference to, among other things, whether the
Misstatement or alleged Misstatement relates to information supplied by the
indemnified party or the indemnifying party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
Misstatement or alleged Misstatement. Marriott and the Stockholders agree that
it would not be just and equitable if contribution pursuant to this Section
10(c) were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to above. No person guilty of fraudulent misrepresentation (within the meaning
of Section 10(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
(d) Any person entitled to indemnification hereunder will: (i) give
prompt notice to the indemnifying party of any claim with respect to which it
seeks indemnification; and (ii) unless in such indemnified party's reasonable
judgment a conflict of interest between such indemnified and indemnifying
parties may exist with respect to such claim, permit such indemnifying party to
assume the defense of such claim with counsel reasonably satisfactory to the
indemnified party. If such defense is assumed, the indemnifying party will not
be subject to any liability for any settlement made without its consent (but
such consent will not be unreasonably withheld). An indemnifying party who is
not entitled or elects not to assume the defense of a
10
claim will not be obligated to pay the fees and expenses of more than one
counsel for all parties indemnified by such indemnifying party with respect to
such claim, unless in the reasonable judgment of any indemnified party a
conflict of interest may exist between such indemnified party and any other such
indemnified parties with respect to such claim. The failure to notify an
indemnifying party promptly of the commencement of any such action, if
prejudicial to his ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this
paragraph, but the omission so to notify the indemnifying party will not relieve
him of any liability that he may have to any indemnified party otherwise than
under this Section.
11. Termination of Marriott's Obligations. Marriott shall have no
-------------------------------------
obligations pursuant to Section 6 with respect to Registrable Securities more
than one year after the Closing.
12. Employment Agreements. Following the date hereof, but prior to the
---------------------
commencement of the Offer, each Stockholder agrees to negotiate and execute
employment agreements with respect to his employment by Acquisition following
the Closing, in accordance with the form of employment agreement attached as
Exhibit II.
13. The Options. Each Stockholder hereby agrees as follows:
-----------
(a) Grant of Options. Subject to the terms of this Section 13, each
----------------
Stockholder hereby grants to Acquisition (or its designee), effective upon the
purchase of the Shares by Acquisition at the Tender Offer Purchase Time, an
irrevocable option (each, an "Option") to purchase all Shares held of record or
Beneficially Owned by such Stockholder at a purchase price per Share equal to
$13.
(b) Exercise of Options. Acquisition may exercise the Options, in
-------------------
whole or in part, at any time and from time to time, following the occurrence of
a Purchase Event (as defined below); provided that any Options not theretofore
exercised shall expire and be of no further force and effect upon the earliest
to occur (the "Expiration Date") of (i) the Closing Time, (ii) 5 months after
the first occurrence of a Purchase Event, or (iii) termination of the Merger
Agreement in accordance with its terms. Notwithstanding anything herein to the
contrary, in the event of termination of the Merger Agreement, Marriott at its
option either may elect to exercise the Options, or may accept payment of the
Liquidated Damages Amount provided for in Section 9.3 of the Merger Agreement,
but shall not be entitled to exercise the Options and retain Liquidated Damages
Amount. In the event Marriott determines to exercise the Options, promptly upon
a termination of the Merger Agreement giving rise to payment of the Liquidated
Damages Amount, Marriott shall notify ExecuStay of its waiver of receipt of the
Liquidated Damages Amount pursuant to the Merger Agreement.
As used herein, a "Purchase Event" shall mean any of the following events that
occurs after the date hereof:
(i) Beneficial Ownership of more than 20% of the outstanding
capital stock of ExecuStay (or rights to acquire such capital stock of
ExecuStay) shall have been acquired by any Person or "group" other than
Acquisition, any affiliate of Acquisition or one or more of the Stockholders;
11
(ii) ExecuStay shall have entered into a definitive agreement
or approved or recommended any proposal which provides for the acquisition of
20% or more of the outstanding capital stock of ExecuStay or substantially all
of the assets of ExecuStay by any Person or group other than Acquisition, an
affiliate of Acquisition or one or more of the Stockholders;
(iii) (A) the failure of XxxxxXxxx'x stockholders to approve the
Merger Agreement or the transactions contemplated thereby at a meeting called to
consider such Merger Agreement, if such meeting shall have been preceded by (x)
the public announcement by any Person or group (other than Acquisition or an
affiliate of Acquisition) of an offer or proposal to acquire, merge or
consolidate with ExecuStay, or (y) the Board of Directors of XxxxxXxxx'x
publicly withdrawing or modifying, or publicly announcing its intent to withdraw
or modify, its recommendation that the stockholders of ExecuStay approve the
transactions contemplated by the Merger Agreement, as prohibited by Section
5.4(b) of the Merger Agreement; or (B) the acceptance by XxxxxXxxx'x Board of
Directors of, or the public recommendation by XxxxxXxxx'x Board of Directors
that the stockholders of ExecuStay accept, an offer or proposal from any Person
or group (other than Acquisition or an affiliate of Acquisition), to acquire 20%
or more of the outstanding capital stock of ExecuStay or for a merger or
consolidation or any similar transaction involving ExecuStay, as prohibited by
Section 5.4(b) of the Merger Agreement;
(iv) a proposal made by a third party to ExecuStay, its
affiliates or their respective officers, directors, employees, representatives
or agents, as described in Section 5.4 of the Merger Agreement, resulting in a
breach by ExecuStay of the covenant and obligation contained in that Section 5.4
and such breach (x) would entitle Acquisition or Marriott to terminate the
Merger Agreement pursuant to Section 9.1(b) thereof and (y) shall not have been
cured prior to the date that Acquisition duly gives notices to the Stockholder
of its desire to exercise an Option pursuant to Section 13 hereof; or
(v) any breach by a Stockholder of this Agreement.
(c) Notice of Exercise. To exercise an Option, Acquisition shall,
------------------
prior to the Expiration Date, give written notice to the Stockholder who granted
such Option specifying the location in Maryland or Washington, D.C. and time for
the closing (the "Option Closing") of such purchase. The Option Closing shall be
held on the date that is no later than three business days after the date on
which each of the conditions set forth in Section 13(d) below has been satisfied
or waived by Acquisition.
(d) Conditions to Option Closing Following Exercise of Options. The
----------------------------------------------------------
occurrence of the Option Closing shall be subject to the satisfaction of each of
the following conditions:
(i) to the extent necessary, any applicable waiting periods (and
any extension thereof) under the HSR Act with respect to the purchase of the
Shares following the exercise of an Option shall have expired or been
terminated; and
12
(ii) no preliminary or permanent injunction or other order,
decree or ruling issued by any court of governmental or regulatory authority,
domestic or foreign, of competent jurisdiction prohibiting the exercise of an
Option or the delivery of Shares shall be in effect.
(e) Transferability of Options. Acquisition may sell or transfer the
--------------------------
Options and any Shares acquired upon exercise of an Option at any time, without
the written consent of the Stockholder, to any affiliate or affiliates of
Acquisition.
(f) Payment for and Delivery of Certificates. At the Option Closing,
----------------------------------------
(i) Acquisition (or its designee) shall pay, by check, an amount equal to the
product of (x) $13 and (y) the number of Shares owned by such Stockholder; and
(ii) each Stockholder whose Shares are being purchased shall deliver or shall
cause to be delivered to Acquisition a certificate or certificates evidencing
such Stockholder's Shares, and such Stockholder agrees that such Shares shall be
transferred free and clear of all liens. All such certificates representing
Shares shall be duly endorsed in blank, or with appropriate stock powers, duly
executed in blank, attached thereto, in proper form for transfer, with the
signature of such Stockholder thereon guaranteed, and with all applicable taxes
paid or provided for.
14. Termination. Except as otherwise provided herein, the covenants and
-----------
agreements contained herein with respect to the Shares shall terminate upon the
earliest of (a) termination of the Merger Agreement in accordance with its
terms, or (b) the Effective Time.
15. Stockholder Capacity. No person executing this Agreement who is or
--------------------
becomes during the term hereof a director or executive officer of ExecuStay
makes any agreement or understanding herein in his or her capacity as such
director or executive officer. Each Stockholder signs solely in his or her
capacity as the record and/or beneficial owner of such Stockholder's Shares.
16. Waiver of Appraisal and Dissenter's Rights. Each Stockholder hereby
------------------------------------------
irrevocably waives any rights of appraisal or rights to dissent from the Merger
that such Stockholder may have.
17. Restrictive Covenants
---------------------
(a) The parties acknowledge and agree that the Class A Merger
Consideration, the Class B Merger Consideration and the Cash Merger
Consideration to be transferred in connection with the consummation of the Offer
and the Merger constitute consideration for, among other things, the
confidential information, trade secrets, intellectual property, and customer and
vendor goodwill of the Company and the Company's investment in the skills and
know-how of its employees. In recognition thereof, the Stockholders hereby agree
to be bound by the covenants set forth in this Section 17, subject to the terms
and conditions set forth herein, for the period beginning on the date of the
Closing and ending on the seventh anniversary of the date of the Closing (the
"Restriction Period").
(b) The Stockholders agree that during the Restriction Period the
Stockholders will not, without the written consent of Marriott, in each instance
directly or indirectly, carry on
13
or participate in a business that is the same as or is similar to or in
competition with a business (a "Competing Business") conducted or engaged in by
the Company or any of its subsidiaries as of the date hereof (a "Company
Business") within the Restricted Area (as defined below). The "Restricted Area"
shall mean the geographic area that is within 100 miles of a location at which
Marriott or any of its subsidiaries or affiliates is conducting or engaging in a
Company Business during the Restriction Period.
(c) The term "carry on or participate in a business" shall include
engaging in any of the following activities, directly or indirectly, other than
carrying on or engaging in activities expressly permitted under this Agreement:
(i) Carrying on or engaging in a Competing Business as a
principal, or on his own account, or solely or jointly with others as a
director, officer, agent, employee, consultant or partner, or stockholder,
limited partner or other interest holder owning more than five (5) percent
of the stock or equity interests or securities convertible into more than
five (5) percent of the stock of or equity interests in any entity.
(ii) As agent or principal carrying on or engaging in any
activities or negotiations with respect to the acquisition or disposition
of a Competing Business.
(iii) Extending credit for the purpose of establishing or
operating a Competing Business.
(iv) Lending or allowing his name or reputation to be used in a
Competing Business.
(v) Giving advice to any other person or entity carrying on or
engaging in a Competing Business.
(vi) Otherwise allowing his skill, knowledge or experience to be
used in a Competing Business.
(d) The Stockholders agree that during the Restriction Period the
Stockholders will not, without the written consent of Marriott, in each case
directly or indirectly, solicit, raid, entice, induce or offer any person who is
employed by Marriott or any of its subsidiaries or affiliates in a Company
Business to become employed by any person or entity in any business whether or
not it is a Competing Business.
(e) The Stockholders agree that during the Restriction Period the
Stockholders will not, without the written consent of Marriott, in each case
directly or indirectly, solicit business for a Competing Business from any
person or entity that is then a customer of a Company Business or that is being
solicited by a Company Business.
(f) The Stockholders agree that during the Restriction Period the
Stockholders will not, without the written consent of Marriott, in each case
directly or indirectly, provide, or arrange for or assist in the provision of
services by a Competing Business to any person or entity that is then a customer
of a Company Business or that is being solicited by a Company Business.
14
(g) Upon breach of this Section 17 by any Stockholder, Marriott shall
be entitled to injunctive relief, both pendente lite and permanently, against
the breaching Stockholder, as a remedy at law would be inadequate. In addition,
Marriott shall be entitled to such damages as it can show it has sustained,
directly or indirectly, by reason of such a breach, and neither Marriott nor any
of its subsidiaries or affiliates shall be limited in such damages to the
consideration paid to the breaching Stockholder pursuant to the Merger
Agreement. Nothing in this Agreement shall be construed as limiting Marriott's
remedies in any way.
(h) Except as permitted or directed by Marriott or in connection with
his employment by Marriott or one of its subsidiaries or affiliates, each
Stockholder agrees to keep confidential and not to divulge or use any
information, materials, methods or developments of any nature and in any form
that at the time or times concerned is not generally known to those persons
engaged in a Competing Business and that relates to any one or more aspects of a
Company Business which the Stockholder has acquired or become acquainted with
prior to the termination of his employment with the Company or Marriott or any
of its subsidiaries or affiliates, whether developed by the Stockholder or by
others, including, without limitation, internal business policies, processes,
techniques, know-how, development plans, financial matters, customers and
customer lists, vendors and vendor lists, leases and sub-leases or any other
confidential information or secret aspect of any Company Business. Each
Stockholder acknowledges that the above-described knowledge or information
constitutes a unique and valuable asset of the Company and represents a
substantial investment of time and expense by the Company and that any
disclosure or use of such knowledge or information other than for the sole
benefit of the Company or Marriott or any of its subsidiaries or affiliates
would be wrongful and would cause irreparable harm to Marriott and its
subsidiaries and affiliates. The terms of this paragraph shall survive the
Restriction Period.
(i) The validity, interpretation, performance, and enforcement of the
provisions of this Section 17 shall be governed by the laws of the State of
Maryland without reference to the conflict of laws provisions thereof. To the
extent that any provision of this Section 17 shall be determined to be invalid
or unenforceable, the invalid or unenforceable portion of such provision shall
be deleted from this Agreement, and the validity and enforceability of the
remainder of such provision and of this Section 17 shall be unaffected. In
furtherance and not in limitation of the foregoing, it is expressly agreed that,
should the duration of, or geographical extent of, or business activities
covered by, the covenants contained in this Section 17 be determined to be in
excess of that which is valid or enforceable under applicable law, then such
covenants shall be construed to cover only that duration or geographical extent
or those activities that may be validly covered and enforced; provided, however,
that to the full extent that the provisions of any applicable law may be waived
by a Stockholder, they are hereby waived, such that this Section 17 may be
deemed to be valid and enforceable to the greatest possible extent. The
Stockholders acknowledge the uncertainty of the law in this respect and
expressly stipulate that this Section 17 shall be construed in a manner that
renders its provisions valid and enforceable to the maximum extent possible
under applicable law.
15
18. Miscellaneous.
-------------
(a) Certain Definitions. As used in this Agreement, the following
-------------------
capitalized terms shall have the following meanings:
(i) "Beneficially Own" or "Beneficial Ownership" with respect
to any securities shall mean having "beneficial ownership" of such securities
(as determined pursuant to Rule 13d-3 under the Exchange Act), including
pursuant to any agreement, arrangement or understanding, whether or not in
writing. Without duplicative counting of the same securities by the same holder,
securities Beneficially Owned by a Person shall include securities Beneficially
Owned by all other Persons with whom such Person would constitute a "group" as
within the meanings of Section 13(d)(3) of the Exchange Act.
(ii) "Misstatement" means an untrue statement of a material
fact or an omission to state a material fact required to be stated in a
publicly-filed document necessary to make the statements in such a document not
misleading; provided, however, that such term shall not apply to any statement
or omission based on information supplied by an indemnified person to an
indemnifying person for inclusion in the publicly-filed document.
(iii) "Person" shall mean an individual, corporation,
partnership, joint venture, association, trust, unincorporated organization or
other entity.
(iv) "register," "registered," and "registration" refer to a
registration effected by preparing and filing with the SEC a registration
statement in compliance with the Securities Act and the declaration or ordering
by the SEC of effectiveness of such registration statement.
(v) "Registrable Securities" refers to any and all of the
shares of Marriott Stock held by the Stockholders as of the Closing, except that
any such Marriott Stock shall cease to be Registrable Securities when and to the
extent (A) a Form S-3 with respect to the sale of such Marriott Stock has become
effective under the Securities Act and such Marriott Stock has been disposed of
in accordance with such Form S-3; (B) such Marriott Stock has been sold to the
public pursuant to Rule 144 or any successor provision under the Securities Act;
(C) such Marriott Stock shall have been otherwise transferred, new certificates
therefor not bearing a legend restricting further transfer shall have been
delivered by Marriott and subsequent disposition of such Marriott Stock does not
require registration or qualification under the Securities Act or any similar
state law then in force in the opinion of legal counsel for Marriott; or (D)
such Common Stock shall have ceased to be outstanding.
(vi) "subsidiary " or "subsidiaries " of Marriott, Acquisition,
ExecuStay or any other person means any corporation, partnership, limited
liability company, association, trust, unincorporated association or other legal
entity of which the Marriott, Acquisition, ExecuStay or any such other person,
as the case may be, (either alone or through or together with any other
subsidiary) owns, directly or indirectly, 50% or more of the capital stock the
holders of which are generally entitled to vote for the election of the board of
directors or other governing body of such corporation or other legal entity.
16
(b) Entire Agreement. This Agreement, the Other Stockholder
----------------
Agreements and the Merger Agreement constitute the entire agreement between the
parties with respect to the subject matter hereof and supersede all other prior
agreements and understandings, both written and oral, between the parties with
respect to the subject matter hereof.
(c) Certain Events. Each Stockholder agrees that this Agreement and
--------------
the obligations hereunder shall attach to such Stockholder's Shares and shall be
binding upon any person or entity to which legal or beneficial ownership of such
Shares shall pass, whether by operation of law or otherwise, including, without
limitation, such Stockholder's heirs, guardians, administrators or successors.
Notwithstanding any transfer of Shares, the transferor shall remain liable for
the performance of all obligations under this Agreement of the transferor.
(d) Assignment. This Agreement shall not be assigned by operation of
----------
law or otherwise without the prior written consent of the other party, provided
that Marriott may assign, in its sole discretion, its rights and obligations
hereunder to any direct or indirect wholly-owned subsidiary of Marriott, but no
such assignment shall relieve Marriott of its obligations hereunder if such
assignee does not perform such obligations.
(e) Amendments, Waivers, Etc. This Agreement may not be amended,
------------------------
changed, supplemented, waived or otherwise modified or terminated, with respect
to any one or more Stockholders, except upon the execution and delivery of a
written agreement executed by the relevant parties hereto; provided that
--------
Schedule A hereto may be supplemented by Marriott by adding the name and other
relevant information concerning any Stockholder of ExecuStay who agrees to be
bound by the terms of this Agreement (by executing a counterpart signature page
hereof) without the agreement of any other party hereto, and thereafter such
added stockholder shall be treated as a "Stockholder" for all purposes of this
Agreement.
(f) Notices. All notices, requests, claims, demands and other
-------
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram, telex
or telecopy, or by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any courier service, such as Federal Express, providing
proof of delivery. All communications hereunder shall be addressed to the
respective parties at the following addresses:
If to any Stockholder: At the addresses set forth on Schedule A
hereto.
If to Marriott or Acquisition: MARRIOTT INTERNATIONAL, INC.
00000 Xxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Telecopier: (000) 000-0000
Attention: General Counsel, Dept. 52/923
with a copy to: Xxxxxx, Xxxx & Xxxxxxxx LLP
17
0000 Xxxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxx, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(g) Severability. Whenever possible, each provision or portion of any
------------
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law, but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
(h) Specific Performance. Each of the parties hereto recognizes and
--------------------
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain damages for which it would
not have an adequate remedy at law for money damages, and therefore each of the
parties hereto agrees that in the event of any such breach the aggrieved party
shall be entitled to the remedy of specific performance of such covenants and
agreements and injunctive and other equitable relief in addition to any other
remedy to which it may be entitled, at law or in equity.
(i) Remedies Cumulative. All rights, powers and remedies provided
-------------------
under this Agreement or otherwise available in respect hereof at law or in
equity shall be cumulative and not alternative, and the exercise of any thereof
by any party shall not preclude the simultaneous or later exercise of any other
such right, power or remedy by such party.
(j) No Waiver. The failure of any party hereto to exercise any right,
---------
power or remedy provided under this Agreement or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by any other party
hereto with its obligations hereunder, and any custom or practice of the parties
at variance with the terms hereof, shall not constitute a waiver by such party
of its right to exercise any such or other right, power or remedy or to demand
such compliance.
(k) No Third Party Beneficiaries. This Agreement is not intended to
----------------------------
be for the benefit of, and shall not be enforceable by, any person or entity who
or which is not a party hereto.
(l) Governing Law. Except as to Section 17, which shall be governed
-------------
by the laws of the State of Maryland, without giving effect to the principles of
conflicts of laws thereof, this Agreement shall be governed and construed in
accordance with the laws of the State of New York, without giving effect to the
principles of conflicts of laws thereof.
18
(m) Descriptive Headings. The descriptive headings used herein are
--------------------
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
(n) Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be deemed to be an original, but all of which, taken
together, shall constitute one and the same Agreement.
19
IN WITNESS WHEREOF, Marriott and Acquisition have caused this Agreement to
be duly executed, and each Stockholder has duly executed this Agreement, as of
the day and year first above written.
MARRIOTT INTERNATIONAL, INC.
By: /s/ Xxxxxx Xxxx
--------------------------------
Name: Xxxxxx Xxxx
Title: Executive Vice President and
General Counsel
MI SUBSIDIARY I, INC.
By: /s/ Xxxxxx Xxxx
--------------------------------
Name: Xxxxxx Xxxx
Title: Vice President
/s/ Xxxx X. Xxxxxxxx
------------------------
Xxxx X. Xxxxxxxx
/s/ Xxxx X. Xxxxxx
------------------------
Xxxx X. Xxxxxx
/s/ Xxxxxx X. Xxxxx
------------------------
Xxxxxx X. Xxxxx
20
SCHEDULE A
----------
------------------------------------------------------------------------------------------------
NAME OF STOCKHOLDER ADDRESS NUMBER OF SHARES OWNED
------------------------------------------------------------------------------------------------
Xxxx X. Xxxxxxxx c/x XxxxxXxxx Corporation 1,187,500
0000 Xxxxxxxxxxxx Xxxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000
------------------------------------------------------------------------------------------------
Xxxx X. Xxxxxx c/x XxxxxXxxx Corporation 1,187,500
0000 Xxxxxxxxxxxx Xxxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000
------------------------------------------------------------------------------------------------
Xxxxxx X. Xxxxx c/x XxxxxXxxx Corporation 1,187,500
0000 Xxxxxxxxxxxx Xxxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000
------------------------------------------------------------------------------------------------
21
Exhibit __
Form of Employment Agreement
Employment Agreement
This Employment Agreement (the "Agreement") is entered into this ____
day of ___________, 1999 by and among Marriott International, Inc., a Delaware
corporation ("Marriott"), MI Subsidiary I, Inc. (to be renamed ExecuStay, Inc.),
a Delaware corporation and a direct, wholly-owned subsidiary of Marriott
("XxxxxXxxx") and _____________, a resident of the state of Maryland
("Employee").
WHEREAS, pursuant to the terms and conditions of the Merger Agreement
Dated as of _____________ __, 1999 Among Marriott, XxxxxXxxx Corporation, a
Maryland Corporation ("Old ExecuStay") and ExecuStay (the "Merger Agreement"),
Old ExecuStay agreed to merge with and into ExecuStay (the "Merger"); and
WHEREAS, pursuant to the terms and conditions of the Stockholders
Agreement dated as of _____________ __, 1999 by and among Marriott, XxxxxXxxx
and each of the other parties signatory thereto (the "Stockholders Agreement"),
including Employee, the parties agreed to enter into this Agreement; and
WHEREAS, contingent upon the consummation of the Merger, ExecuStay
wishes to employ Employee on the terms and conditions set forth in this
Agreement, and Employee wishes to be employed by ExecuStay on such terms and
conditions;
NOW, THEREFORE, in consideration of the mutual promises of the parties
and for other good and valuable consideration the receipt and sufficiency of
which is acknowledged, Marriott, XxxxxXxxx and Employee agree as follows:
1. Employment. Contingent upon consummation of the Merger, ExecuStay
----------
agrees to employ Employee, and Employee accepts such employment for the period
and upon the terms and conditions set forth in this Agreement. Marriott and
ExecuStay will recognize continuous service of Employee with ExecuStay prior to
the Merger as prior service with Marriott and its affiliates.
2. Term. Unless terminated earlier in accordance with the terms of
----
this Agreement, the term of Employee's employment shall be for a period of three
(3) years commencing on the date of the Closing (as defined in the Merger
Agreement) and ending on the third anniversary of the Closing (the "Term"),
subject to extension by mutual agreement of the parties.
3. Position and Duties. Employee will serve as [Title] of ExecuStay
-------------------
and perform such duties consistent with Employee's position and such other
reasonable duties as the Board of Directors of ExecuStay shall assign Employee
from time to time. Employee agrees to devote Employee's full time, attention and
efforts to the business and affairs of ExecuStay during the
Term. Employee agrees to comply with all practices, policies, standards, rules
and regulations of Marriott and ExecuStay that are established from time to
time. Employee shall not at any time during the Term render or perform any
services for compensation to any other person or entity other than ExecuStay and
its related entities, unless given express permission to do so by ExecuStay.
4. Location. The principal place of employment and the location of
--------
Employee's principal office and normal place of work shall be the
Baltimore-Washington, D.C. metropolitan area; provided, however, that Employee
shall perform such temporary travel away from that area as is reasonably
required for the proper rendition of services under this Agreement, subject to
reimbursement for reasonable travel expenses in accordance with Marriott
policies and procedures.
5. Compensation.
------------
(a) Base Salary. During the Term, ExecuStay shall pay Employee an
-----------
annual base salary ("Base Salary") of $175,000, payable in biweekly
installments in accordance with Marriott's payroll practices for
managers less applicable withholding amounts.
(b) Annual Bonus. During the Term, Employee will participate
------------
in the Marriott bonus program during each fiscal year of Marriott. The
annual bonus ("Annual Bonus") will be awarded in cash in accordance
with Marriott policies; provided that the minimum bonus will be 25
percent of Base Salary earned during the period and the maximum bonus
will be 40 percent of Base Salary earned during the period, in each
case less applicable withholding amounts. If Employee's employment
terminates at the end of the Term without renewal or replacement of
this Agreement or an offer to continue employment in the same position
with ExecuStay, a pro rata Annual Bonus for the portion of the fiscal
year in which termination occurs will be paid to Employee.
(c) Deferred Bonus Stock. During the Term, Employee will
--------------------
participate in the Marriott deferred bonus stock program under the
Marriott 1998 Comprehensive Stock and Cash Incentive Plan (the "Stock
Plan"), pursuant to which Employee will receive a deferred bonus stock
award for each fiscal year having a value of 20 percent of Employee's
Annual Bonus for that fiscal year. Employee must be employed on the
last day of the fiscal year in order to participate in the deferred
bonus stock program for that fiscal year. The deferred bonus stock
award will be subject to the terms of the Stock Plan, including those
related to vesting.
(d) Stock Options. During the Term, Employee will participate
-------------
in the Marriott stock option program under the Stock Plan, pursuant to
which Employee will be eligible to receive an annual award of options
to purchase Marriott Common Stock in
2
amounts determined by the Compensation Policy Committee of the Marriott
Board of Directors. The stock options will be subject to the terms of
the Stock Plan and the award agreement.
(e) Supplemental Stock Option. A supplemental option to acquire
-------------------------
Marriott Common Stock under the Stock Plan will be issued to Employee
on the first business day following the Merger on which Marriott Common
Stock is publicly traded on the New York Stock Exchange, substantially
in the form attached hereto as Exhibit A (the "Supplemental Option").
The exercise price of the Supplemental Option will be the average of
the high and low trading prices of Marriott Common Stock on the New
York Stock Exchange on the date on which the Supplemental Option is
granted.
(f) Supplemental Bonus. In addition to the Annual Bonus described
------------------
above, for fiscal years 1999, 2000 and 2001, Employee will be entitled
to a supplemental bonus ("Supplemental Bonus") of $150,000 per year if
110 percent of the Target Rate specified in the Supplemental Option for
those fiscal years is reached or exceeded; provided that the EBITDA of
ExecuStay grows at a cumulative annual rate (but not compounded) of at
least 35 percent beginning with the 1999 fiscal year. A percentage of
the Supplemental Bonus will be earned if at least 105 percent of the
Target Rate is reached according to the following schedule:
At least this percentage Percentage of Supplemental
of the Target Rate is reached Bonus Earned
------------------------------ ------------
105 10
106 20
107 30
108 50
109 70
110 100
The determination of EBITDA, any adjustments thereto and the
achievement of Target Rates shall be determined in the same manner as
for the Supplemental Option. This Supplemental Bonus, if any, shall be
excluded from the bonus amount taken into account for purposes of
calculating the deferred bonus stock award described in Section 5(c)
above.
(g) Other Benefits. Employee shall be entitled to participate in
--------------
such other benefits, including welfare benefit plans, executive
deferred compensation plans and fringe benefit policies as are
generally applicable to managers employed by ExecuStay. In the ordinary
course of business, benefit programs evolve as business needs and laws
3
change. To the extent it becomes necessary and desirable to change any
of the plans in which ExecuStay managers participate, such changes will
apply to Employee as they do to other ExecuStay managers.
6. Termination of Employment.
-------------------------
(a) Death and Disability. This Agreement and Employee's
--------------------
employment shall terminate upon the date of Employee's death and upon
the date Employee is determined to be suffering from a Permanent
Disability as that term is defined in the Marriott International, Inc.
Employees' Profit Sharing, Retirement and Savings Plan. In either such
event ExecuStay shall be obligated to pay Employee, if living, or the
Employee's estate, accrued and unpaid Base Salary through the date of
termination and a pro rata maximum Annual Bonus and pro rata
Supplemental Bonus if the Target Rate was met as of the preceding
quarterly interim period (each such bonus will be pro rated based on
the number of days in the fiscal year up to the date of termination
divided by 360) and shall have no further obligations under this
Agreement; provided that the terms of any award or employee benefit
plan in which Employee participates shall govern the rights of
Employee, Employee's estate or Employee's beneficiaries with respect to
any such award or plan, including with respect to the Supplemental
Option.
(b) Termination For Cause. This Agreement and Employee's employment
---------------------
shall terminate upon ExecuStay terminating Employee's employment "for
cause" during the Term. For purposes of this Agreement, "for cause"
shall mean (i) any fraud, misappropriation or embezzlement by Employee;
(ii) any conviction of or nolo contendere plea to a felony or gross
misdemeanor by Employee; (iii) any neglect by Employee to perform the
duties assigned to Employee hereunder, provided that Employee shall
first have received a written notice from ExecuStay which sets forth
the manner in which Employee has neglected Employee's duties and
Employee shall have a period of thirty days to cure unless a cure
cannot be reasonably effected within such period; (iv) any material
breach by Employee of Employee's obligations under this Agreement; and
(v) any public conduct of Employee that has or can reasonably be
expected to have a detrimental effect on ExecuStay. In the event
Employee is terminated for cause, ExecuStay shall be obligated to pay
Employee accrued and unpaid Base Salary through the date of termination
and shall have no further obligation to Employee.
(c) Termination Other Than For Cause. This Agreement and Employee's
employment shall terminate upon ExecuStay terminating Employee's
employment other than "for cause" as defined in Section 6(b) above.
ExecuStay reserves the right to terminate Employee's employment for any
reason during or after the Term. In the event that ExecuStay terminates
Employee's employment other than "for cause", ExecuStay shall pay
Employee the Base Salary and the maximum Annual Bonus through the
4
remainder of the Term and a pro rata Supplemental Bonus if the Target
Rate was met as of the preceding quarterly interim period (such bonus
will be pro rated based on the number of days in the fiscal year up to
the date of termination divided by 360) and shall have no further
obligations under this Agreement; provided that the terms of any award
or employee benefit plan in which Employee participates shall govern
the rights of Employee with respect to such award or plan, including
with respect to the Supplemental Option; and provided further that
Employee shall not be entitled to any benefits under the Marriott
Severance Plan or any other plan, policy or arrangement providing for
severance or similar pay or benefits following termination of
employment. Following termination other than "for cause," Employee
shall not be entitled to any further awards of deferred bonus stock or
stock options.
(d) Resignation From Employment. This Agreement and Employee's
---------------------------
employment shall terminate if Employee voluntarily resigns from
employment with ExecuStay. In such event, ExecuStay shall be obligated
to pay Employee accrued and unpaid Base Salary through the date of
termination and shall have no further obligations under this Agreement;
provided that the terms of any award or employee benefit plan in which
Employee participates shall govern the rights of Employee, with respect
to any such award or plan, including with respect to the Supplemental
Option.
(e) Return of Property. Upon termination of Employee's employment
------------------
for any reason, Employee shall promptly deliver to ExecuStay all
records, manuals, books, blank forms, documents, letters, memoranda,
notes, notebooks, reports, data or copies thereof, and all other
tangible property of ExecuStay or Marriott, that are in Employee's
possession or under Employee's control.
7. Employment Covenants and Agreements.
-----------------------------------
(a) Non-Competition.
---------------
(1) While Employee is employed by ExecuStay or another
Marriott affiliate and for a period of three (3) years following
termination of employment (the "Restriction Period"), Employee will
not, without the written consent of ExecuStay, in each instance
directly or indirectly, carry on or participate in a business that
is the same as or is similar to or in competition with a business (a
"Competing Business") conducted or engaged in by ExecuStay or any of
its subsidiaries (a "Company Business") within the Restricted Area
(as defined below). The "Restricted Area" shall mean the geographic
area that is within 100 miles of a location at which Marriott or any
of its subsidiaries or affiliates is conducting or engaging in a
Company Business during the Restriction Period.
5
(2) The term "carry on or participate in a business"
shall include engaging in any of the following activities, directly
or indirectly, other than carrying on or engaging in activities
expressly permitted under this Agreement:
(i) Carrying on or engaging in a Competing Business as
a principal, or on his own account, or solely or jointly with
others as a director, officer, agent, employee, consultant or
partner, or stockholder, limited partner or other interest
holder owning more than five (5) percent of the stock or
equity interests or securities convertible into more than five
(5) percent of the stock of or equity interests in any entity.
(ii) As agent or principal carrying on or engaging in
any activities or negotiations with respect to the acquisition
or disposition of a Competing Business.
(iii) Extending credit for the purpose of establishing or
operating a Competing Business.
(iv) Lending or allowing his name or reputation to be
used in a Competing Business.
(v) Giving advice to any other person or entity
carrying on or engaging in a Competing Business.
(vi) Otherwise allowing his skill, knowledge or
experience to be used in a Competing Business.
(3) During the Restriction Period Employee will not, without
the written consent of ExecuStay, in each case directly or
indirectly, solicit, raid, entice, induce or offer any person who
is employed by Marriott or any of its subsidiaries or affiliates in
a Company Business to become employed by any person or entity in
any business whether or not it is a Competing Business.
(4) During the Restriction Period Employee will not, without
the written consent of ExecuStay, in each case directly or
indirectly, solicit business for a Competing Business from any
person or entity that is then a customer of a Company Business or
that is being solicited by a Company Business.
(5) During the Restriction Period Employee will not, without
the written consent of ExecuStay, in each case directly or
indirectly, provide, or arrange for or assist in the provision of
services by a Competing Business to any
6
person or entity that is then a customer of a Company Business or
that is being solicited by a Company Business.
(6) Upon breach of this Section 7(a) by Employee,
ExecuStay shall be entitled to injunctive relief, both pendente
lite and permanently, against Employee, as a remedy at law would be
inadequate. In addition, ExecuStay shall be entitled to such
damages as it can show it has sustained, directly or indirectly, by
reason of such a breach, and neither ExecuStay nor any of its
subsidiaries or affiliates shall be limited in such damages to the
consideration paid to Employee pursuant to this Agreement. Nothing
in this Agreement shall be construed as limiting XxxxxXxxx'x
remedies in any way.
(b) Confidential Information. Except as permitted or directed
------------------------
by ExecuStay or in connection with Employee's employment by ExecuStay
or one of its subsidiaries or affiliates, Employee agrees to keep
confidential and not to divulge or use any information, materials,
methods or developments of any nature and in any form that at the time
or times concerned is not generally known to those persons engaged in a
Competing Business and that relates to any one or more aspects of a
Company Business which Employee has acquired or become acquainted with
prior to the termination of employment with ExecuStay, Old ExecuStay or
any of their subsidiaries or affiliates, whether developed by Employee
or by others, including, without limitation, internal business
policies, processes, techniques, know-how, development plans, financial
matters, customers and customer lists, vendors and vendor lists, leases
and sub-leases or any other confidential information or secret aspect
of any Company Business. Employee acknowledges that the above-described
knowledge or information constitutes a unique and valuable asset of
ExecuStay and represents a substantial investment of time and expense
by ExecuStay and that any disclosure or use of such knowledge or
information other than for the sole benefit of ExecuStay or Marriott or
any of its subsidiaries or affiliates would be wrongful and would cause
irreparable harm to ExecuStay and its subsidiaries and affiliates. The
terms of this paragraph shall survive the Restriction Period.
(c) Employee's Knowledge. Employee agrees to make available to
--------------------
ExecuStay all knowledge possessed by Employee relating to any methods,
developments, improvements, processes or other knowledge that concerns
Company Business in any way, whether acquired by Employee before or
during employment with ExecuStay.
8. Governing Law. The validity, interpretation, performance, and
-------------
enforcement of the provisions of this Agreement shall be governed by the laws of
the State of Maryland without reference to the conflict of laws principles
thereof.
7
9. Severability. To the extent that any provision of this Agreement
------------
shall be determined to be invalid or unenforceable, the invalid or unenforceable
portion of such provision shall be deleted from this Agreement, and the validity
and enforceability of the remainder of such provision and of this Agreement
shall be unaffected. In furtherance and not in limitation of the foregoing, it
is expressly agreed that, should the duration of, or geographical extent of, or
business activities covered by, the covenants contained in Section 7 be
determined to be in excess of that which is valid or enforceable under
applicable law, then such covenants shall be construed to cover only that
duration or geographical extent or those activities that may be validly covered
and enforced; provided, however, that to the full extent that the provisions of
any applicable law may be waived by Employee, they are hereby waived, such that
Section 7 may be deemed to be valid and enforceable to the greatest possible
extent. Employee acknowledges the uncertainty of the law in this respect and
expressly stipulates that Section 7 shall be construed in a manner that renders
its provisions valid and enforceable to the maximum extent possible under
applicable law.
10. Assignment. This Agreement shall be binding upon and inure to the
----------
benefit of ExecuStay and its successors and assigns. Employee may not assign
this Agreement or any of Employee's rights hereunder, including the right to the
payment of money or other property. Any purported or attempted assignment or
transfer by the Employee of this Agreement or any of the Employee's duties,
responsibilities or obligations hereunder shall be void.
11. Notices. All notices, requests, demands and other communications
-------
under this Agreement shall be in writing, and shall be deemed to have been duly
given on the date of service if personally served on the party to whom notice is
to be given, or on the second day after mailing if mailed to the party to whom
notice is to be given by first class mail, postage prepaid, and properly
addressed as follows:
If to Employee:
If to ExecuStay or Marriott:
or to such other address as either party shall have furnished to the other in
writing in accordance herewith.
12. Withholding. ExecuStay may withhold from any amounts payable under
-----------
this Agreement such Federal, state and local taxes as shall be required to be
withheld pursuant to any
8
applicable law or regulation and any amounts required to be withheld pursuant to
court order or Employee's election.
13. Entire Agreement and Amendments. This Agreement constitutes the
-------------------------------
entire agreement between Marriott, XxxxxXxxx and Employee on the subject of
Employee's employment with ExecuStay, supersedes any and all prior agreements
among the parties with respect to the subject matter hereof, shall be the only
agreement among the parties with respect to the subject matter hereof, and may
be modified, amended or waived with respect to any party only by written
instrument executed by the parties.
14. Waiver. A party's failure to insist upon strict compliance with any
------
provision of this Agreement or the failure to assert any right a party might
have under this Agreement, shall not be deemed to be a waiver of such provision
or right and no waiver of any right or remedy in respect of any occurrence or
event on one or more occasions shall be deemed a waiver of such right or remedy
in respect of any other occurrence or event, whether similar or dissimilar, on
any other occasion.
15. Captions and Headings. The captions and paragraph headings used in
---------------------
this Agreement are for convenience of reference only, and shall not affect the
construction or interpretation of this Agreement.
9
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be
executed by their signatures below.
MARRIOTT INTERNATIONAL, INC.
By: Date:
----------------------------- -----------
Name:
Title:
MI SUBSIDIARY I, INC.
By: Date:
------------------------------ -----------
Name:
Title:
EMPLOYEE
Date:
---------------------------------- -----------
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