Exibit D
STOCKHOLDER AGREEMENT
THIS STOCKHOLDER 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 ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
("▇▇▇▇▇▇▇▇").
WHEREAS, concurrently herewith, Marriott, Acquisition and ▇▇▇▇▇▇▇▇▇
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, ▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇'▇ name on
Schedule A hereto;
WHEREAS, the Merger Agreement contemplates that, in anticipation of
consummation of the Merger, one share of Class B Preferred Stock, par value
$0.01 per share, of ExecuStay ("Class B Shares") will be issued to ▇▇▇▇▇▇▇▇ in
exchange (the "Exchange") for each ExecuStay Share held by ▇▇▇▇▇▇▇▇ (as used
herein, the term "Shares" refers to the ExecuStay Shares prior to the Exchange
and the Class B Shares after the Exchange);
WHEREAS, Marriott has agreed that ▇▇▇▇▇▇▇▇ shall receive shares of Marriott
common stock, par value $0.01 per share ("Marriott Stock"), in the Merger, in
respect of his Shares, and ▇▇▇▇▇▇▇▇ desires to receive such Marriott Stock; and
WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, Marriott has required that ▇▇▇▇▇▇▇▇ agrees, and ▇▇▇▇▇▇▇▇ has 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) ▇▇▇▇▇▇▇▇ hereby agrees that during the period commencing on 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, ▇▇▇▇▇▇▇▇ shall vote (or cause to be voted) the Shares held of record or
Beneficially Owned (as defined herein) by ▇▇▇▇▇▇▇▇, 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 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 ▇▇▇▇▇▇▇▇▇'▇ charter or By-Laws;
(3) any other material change in ▇▇▇▇▇▇▇▇▇'▇ 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. ▇▇▇▇▇▇▇▇ shall not 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, ▇▇▇▇▇▇▇▇ hereby grants to, and appoints, Acquisition and ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇, 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, ▇▇▇▇▇▇▇▇'▇ 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 at the Tender Offer Purchase Time. ▇▇▇▇▇▇▇▇
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 ▇▇▇▇▇▇▇▇ with respect to the Shares. ▇▇▇▇▇▇▇▇ understands
and acknowledges that Acquisition is entering into the Merger Agreement in
reliance on his execution and delivery of this irrevocable proxy. ▇▇▇▇▇▇▇▇
hereby affirms that this irrevocable proxy is given in connection with the
execution of this Agreement and the Merger Agreement, and further
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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.
▇▇▇▇▇▇▇▇ 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. ▇▇▇▇▇▇▇▇ hereby
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represents and warrants to Marriott and Acquisition as of the date hereof and as
of the Closing as follows:
(a) Ownership of Shares. ▇▇▇▇▇▇▇▇ is the record and Beneficial Owner
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of the number of Shares set forth opposite ▇▇▇▇▇▇▇▇'▇ name on Schedule A hereto.
On the date hereof, the Shares set forth opposite ▇▇▇▇▇▇▇▇'▇ name on Schedule A
hereto constitute all of the Shares owned of record or Beneficially Owned by
▇▇▇▇▇▇▇▇. ▇▇▇▇▇▇▇▇ 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. ▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇'▇ name on Schedule A hereto, with no limitations,
qualifications or restrictions on such rights.
(b) Power; Binding Agreement. ▇▇▇▇▇▇▇▇ has the legal capacity, power
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and authority to enter into and perform all of ▇▇▇▇▇▇▇▇'▇ obligations under this
Agreement. The execution, delivery and performance of this Agreement by
▇▇▇▇▇▇▇▇ will not violate any other agreement to which ▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇ and constitutes a valid and binding agreement of ▇▇▇▇▇▇▇▇,
enforceable against ▇▇▇▇▇▇▇▇ 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 principle 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 ▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇ of the
transactions contemplated hereby. If ▇▇▇▇▇▇▇▇ is married and ▇▇▇▇▇▇▇▇'▇ Shares
constitute community property, this Agreement has been duly authorized, executed
and delivered by, and constitute a valid and binding agreement of, ▇▇▇▇▇▇▇▇'▇
spouse, enforceable against such person 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 principle are applied in a proceeding at
law or in equity).
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(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 ▇▇▇▇▇▇▇▇ and the consummation
by ▇▇▇▇▇▇▇▇ of the transactions contemplated hereby and (ii) none of the
execution or delivery of this Agreement by ▇▇▇▇▇▇▇▇, the consummation by
▇▇▇▇▇▇▇▇ of the transactions contemplated hereby or compliance by ▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇ is a party or by which ▇▇▇▇▇▇▇▇ or, to the best of
▇▇▇▇▇▇▇▇'▇ knowledge, any of ▇▇▇▇▇▇▇▇'▇ properties or assets may be bound, or
(B) violate any order, writ, injunction, decree, judgment, order, statute, rule
or regulation applicable to ▇▇▇▇▇▇▇▇ or any of ▇▇▇▇▇▇▇▇'▇ properties or assets.
This Agreement hereby supersedes all prior agreements to which ▇▇▇▇▇▇▇▇ is a
party with respect to ▇▇▇▇▇▇▇▇'▇ Shares, including without limitation any
registration rights agreement with respect to any of ▇▇▇▇▇▇▇▇'▇ Shares.
(d) No Finder's Fees. No broker, investment banker, financial adviser
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or 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
▇▇▇▇▇▇▇▇.
(e) Other Potential Acquirors. ▇▇▇▇▇▇▇▇ (i) shall immediately cease
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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
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 ▇▇▇▇▇▇▇▇'▇ agents to do so, and ▇▇▇▇▇▇▇▇ 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 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. ▇▇▇▇▇▇▇▇
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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
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sale, sale, transfer, tender, pledge, encumbrance, assignment or other
disposition of, any or all of ▇▇▇▇▇▇▇▇'▇ 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 ▇▇▇▇▇▇▇▇ contained
herein untrue or incorrect or have the effect of preventing or disabling
▇▇▇▇▇▇▇▇ from performing ▇▇▇▇▇▇▇▇'▇ obligations under this Agreement.
(g) Investment Intention.
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(i) ▇▇▇▇▇▇▇▇ confirms that Marriott and Acquisition have made
available to ▇▇▇▇▇▇▇▇, 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 ▇▇▇▇▇▇▇▇ has requested, and
such information has been received.
(ii) The shares of Marriott Stock to be issued to ▇▇▇▇▇▇▇▇ 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) ▇▇▇▇▇▇▇▇ 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) ▇▇▇▇▇▇▇▇ is an "accredited investor" within the meaning of
Section 2(a)(15) of the Securities Act.
(h) Reliance by Marriott and Acquisition. ▇▇▇▇▇▇▇▇ understands and
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acknowledges that Marriott and Acquisition are relying upon the foregoing
representations by ▇▇▇▇▇▇▇▇, and on ▇▇▇▇▇▇▇▇'▇ 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"). ▇▇▇▇▇▇▇▇ agrees that the Marriott Stock will not be
transferred unless in the opinion of Marriott's legal counsel such transfer will
not violate the registration requirements of the Securities Act or Blue Sky
Laws.
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, ▇▇▇▇▇▇▇▇
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. ▇▇▇▇▇▇▇▇
further agrees not to take any action, or omit to take any 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.
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4. Stop Transfer; Form of Legend.
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(a) ▇▇▇▇▇▇▇▇ agrees with, and covenants to, Marriott that ▇▇▇▇▇▇▇▇ shall
not request that ExecuStay register the transfer (book-entry or otherwise) of
any certificate or uncertificated interest representing any of ▇▇▇▇▇▇▇▇'▇
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 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 ▇▇▇▇▇▇▇▇'▇ Shares shall contain
the following legend:
"The securities represented by this certificate are subject to certain
restrictions on transfer and other terms of a Stockholder Agreement,
dated as of January 6, 1999, among Marriott International, Inc., MI
Subsidiary I, Inc. and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, 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 ▇▇▇▇▇▇▇▇ on a share-for-share basis, Class B Shares in exchange for
Common Stock held of record or Beneficially Owned by them. In the Merger,
▇▇▇▇▇▇▇▇ shall receive, in respect of each Class B Share held of record or
Beneficially Owned by ▇▇▇▇▇▇▇▇, shares of Marriott Stock in an amount determined
by the "Class B 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 ▇▇▇▇▇▇▇▇ of shares of Marriott Stock held by him 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 ▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇, if he is
holding Registrable
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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 ▇▇▇▇▇▇▇▇.
(e) ▇▇▇▇▇▇▇▇ may not use the Form S-3 unless he provides Marriott with
the information required by Section 7 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 ▇▇▇▇▇▇▇▇ if he 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.
(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
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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 ▇▇▇▇▇▇▇▇, if he is
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 ▇▇▇▇▇▇▇▇, if he is holding Registrable
Securities, without charge, as many copies of each prospectus and any amendment
thereof or supplement thereto as ▇▇▇▇▇▇▇▇ may reasonably request.
(e) Marriott shall cooperate with ▇▇▇▇▇▇▇▇ as a selling stockholder 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. Condition Precedent. It shall be a condition precedent to the
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obligations of Marriott to take any action pursuant hereto that ▇▇▇▇▇▇▇▇ shall
furnish to Marriott such information regarding him, the Registrable Securities
held by him 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.
8. 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 ▇▇▇▇▇▇▇▇, and (b) any
underwriting or brokers' discounts or similar transaction fees, which shall be
borne by ▇▇▇▇▇▇▇▇.
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9. Indemnification.
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(a) Marriott agrees to indemnify and hold harmless ▇▇▇▇▇▇▇▇ (as the
"Holder Indemnified Party"), against any losses, claims, damages or liabilities,
joint or several, to which the 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 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 9(a), the indemnity agreement contained in
this Section 9(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 such Holder Indemnified Party.
(b) ▇▇▇▇▇▇▇▇ 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. ▇▇▇▇▇▇▇▇ 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 9(b), the indemnity agreement contained in this
Section 9(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 ▇▇▇▇▇▇▇▇ (which consent shall not be unreasonably withheld).
(c) If the indemnification provided for in this Section 9 is
unavailable to an indemnified party under Section 9(a) or Section 9(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 9(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
9
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 ▇▇▇▇▇▇▇▇ agree that it would not be just and
equitable if contribution pursuant to this Section 9(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 9(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 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.
10. 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.
11. Employment Agreement. Following the date hereof, but prior to the
--------------------
commencement of the Offer, ▇▇▇▇▇▇▇▇ 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.
12. The Options. ▇▇▇▇▇▇▇▇ hereby agrees as follows:
-----------
(a) Grant of Options. Subject to the terms of this Section 12, ▇▇▇▇▇▇▇▇
----------------
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 ▇▇▇▇▇▇▇▇ at a purchase price per Share equal to $14.
(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
10
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 ▇▇▇▇▇▇▇▇;
(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 ▇▇▇▇▇▇▇▇;
(iii) (A) the failure of ▇▇▇▇▇▇▇▇▇'▇ 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 ▇▇▇▇▇▇▇▇▇'▇
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 ▇▇▇▇▇▇▇▇▇'▇ Board of
Directors of, or the public recommendation by ▇▇▇▇▇▇▇▇▇'▇ 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 ▇▇▇▇▇▇▇▇ of its desire
to exercise an Option pursuant to Section 12 hereof; or
(v) any breach by ▇▇▇▇▇▇▇▇ of this Agreement.
11
(c) Notice of Exercise. To exercise an Option, Acquisition shall,
------------------
prior to the Expiration Date, give written notice to ▇▇▇▇▇▇▇▇ 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 12(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
(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 ▇▇▇▇▇▇▇▇, 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) $14 and (y) the number of Shares owned by ▇▇▇▇▇▇▇▇; and (ii)
▇▇▇▇▇▇▇▇ shall deliver or shall cause to be delivered to Acquisition a
certificate or certificates evidencing ▇▇▇▇▇▇▇▇'▇ Shares, and ▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇ 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. ▇▇▇▇▇▇▇▇'▇ Capacity. To the extent that ▇▇▇▇▇▇▇▇ is or becomes during
-------------------
the term hereof a director or executive officer of ExecuStay makes any agreement
or understanding herein in his capacity as such director or executive officer.
▇▇▇▇▇▇▇▇ signs solely in his capacity as the record and/or beneficial owner of
his Shares.
16. Waiver of Appraisal and Dissenter's Rights. ▇▇▇▇▇▇▇▇ hereby
------------------------------------------
irrevocably waives any rights of appraisal or rights to dissent from the Merger
that he may have.
12
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, ▇▇▇▇▇▇▇▇ hereby agrees 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 third anniversary of the last day of his employment with the
Company (the "Restriction Period").
(b) ▇▇▇▇▇▇▇▇ agrees that during the Restriction Period he will not,
without the written consent of Marriott, 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 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.
13
(d) ▇▇▇▇▇▇▇▇ agrees that during the Restriction Period he 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) ▇▇▇▇▇▇▇▇ agrees that during the Restriction Period he 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) ▇▇▇▇▇▇▇▇ agrees that during the Restriction Period he 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.
(g) Upon breach of this Section 17 by ▇▇▇▇▇▇▇▇, Marriott shall be entitled
to injunctive relief, both pendente lite and permanently, against ▇▇▇▇▇▇▇▇, 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 ▇▇▇▇▇▇▇▇ 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, ▇▇▇▇▇▇▇▇ 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
▇▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇▇ 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. ▇▇▇▇▇▇▇▇ 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
14
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 ▇▇▇▇▇▇▇▇, they are hereby waived, such that
this Section 17 may be deemed to be valid and enforceable to the greatest
possible extent. ▇▇▇▇▇▇▇▇ acknowledges the uncertainty of the law in this
respect and expressly stipulates 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.
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 ▇▇▇▇▇▇▇▇ to Marriott or Acquisition
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 ▇▇▇▇▇▇▇▇ as of the Closing Time, 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)
15
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.
(b) Entire Agreement. This Agreement 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. ▇▇▇▇▇▇▇▇ agrees that this Agreement, the Other
--------------
Stockholders Agreements and the obligations hereunder shall attach to ▇▇▇▇▇▇▇▇'▇
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, ▇▇▇▇▇▇▇▇'▇ 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 ▇▇▇▇▇▇▇▇, except upon the execution and delivery of a written agreement
executed by the relevant parties hereto.
(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 ▇▇▇▇▇▇▇▇: At the address set forth on Schedule A hereto.
16
If to Marriott or Acquisition: MARRIOTT INTERNATIONAL, INC.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel, Dept. 52/923
with a copy to: ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇, 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.
17
(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 and laws thereof.
(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.
18
(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.
IN WITNESS WHEREOF, Marriott and Acquisition have caused this Agreement to
be duly executed, and ▇▇▇▇▇▇▇▇ has duly executed this Agreement, as of the day
and year first above written.
MARRIOTT INTERNATIONAL, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇
Title: Executive Vice President and
General Counsel
MI SUBSIDIARY I, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇
Title: Vice President
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
19
SCHEDULE A
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NAME OF STOCKHOLDER ADDRESS NUMBER OF SHARES OWNED
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ c/▇ ▇▇▇▇▇▇▇▇▇ Corporation 157,500
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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20
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
("▇▇▇▇▇▇▇▇▇") and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, a resident of the state of California
("Employee").
WHEREAS, pursuant to the terms and conditions of the Merger Agreement Dated
as of _____________ __, 1999 Among Marriott, ▇▇▇▇▇▇▇▇▇ 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, ▇▇▇▇▇▇▇▇▇ and
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, ▇▇▇▇▇▇▇▇▇ 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 southern
California; 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 $[126,000], 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 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.
2
(e) 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 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 (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.
(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
3
that ExecuStay terminates Employee's employment other than "for cause",
ExecuStay shall pay Employee the Base Salary and the maximum Annual Bonus
through the remainder of the Term 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; 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.
(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.
4
(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
5
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 ▇▇▇▇▇▇▇▇▇'▇ 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.
6
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 applicable law or regulation and
any
7
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, ▇▇▇▇▇▇▇▇▇ 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.
8
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:
-------------------------------- -----------
F:\GROUPS\CORPAFF\CORPTAX\EROSIC\ARMCHAIR\Execemp6.doc
9
Exhibit A
SUPPLEMENTAL EXECUTIVE STOCK OPTION AGREEMENT
MARRIOTT INTERNATIONAL, INC.
1998 COMPREHENSIVE STOCK AND CASH INCENTIVE PLAN
This Agreement ("Agreement") is entered into as of ___________ __
1999 (the "Grant Date") by and between Marriott International, Inc. ("Company"),
and _____________________(the "Employee").
The award of this option is made pursuant to the Employment
Agreement (the "Employment Agreement") entered into on ___________, 1999 by and
among the Company, MI Subsidiary I, Inc. (to be renamed ExecuStay, Inc.), a
Delaware corporation and a direct, wholly-owned subsidiary of the Company
("ExecuStay") and _____________, a resident of the state of Maryland
("Employee"). This option award is made under the terms of the Company's 1998
Comprehensive Stock and Cash Incentive Plan (the "Plan") in accordance with the
terms of the Plan and this Agreement.
Now, THEREFORE, it is agreed as follows:
1. Prospectus. The Employee has been provided with, and hereby
acknowledges receipt of, a Prospectus for the Plan dated March 27, 1998, which
contains, among other things, a detailed description of the stock option
provisions of the Plan.
2. Interpretation. The provisions of the Plan are incorporated
herein by reference and form an integral part of this Agreement. Except as
otherwise set forth herein, capitalized terms used herein shall have the
meanings given to them in the Plan or the Employment Agreement. In the event of
any inconsistency between this Agreement or the Employment Agreement and the
Plan, the terms of the Plan shall govern. A copy of the Plan is available from
the Compensation Department of the Company upon request. All decisions and
interpretations made by the Compensation Policy Committee of the Company's Board
of Directors (the "Committee") or its delegate with regard to any question
arising hereunder or under the Plan shall be binding and conclusive. The options
granted pursuant to this Agreement are not intended to qualify as "incentive
stock options" within the meaning of Section 422 of the Internal Revenue Code.
3. Grant of Options and Option Prices. The Company hereby grants
to the Employee an option (the "Option") to acquire fifty thousand (50,000)
shares (the "Option Shares") of the Company's Class A Common Stock (the "Company
Stock") at $________ per share (the "Option Price").
4. Option Term. The Option has a term of 15 years, beginning on
the Grant Date and ending on the fifteenth anniversary of the Grant Date, unless
earlier terminated as provided herein (the "Term").
5. Vesting.
(a) General. The Option granted hereunder shall vest and become exercisable
as to 100 percent of the Option Shares on March 1, 2007;
provided, however, that the Option may vest earlier as
provided in Section 5(b) below.
a. Early Vesting. The Option granted hereunder shall vest and become
exercisable as to one-third (1/3) of the Option Shares
on each of any three of the Potential Vesting Dates if
(i) EBITDA (as defined below) of ExecuStay grows at a
cumulative annual rate (but not compounded) of at least
thirty-five percent (35%) beginning with the 1999 Fiscal
Year of ExecuStay and (ii) EBITDA grows at least at the
Target Rate for a specified Fiscal Year of ExecuStay as
compared to the preceding fiscal year. The Target Rate
and Potential Vesting Dates are as follows:
Fiscal Year Target Rate Potential Vesting Date
----------- ----------- ----------------------
1999 35% March 1, 2000
2000 50% March 1, 2001
2001 50% March 1, 2002
2002 50% March 1, 2003
2003 50% March 1, 2004
2004 50% March 1, 2005
2005 50% March 1, 2006
For purposes of this Agreement, ?EBITDA? means earnings before
interest expense, income taxes, depreciation and amortization,
computed in accordance with generally accepted accounting
principles as reflected in or derived from ExecuStay?s audited
financial statements for the relevant fiscal year. EBITDA
shall be adjusted in a manner determined by the Committee to
reasonably reflect any capital or other investment in
ExecuStay by the Company other than in connection with the
acquisition of the outstanding common stock of ExecuStay. For
purposes of determining the growth in EBITDA for ExecuStay?s
Fiscal Year 1999, the EBITDA of ▇▇▇▇▇▇▇▇▇ Corporation for 1998
as reflected in or derived from its audited financial
statements shall be used; provided that for purposes of this
provision, EBITDA of ▇▇▇▇▇▇▇▇▇ Corporation for 1998 shall be
at least $12.7 million.
6. Method of Exercising Option. To the extent vested, the Option
may be exercised upon providing a signed written notice to the Company stating
the number of Option Shares with respect to which the Option is being exercised.
Upon receipt of such notice, the Company will advise the person exercising the
Option of the amount of withholding taxes to be paid under Federal and, where
applicable, state and local law resulting from such exercise. The Option may be
exercised by (a) payment of the Option Price for the Option Shares being
purchased in accordance with Section 6.6 of the Plan, (b) making provision for
the satisfaction of the applicable withholding taxes, and (c) an undertaking to
furnish and execute such documents as the Company deems necessary (i) to
evidence such exercise, and (ii) to determine whether registration is then
required to comply with the Securities Act of 1933 or any other law. Upon
payment of the Option Price and provision for the satisfaction of the
withholding taxes, the
2
Company shall, without transfer or issue tax to the person exercising the
Option, either cause delivery to such person of a share certificate or other
evidence of the Option Shares purchased or provide confirmation from the
transfer agent for the Company Stock that said transfer agent is holding shares
for the account of such person in a certificateless account. Payment of the
purchase price may be made by delivery of shares of the Company's Common Stock
held by the Employee for at least six months prior to the delivery. Pursuant to
procedures, if any, that may be adopted by the Committee or its delegate, the
exercise of the Option may be by any other means that the Committee determines
to be consistent with the Plan's purpose and applicable law.
7. Rights as a Shareholder. The Employee shall have no rights as a
shareholder with respect to any Option Shares covered by the Option granted
hereby until the date of issuance of a stock certificate or confirmation of the
acquisition of such Option Shares. No adjustment shall be made for dividends or
other rights for which the record date is prior to the date of issuance of stock
upon exercise of the Option.
8. Non-Assignability. The Option shall not be assignable or
transferable by the Employee except by will or by the laws of descent and
distribution. During the Employee's lifetime, the Option may be exercised only
by the Employee or, in the event of incompetence, by the Employee's legally
appointed guardian.
9. Effect of Termination of Employment or Death. Pursuant to the
Committee's authority under Section 10.2 of the Plan to issue Other Share-Based
Awards, the Option shall be subject to a modified version of Section 6.9 of the
Plan as set forth herein. If Employee ceases employment by reason of death or
disability (in accordance with the terms of the Employment Agreement), the
Option will become fully vested and be exercisable by the Employee or his
personal representative until the earlier of (i) the expiration of the Option in
accordance with the term for which it was granted or (ii) one year from the date
of death or termination of employment by reason of disability. If Employee
voluntarily resigns, is involuntarily terminated for cause (in accordance with
the terms of the Employment Agreement) or goes on leave of absence for a period
of greater than twelve months (except a leave of absence approved by the Board
of Directors or the Committee), the unvested portion of the Option shall be
forfeited and the vested portion shall be exercisable until the earlier of (i)
the expiration of the Option in accordance with the term for which it was
granted or (ii) three months from the effective date of the resignation or
anniversary of the first day of the leave of absence. If Employee is
involuntarily terminated other than for cause (in accordance with the terms of
the Employment Agreement), Section 5(b) of this Agreement shall cease to apply,
Section 5(a) of this Agreement shall continue to apply and the Option shall
expire on December 31, 2007; provided, however, that, if earlier, the Option
shall expire at such time as Employee fails to comply with Section 7(a) of the
Employment Agreement. If Employee's employment with the Company and its
Subsidiaries is terminated at the end of the Term of the Employment Agreement
without renewal
3
or replacement thereof or an offer for continued employment being made for the
same position with ExecuStay, the termination shall be treated as an involuntary
termination other than for cause for purposes of this Agreement. If Employee
terminates employment with the Company and its Subsidiaries as an Approved
Retiree (as defined in the Plan), then the Option shall expire at the sooner to
occur of (i) the expiration of such option in accordance with its original term
or (ii) the expiration of five years from the date of retirement. In the event
of the death of Employee without Approved Retiree status during the three month
period following termination of employment, the Option shall be exercisable by
the Employee's personal representative, heirs or legatees to the same extent and
during the same period that the Employee could have exercised the Option if the
Employee had not died. In the event of the death of Employee while an Approved
Retiree, the Option shall be exercisable in its entirety by the Employee's
personal representatives, heirs or legatees at any time prior to the expiration
of one year from the date of the death of the Employee, but in no event after
the term for which the Option was granted.
10. Recapitalization or Reorganization. Certain events affecting the
Common Stock of the Company and mergers, consolidations and reorganizations
affecting the Company may affect the number or type of securities deliverable
upon exercise of the Option or limit the remaining term over which this Option
may be exercised.
11. General Restriction. In accordance with the terms of the Plan, the
Company may limit or suspend the exercisability of the Option or the purchase or
issuance of Option Shares thereunder under certain circumstances.
12. Amendment of This Agreement. The Board of Directors may at any
time amend, suspend or terminate the Plan; provided, however, that no amendment,
suspension or termination of the Plan or the Option shall adversely affect in
any material way the Option without the written consent of the Employee.
13. Notices. Notices hereunder shall be in writing, and if to the
Company, may be delivered personally to the Compensation Department or such
other party as designated by the Company or mailed to its principal office at
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, addressed to the attention of the
Stock Option Administrator (Department 935.40), and if to the Employee, may be
delivered personally or mailed to the Employee at his or her address on the
records of the Company.
14. Successors and Assigns. This Agreement shall bind and inure to
the benefit of the parties hereto and the successors and assigns of the Company
and, to the extent provided in Paragraph 9 above and Section 6.9 of the Plan, to
the personal representatives, legatees and heirs of the Employee.
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15. No Effect on Employment. Nothing contained in this Agreement shall
be construed to limit or restrict the right of the Company or of any subsidiary
to terminate the Employee's employment at any time, with or without cause, or to
increase or decrease the Employee's compensation from the rate of compensation
in existence at the time this Agreement is executed.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to
be effective as of the Grant Date.
MARRIOTT INTERNATIONAL, INC. EMPLOYEE
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Employee Name (Please Print)
By:
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Senior Vice President, Human Resources
Employee Social Security Number
(Please Print)
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Employee Signature
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