-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Jbv5F2DY0lTWTBQr8YNX6OOdqdwLsQqUsVOVlqBN8gfpMFUnukljpzArjE8B3Lwa J10OykUwzGyYJrEBhQClow== 0000928385-98-000879.txt : 19980504 0000928385-98-000879.hdr.sgml : 19980504 ACCESSION NUMBER: 0000928385-98-000879 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19980102 FILED AS OF DATE: 19980430 SROS: CSX SROS: NYSE SROS: PHLX SROS: PCX FILER: COMPANY DATA: COMPANY CONFORMED NAME: SODEXHO MARRIOTT SERVICES INC CENTRAL INDEX KEY: 0000905036 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 520936594 STATE OF INCORPORATION: DE FISCAL YEAR END: 0828 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: SEC FILE NUMBER: 001-12188 FILM NUMBER: 98606467 BUSINESS ADDRESS: STREET 1: 10400 FERNWOOD RD CITY: BETHESDA STATE: MD ZIP: 20817 BUSINESS PHONE: 3013803100 MAIL ADDRESS: STREET 1: 10400 FERNWOOD RD CITY: BETHESDA STATE: MD ZIP: 20817 FORMER COMPANY: FORMER CONFORMED NAME: MARRIOTT INTERNATIONAL INC DATE OF NAME CHANGE: 19930517 10-K/A 1 FORM 10-K/A SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K/A [X] Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Fiscal Year Ended January 2, 1998 [_] Transition Report Pursuant to Section 13 or 14(d) of the Securities Exchange Act of 1934 For the transition period from _____ to ________ Commission File No. 1-12188 SODEXHO MARRIOTT SERVICES, INC. (Exact name of registrant as specified in its charter) DELAWARE 52-0936594 (State of incorporation) (I R S. Employer Identification No.) 10400 Fernwood Road, Bethesda, Maryland 20817 (Address of principal executive offices) Registrant's phone number including area code: (301) 380-3100 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Title of each class Name of each exchange on which registered ------------------------ ----------------------------------------- Common Stock, $1.00 par value New York Stock Exchange Chicago Stock Exchange Pacific Stock Exchange Philadelphia Stock Exchange Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days Yes [X] No [_] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in the definitive proxy or information statements incorporated by reference in Part III of this Form 10-K/A or any further amendment to the Form 10-K [_] The aggregate market value of the voting stock held by non-affiliates of the registrant based on the closing sale price on such stock as of March 30, 1998 amounted to approximately $846,534,180. The number of shares outstanding of each of the registrant's classes of common stock as of March 27, 1998 was 61,860,367 shares, all of one class of $1.00 par value Common Stock. DOCUMENTS INCORPORATED BY REFERENCE: Portions of the Definitive Proxy Statement prepared for the Special Meeting of Stockholders of Marriott International, Inc. commenced on March 17, 1998 and adjourned to March 20, 1998 are incorporated by reference into Part III of this report. Index to Exhibits is located on pages 17 through 20. This Amendment No. 1 amends the Form 10-K Annual Report filed on February 23, 1998 (the "Form 10-K") by Marriott International, Inc. ("Old Marriott"), which was renamed Sodexho Marriott Services, Inc. (the "Company" or "SMS") immediately following the Transactions (as defined below) on March 27, 1998, by including the information required by Items 10, 11, 12 and 13 that was not already included in the Form 10-K and by amending Item 14(a)(3). PART III On March 27, 1998, Old Marriott consummated a series of transactions that, among other things, resulted in (collectively, the "Transactions"): (i) A spinoff ("Spinoff") to Old Marriott's stockholders of all businesses of Old Marriott other than its food service and facilities management business that was effected through the issuance of a special dividend of all of the outstanding shares of capital stock of a new company ("New Marriott") to which Old Marriott had contributed its lodging, senior living and distribution services businesses and which will use the Marriott International, Inc. name; (ii) A merger ("Merger") pursuant to which Old Marriott acquired the North American operations of Sodexho Alliance, S.A., a worldwide food and management services organization headquartered in France and listed on the Paris Bourse ("Sodexho"); and (iii) a one-for-four reverse stock split ("Reverse Stock Split"). ITEM 10 -- DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Directors Set forth below are the names of all current Directors of the Company, their ages, all positions and offices held by each such person, the period during which such person has served as such, and the principal occupations and employment of each such person during the past five years. Each of the Company's Directors listed below (except for William J. Shaw, who was already serving on the Old Marriott Board) was elected to the Board of Directors of the Company effective on March 27, 1998, the date upon which the Transactions were consummated, which election was ratified by the stockholders of Old Marriott at a special meeting of stockholders commenced on March 17, 1998 and adjourned to March 20, 1998. Name Age - ---- --- William J. Shaw................... 52 On March 31, 1997, Mr. Shaw became Chairman of the Board President and Chief Operating Officer of Old Marriott, positions he now holds with New Marriott. Mr. Shaw joined Marriott Corporation in 1974, was elected Corporate Controller in 1979 and a Vice President in 1982. In 1986, Mr. Shaw was elected Senior Vice President--Finance and Treasurer of Marriott Corporation. He was elected Executive Vice President of Marriott Corporation and promoted to Chief Financial Officer in April 1988. In February 1992, he was elected President of the Marriott Service Group, which now comprises New Marriott's Contract Service Group. Mr. Shaw was elected Executive Vice President and President--Marriott Service Group in October 1993. Mr. Shaw is also Chairman of the Board of Directors of Host Marriott Services. He also serves on the Board of Trustees of the University of Notre Dame, Loyola College in Maryland and the Suburban Hospital Foundation. Mr. Shaw has been a director of the Company since May 1997. -2- Charles D. O'Dell................. 46 On March 27, 1998, Mr. O'Dell became President and Chief Executive Officer of the Company. Mr. O'Dell joined Marriott Corporation in 1979 and became a Regional Manager in Marriott Corporation's Roy Rogers Division in 1981. Mr. O'Dell held several management positions in that Division until 1985, when he was named Division Vice President--Education in the Food and Services Management Division. In 1986, Mr. O'Dell became Senior Vice President of Business Food and Auxiliary Services, and in November 1990 he was appointed President of Marriott Management Services. Mr. O'Dell serves as a foundation trustee for the Educational Foundation of the National Restaurant Association. He is a director of the Deafness Research Foundation and is a board member of Second Harvest National Food Bank Network. Pierre Bellon..................... 68 Mr. Bellon is Chairman and Chief Executive Officer of Sodexho, a company which he founded in 1966 and which has been listed on the Paris Bourse since 1983. In addition, he is Vice-Chairman of the Conseil National du Patronat Francais (Confederation of French Industries and Services), and from 1969-1979 was a member of the Conseil Economique et Social (Social and Economic Council) in France. Mr. Bellon also serves as a director of L'Air Liquide (an industrial gas company). Bernard Carton.................... 64 Mr. Carton is Senior Vice President and Chief Financial Officer of Sodexho, a position he has held since 1975. Prior to joining Sodexho, Mr. Carton held positions with several French and American companies, including Manpower, Inc. (Vice President, Finance for European Operations 1970-1975), Control Data Corporation (Vice President, Finance European countries 1962-1970) and General Electric Company (Engineer 1960-1962). Edouard de Royere................. 65 Mr. de Royere is a director of L'Air Liquide and its former Chairman and Chief Executive Officer, a position he held from 1985 until his retirement in 1995. Prior to such time, Mr. de Royere served in various capacities at L'Air Liquide, including Vice President (1982-1985), Assistant Vice President (1980-1982), Assistant to the Chief Executive Officer (1979) and General Counsel and Company Secretary (1967- 1979). Mr. de Royere also serves as a director of Sodexho, L'Oreal S.A. (a beauty and personal care company), Groupe Danone (a food and beverage company) and Solvay S.A. (a chemical and pharmaceutical company). -3- John W. Marriott III.............. 36 In June 1996 Mr. Marriott became Senior Vice President of Old Marriott's Mid- Atlantic Region, a position he has retained with New Marriott. He joined Marriott Corporation in 1986 as a Sales Manager and subsequently served as a Restaurant Manager and as a director of Food and Beverage. In 1989, Mr. Marriott served as Executive Assistant to the Chairman, J.W. Marriott, Jr., who is his father. He has also held positions as Director of Corporate Planning, Finance, Director of Marketing for a hotel and General Manager. Since 1993, Mr. Marriott has held successive positions as Director of Finance in Old Marriott's Treasury Department, Director of Finance in the Host Marriott Finance and Development Department, and Vice President, Lodging Development for The Ritz-Carlton Hotel Company LLC. Doctor R. Crants.................. 53 Doctor R. Crants, a founder of Corrections Corporation of America ("CCA"), was elected Chief Executive Officer and Chairman of the Board of CCA in 1994 and President of CCA in 1998. From 1987 to 1994, he served as President, Chief Executive Officer and Vice Chairman of the Board of Directors of CCA. From 1983 to 1987, Mr. Crants served as Secretary and Treasurer of CCA. Mr. Crants has served as a director of CCA since 1983. In 1997, Mr. Crants founded and became Chairman of the Board of Trustees of CCA Prison Realty Trust. Mr. Crants serves as a director of the Nashville Area Chamber of Commerce and the Tennessee Vietnam Leadership Program. Daniel J. Altobello............... 56 Daniel J. Altobello is the Chairman of Onex Food Services, Inc., the parent corporation of Caterair International, Inc. and LSG/SKY Chefs, and the largest airline catering company in the world. From 1989 to 1995, Mr. Altobello served as Chairman, President and Chief Executive Officer of Caterair International Corporation. From 1979 to 1989, he held various managerial positions with the food service management and in-flight catering divisions of Marriott Corporation, including Executive Vice President of Marriott Corporation and President, Marriott Airport Operations Group. Mr. Altobello began his management career at Georgetown University, including service as Vice President, Administration Services. He is a member of the board of directors of American Management Systems, Inc., Colorado Prime Corp. and Blue Cross Blue Shield of Maryland, and a trustee of Loyola Foundation, Inc., Mt. Holyoke College, Suburban Hospital Foundation, Inc. and the Woodstock Theological Center at Georgetown University. Directors are elected annually and hold office until the next annual meeting of stockholders and until their successors are elected and qualified. The above-listed Directors will hold office until the next Annual Meeting of Stockholders. Three of the above-listed Directors (Pierre Bellon, Bernard Carton and Edouard de Royere) were nominated by Sodexho in accordance with the Stockholder Agreement dated March 27, 1998 by -4- and between the Company and Sodexho (the "Stockholder Agreement"). In addition, two of the above-listed Directors (William J. Shaw and J.W. Marriott III) were nominated by Old Marriott in accordance with the Stockholder Agreement. Charles D. O'Dell was also nominated pursuant to the Stockholder Agreement in anticipation of his nomination as Chief Executive Officer of the Company. See "THE TRANSACTION -- Arrangements Between SMS and Sodexho -- Stockholder Agreement" on pages 49 through 50 of the Definitive Proxy Statement prepared for the Special Meeting of Stockholders of Marriott International, Inc. commenced on March 17, 1998 and adjourned to March 20, 1998 (the "Proxy Statement"). Such section of the Proxy Statement is incorporated by reference into this report. Executive Officers Please refer to the Form 10-K, as filed on February 23, 1998, for information on the Executive Officers of the Company. Committees of the Company's Board The Company's Board has two standing committees: Audit and Compensation. The members of the Audit Committee are Doctor R. Crants, Edouard de Royere and Daniel J. Altobello, who serves as Chair. The Audit Committee meets at least two times a year with the Company's independent auditors, management representatives and internal auditors. The Audit Committee recommends to the Company's Board the appointment of independent auditors, approves the scope of audits and other services to be performed by the independent and internal auditors, and reviews the results of internal and external audits, the accounting principles applied in financial reporting and the adequacy of financial and operational controls. The independent auditors and internal auditors have unrestricted access to the Audit Committee and vice versa. The members of the Compensation Committee are Bernard Carton, William J. Shaw and Doctor R. Crants, who serves as Chair. The functions of this Committee include determining the compensation of senior officers and certain other employees, administering employee compensation and benefit plans and reviewing the operations and policies of such plans. Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act") requires the Company's executive officers and directors, and persons who own more than ten percent of a registered class of the Company's equity securities ("Reporting Persons"), to file reports of beneficial ownership and changes in beneficial ownership of the Company's equity securities with the Securities and Exchange Commission ("SEC") and the New York Stock Exchange. Specific due dates for these reports have been established, and the Company is required to report in this report any failure by such persons to file such reports on a timely basis during 1997. During 1997, the Reporting Persons of Old Marriott were in compliance with these requirements, with the exception of one transaction not timely reported by Robert T. Pras and one transaction not timely reported by Edwin D. Fuller. ITEM 11 -- COMPENSATION OF EXECUTIVE OFFICERS OF THE REGISTRANT The following tables on Executive Compensation (Table I - Summary Compensation Table, Table II - Stock Option Grants in Last Fiscal Year, and Table III - Aggregated Stock Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values) reflect awards denominated in Old Marriott Common Stock and do not reflect redenomination of such awards into shares of New -5- Marriott Common Stock as a result of the Spinoff. All awards were made under the Marriott International, Inc. 1993 Comprehensive Stock Incentive Plan or the Marriott International, Inc. 1996 Comprehensive Stock Incentive Plan (the "Old Marriott Plans"). In connection with the Spinoff, the awards under the Old Marriott Plans were canceled and substitute awards were granted under the Marriott International, Inc. 1998 Comprehensive Stock and Cash Incentive Plan (the "New Marriott Plan"). The substitute awards preserved (but did not increase or decrease) the economic value of the awards under the Old Marriott Plans. Summary Compensation Table Table I below sets forth a summary of the compensation paid by Old Marriott during the last three fiscal years to the Chief Executive Officer of Old Marriott and the five most highly compensated executive officers (other than the Chief Executive Officer) of Old Marriott as of January 2, 1998. As of March 27, 1998, immediately following the Transactions, the persons listed below no longer hold executive officer positions with the Company, but have assumed positions with New Marriott. Although not an employee of the Company, William J. Shaw has been elected Chairman of the Board of Directors of the Company.
================================================== Annual Compensation Long-Term Compensation ================================================================================================================== Restricted All Other Salary Stock Stock Compensation Fiscal (1)(2) Bonus (3)(4) Options (5)(6) Name Year ($) ($) ($) (#) ($) ================================================================================================================== J. W. Marriott Jr. 1997 900,000 990,000 198,001 287,500 79,590 Chairman and Chief 1996 840,866 809,754 161,975 71,000 32,125 Executive Officer 1995 800,000 696,000 139,202 100,000 7,592 - ------------------------------------------------------------------------------------------------------------------ William J. Shaw 1997 618,846 556,961 111,410 195,000 24,009 President and Chief 1996 545,289 425,325 85,085 46,000 19,780 Operating Officer 1995 520,000 342,680 589,152 52,000 35,910 - ------------------------------------------------------------------------------------------------------------------ William R. Tiefel 1997 565,000 452,000 90,431 135,000 44,714 Executive Vice 1996 545,289 393,699 1,175,020 46,000 40,323 President and 1995 520,000 341,120 365,720 52,000 35,187 President - Marriott Lodging Group - ------------------------------------------------------------------------------------------------------------------ Joseph Ryan 1997 400,000 320,000 741,766 100,000 12,493 Executive Vice 1996 371,000 248,941 49,775 25,000 1,170 President and General 1995 350,000 217,000 43,403 30,000 119,900 Counsel - ------------------------------------------------------------------------------------------------------------------ Michael A. Stein 1997 400,000 320,000 63,966 100,000 29,761 Executive Vice 1996 356,731 239,366 47,850 23,000 25,950 President and Chief 1995 325,000 201,500 572,792 25,000 21,126 Financial Officer - ------------------------------------------------------------------------------------------------------------------ James M. Sullivan 1997 400,000 320,000 63,966 100,000 29,684 Executive Vice 1996 320,000 236,730 47,355 23,000 24,622 President - Lodging 1995 265,000 383,787 460,450 11,500 19,700 Development - ------------------------------------------------------------------------------------------------------------------
-6- (1) Fiscal year 1996 base salary earnings were for 53 weeks, all other fiscal year base salary earnings were for 52 weeks. (2) Salary amounts include base salary earned and paid in cash during the fiscal year and the amount of base salary deferred at the election of the executive officer under the Old Marriott Employees' Profit Sharing, Retirement and Savings Plan and Trust (the "Profit Sharing Plan") and Executive Deferred Compensation Plan (the "Deferred Plan"). (3) All awards of restricted stock noted in the above table for 1995, 1996 and 1997 were originally made under the Old Marriott Plans for 1995, 1996 and 1997 performance. Restricted stock awards granted by Old Marriott are subject to general restrictions, such as continued employment and non- competition, and in some cases, additional performance restrictions such as attainment of financial objectives. Holders of restricted stock receive dividend payments and exercise voting rights with respect to such shares. Awards of deferred bonus stock were generally derived by dividing 20 percent of each individual's annual cash bonus award by the average of the high and low trading prices for a share of Old Marriott Common Stock on the last trading day for the fiscal year. No voting rights or dividends are attributed to award shares until such awards are distributed. The individual executive may elect to denominate the awards as current or deferred. A current award is distributed in 10 annual installments commencing one year after the award is granted. A deferred award is distributed in a lump sum or in up to 10 installments following termination of employment. Deferred bonus stock contingently vests pro-rata in ten annual installments commencing one year after the award is granted to the employee. Awards are not subject to forfeiture once the employee reaches age 55 with 10 years of service with Old Marriott, or has 20 years of service with Old Marriott with Board approval. (4) Total awards for each executive including awards reflected in the restricted stock column in the above table include the following for the named individual: (i) for Mr. Marriott 5,833 shares deferred bonus stock with a value of $399,910; (ii) for Mr. Shaw 15,651 shares deferred bonus stock, 27,000 shares restricted stock and 25,000 shares deferred contract stock with an aggregate value of $4,638,153; (iii) for Mr. Tiefel 66,569 shares deferred bonus stock, 2,000 shares restricted stock and 49,847 shares deferred contract stock with an aggregate value of $8,118,601; (iv) for Mr. Ryan 3,098 shares deferred bonus stock, 28,000 shares restricted stock and 10,000 shares deferred contract stock with an aggregate value of $2,817,679; (v) for Mr. Stein 5,977 shares deferred bonus stock, 15,000 shares restricted stock and 10,000 shares deferred contract stock with an aggregate value of $2,123,783; and (vi) for Mr. Sullivan 9,308 shares deferred bonus stock, 12,000 shares restricted stock, 10,000 shares deferred contract stock with an aggregate value of $2,146,476. (5) Amounts included in "All Other Compensation" represent Company matching contributions made under one or both of the Profit Sharing Plan and the Deferred Plan. In 1997, for Mr. Marriott, $3,711 was attributable to the Profit Sharing Plan and $75,879 was attributable to the Deferred Plan; for Mr. Shaw, $2,082 was attributable to the Profit Sharing Plan and $21,926 was attributable to the Deferred Plan; for Mr. Tiefel, $3,711 was attributable to the Profit Sharing Plan and $41,003 was attributable to the Deferred Plan; for Mr. Ryan, $1,531 was attributable to the Profit Sharing Plan and $10,962 was attributable to the Deferred Plan; for Mr. Stein, $3,711 was attributable to the Profit Sharing Plan and $26,050 was attributable to the Deferred Plan; for Mr. Sullivan, $3,711 was attributable to the Profit Sharing Plan and $25,972 was attributable to the Deferred Plan. (6) In 1996, Mr. J.W. Marriott, Jr. waived his vested right to receive post- retirement distributions of cash under the Deferred Plan and Old Marriott Common Stock under the Old Marriott 1993 Comprehensive Stock Incentive Plan (the "1993 Plan"). The payments and stock distributions waived were awarded to Mr. Marriott in 1995 and prior years and were -7- disclosed as required in earlier proxy statements of Old Marriott or of Marriott Corporation. In connection with this waiver, Old Marriott entered into an arrangement to purchase life insurance policies for the benefit of a trust established by Mr. Marriott, which arrangement has been assigned to Old Marriott. The cost of the life insurance policies to Old Marriott will not exceed the projected after-tax cost Old Marriott expected to incur in connection with the payments under the Deferred Plan and the stock distributions under the 1993 Plan that were waived by Mr. Marriott. Stock Options Table II and Table III below set forth information regarding options to purchase Old Marriott Common Stock granted in fiscal 1997 under the Old Marriott Plans.
Stock Option Grants in Last Fiscal Year % of Total Stock Options Stock Granted Options to Grant Date Granted Employees Exercise Expiration Present (1) in Fiscal Price Date Value (4) Name (#) Year ($/Sh) (2)(3) ($) J. W. Marriott, Jr. 225,000 6.5 54.188 02/06/07 4,155,750 62,500 1.8 67.7813 11/06/12 1,470,000 William J. Shaw 150,000 4.3 54.188 02/06/07 2,770,500 45,000 1.3 67.7813 11/06/12 1,058,400 William R. Tiefel 100,000 2.9 54.188 02/06/07 1,847,000 35,000 1.0 67.7813 11/06/12 823,200 Joseph Ryan 80,000 2.3 54.188 02/06/07 1,477,600 20,000 0.6 67.7813 11/06/12 470,400 Michael A. Stein 80,000 2.3 54.188 02/06/07 1,477,600 20,000 0.6 67.7813 11/06/12 470,400 James M. Sullivan 80,000 2.3 54.188 02/06/07 1,477,600 20,000 0.6 67.7813 11/06/12 470,400
(1) Under the Old Marriott Plans, Old Marriott was entitled to grant to eligible employees stock options either on a non-qualified tax basis or as "incentive stock options" within the meaning of Section 422 of the Internal Revenue Code. All options granted to Old Marriott employees in 1997 were non-qualified options and totaled 3,449,975 shares. (2) All options granted except for the supplemental options granted on February 6, 1997, vest over four years on the anniversary date of the grant at a rate of 25% per year and have a 15-year term. Except as set forth in the succeeding sentence, if an optionee ceases to be an employee, other than by reason of death, while holding an exercisable option, the option will generally terminate if not exercised within three months of termination of employment. Options held by optionees who retire and meet certain retirement provisions of the Old Marriott Plan (retirement approved by the Compensation Policy Committee of the Board of -8- Directors and either age 55 with 10 years of service, or 20 years of service) will not expire until the earlier of (i) the expiration of the option in accordance with its original term or (ii) one year from the date on which the option granted latest in time to the optionee has fully vested. Options are not transferable except that if an optionee dies while an employee of Old Marriott more than one year from the date the option was granted, a legatee may exercise the remaining options at any time up to one year after the date of death of the employee. (3) The options granted on February 6, 1997 will vest in full at the end of eight years on the anniversary date of the grant and may vest earlier at the end of three, four or five years if certain stock price appreciation goals are achieved. (4) The Black-Scholes option pricing model was used to estimate the present value of the options at the date of the grant. The material assumptions and adjustments used in estimating the value of the options include: a 10-year option term for the February grant and a 15-year option term for the November grant, an exercise price of $54.188 for the options issued in February and $67.7813 for the options issued in November, expected volatility of 23.97%, an annual dividend of $0.35, a risk free interest rate of 6.15%, an expected life of 7.15 years and a 13.3% reduction to reflect the probability of forfeiture due to termination prior to vesting. These inputs resulted in an $18.47 per share option value for the February grant and a $23.52 per share option value for the November grant.
Aggregated Stock Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values - -------------------------------------------------------------------------------------------------------------------- Number of Shares Underlying Value of Unexercised Unexercised Options at Fiscal In-the-Money Stock Options at Year End (#) Fiscal Year End (3) ------------------------------ ----------------------------- Shares Acquired on Value Company Exercise Realized Name (1)(2) (#) ($) Exercisable Unexercisable Exercisable Unexercisable - --------------------------------------------------------------------------------------------------------------------- J.W. Marriott, Jr. MI 0 0 954,250 413,250 45,379,937 6,470,336 HMC 0 0 810,447 0 12,671,964 0 ------------------------------------------------------------------------------------------------- TOTAL 0 0 1,764,697 413,250 58,051,901 6,470,336 - --------------------------------------------------------------------------------------------------------------------- William J. Shaw MI 20,000 952,066 528,500 269,500 25,707,664 4,032,905 HMC 22,389 364,950 439,927 0 7,033,999 0 ------------------------------------------------------------------------------------------------- TOTAL 42,389 1,317,016 968,427 269,500 32,741,663 4,032,905 - --------------------------------------------------------------------------------------------------------------------- William R. Tiefel MI 30,000 1,314,617 358,500 209,500 17,291,480 3,306,518 HMC 9,795 150,171 283,211 0 4,581,072 0 ------------------------------------------------------------------------------------------------- TOTAL 39,795 1,464,788 641,711 209,500 21,872,552 3,306,518 - --------------------------------------------------------------------------------------------------------------------- Joseph Ryan MI 25,000 1,208,600 33,750 146,250 1,068,972 2,406,150 HMC 0 0 0 0 0 0 ------------------------------------------------------------------------------------------------- TOTAL 25,000 1,208,600 33,750 146,250 1,068,972 2,406,150 - --------------------------------------------------------------------------------------------------------------------- Michael A. Stein MI 20,400 1,105,086 70,250 137,250 2,612,242 2,090,397 HMC 14,386 288,409 0 0 0 0 ------------------------------------------------------------------------------------------------- TOTAL 34,786 1,393,495 70,250 137,250 2,612,242 2,090,397 - --------------------------------------------------------------------------------------------------------------------- James M. Sullivan MI 4,700 165,830 108,125 126,375 5,160,066 1,715,963 HMC 0 0 13,154 0 213,072 0 ------------------------------------------------------------------------------------------------- TOTAL 4,700 165,830 121,279 126,375 5,373,138 1,715,963 - ---------------------------------------------------------------------------------------------------------------------
(1) "MI" represents options to purchase Old Marriott Common Stock. "HMC" represents options to purchase Host Marriott Corporation Common Stock. (2) In connection with the distribution of all of Old Marriott's outstanding common stock on a share-for-share basis to shareholders of Marriott Corporation (now Host Marriott -9- Corporation) ("Host Marriott") in October 1993 (the "October 1993 Distribution") and pursuant to the Marriott Corporation Employee Stock Option Plan, all Marriott Corporation options were adjusted to reflect the October 1993 Distribution. Each nonqualified Marriott Corporation option was "split" by (i) adjusting the price at which the Marriott Corporation option (as adjusted, a "Host Marriott Corporation Option") was exercisable for common stock of Host Marriott Corporation and (ii) providing the holder thereof with an option to purchase an identical number of shares of Old Marriott Common Stock (each, an "Old Marriott Option"). The exercise price of the Old Marriott Option was set, and the exercise price of the corresponding Host Marriott Corporation Option was adjusted, so as to equal, in the aggregate, the exercise price of the Marriott Corporation option prior to the October 1993 Distribution. Accordingly, these adjustments merely preserved, and did not increase or decrease, the economic value of the outstanding Marriott Corporation option prior to the October 1993 Distribution. In December of 1995, in connection with the distribution of all of Host Marriott Services Corporation's outstanding common stock on a share-for-share basis to shareholders of Host Marriott Corporation (the "Host Marriott Services Distribution") and pursuant to the Host Marriott Corporation 1993 Comprehensive Stock Incentive Plan, all Host Marriott Corporation Options were adjusted to reflect the Host Marriott Services Distribution. The Host Marriott Services Distribution resulted in a lower option price and greater number of options in Host Marriott Corporation for all Old Marriott employees with outstanding options in Host Marriott Corporation. The exercise price was set, and the price of the Host Marriott Corporation Options were adjusted, so as to preserve (but not increase or decrease) the economic value of each Host Marriott Corporation Option immediately prior to the Host Marriott Services Distribution. (3) Based on a per share price for Old Marriott Common Stock of $68.56 and a per share price for Host Marriott Corporation Common Stock of $19.21. These prices reflect the average of the high and low trading prices on the New York Stock Exchange on January 2, 1998. Compensation of Directors Directors who are also employees of the Company receive no additional compensation for service as directors. The Chairman of the Board, who is not an employee of the Company, receives an annual retainer fee of $50,000. Other directors who are not employees of the Company receive an annual retainer fee of $25,000. Non-employee directors also receive a fee of $1,250 for attendance at Board, Committee or Stockholder meetings. The Chair of each Committee of the Board also receives a fee of $1,250. Directors are also reimbursed for travel expenses and other out-of-pocket costs when incurred in attending meetings. Compensation Committee Interlocks And Insider Participation During 1997, the Compensation Policy Committee of Old Marriott was comprised of Floretta Dukes McKenzie (Chair), Roger W. Sant, W. Mitt Romney and Lawrence M. Small. J.W. Marriott, Jr., the former Chairman and Chief Executive Officer of Old Marriott and now Chairman and Chief Executive Officer of New Marriott, serves on the Executive Compensation Committee of the Board of Directors of General Motors Corporation. Harry J. Pearce, a director of New Marriott, is an executive officer and director of General Motors Corporation. -10- ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Security Ownership Of Certain Beneficial Owners The following table sets forth the number and percentage of shares of the Company's Common Stock owned beneficially (or deemed to be beneficially owned pursuant to the rules of the SEC), as of March 27, 1998, by any person who is known to the Company to be the beneficial owner of 5% or more of such Common Stock, immediately after giving effect to the Transactions (including the Reverse Stock Spilt) on March 27, 1998. Information as to beneficial ownership is based upon statements furnished to the Company by such persons.
Number of Shares Percent of Name and Address Owned of Record Common Stock of Beneficial Owner and Beneficially (1) Outstanding Sodexho Alliance, S.A. (2)................. 29,949,925 48.4% 3 avenue Newton 78189 Montigny-le-Bretonneux, France Richard E. Marriott (3)(4)................. 3,223,156 5.2 10400 Fernwood Road Bethesda, MD 20817 J.W. Marriott, Jr. (3)(5).................. 3,112,740 5.0 10400 Fernwood Road Bethesda, MD 20817
(1) Based on the number of shares outstanding at March 27, 1998. Share amounts reflect cancellation of options and other awards which were replaced with grants of replacement options and awards by New Marriott, as well as certain adjustments in order to preserve (but not increase or decrease) the economic value of the securities previously held. For purposes of this table, "beneficial ownership" is used as defined in Rule 13d-3 of the Exchange Act. (2) Bellon S.A. is the majority stockholder of Sodexho Alliance, S.A. Pierre Bellon, a Director of the Company, along with members of his family, is the majority stockholder of Bellon S.A. Mr. Bellon, as the majority stockholder of Bellon S.A., and Bellon S.A., as the majority stockholder of Sodexho Alliance, S.A., may each be deemed to have beneficial ownership of the shares beneficially owned by Sodexho Alliance, S.A. Except to the extent of their pecuniary interest in Sodexho Alliance, S.A., Bellon S.A. and Pierre Bellon disclaim beneficial ownership of such shares. (3) Includes: 393,750 shares held by J.W. Marriott, Jr. and Richard E. Marriott as co-trustees of 16 trusts of the benefit of their children and 634,196 shares owned by The J. Willard Marriott Foundation, a charitable foundation in which J.W. Marriott, Jr., Richard E. Marriott and their mother serve as co-trustees. These shares are reported as beneficially owned by both J.W. Marriott, Jr. and Richard E. Marriott. The shares included herein do not include: (i) 477,588 shares owned and controlled by certain other members of the Marriott family, (ii) 416,846 shares held by a charitable annuity trust, created by the will of J. Willard Marriott, in which J.W. Marriott, Jr. and Richard E. Marriott have a remainder interest and in which -11- their mother is trustee, or (iii) 39,443 shares held by the adult children of J.W. Marriott, Jr. and Richard E. Marriott, as trustee of 26 trusts established for the benefit of the grandchildren of J.W. Marriott, Jr. and Richard E. Marriott. (4) Includes, in addition to the shares referred to in footnote (3): (i) 74,922 shares held as trustee of two trusts established for the benefit of J.W. Marriott, Jr., (ii) 17,054 shares owned by Richard E. Marriott's wife, (iii) 150,957 shares owned by four trusts for the benefit of Richard E. Marriott's children, in which his wife serves as a co-trustee, and (iv) 575,682 shares owned by First Media Limited Partners, whose general partner is Richard E. Marriott. (5) Includes, in addition to the shares referred to in footnote (3): (i) 100,607 shares held as trustee of two trusts for the benefit of Richard E. Marriott, (ii) 17,106 shares owned by J.W. Marriott, Jr.'s wife (Mr. Marriott disclaims beneficial ownership of such shares), (iii) 167,566 shares owned by four trusts for the benefit of J.W. Marriott, Jr.'s children, in which his wife serves as a co-trustee, (iv) 5,829 shares owned by six trusts for the benefit of J.W. Marriott, Jr.'s grandchildren, in which his wife serves as a co-trustee, (v) 20,000 shares owned by JWM Associates Limited Partnership, whose general partner is J.W. Marriott, Jr., and (vi) 676,897 shares owned by Family Enterprises whose general partner is a corporation in which J.W. Marriott, Jr. is a controlling stockholder. Security Ownership Of Management The following table sets forth the number and percentage of shares of the Company's Common Stock owned beneficially (or deemed to be beneficially owned pursuant to the rules of the SEC), as of March 27, 1998, by each current Director of the Company, and by all current Directors and current Executive Officers of the Company as a group, in each case immediately after giving effect to the Transactions (including the Reverse Stock Spilt) on March 27, 1998. Beneficial ownership reporting with respect to the Named Executive Officers of the Company (none of which are current Executive Officers), required to be disclosed pursuant to the rules of the SEC, is included in a separate table. The following information as to beneficial ownership is based upon statements furnished to the Company by such persons.
Amount of Shares Percent Name Beneficially Owned (1) of Class Directors: Pierre Bellon (2)............................... 29,949,926 48.4% John W. Marriott, III (3)....................... 58,901 * Charles D. O'Dell (4)........................... 25,786 * William J. Shaw (5)............................. 14,844 * Daniel J. Altobello (6)......................... 4,001 * Doctor R. Crants................................ 1 * Bernard Carton.................................. 1 * Edouard de Royere............................... 1 * All current Directors and Executive Officers as a Group (19 persons)............................ 30,115,919 48.7
________________________ * Less than 1% -12- (1) Based on the number of shares outstanding as of March 27, 1998. Share amounts reflect cancellation of certain options and other awards which were replaced with grants of replacement options and awards by New Marriott, as well as certain adjustments in order to preserve (but not increase or decrease) the economic value of the securities previously held. For purposes of this table, "beneficial ownership" is used as defined in Rule 13d-3 of the Exchange Act. (2) Includes 29,949,925 shares beneficially owned by Sodexho Alliance, S.A. Mr. Bellon, along with members of his family, is the majority stockholder of Bellon S.A., which is the majority stockholder of Sodexho Alliance, S.A. Sodexho Alliance, S.A. beneficially owns 29,949,925 shares of Common Stock of the Company. Bellon S.A., as the majority stockholder of Sodexho Alliance, S.A., and Mr. Bellon, as the majority stockholder of Bellon S.A., may each be deemed to have beneficial ownership of 29,949,925 shares of Common Stock of the Company beneficially owned by Sodexho Alliance, S.A. Except to the extent of their pecuniary interest in such shares, Bellon S.A. and Mr. Bellon disclaim beneficial ownership of such shares. (3) Includes 3,604 shares held by Mr. Marriott, III as trustee of three trusts for the benefit of his children, 2,805 shares owned by three trusts for the benefit of his children in which his wife serves as co-trustee, and 1,590 shares owned by his wife. (4) Includes 18,277 shares of unvested restricted stock awarded under the Old Marriott Plans (as redenominated in connection with the Transactions). Shares of restricted stock are voted by the holder thereof. See footnote (3) of the "Summary Compensation Table" included in this Form 10-K. (5) Includes 2,912 shares beneficially owned by Mr. Shaw's children. (6) Includes 400 shares owned by Mr. Altobello's wife (Mr. Altobello disclaims beneficial ownership of such shares). Security Ownership of Former Named Executive Officers Pursuant to the rules of the SEC, the following table sets forth the number and percentage of shares of the Company's Common Stock owned beneficially (or deemed to be beneficially owned pursuant to the rules of the SEC), as of March 27, 1998, by each of the persons identified as Named Executive Officers of the Company for the previous fiscal year, immediately after giving effect to the Transactions (including the Reverse Stock Spilt) on March 27, 1998. On March 27, 1998, in connection with the Transactions, each of the Named Executive Officers identified below resigned as an executive officer of Old Marriott and became executive officers of New Marriott. The following information as to beneficial ownership is based upon statements furnished to the Company by such persons.
Amount of Shares Percent Name Beneficially Owned (1) of Class Named Executive Officers: William R. Teifel............................... 15,249 * Michael A. Stein................................ 4,372 * James M. Sullivan............................... 3,727 * Joseph Ryan..................................... 2,157 *
________________________ * Less than 1% (1) Based on the number of shares outstanding at March 27, 1998. Share amounts reflect cancellation of options and other awards which were replaced with grants of replacement options and awards by New Marriott, as well as certain adjustments in order to preserve (but not increase or decrease) the economic value of the securities previously held. For purposes of this table, "beneficial ownership" is used as defined in Rule 13d-3 of the Exchange Act. -13- ITEM 13 -- CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS General In general, see "THE TRANSACTIONS--Arrangements Between SMS and New Marriott" and "Arrangements Between SMS and Sodexho" on pages 43 through 50 of the Proxy Statement, for a discussion of certain arrangements with New Marriott and Sodexho, respectively, that were entered into upon consummation of the Transactions. Such sections of the Proxy Statement are incorporated by reference into this report. Pierre Bellon, who is a Director of the Company, is the Chairman and Chief Executive Officer of Sodexho. Bellon S.A., a privately held corporation, beneficially owns approximately 42 percent of Sodexho. Mr. Bellon and members of his family beneficially own approximately 68 percent of Bellon S.A., and subsidiaries of Sodexho beneficially own approximately 19 percent of Bellon S.A. Bernard Carton, who is a Director of the Company, is the Vice President, Finance of Sodexho. Edouard de Royere, who is a director of the Company, is a director of Sodexho. Certain Transactions JWM Family Enterprises, L.P. ("Family Enterprises"), a Delaware limited partnership owned by J.W. Marriott, Jr., the former Chairman and Chief Executive Officer of Old Marriott and now Chairman and Chief Executive Officer of New Marriott, and members of his immediate family, owns a 216-room Courtyard Hotel in Long Beach, California, a 120-room Residence Inn in San Antonio, Texas and a 468-room Fairfield Inn in Anaheim, California. Subsidiaries of Old Marriott operate the three properties pursuant to management agreements with Family Enterprises. For 1997, Old Marriott received management fees totaling $878,183 for these properties, plus reimbursement of certain expenses. Old Marriott also received payments in 1997 of $54,647 from Family Enterprises related to furnishings and supplies for the Anaheim and Long Beach Hotels. McIntosh Mill Ltd. ("McIntosh Mill"), a Utah limited partnership in which Richard E. Marriott, a former director of Old Marriott and a current director of New Marriott, has a 40 percent limited partnership interest, is party to an agreement with Marriott Ownership Resort, Inc. ("MORI"), a subsidiary of Old Marriott, under which MORI purchased land in Park City, Utah from McIntosh Mill on which MORI is constructing a mixed-use, multi-phase development. The terms of the Agreement call for McIntosh Mill to purchase from MORI the commercial condominium units for a cash purchase price calculated as the pro rata share of the development and construction costs of the project allocable to the commercial units less (i) the value of the land allocated to the residential condominium units retained by MORI for its time share resort, and (ii) an agreed upon development fee earned by McIntosh Mill. Construction of all phases was completed in 1997 and the cash portion of the purchase price for the commercial space payable to MORI is approximately $3.95 million. MORI has secured payment of these amounts by purchase money mortgages on the commercial condominium units until McIntosh Mill obtains long term mortgage financing which is expected to be arranged in 1998. On March 29, 1997, Old Marriott acquired substantially all of the outstanding common stock of Renaissance Hotel Group N.V. ("RHG"), an operator and franchisor of 150 hotels in 38 countries, for approximately $1 billion. Dr. Henry Cheng Kar-Shun, a former director of Old Marriott and now a director of New Marriott, together with members of the Cheng family, beneficially owned approximately 60 percent of the RHG shares acquired by Old Marriott, and Dr. Cheng became a director of Old Marriott in connection with the RHG acquisition. RHG operates 87 hotels in which affiliates of Dr. Cheng and members of the Cheng family have a direct or indirect ownership or leasehold interest. New World Development, for which Dr. Cheng serves as Managing Director and which is 35.3 percent owned by Dr. Cheng and members of the Cheng family, its affiliates or -14- affiliates of Dr. Cheng have indemnified RHG, its subsidiaries and Old Marriott for certain lease, debt, guarantee and other obligations in connection with the formation of RHG as a hotel management company in 1995. Relationship Between Old Marriott and Host Marriott J.W. Marriott, Jr. and Richard E. Marriott and their respective immediate family members beneficially own approximately 6.5 percent and 6.5 percent, respectively, of the common stock of Host Marriott Corporation ("Host Marriott"). Richard E. Marriott is the Chairman of the Board of Host Marriott, and J.W. Marriott, Jr. is a director of Host Marriott. Old Marriott and Host Marriott are or have been party to agreements which provide, among other things, for Old Marriott to (i) manage lodging properties owned or leased by Host Marriott (the "Host Marriott Lodging Management Agreements"), (ii) manage senior living communities owned by Host Marriott (the "Host Marriott Senior Living Management Agreements"), (iii) advance up to $225 million to Host Marriott under a line of credit (the "Host Marriott Credit Agreement"), (iv) guarantee Host Marriott's performance in connection with certain loans or other obligations (the "Old Marriott Guarantees") and (v) provide Host Marriott with various administrative and consulting services and a sublease of office space at the Marriott headquarters building (the "Services Agreements"). Old Marriott had the right to purchase up to 20 percent of the voting stock of Host Marriott if certain events involving a change of control of Host Marriott occur. These agreements were assigned from Old Marriott to New Marriott upon completion of the Spinoff. The Host Marriott Lodging Management Agreements provide for Old Marriott to manage Marriott hotels, Courtyard hotels and Residence Inns owned or leased by Host Marriott. Each Host Marriott Lodging Management Agreement, when entered into, reflects market terms and conditions and is substantially similar to the terms of management agreements with third-party owners regarding lodging facilities of a similar type. Old Marriott recognized sales of $2,302 million and operating profit (before corporate expenses and interest) of $140 million during 1997, from the lodging properties owned or leased by Host Marriott. Additionally, Host Marriott is a general partner in several unconsolidated partnerships that own lodging properties operated by Old Marriott under long- term agreements. Old Marriott recognized sales of $1,513 million and operating profit (before corporate expenses and interest) of $122 million in 1997, from the lodging properties owned by these unconsolidated partnerships. Old Marriott also leases land to certain of these partnerships and recognized land rent income of $23 million in 1997. In June 1997, Old Marriott sold to Host Marriott all of the issued and outstanding stock of Forum Group, Inc. which owns or leases 29 senior living communities, for aggregate consideration of approximately $550 million, comprised of cash, notes from Host Marriott, Old Marriott's share of outstanding debt of Forum Group, and approximately $87 million to be received as expansions as certain communities are completed. Marriott Senior Living Services, Inc., a subsidiary of Old Marriott, manages these communities under the Host Marriott Senior Living Management Agreements. Each Host Marriott Senior Living Management Agreement reflects market terms and conditions and is substantially similar to the terms of management agreements with third-party owners regarding senior living facilities of a similar type. Old Marriott recognized sales of $126 million and operating profit (before corporate expenses and interest) of $1 million under these agreements during 1997. On June 19, 1997, the $225 million secured credit facility under the Host Marriott Credit Agreement was terminated by mutual consent. Under the Host Marriott Credit Agreement, interest on outstanding balances up to $112.5 million accrued at LIBOR plus 3 percent; interest on outstanding balances from $112.5 million to $225 million accrued at LIBOR plus 4 percent. Old Marriott has provided, and New Marriott may in the future provide, financing to Host Marriott for a portion of the cost of acquiring properties to be operated or franchised by New Marriott, including -15- notes received as partial consideration for Host Marriott's purchase of Forum Group, Inc. The outstanding principal amount of these loans was $135 million at January 2, 1998, and Old Marriott recognized $9 million in 1997 in interest and fee income under these credit agreements with Host Marriott. Under the Old Marriott Guarantees, Old Marriott has guaranteed Host Marriott's performance to lenders and other third parties. These guarantees were limited to $107 million at January 2, 1998. No payments have been made by Old Marriott pursuant to these guarantees. Old Marriott also provides certain administrative services to Host Marriott (including the services provided to Host Marriott Services prior to the Host Marriott Services Distribution) for which Old Marriott was paid approximately $17 million in 1997, including reimbursements, pursuant to the Services Agreements. In December 1997, Host Marriott completed its acquisition of the Leisure Park at Lakewood, New Jersey senior living community, purchasing all but one percent of Old Marriott's 50 percent interest for approximately $8.65 million in cash and notes. In 1997, Old Marriott's subsidiary that manages this facility received management fees of $919,665 from the partnership. Relationship Between Old Marriott and Host Marriott Services Until December 29, 1995, Host Marriott Services Corporation ("Host Marriott Services") was a wholly owned subsidiary of Host Marriott. On that date, Host Marriott separated the Host Marriott Services businesses from its other businesses through the "Host Marriott Services Distribution" to holders of outstanding shares of Host Marriott common stock of one share of Host Marriott Services common stock for each five shares of Host Marriott common stock. Upon the consummation of the Host Marriott Services Distribution, Host Marriott Services became a separate, publicly held company. J.W. Marriott, Jr. and Richard E. Marriott and their respective immediate family members beneficially own approximately 6.9 percent and 6.8 percent, respectively, of the common stock of Host Marriott Services. William J. Shaw, former President and Chief Operating Officer and a director of Old Marriott and now the President and Chief Operating Officer and a director of New Marriott and a Director of the Company, is the Chairman of the Board of Host Marriott Services, and J.W. Marriott, Jr. and Richard E. Marriott are directors of Host Marriott Services. In connection with the Host Marriott Services Distribution, Old Marriott and Host Marriott Services entered into service agreements that are similar to the Service Agreements, and in some cases Host Marriott has assigned to Host Marriott Services, and Host Marriott Services has assumed, the applicable Services Agreements. Old Marriott received payments aggregating approximately $10 million in 1997, including reimbursements, pursuant to these agreements. In addition, Old Marriott provides and distributes food and supplies to Host Marriott Services, for which Old Marriott charged approximately $80 million in 1997. In connection with the Transactions, the obligations of Old Marriott to Host Marriott Services under various service agreements were assigned to New Marriott, and the Company and New Marriott entered into restated Noncompetition Agreements with Host Marriott Services that superceded the previous Noncompetition Agreement between Old Marriott and Host Marriott Services. -16- PART IV ITEM 14 -- EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) LIST OF DOCUMENTS FILED AS PART OF THIS REPORT (1) FINANCIAL STATEMENTS Please refer to the Form 10-K, as filed on February 23, 1998, for the information required to be included in Item 14(a)(1). (2) FINANCIAL STATEMENT SCHEDULES Please refer to the Form 10-K, as filed on February 23, 1998, for the information required to be included in Item 14(a)(2). (3) EXHIBITS Any shareholder who desires a copy of the following Exhibits may obtain a copy upon request from the Company at a charge that reflects the reproduction cost of such Exhibits. Requests should be made to the Secretary, Sodexho Marriott Services, Inc., 10400 Fernwood Road, Bethesda, Maryland 20817. Incorporation by Reference (where a report or registration statement is indicated below, that document has been previously filed by the Company and the applicable exhibit is incorporated by reference thereto.) Exhibit No. Description - ------------------------------------------------------------------------------------------------------------------------------------ 3.1 Amended and Restated Certificate of Exhibit No. 3(a) to Form 8-K dated April 3, 1998. Incorporation. 3.2 Amended and Restated Bylaws. Exhibit No. 3(b) to Form 8-K dated April 3, 1998. 4.1 Certificate of Designation, Preferences and Exhibit No. 4.1 to Form 8-K dated October 25, 1993. Rights of Series A Junior Participating Preferred Stock. 4.2 Rights Agreement with The Bank of New York, (a) Exhibit No. 4.2 to Form 8-K dated October 25, 1993; as Rights Agent, as amended. (b) Exhibit No. 1 to Form 8-A/A filed on October 15, 1997 (Amendment No. 1); and (c) Amendment No. 2 to Rights Agreement dated as of March 27, 1998 to be filed by amendment to Form 8-A. 4.3 Indenture with Chemical Bank, as Trustee, as (a) Exhibit Nos. 4(i) and 4(ii) to Form 8-K dated supplemented December 8, 1993 (original Indenture and First Supplemental Indenture); (b) Exhibit No. 4(ii) to Form 8-K dated April 19, 1995 (Second Supplemental Indenture); (c) Exhibit No. 4.2 to Form 8-K dated June 7, 1995 (Third Supplemental Indenture); (d) Exhibit No. 4.2 to Form 8-K dated December 11, 1995 (Fourth
-17- Incorporation by Reference (where a report or registration statement is indicated below, that document has been previously filed by the Company and the applicable exhibit is incorporated by reference thereto.) Exhibit No. Description - ---------------------------------------------------------------------------------------------------------------------------- Supplemental Indenture); (e) Exhibit No. 4(a) to Form 8-K/A dated April 27, 1998 (Fifth Supplemental Indenture); (f) Exhibit No. 4(b) to Form 8-K/A dated April 27, 1998 (Sixth Supplemental Indenture); Exhibit No. 4(c) to Form 8-K/A dated April 27, 1998 (Seventh Supplemental Indenture); and Exhibit No. 4(d) to Form 8-K/A dated April 27, 1998 (Eighth Supplemental Indenture). 4.4 Indenture with The Bank of New York, as (a) Exhibit No. 4.1 to Form 8-K dated March 25, 1996; (b) Trustee, relating to Liquid Yield Option Exhibit No. 4.2 to Form 8-K dated March 25, 1996 (First Notes, as supplemented. Supplemental Indenture) 4.5 Indenture among RHG Finance Corporation, as (a) Exhibit No. 2.02 to Renaissance Hotel Group N.V. issuer, Renaissance Hotel Group N.V. and Old Annual Report on Form 20-F for the fiscal year ended June Marriott, as guarantors, and The First 30, 1996; and (b) Exhibit No. 4 to Form 10-Q for the National Bank of Chicago as Trustee, as fiscal quarter ended June 20, 1997 (First and Second supplemented. Supplemental Indenture). 10.1 $1.5 billion Credit Agreement with Citibank, (a) Exhibit No. 10 to Form 10-Q for the fiscal quarter N.A., as Administrative Agent, and certain ended March 28, 1997 (original agreement), and (b) banks, as Banks, as amended. previously filed as Exhibit No. 10.1 to the Form 10-K for the fiscal year ended January 2, 1998 (First Amendment). 10.2 Distribution Agreement with Host Marriott, (a) Exhibit No. 10.3 to Form 8-K dated October 25, 1993; as amended. (b) Exhibit No. 10.2 to Form 10-K for the fiscal year ended December 29, 1995 (first Amendment); and (c) Exhibit No. 10-1 to Form 10-Q for the fiscal quarter ended September 12, 1997 (Second Amendment). 10.3 Non Competition Agreement with Host Marriott (a) Exhibit No. 10.7 to Form 8-K dated October 25, 1993; and Host Marriott Services Corporation, as (b) Exhibit No. 10.4 to Form 10-K for the fiscal year amended. ended December 29, 1995 (Amendment No. 1). 10.4 Employee Benefits and Other Employment Exhibit No. 10.6 to Form 8-K dated October 25, 1993. Matters Allocation Agreement with Host Marriott. 10.5 1993 Comprehensive Stock Incentive Plan, as Exhibit No. 10.7 to Form 10-K for the fiscal year ended amended. December 30, 1994. 10.6 1996 Comprehensive Stock Incentive Plan. Appendix A to Proxy Statement for the Annual Meeting of Shareholders held on May 10, 1996. 10.7 1994 Executive Officer Incentive Plan. Exhibit No. 10.1 to Form 10-Q for the fiscal quarter ended March 25, 1994.
-18- Incorporation by Reference (where a report or registration statement is indicated below, that document has been previously filed by the Exhibit No. Description Company and the applicable exhibit is incorporated by reference thereto.) - --------------------------------------------------------------------------------------------------------------------------- 10.8 1995 Non-Employee Directors' Deferred Stock Appendix A to Proxy Statement for the Annual Meeting of Compensation Plan. Shareholders held on May 9, 1997. 10.9 Agreement and Plan of Merger by and among Exhibit No. (c)(1) to Schedule 14d-1 dated February 23, Marriott International, Inc., FGI 1996. Acquisition Corp. and Forum Group, Inc. 10.10 Acquisition Agreement, dated as of February Exhibit No. 10.1 to Form 8-K dated February 19, 1997. 17, 1997, by and between Old Marriott and Renaissance Hotel Group N.V. 10.11 Shareholder Agreement, dated as of February Exhibit No. 10.2 to Form 8-K dated February 19, 1997. 17, 1997, by and between Marriott International, Inc. and Diamant Hotel Investments N.V. 10.12 Stock Purchase Agreement, dated as of June Exhibit No. 10.2 to Form 10-Q for the fiscal quarter 21, 1997, by and between Host Marriott ended September 12, 1997. Corporation and Marriott Senior Living Services, Inc. 10.13 Distribution Agreement dated as of September Appendix A to Definitive Proxy Statement for a Special 30, 1997 between the Company and New Meeting of Shareholders commenced on March 17, 1998 and Marriott MI, Inc. adjourned to March 20, 1998. 10.14 Agreement and Plan of Merger dated as of Appendix B to Definitive Proxy Statement for a Special September 30, 1997 by and among the Company, Meeting of Shareholders commenced on March 17, 1998 and Marriott-ICC Merger Corp., New Marriott MI, adjourned to March 20, 1998. Inc., Sodexho Alliance, S.A., and International Catering Corporation 10.15 Omnibus Restructuring Agreement dated as of Appendix C to Definitive Proxy Statement for a Special September 30, 1997 by and among the Company, Meeting of Shareholders commenced on March 17, 1998 and Marriott-ICC Merger Corp., New Marriott MI, adjourned to March 20, 1998. Inc., Sodexho Alliance, S.A., and International Catering Corporation. 10.16 Amendment Agreement, dated as of January 28, Appendix D to Definitive Proxy Statement for a Special 1998, by and among the Company, Marriott-ICC Meeting of Shareholders commenced on March 17, 1998 and Merger Corp., New Marriott MI, Inc. Sodexho adjourned to March 20, 1998. Alliance, S.A. and International Catering Corporation.
-19- Incorporation by Reference (where a report or registration statement is indicated below, that document has been previously filed by the Company and the applicable exhibit is incorporated by reference thereto.) Exhibit No. Description - --------------------------------------------------------------------------------------------------------------------------- 10.17 Employee Benefits and Other Employment Exhibit No. 10.1 to Form 10 of New Marriott MI, Inc. Matters Allocation Agreement, dated as of filed on February 13, 1998. September 30, 1997, by and between the Company and New Marriott MI, Inc. 10.18 Trademark and Trade Name License Agreement Filed herewith. dated as of March 27, 1998 among the Company, New Marriott and Marriott Worldwide Corporation 10.19 Royalty Agreement dated as of March 27, 1998 Filed herewith. between Sodexho Alliance, N.A. and the Company. 10.20 $620 million Credit Agreement dated as of (a) Exhibit No. 10(a) to Form 8-K/A dated April 27, 1998; January 30, 1998 with the Company, as Borrower, and (b) Exhibit No. 10(c) to Form 8-K/A dated April 27, certain initial lenders, as Initial Lenders, 1998 (Amendment No. 1). Societe Generale and J.P. Morgan Securities Inc. ("J.P. Morgan"), as Arrangers, Societe Generale, as Administrative Agent, and Morgan Guaranty Trust Company of New York ("Morgan"), as Documentation Agent, as amended. 10.21 $735 million Credit Agreement dated as of (a) Exhibit No. 10(b) to Form 8-K/A dated April 27, 1998; January 30, 1998 with Sodexho Marriott and (b) Exhibit No. 10(d) to Form 8-K/A dated April 27, Operations, Inc., as Borrower, the Company, as 1998 (Amendment No. 1). Parent Guarantor, certain initial lenders, as Initial Lenders, Societe Generale and Morgan, as Initial Issuing Banks, Morgan, as Documentation Agent and Administrative Agent, and Societe Generale and J.P. Morgan, as Arrangers, as amended. 10.22 Stockholder Agreement dated as of Filed herewith. March 27, 1998 between Sodexho Alliance, N.A. and the Company. 12 Computation of Ratio of Earnings to Fixed Previously filed as Exhibit No. 12 to the Charges. Form 10-K for the fiscal year ended January 2, 1998. 21 Subsidiaries of Marriott International, Inc. Previously filed as Exhibit No. 21 to the Form 10-K for the fiscal year ended January 2, 1998. 23 Consent of Arthur Andersen LLP. Previously filed as Exhibit No. 23 to the Form 10-K for the fiscal year ended January 2, 1998. 99 Forward-Looking Statements. Previously filed as Exhibit No. 99 to the Form 10-K for the fiscal year ended January 2, 1998.
-20- SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SODEXHO MARRIOTT SERVICES, INC. Dated: April 15, 1998 BY: /s/ Charles D. O'Dell ------------------------------------------ Charles D. O'Dell President and Chief Executive Officer Pursuant to the requirement of the Securities Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in capacities and on the dates indicated. Dated: April 15, 1998 By: /s/ Charles D. O'Dell ---------------------------------------- Charles D. O'Dell President, Chief Executive Officer and Director [Principal Executive Officer] Dated: April 15, 1998 By: /s/ Lawrence E. Hyatt ---------------------------------------- Lawrence E. Hyatt Senior Vice President and Chief Financial Officer [Principal Financial Officer] Dated: April 15, 1998 By: /s/ Lota Zoth ---------------------------------------- Lota Zoth Corporate Controller and Chief Accounting Officer [Principal Accounting Officer] Dated: April 15, 1998 By: /s/ William J. Shaw ---------------------------------------- William J. Shaw Chairman and Director Dated: April 15, 1998 By: /s/ Pierre Bellon ---------------------------------------- Pierre Bellon Director Dated: April 15, 1998 By: /s/ Bernard Carton ---------------------------------------- Bernard Carton Director Dated: April 15, 1998 By: /s/ Edouard de Royere ---------------------------------------- Edouard de Royere Director -21- Dated: April 15, 1998 By: /s/ John W. Marriott, III ---------------------------------------- John W. Marriott, III Director Dated: April 15, 1998 By: /s/ Doctor R. Crants ---------------------------------------- Doctor R. Crants Director Dated: April 15, 1998 By: /s/ Daniel J. Altobello ---------------------------------------- Daniel J. Altobello Director -22- EX-10.18 2 EXHIBIT 10.18 EXHIBIT 10.18 TRADEMARK AND TRADE NAME LICENSE AGREEMENT ------------------------------------------ THIS TRADEMARK AND TRADE NAME LICENSE AGREEMENT (this "Agreement") is made and entered into as of this 27th day of March, 1998 by and between MARRIOTT INTERNATIONAL, INC. (to be renamed "Sodexho Marriott Services, Inc."), a Delaware corporation ("SMS"), NEW MARRIOTT MI, INC. (to be renamed "Marriott International, Inc."), a Delaware corporation ("Spinco"), and MARRIOTT WORLDWIDE CORPORATION, a Maryland corporation ("MWC"). RECITALS -------- WHEREAS, SMS, directly and through subsidiaries, conducts both the Management Services Business (as hereinafter defined) and the Spinco Business (as defined in the Distribution Agreement described below); WHEREAS, SMS and Spinco are parties to that certain Distribution Agreement dated as of September 30, 1997 (the "Distribution Agreement"), pursuant to which (i) SMS has agreed to transfer to Spinco the Spinco Business, (ii) SMS has agreed to assign to Spinco all trademark, service mark, trade name and related rights that it owns with the exception of certain rights pertaining to the Management Services Business, and (iii) SMS has agreed to distribute to its stockholders all of Spinco's issued and outstanding capital stock (the "Distribution"); WHEREAS, SMS and Spinco are also parties to an Agreement and Plan of Merger dated as of September 30, 1997 (the "Merger Agreement") among SMS, Marriott-ICC Merger Corp. (a wholly owned subsidiary of SMS), Spinco, Sodexho Alliance, S.A. ("Sodexho") and International Catering Corporation (the subsidiary of Sodexho that operates the management services business of Sodexho in North America) (the "Company"), pursuant to which, among other things, Marriott-ICC Merger Corp. will merge with the Company (the "Merger") and Sodexho will receive merger consideration consisting of approximately 49% of the outstanding capital stock of SMS; WHEREAS, as a condition to the Distribution and the acquisition of the Company, Spinco has agreed to license to SMS and to cause MWC to license to SMS certain intellectual property rights on the terms and conditions set forth herein; NOW, THEREFORE, in consideration of the premises and the mutual covenants contained in this Agreement and the Distribution Agreement and in the related agreements entered into pursuant hereto and thereto, and for other valuable consideration, the receipt and sufficiency of which are hereby mutually acknowledged, the parties agree as follows: 1. Definitions; Interpretations. (a) Capitalized terms used but not ---------------------------- defined herein have the meanings set forth in the Distribution Agreement. In addition, the following terms have the meanings set forth below: "Agreement" means this Trademark and Trade Name License Agreement, together --------- with all exhibits and schedules hereto, as the same may be amended from time to time in accordance with the terms hereof. "Change of Control" means (i) the board of directors of SMS shall not ----------------- include for any consecutive forty-five (45) business day period both of William J. Shaw and John w. Marriott III or, in the event one of such persons resigns or otherwise no longer serves on the board, a successor director nominated or approved by the remaining director named above (or if each such director resigns or otherwise no longer serves, effective on or about the same date, a successor director nominated or approved by such departing director in lieu of by the remaining director) within fifteen (15) business days after such resignation or other departure becomes effective (and if no such successor director is so nominated or approved within such 15 day period then a Change of Control shall not be deemed to have occurred, and if both such directors shall have resigned or otherwise ceased to be on the board and in each case a successor was not so nominated or approved within such 15 day period, then this clause (i) shall no longer be of any force or effect), or (ii) any Person or two or more Persons acting in concert (other than, with respect to Sodexho only, a Significant Shareholder or group of Significant Shareholders and with respect to SMS only, Sodexho and/or any of its Affiliates) shall have acquired beneficial ownership (within the meaning of Rule 13d-3 of the Securities Exchange Commission under the Securities Exchange Act of 1934), directly or indirectly, of Voting Stock of SMS (after giving effect to the Distribution) or Sodexho, as the case may be, (or other securities convertible into such Voting Stock) representing fifty percent (50%) or more of the combined voting power of all Voting Stock of SMS or Sodexho, as the case may be, or (iii) Significant Shareholders, as a group, shall fail to have beneficial ownership (within the meaning of Rule 13d-3 of the Securities Exchange Act of 1934), directly or indirectly, of Voting Stock of Sodexho representing not less than twenty-five percent (25%) of the combined voting power of all Voting Stock of Sodexho. "Corporate Names" has the meaning set forth in Section 2(a). --------------- "Dispute" has the meaning set forth in Section 9(b). ------- "Distribution" has the meaning specified in the Recitals hereto. ------------ "Distribution Date" means the date on which the Distribution occurs. ----------------- "Expenses" has the meaning set forth in Section 9(b). -------- "Indemnified Party" has the meaning set forth in Section 9(c). ----------------- "Indemnitor" has the meaning set forth in Section 9(c). ---------- 2 "License" means the license granted pursuant to Section 2 of this ------- Agreement. "License Fee" has the meaning set forth in Section 5. ----------- "Management Services Business" means (i) the business of providing (A) ---------------------------- management services or operations with respect to food (including catering), beverages, housekeeping, laundry, vending, plant and equipment operation and maintenance, grounds care, convenience stores, and gift or merchandise shops, located in hospitals, nursing homes and other health care facilities, primary and secondary schools, colleges, universities, academies and other educational facilities, corporate headquarters and office buildings, manufacturing or industrial facilities, municipal, state or federal government offices, courthouses, stadiums and arenas owned or operated by colleges or universities (except for such stadiums and arenas utilized by professional football, basketball, or major league baseball or hockey teams), national or state parks, ski resorts or other seasonal resorts, zoos, aquariums, concert or other entertainment facilities, tourist attractions, or professional minor league sporting arenas and stadiums; and (B) route vending provided to airports or facilities related thereto; (ii) to the extent not included in the preceding clause (i), such other business activities conducted by the Marriott Management Services strategic business unit of SMS through or using the Retained Assets, by the Company and its Subsidiaries, and by Sodexho Financiere du Canada Inc. and its Subsidiaries, in each case as of the date of the Merger (and after giving effect to the Distribution) including managing the Retained Conference Centers, which for purposes of this Agreement shall be deemed to include only those Retained Conference Centers that are used solely by the party contracting with the SMS Party and its invitees which have a preexisting relationship with the client or are using its facilities (other than the conference center itself); provided that the activities included in this clause (ii) but which are not - -------- covered by the preceding clause (i) shall be limited to the specific location and accounts so covered and shall not apply to future accounts or locations; and (iii) such other businesses, reasonably related to the foregoing, to which Spinco may from time to time consent in writing, such consent not to be unreasonably withheld. Notwithstanding the foregoing, under no circumstances shall the Management Services Business include (X) activities conducted at prisons, penitentiaries or other penal institutions, (Y) gaming activities (other than retail sale of lottery tickets) or (Z) any activity prohibited by law. For the avoidance of doubt, the parties agree that Management Services Business does not include (I) the Lodging and Conference Center Management Business (other than managing the Retained Conference Centers as described above, providing commercial laundry facilities to lodging and conference center properties, and the lodging management activities conducted by the NANA Joint Ventures), (II) the provision or delivery of any assisted living, nursing or other personal care services at any Senior Living Facility, (III) the Home Services Business (other than such services provided to non-residential customers), (IV) the Timeshare and Interval Ownership Business, (V) the Golf Property Management Business, (VI) the A&C and Employment Related Services Business (other than activities covered by clause (ii) of the first sentence of this definition) and (VII) the other businesses described on Exhibit 2 attached --------- hereto. Capitalized terms used in clauses (I) through (VI) in the preceding sentence shall have the meanings ascribed to them in the Noncompetition Agreement. 3 "Marriott Marks" means any name or mark including the word "MARRIOTT." -------------- "Merger Agreement" has the meaning specified in the Recitals hereto. ---------------- "MWC" has the meaning set forth in the first paragraph of this Agreement. --- "Noncompetition Agreement" means that certain Noncompetition Agreement, ------------------------ dated as of the date hereof, between Spinco and SMS. "Significant Shareholder" means with respect to Sodexho, any Person that ----------------------- (a) is Pierre Bellon, (b) is or hereafter becomes a spouse of or any other relative (by blood, marriage or adoption) of Pierre Bellon, (c) is or becomes a transferee of the interests of any of the foregoing Person or Persons by descent or by trust or similar arrangement intended as a method of descent, (d) is a corporation or other entity controlled, directly or indirectly, by one or more of the foregoing, or (e) is any trust or other entity established primarily for the benefit of one or more of the foregoing. "SMS" has the meaning set forth in the first paragraph of this Agreement. --- "SMS Party" means SMS and any Subsidiary of SMS that executes and delivers --------- to Spinco an Additional Signature Page in the form attached as Exhibit 1, but only as long as such Subsidiary remains a Subsidiary of SMS. "Spinco" has the meaning set forth in the first paragraph of this ------ Agreement. "Voting Stock" means capital stock issued by a corporation or equivalent ------------ interests in any other Person, the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even though the right to so vote has been suspended by the happening of such contingency. (b) Interpretation. The descriptive headings 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. For all purposes of this Agreement, except as otherwise expressly provided, (i) the enumeration of one or more items following the term "including" shall not be interpreted as excluding any items not so enumerated, (ii) defined terms shall include the plural as well as the singular, (iii) all references to "Articles," "Sections" or other subdivisions are to designated Articles, Sections and other subdivisions of the body of this Agreement, (iv) pronouns of either gender or neuter shall include, as appropriate, the other pronoun forms, and (v) the words "herein," "hereof" and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision. 2. Scope of License to Use Marriott Marks. For good and valuable -------------------------------------- consideration, and in accordance with the terms and conditions hereunder, Spinco (with respect to the United 4 States) and MWC (with respect to Canada) each hereby grants the following non- exclusive license to use the Marriott Marks in connection with the Management Services Business: a. Corporate Name Use. For a period of four years following ------------------ the Distribution Date, Spinco (with respect to the United States) and MWC (with respect to Canada) grants to the SMS Parties a non-exclusive limited license to use the "Marriott" mark solely as a part of (i) SMS's corporate name, "Sodexho Marriott Services, Inc.," or "Sodexho Marriott Services", (ii) the names of SMS's principal business divisions, which names shall be limited to "Sodexho Marriott Health Care Services," "Sodexho Marriott Education Services," "Sodexho Marriott Corporate Services," "Sodexho Marriott School Services," "Sodexho Marriott Laundry Services," and "Sodexho Marriott Services Canada", and (iii) such reasonable number of other corporate names of SMS Parties as may be consented to by Spinco, such consent not to be unreasonably withheld (collectively, the "Corporate Names"). Such use of the Corporate Names can be made only in connection with the Management Services Business. No Subsidiary of SMS, or party other than SMS itself, may use any Marriott Mark in any manner, including its corporate, partnership, trade name or other entity name except that any such Subsidiary may use the Corporate Names as the name of such corporation, partnership or other entity, or as a d/b/a/ name, solely in connection with the Management Services Business for the same period and subject to the same terms and limitations that apply to use of the Corporate Names. Subject to the other terms and provisions in this Agreement, this License permits only the following uses of the Corporate Names in connection with the Management Services Business: (i) Printed Materials. The SMS Parties may use the ----------------- Corporate Names on printed materials and documentation, other than promotional materials and advertising (and other printed materials that are covered by clauses (ii) - (v) below), solely (a) to identify SMS as a company in shareholder communications, including annual and quarterly reports, filings with the Securities and Exchange Commission and other governmental entities, (b) in documentation submitted to financial institutions in connection with financial transactions such as loan applications, (c) to identify any SMS Party or its employees to clients, suppliers and other third parties with which it deals in the Management Services Business, (d) on stationary used in the Management Services Business, and (e) on accounting forms, invoices, receipts and similar preprinted or standardized business forms used in the Management Services Business. (ii) Promotional Materials and Advertising. The SMS ------------------------------------- Parties may use the Corporate Names in promotional materials and advertising provided that (a) such use clearly identifies the services offered as relating solely to the Management Services Business, and (b) at Spinco's or MWC's request, not more often than once per fiscal quarter, and at any time upon Spinco's or MWC's reasonable request based upon a reasonable belief that a violation of this Agreement by an SMS Party may have occurred or be imminent, representatives familiar with SMS's promotional materials and advertising shall meet with representatives of Spinco and/or MWC at Spinco's headquarters to provide samples of all such promotional materials and advertising used or proposed to be used, the intended use or uses thereof, and other information reasonably required by Spinco and/or MWC to enable Spinco and/or MWC to confirm that such materials and uses are in conformity with this Agreement. 5 (iii) Signage. The SMS Parties may use the Corporate Names in ------- connection with the Management Services Business on signage solely (a) at corporate offices (e.g., corporate headquarters, regional offices, local offices), and (b) at the unit level in the types of locations, and substantially in the sizes, manner and frequency, consistent with past practice as of September 30, 1997. (iv) SMS Logo. The SMS Parties may use the Corporate Names -------- in a logo developed specifically for use by SMS, which logo must be approved by Spinco and MWC, which approval shall not be unreasonably withheld. The logo may be used solely in the manners permitted by this Section 2. (v) Employee Badges and Uniforms, etc. The SMS Parties may --------------------------------- use the Corporate Names on employee uniforms, badges, identification cards, bulletin boards, menus and menu boards and employee recognition displays and other means of identifying the SMS Parties or their employees in connection with the Management Services Business, consistent with past practice as of September 30, 1997. Notwithstanding the foregoing, employee uniforms and name badges may contain the words "Sodexho Marriott" only, without the need to add "Services" thereto. (vi) Certain Limitations at Senior Living Facilities. ----------------------------------------------- Notwithstanding the foregoing, the Corporate Names shall not be used in any way at or in connection with any limited service or full service retirement or senior living service facility or community, including any independent and/or assisted living facility or congregate care facility; provided, that this -------- limitation shall not apply to (A) any such facility in which SMS (not including the Company or its Subsidiaries) has an account as of the Distribution Date, or (B) any skilled nursing facility that does not include independent or assisted living units; provided, further, that if requested by a client or potential -------- ------- client, an SMS Party may use the Corporate Names solely to disclose relevant corporate-subsidiary relationships to the client. With respect to any use of the Corporate Names permitted by clause (A) of the foregoing proviso, SMS shall prohibit its client from using the Corporate Names in promotional or advertising materials and shall use its commercially reasonable efforts to cause such client not to use or invoke the Corporate Names in its sales or promotional activities, whether within or outside the unit. (vii) Certain Limitations at Conference Centers. ----------------------------------------- Notwithstanding the foregoing, the Corporate Names shall be used at or in connection with the Retained Conference Centers only in a manner consistent with past practice as of September 30, 1997. The parties agree that the Corporate Names may not be used to advertise, promote or market the Retained Conference Centers to the general public or to other third parties, other than brochures or similar print media sent or provided solely to the client or to potential invitees of the client which would use the conference center either in connection with a preexisting relationship with the client or to use its facilities (other than the conference center itself), in a manner consistent with past practice as of September 30, 1997. 6 (viii) Name Prominence. The word "Marriott" shall be no --------------- more prominent that the word "Sodexho" in connection with any use of the Marriott Mark or the Corporate Names hereunder. For the avoidance of doubt, neither Spinco nor MWC shall have any right to approve any use of (1) the corporate name of any SMS Party except the Corporate Names or (2) other materials that do not include any Marriott Mark. b. Existing Agreements. Spinco (with respect to the United ------------------- States) and MWC (with respect to jurisdictions outside the United States) grants to the SMS Parties a non-exclusive limited license to use the Marriott Marks solely in accordance with and to the extent required by the terms of any joint venture or similar agreement listed on Exhibit 1 hereto as any such agreement exists as of the date hereof; provided that the SMS Parties shall use -------- commercially reasonable efforts commencing as soon as practicable after the date hereof to amend such agreements to delete any right to use the Marriott Marks; provided further that if the SMS Parties fail to amend such agreements as - ---------------- provided in the first proviso within one year following the Distribution Date, Spinco and MWC, as applicable, shall have the right to negotiate directly with the joint venture or its members to effect such amendment on terms reasonably satisfactory to Spinco and SMS, and SMS agrees to cooperate with Spinco or MWC, as applicable, in connection therewith, provided that such negotiations shall not unreasonably interfere with the applicable joint venture's conduct of its Management Services Business. c. Transitional Trademark Usage. For a period of nine months ---------------------------- following the Distribution Date, each of Spinco (with respect to the United States) and MWC (with respect to Canada) grants to the SMS Parties a non-exclusive license to use the Marriott Marks as trademarks or service marks to identify goods or services provided in connection with the Management Services Business solely in the manner in which the Marriott Marks are used in the United States and Canada by the Marriott Management Services strategic business unit of SMS as of September 30, 1997. This transitional license is granted by Spinco and MWC to the SMS Parties solely for the purpose of phasing out existing use of the Marriott Marks. Except for the use of the Corporate Names permitted in Section 2(a) above and the use of the Marriott Marks permitted in Section 2(b), the SMS Parties shall make no use whatsoever of the Marriott Marks after the expiration of the nine month period following the Distribution Date. d. Usage Generally. No SMS Party is permitted to make any --------------- other use of the Marriott Marks without the prior written permission of Spinco or MWC, as applicable, which Spinco or MWC, as applicable, may grant or withhold in its sole discretion. 3. Territory. The License granted in this Agreement covers the --------- United States, its possessions, Canada and, to the extent necessary to perform the agreements set forth on Exhibit 1, as amended after the date hereof, such other territories specifically identified in such agreements (which agreements may not be amended or modified as to the use of the Marriott Marks, without the prior written consent of Spinco or MWC, as applicable, which Spinco or MWC, as applicable, may grant or withhold in its sole discretion). 7 4. Restriction of License to SMS. The parties agree that the License ----------------------------- granted herein to use the Marriott Marks in connection with the Management Services Business shall be restricted solely to SMS and the other SMS Parties, and only for so long as such entities remain SMS Parties. 5. Payment of License Fee. During the term hereof, SMS hereby agrees to ---------------------- pay to Spinco and MWC an annual license fee (the "License Fee") in the aggregate amount of One Million Dollars ($1,000,000). Such amount shall be paid in equal quarterly installments of $250,000 payable in advance on the Distribution Date (pro rated for the remainder of the then-current fiscal quarter of Spinco) and on the first day of each fiscal quarter of Spinco thereafter. If this Agreement is terminated, such fee shall be prorated for any partial quarter during which this Agreement is in effect, and Spinco and MWC (as a joint and several obligation) will promptly return to SMS the balance of the License Fee for such quarter. 6. Spinco's and MWC's Ownership of the Marriott Marks. -------------------------------------------------- a. The SMS Parties acknowledge that Spinco is the exclusive owner of the Marriott Marks in the United States, and that MWC is the exclusive owner of the Marriott Marks in Canada and in other territories outside the United States. The SMS Parties agree that, except for the limited licensed right to use the Marriott Marks as provided in this Agreement, no SMS Party has any right, title or interest in or to the Marriott Marks. For purposes of clarification, the parties acknowledge that no SMS Party has any right to use the Marriott Marks in connection with the Management Services Business, except as provided in this Agreement. The SMS Parties agree that all uses of the Marriott Marks by the SMS Parties and the goodwill associated with such uses shall inure solely to the benefit of Spinco and MWC, and upon termination of its rights to use the Marriott Marks as provided in this Agreement, all right and interest of the SMS Parties in and to the Marriott Marks shall revert fully to Spinco and MWC, as applicable. b. The SMS Parties agree to cooperate fully with Spinco and MWC in recording appropriate assignment and other documents evidencing Spinco's or MWC's, as applicable, ownership of the Marriott Marks. The SMS Parties agree to take no action inconsistent with Spinco's or MWC's ownership of and interest in the Marriott Marks. Each of Spinco and MWC agrees to cooperate fully with SMS in recording appropriate documents evidencing the License to SMS. c. The SMS Parties shall not (i) attack or challenge in any manner whatsoever the validity of the Marriott Marks, Spinco's and MWC's ownership thereof or any of the terms of this Agreement, or (ii) assist any third party in doing any of the same. The SMS Parties hereby waive any right to contest the validity of the Marriott Marks. 7. Limitations on Use of the Marriott Marks. The License to use the ---------------------------------------- Marriott Marks described in Section 2 of this Agreement is expressly subject to the following conditions: 8 a. All uses of Marriott Marks by the SMS Parties, except such uses in advertising and promotional materials which are covered by Section 2.a.(ii) above, shall be subject to Spinco's and MWC's (as applicable) prior written approval on the basis of samples submitted by SMS with a written description of the intended use or uses. If such samples and uses are approved in the manner set forth herein, they shall be made in strict conformance with such reasonable specifications or requirements as Spinco or MWC (as applicable) shall establish (such specifications and requirements to be consistent with the requirements of this Agreement and/or with specifications and requirements then in use for the Marriott Mark by Spinco and/or MWC), as such specifications or requirements may be modified by Spinco or MWC from time to time upon reasonable notice to SMS. b. All displays of Marriott Marks by the SMS Parties shall bear such copyright, trademark, service mark and other notices as Spinco or MWC (as applicable) shall reasonably require, and the SMS Parties shall adhere to any other reasonable and customary posting requirements developed by Spinco and MWC with respect to the Marriott Marks. c. The SMS Parties shall not use the Marriott Marks as part of, or display the Marriott Marks in conjunction with, any other names or marks except with Spinco's or MWC's (as applicable) prior written approval which approval (except as provided otherwise in Section 2) may be granted or withheld by Spinco in its sole discretion. Such prior written approval by Spinco shall be provided within fifteen (15) days after receipt of such request from any SMS Party. In the absence of a written disapproval within fifteen (15) days, the specific use or intended use by the SMS Parties shall be presumed to be consistent with this Agreement. d. The SMS Parties shall not use the Marriott Marks or any confusingly similar name, mark, term or design, except as expressly authorized in this Agreement or consented to by Spinco or MWC (as applicable) in writing, and the SMS Parties shall not attempt to register or aid any third party in using or attempting to register any such name, mark, term or design in any jurisdiction or locale. e. The SMS Parties shall not use the Marriott Marks in any manner that is inconsistent with the fact that they are using the Marriott Marks as a licensee of Spinco or MWC (as applicable). f. The SMS Parties shall not use the Marriott Marks in connection with any reference to the experience, operations or history in the Spinco Business of SMS, its Affiliates or predecessors (including the lodging, senior living services and timeshare businesses) except for the specific reference to SMS as "a former division of Marriott International, Inc., a worldwide hospitality company." 9 g. The SMS Parties shall not use the Marriott Marks in any manner that may tend to: (1) negatively impact or disparage the image or reputation of the Marriott Marks, and/or (2) dilute the distinctiveness of the Marriott Marks. Any breach of the foregoing provisions may be remedied by the remedies set forth in Section 16 of this Agreement as applicable. 8. Quality Control. --------------- a. Each of Spinco and MWC is familiar with the general quality of the goods and services now provided by SMS and the Retained Subsidiaries in the Management Services Business and finds, at the present time, the quality of such goods and services to be acceptable. All goods and services to be provided by the SMS Parties under the Marriott Marks shall be provided in accordance with the quality standards of SMS and the Retained Subsidiaries now in place and such other quality standards that Spinco or MWC (as applicable) may reasonably impose from time to time; provided that such other quality standards shall not be -------- higher than the standard then prevailing in the industry for similar services and products in similar markets, unless a higher standard is required by law. b. Spinco (in the United States) and MWC (in Canada and elsewhere in the Territory) shall have the right, at reasonable times and with prior notice, to inspect any facility operated by any SMS Party, and any goods provided by any SMS Party, at any time for the purpose of determining whether they have met or are meeting the quality standards required under this Agreement. SMS shall promptly produce and deliver (at its own expense) to Spinco or MWC (as applicable) such examples of the use of the Marriott Marks by any SMS Party as Spinco shall reasonably request. Any breach of the foregoing provisions discovered by inspection or otherwise may be remedied by the remedies set forth in Section 16 of this Agreement. 9. Limitation of Liability; Indemnity. ---------------------------------- a. IN NO EVENT SHALL SPINCO OR MWC BE LIABLE FOR ANY MATTER WHATSOEVER RELATING TO THE USE BY ANY SMS PARTY OF THE MARRIOTT MARKS EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS SECTION 9. b. The SMS Parties shall indemnify, defend and hold harmless Spinco and MWC and their respective employees, representatives, directors, officers and agents from and against any and all costs, judgments, liabilities and expenses, including interest, penalties, attorneys' and third party fees, and all other amounts paid in the investigation, litigation, defense and/or settlement (collectively, "Expenses") resulting from any actual or potential claim, demand, dispute, notice, lawsuit, administrative proceeding or other action (collectively, 10 "Dispute") that relates in any way to the exercise of the rights granted in this Agreement by any SMS Party or any other usage by any SMS Party of any Marriott Mark. c. Spinco and MWC shall, jointly and severally, indemnify, defend and hold harmless the SMS Parties and their employees, representatives, directors, officers and agents from and against any and all Expenses resulting from any Dispute that relates to a third party claim that the Marriott Mark infringes any other trademark, tradename or service mark. d. The parties agree that Disputes arising hereunder shall be governed by the procedures set forth in Section 4.4 and 4.5 of the Distribution Agreement. e. The SMS Parties shall maintain a third party liability insurance policy during the term of this Agreement and for two years after its termination, in amounts and coverages and with deductibles customary for businesses of SMS's nature and size, to which policy each of Spinco and MWC shall be named as an additional insured to the full extent of the insurance carried by the SMS Parties; provided that in substitution of such policy Sodexho -------- may provide an unconditional, continuing guaranty in favor of each of Spinco and MWC (in form and substance reasonably acceptable to Spinco and MWC) pursuant to which Sodexho shall guaranty the indemnification obligations of the SMS Parties under this Section 9. 10. Infringement Proceedings. Each of Spinco and MWC shall take ------------------------ those steps it deems necessary, in its reasonable judgment, to protect its rights and interests in the Marriott Marks. Promptly upon receiving notice or knowledge thereof, each SMS Party shall provide Spinco and MWC with written notice of any unauthorized use or potentially infringing use by third parties of any Marriott Mark or any confusingly similar trademarks, service marks, trade names, terms or designs. Spinco and MWC shall each have the right, in its sole discretion and at its sole cost and expense, to commence infringement, unfair competition or other actions regarding any such use by third parties of any of the Marriott Marks or confusingly similar marks. The SMS Parties, at Spinco's and MWC's expense, shall cooperate with and assist Spinco and/or MWC in its investigation and prosecution of any of the foregoing. 11. Assignment and Sublicense. The SMS Parties may not assign ------------------------- their rights under this Agreement or sublicense their rights to use the Marriott Marks licensed to them pursuant to Section 2 of this Agreement, in whole or in part, to any third party. Any purported assignment or sublicense by the SMS Parties not in compliance with the terms of this Agreement shall be null and void. Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of the parties and their successors and assigns. No third party beneficiaries are intended by execution and delivery of this Agreement. 12. Other Licensees. During the term of the license granted --------------- hereunder, neither Spinco nor MWC shall grant a license or other right to any other party (other than a Subsidiary or Affiliate of Spinco; for the avoidance of doubt, Host Marriott Services Corporation and its Subsidiaries are not Affiliates of Spinco for this purpose) to use a Marriott Mark in any business that competes with the MMS Business as such term is defined in the Non- Competition 11 Agreement; provided, however, that the foregoing shall not require Spinco to -------- ------- amend, waive or take any other action with respect to that certain License Agreement, dated as of December 29, 1995, between SMS and Host Marriott Services Corporation, or that certain Assignment and License Agreement, dated as of October 8, 1993, between SMS and Host Marriott Corporation (it being understood that SMS's interest in each such agreement has been or will be assigned to Spinco). 13. Term. The License to use the Marriott Marks will extend from ---- the Distribution Date until: a. with respect to the permitted uses described in Section 2(a) of this Agreement, until the fourth anniversary of the Distribution Date, b. with respect to the permitted uses described in Section 2(b) of this Agreement, with respect to each agreement listed on Schedule 2(b), upon the earlier of the date such agreement (i) terminates or expires or (ii) is amended to delete any right to use the Marriott Marks, and c. with respect to the permitted use described in Section 2(c) of this Agreement, until the date nine months following the Distribution Date. 14. Termination of License. (i) Spinco and MWC may terminate this ---------------------- Agreement prior to the expiration of the term as follows: a. upon a Change of Control; b. upon (i) filing of a voluntary bankruptcy petition by SMS; (ii) filing of an involuntary bankruptcy petition against SMS which is not vacated, stayed or dismissed within ninety (90) days after filing thereof and results in the entry of an order for relief; (iii) assignment for the benefit of creditors made by SMS; or (iv) appointment of a receiver for SMS; c. if any SMS Party attempts to transfer or license any rights to any Marriott Mark in violation of this Agreement; or d. if any SMS Party breaches any term of this Agreement and such breach is not cured within thirty (30) days following provision of written notice of such breach by Spinco to SMS. SMS hereby agrees to notify Spinco and MWC in writing immediately upon the occurrence of an event constituting a Change of Control and any breach by any SMS Party of this Agreement. (ii) SMS may terminate this Agreement upon 180 days' prior written notice to Spinco and MWC. 12 15. Effect of Termination. For a period of 180 days after the earlier --------------------- of the termination of this Agreement or the giving of notice of termination under Section 14.(ii) (but in any event not beyond the expiration of the term (set forth in Section 13)), the SMS Parties shall be entitled to continue to use the Marriott Marks in accordance with the terms of this Agreement, but only for the purpose of effecting an orderly transition to the use of new marks or names. No use whatsoever is permitted after the expiration of the term (set forth in Section 13). Upon the expiration of the earlier of the term (set forth in Section 13) or of such 180 day period, as applicable, the SMS Parties shall: a. immediately discontinue use of the Marriott Marks, and not use any confusingly similar names, marks, terms or designs; take all steps necessary to remove the Marriott Marks from the Corporate Names; and eliminate all uses of the Marriott Marks, including destroying all unused materials bearing the Marriott Marks such as stationary and forms, and changing all signage that bears the Marriott Marks; b. if Spinco or MWC (as applicable) requires, cooperate with Spinco or MWC (as applicable) to apply to the appropriate authorities to cancel from all governmental records the recording of this Agreement; c. permit Spinco and MWC to inspect any of the SMS Parties' premises to ensure compliance with this Section 15; and d. upon request, provide Spinco and MWC with evidence that the SMS Parties have changed their corporate names and their d/b/a names to eliminate all uses of the Marriott Marks and otherwise complied with this Section 15. Notwithstanding any termination of this Agreement and/or the License, the provisions of Sections 6, 7(d), 9 and 15 of this Agreement shall remain in full force and effect in perpetuity. 16. Remedies. -------- a. The SMS Parties, and Spinco and MWC, acknowledge and agree that money damages would be inadequate relief for any breach or threatened breach by the other of its obligations hereunder, and that upon such breach, the non- breaching party or parties, as the case may be, shall be entitled to injunctive or other equitable relief for any breach or threatened breach thereof. b. The SMS parties acknowledge that the failure by any SMS Party to cease use of the Marriott Marks after termination of the License, the use by any SMS Party of the Marriott Marks in any way that negatively impacts or disparages such Marriott Marks, or the attempt by any SMS Party to assign its rights in violation of this Agreement will result in immediate and irreparable damage to Spinco and MWC. The SMS Parties acknowledge and admit that there is no adequate remedy at law for such breaches of this Agreement, and the SMS Parties agree that in the event of such breaches (individually or collectively), Spinco and MWC 13 shall be entitled to equitable relief by way of a preliminary injunction and such other relief as any court with jurisdiction may deem just and proper. 17. Severability. The invalidity or partial invalidity or ------------ unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provisions. 18. Choice of Law. This Agreement shall be construed under and enforced ------------- in accordance with the internal laws of the State of Maryland without giving effect to conflict of law principles. 19. Attorneys' Fees. If any party commences an action against another --------------- party with respect to this Agreement, the prevailing party in such action shall be entitled to an award of reasonable costs and expenses of litigation, including reasonable attorneys' fees, to be paid by the non-prevailing party. 20. Entire Agreement. This Agreement (together with the Distribution ---------------- Agreement and the other Transaction Documents) constitutes the entire agreement and understanding among the parties with respect to its subject matter and is intended as a complete and exclusive statement of the terms of their agreement. To the extent that this Agreement conflicts with any prior or contemporaneous agreement or understanding related to the subject matter hereof, the terms of this Agreement shall control. 21. Amendments. This Agreement may not be amended, supplemented or ---------- modified in any respect except by written agreement between the parties, duly signed by their respective authorized representatives. 22. Counterparts. This Agreement may be executed in one or more ------------ counterparts, each of which shall be deemed an original, and all such counterparts together shall constitute but one and the same instrument. 23. Consent to Jurisdiction. Any suit, action or proceeding under or in ----------------------- connection with this Agreement shall be brought in any federal or state court of competent jurisdiction located in the State of Maryland. By execution of this Agreement, each party consents to the exclusive jurisdiction of such courts, and waives any right to challenge the jurisdiction of such courts or the appropriateness of venue in such courts. EACH PARTY HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY IN CONNECTION WITH ANY SUIT, ACTION OR PROCEEDING UNDER OR IN CONNECTION WITH THIS AGREEMENT. 24. Waiver. SMS may specifically waive any breach of this Agreement by ------ Spinco or MWC and Spinco and MWC may waive any breach of this Agreement by SMS; provided, however, that no such waiver shall be deemed effective unless in - -------- ------- writing, signed by the waiving party, and specifically designating the breach waived. No waiver shall constitute a continuing waiver of similar or other breaches. 14 25. Notices. All notices and other communications hereunder shall be in ------- writing and shall be delivered by hand, by facsimile, delivered by nationally recognized overnight courier, or mailed by registered or certified mail (return receipt requested) to the parties at the following addresses (or at such other addresses for a party as shall be specified by like notice) and shall be deemed given on the date on which such notice is received: To SMS: Sodexho Marriott Services, Inc. 10400 Fernwood Road Bethesda, Maryland 20817 Attention: CEO Telecopier: 301-380-7856 with a copy to: Sodexho Marriott Services, Inc. 10400 Fernwood Road Bethesda, Maryland 20817 Attention: General Counsel Telecopier: 301/380-6727 To Spinco or MWC: Marriott International, Inc. 10400 Fernwood Road Bethesda, Maryland 20817 Attention: Chief Financial Officer Telecopier: 301/380-5067 with a copy to: Marriott International, Inc. 10400 Fernwood Road Bethesda, Maryland 20817 Attention: Executive Vice President, Brand Management Telecopier: 301/380-2237 15 and with a copy to: Marriott International, Inc. 10400 Fernwood Road Bethesda, Maryland 20817 Attention: General Counsel Telecopier: 301/380-6727 26. Relationship of Parties. It is understood and agreed that nothing ----------------------- in this Agreement shall be deemed or construed by the parties or any third party as creating an employer-employee principal/agent, partnership or joint venture relationship between the parties. 27. Headings. The descriptive headings of the several sections of this -------- Agreement are for convenience only and do not constitute a part of the Agreement or affect its meaning or interpretation. 28. Voluntary Execution. This Agreement is executed voluntarily and ------------------- without any duress or undue influence on the parties or their officers, employees, agents, or attorneys, and no party is relying on any inducement, promises or representations made by any other party or any of its officers, employees, agents or attorneys other than as set forth herein. The parties hereto acknowledge that they have been represented in the negotiations for and in the preparation of this Agreement by counsel, that they have had this Agreement fully explained to them by such counsel, and that they are aware of the contents of this Agreement and of its legal effect. 29. SMS Parties ----------- a. The parties agree that the provisions of this Agreement shall bind and apply to all SMS Parties to whom the License granted by this Agreement applies. b. SMS hereby covenants and agrees to cause each SMS Party to execute, on the date hereof, and deliver to Spinco an additional signature page in the form attached hereto as Exhibit 1 evidencing the agreement of such SMS Party to become a party to, and be bound by, this Agreement including, the full relinquishment of its rights to use the Marriott Marks in connection with the Management Services Business set forth in Section 4 of this Agreement and the limitation on its ability to use the Marriott Marks set forth in Section 2. [The remainder of this page is left intentionally blank] 16 IN WITNESS WHEREOF, a duly authorized representative of each party has executed this Agreement as of the date first written above. NEW MARRIOTT MI, INC. (to be renamed "Marriott International, Inc.") By: /s/ Raymond G. Murphy ------------------------------------- Print: Raymond G. Murphy ---------------------------------- Title: Vice President & Treasurer ---------------------------------- MARRIOTT INTERNATIONAL, INC. (to be renamed "Sodexho Marriott Services, Inc.") By: /s/ Lawrence E. Hyatt ------------------------------------- Print: Lawrence E. Hyatt ---------------------------------- Title: Vice President ---------------------------------- MARRIOTT WORLDWIDE CORPORATION By: /s/ Raymond G. Murphy ------------------------------------- Print: Raymond G. Murphy ---------------------------------- Title: Treasurer ---------------------------------- 17 STATE OF NEW YORK ) ) ss: COUNTY OF NEW YORK ) Before me, a Notary Public, in and for said County and State, on this day personally appeared Lawrence E. Hyatt, the Vice President of Marriott ----------------- -------------- International, Inc., Raymond G. Murphy, the Vice President & Treasurer of New ----------------- -------------------------- Marriott MI, Inc., and Raymond G. Murphy, the Treasurer of Marriott Worldwide ----------------- --------- Corporation each known to me as those persons whose names are subscribed to the foregoing instrument. Given under my hand and seal this 27th day of March, 1998 /s/ Elizabeth Poulos -------------------- Notary Public My Commission Expires: February 16, 2000 ----------------- ELIZABETH POULOS Notary Public, State of New York No. 4918734 Qualified in Suffolk County Commission Expires February 16, 2000 18 Exhibit 1 --------- Additional Signature Pages -------------------------- By execution of the applicable signature block, the undersigned hereby agrees to become a party to, and be bound by, that certain Trademark and Trade Name License Agreement dated as of March 27, 1998 by and between Marriott International, Inc, New Marriott MI, Inc. and Marriott Worldwide Corporation and to comply in all respects with the terms and conditions thereof. SODEXHO MARRIOTT OPERATIONS, INC. By: /s/ Lawrence E. Hyatt ----------------------- Name: Lawrence E. Hyatt Title: Vice President SODEXHO MARRIOTT MANAGEMENT, INC. By: /s/ Lawrence E. Hyatt ----------------------- Name: Lawrence E. Hyatt Title: Vice President MARRIOTT EDUCATIONAL SERVICES, INC. (to be renamed "Sodexho Marriott Education Services, Inc.") By: /s/ Lawrence E. Hyatt ----------------------- Name: Lawrence E. Hyatt Title: Vice President 19 MARRIOTT EDUCATIONAL SERVICES OF WISCONSIN, INC. (to be renamed "SMS Education Services of Wisconsin, Inc.") By: /s/ Lawrence E. Hyatt ----------------------- Name: Lawrence E. Hyatt Title: Vice President MARRIOTT ELECTRICAL, INC. (to be renamed "SMS Electrical, Inc.") By: /s/ Lawrence E. Hyatt ----------------------- Name: Lawrence E. Hyatt Title: Vice President SODEXHO MARRIOTT LAUNDRY SERVICES, INC. By: /s/ Lawrence E. Hyatt ----------------------- Name: Lawrence E. Hyatt Title: Vice President 20 MARRIOTT SERVICES, INC. (to be renamed "SMS Services of California, Inc.") By: /s/ Lawrence E. Hyatt ----------------------- Name: Lawrence E. Hyatt Title: Vice President MARRIOTT EDUCATIONAL SERVICES OF TEXAS, INC. (to be renamed "SMS Education Services of Texas, Inc.") By: /s/ Lawrence E. Hyatt ----------------------- Name: Lawrence E. Hyatt Title: Vice President MARRIOTT FOOD SERVICES, INC. OF VERMONT, INC. (to be renamed "SMS Food Services of Vermont, Inc.") By: /s/ Lawrence E. Hyatt ----------------------- Name: Lawrence E. Hyatt Title: Vice President MARRIOTT INTERNATIONAL SERVICES, INC. (to be renamed "Sodexho Management Corp.") By: /s/ Lawrence E. Hyatt ----------------------- Name: Lawrence E. Hyatt Title: Vice President 21 MARRIOTT CORPORATION OF CANADA, LTD. (to be renamed "Sodexho Marriott Services Canada, Ltd.") By: /s/ Lawrence E. Hyatt ----------------------- Name: Lawrence E. Hyatt Title: Vice President MARRIOTT MANAGEMENT SERVICES LIMITED PARTNERSHIP (to be renamed "Sodexho Marriott Services of Indiana Limited Partnership") By: /s/ Lawrence E. Hyatt ----------------------- Name: Lawrence E. Hyatt Title: Vice President CORPORATE FOOD SERVICES, INC. By: /s/ Lawrence E. Hyatt ----------------------- Name: Lawrence E. Hyatt Title: Vice President MFS OF BOISE, INC. By: /s/ Lawrence E. Hyatt ----------------------- Name: Lawrence E. Hyatt Title: Vice President 22 SERVICE SYSTEMS CORPORATION By: /s/ Lawrence E. Hyatt ----------------------- Name: Lawrence E. Hyatt Title: Vice President SAGA EDUCATIONAL FOOD SERVICES, INC. By: /s/ Lawrence E. Hyatt ----------------------- Name: Lawrence E. Hyatt Title: Vice President SAGA HEALTH CARE DIETARY MANAGEMENT SERVICES, INC. By: /s/ Lawrence E. Hyatt ----------------------- Name: Lawrence E. Hyatt Title: Vice President 23 [This page intentionally left blank] 24 STATE OF NEW YORK ) ) ss: COUNTY OF NEW YORK ) Before me, a Notary Public, in and for said county and state, on this day personally appeared Lawrence E. Hyatt, the Vice Prescient for each of Sodexho Marriott Operations, Inc., Sodexho Marriott Management, Inc., Marriott Educational Services, Inc., Marriott Educational Services of Wisconsin, Inc., Marriott Electrical, Inc., Sodexho Marriott Laundry Services, Inc., Marriott Services, Inc., Marriott Educational Services of Texas, Inc., Marriott Food Services, Inc. of Vermont, Inc., Marriott International Services, Inc., Marriott Corporation of Canada, Ltd., Administration Marriott Ltee, Marriott Management Services Limited Partnership, Corporate Food Services, Inc., MFS of Boise, Inc., Service Systems Corporation, Saga Educational Food Services, Inc., Saga Health Care Dietary Management Services, Inc., Marriott Globetrotters Joint Venture, known to me as the person whose name is subscribed to this instrument. Given under my hand and seal this 27th day of March, 1998 /s/ Elizabeth Poulos -------------------- Notary Public My Commission Expires: February 16, 2000 ----------------- ELIZABETH POULOS Notary Public, State of New York No. 4918734 Qualified in Suffolk County Commission Expires February 16, 2000 25 ADMINISTRATION MARRIOTT LTEE (to be renamed "Sodexho Marriott Quebec Ltee") By: /s/ M. Lester Pulse, Jr. ----------------------------- Print: M. Lester Pulse, Jr. -------------------------- Title: Assistant Secretary -------------------------- 26 STATE OF MARYLAND ) ) ss: COUNTY OF MONTGOMERY ) Before me, a Notary Public, in and for said County and State, on this day personally appeared M. Lester Pulse, Jr., an Assistant Secretary of Administration Marriott Ltee, known to me as the person whose name is subscribed to this instrument. Given under my hand and seal this 26th day of March, 1998 /s/ Susan L. Redding -------------------- Notary Public My Commission Expires: 2/1/02 ------ The Exhibits to this Trademark and Trade Name License Agreement are not included with this Form 10-K/A. The Registrant will provide a copy of such Exhibits upon the request of the Securities and Exchange Commission. 27 EX-10.19 3 EXHIBIT 10.19 EXHIBIT 10.19 ROYALTY AGREEMENT THIS ROYALTY AGREEMENT (this "Agreement") is made and entered into as of March 27, 1998 by and between SODEXHO ALLIANCE, S.A. ("Sodexho") and MARRIOTT INTERNATIONAL, INC. (to be renamed "Sodexho Marriott Services, Inc."), a Delaware corporation ("SMS"). RECITALS WHEREAS, Sodexho and SMS have entered into an Assistance Agreement dated as of the date hereof, pursuant to which Sodexho will provide financial, technical, administrative and management services to SMS; WHEREAS, Sodexho is the exclusive owner of the Tradename (as defined below); WHEREAS, Sodexho has developed and is continuing to develop substantial goodwill, reputation and public recognition associated with and identified by the Tradename which has substantial value; and WHEREAS, SMS recognizes the benefit to the long-term development of its business to be derived from being identified with the Tradename and being able to utilize the Tradename which Sodexho shall make available pursuant to the terms of this Agreement. NOW, THEREFORE, the parties hereto agree as follows: 1. Definitions; Interpretations. (a) Capitalized terms used but not defined herein have the meanings set forth in the Distribution Agreement. In addition, the following terms have the meanings set forth below: "Agreement" means this Royalty Agreement, together with all appendices hereto, as the same may be amended from time to time in accordance with the terms hereof. "Dispute" has the meaning set forth in Section 8(b). "Distribution Agreement" means the Distribution Agreement dated as of September 30, 1997 between SMS and Spinco, as amended. "Expenses" has the meaning set forth in Section 8(b). "ICC" means International Catering Corporation, a Delaware corporation and a wholly-owned subsidiary of SMS. "Independent Directors" means each director of SMS who is not (i) a person designated by Sodexho for nomination to the Board of Directors of SMS pursuant to the Stockholder Agreement dated as of the date hereof between Sodexho and SMS, (ii) an employee or officer of Sodexho, SMS or Spinco or their respective affiliates, or (iii) William J. Shaw or John W. Marriott III, or any successor director designated by either of them or by any such successor. "Initial Period" has the meaning set forth in Section 4(a). "License" means the license granted pursuant to Section 2 of this Agreement. "MMS" means Marriott Management Services Corp., a New York corporation. "MMS Canada" means Marriott Corporation of Canada, Ltd., a Canadian corporation. "New York Court" has the meaning set forth in Section 21. "Royalty Fee" has the meaning set forth in Section 4. "SMS" has the meaning set forth in the preamble of this Agreement. "SMS Business" means (i) the business of providing food and facilities management services and operations, including with respect to food (including catering), beverages, housekeeping, laundry, vending, plant and equipment operation and maintenance, grounds care, convenience stores, and gift or merchandise shops, located in hospitals, nursing homes and other health care facilities; schools, colleges, universities, academies and other educational facilities; corporate headquarters and office buildings; manufacturing or industrial facilities; municipal, state or federal government offices and courthouses; airports and related facilities; stadiums and arenas; national or state parks; ski resorts or other seasonal resorts; zoos and aquariums; concert or other entertainment facilities; and tourist attractions; (ii) to the extent not included in the preceding clause (i), such other business activities conducted as of the Distribution Date by MMS, MMS Canada, ICC, Sodexho Canada and their respective subsidiaries; and (iii) to the extent not included in the preceding clauses (i) or (ii), such other business activities as are approved in writing by Sodexho. "Sodexho" has the meaning set forth in the preamble of this Agreement. "Sodexho Canada" means Sodexho Financiere du Canada, Inc., a Canadian corporation. "Spinco" means New Marriott MI, Inc. (to be renamed Marriott International, Inc.), a Delaware corporation. "Subsidiary" means any corporation or other entity of which more than fifty percent (50%) of the capital stock or other equity interest is owned, directly or indirectly, by SMS. "Territory" means the United States and Canada and their respective territories. "Trademark and Trade Name License Agreement" means the Trademark and Tradename License Agreement dated as of the date hereof among SMS, Spinco and Marriott Worldwide Corporation. 2 "Tradename" means the trade name "SODEXHO" and, subject to Section 2(d), a logo associated therewith, including, but not limited to, all trademarks, service marks, commercial symbols, insignias, and designs pertaining thereto, and including the marks designated on Appendix A attached hereto and incorporated herein, now owned by Sodexho, as the same may be amended, modified, revised or improved hereafter, which will be associated and identified with the business of SMS. (b) The descriptive headings 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. For all purposes of this Agreement, except as otherwise expressly provided, (i) the enumeration of one or more items following the term "including" shall not be interpreted as excluding any items not so enumerated, (ii) defined terms shall include the plural as well as the singular, (iii) all references to "Articles," "Sections" or other subdivisions are to designated Articles, Sections and other subdivisions of the body of this Agreement, (iv) pronouns of either gender or neuter shall include, as appropriate, the other pronoun forms, and (v) the words "herein," "hereof" and "hereunder" and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision. 2. License of Tradename. (a) For good and valuable consideration, including SMS's agreement to pay the Royalty Fee, Sodexho hereby grants to SMS a non-exclusive license to use the Tradename in the Territory in connection with the SMS Business, subject to the terms and conditions contained in this Agreement. (b) Without limiting Section 2(a), SMS shall be permitted to use the Tradename with the "Marriott" mark as contemplated by the Trademark and Trade Name License Agreement. (c) SMS may use the Tradename in promotional materials and advertising, provided that (x) such use clearly identifies the services offered as relating solely to the SMS Business, and (y) at Sodexho's request, not more often than once per SMS's fiscal quarter, and at any other time upon Sodexho's reasonable request based upon a reasonable belief that a violation of this Agreement by SMS may have occurred or be imminent, representatives familiar with SMS's promotional materials and advertising shall meet with representatives of Sodexho at Sodexho's headquarters to provide samples of all such promotional materials and advertising used or proposed to be used, the intended use or uses thereof, and other information reasonably required by Sodexho to enable Sodexho to confirm that such materials and uses are in conformity with this Agreement. (d) SMS may use the Tradename in a logo developed specifically for use by SMS, which logo must be approved by Sodexho (such approval not to be unreasonably withheld). 3. Sublicenses. Except as set forth in this Section 3, SMS shall not be permitted to sublicense the Tradename. SMS shall have the right to sublicense the Tradename (i) to its Subsidiaries, and (ii) with the prior written consent of Sodexho (which shall not be unreasonably withheld), to joint ventures or similar entities in which SMS has a 50% or lesser interest; provided that each such sublicense shall comply with the terms and conditions of this 3 Agreement, and Sodexho shall be permitted to enforce its rights under this Agreement directly against any such sublicensee. 4. Royalty Fee. During the term hereof, SMS hereby agrees to pay to Sodexho a license fee (the "Royalty Fee") as follows: (a) For the period from the date hereof until March 27, 2001 (the "Initial Period"), the Royalty Fee shall equal 0.05% of the gross sales of SMS and its consolidated subsidiaries, determined in accordance with generally accepted accounting principles in the United States. (b) Beginning 120 days prior to the end of the Initial Period, Sodexho and SMS shall negotiate in good faith to determine the amount and payment mechanics of the Royalty Fee payable for periods commencing after the Initial Period, based on the fair market value of the use of the Tradename hereunder. Any such subsequent Royalty Fee shall require the approval of the Independent Directors. (c) During the Initial Period, the Royalty Fee shall be payable as follows: (i) On the Distribution Date, SMS shall pay to Sodexho an amount equal to 0.05% of (x) SMS's projected gross sales for the then- current fiscal quarter of SMS multiplied by (y) a fraction the numerator of which is the number of days remaining in such fiscal quarter and the denominator of which is the total number of days in such fiscal quarter. (ii) On the first day of each fiscal quarter of SMS thereafter, SMS shall pay to Sodexho an amount equal to 0.05% of SMS's projected gross sales for such fiscal quarter. (iii) Within 45 days following the end of each fiscal quarter, SMS shall deliver to Sodexho its consolidated income statement for such fiscal quarter and a calculation of the Royalty Fee payable for such fiscal quarter based on the gross sales set forth therein. If the Royalty Fee exceeds the quarterly advance previously paid with respect to such fiscal quarter, then SMS will promptly pay to Sodexho the amount of such excess, and if the quarterly advance previously paid with respect to such fiscal quarter exceeds the Royalty Fee, then Sodexho will promptly pay to SMS the amount of such excess. (d) If this Agreement is terminated, the Royalty Fee shall be prorated for any partial quarter (based on the number of days elapsed) during which this Agreement is in effect, and Sodexho will promptly return to SMS the balance of the Royalty Fee for such quarter. 5. Sodexho's Ownership of the Tradename. (a) SMS acknowledges that Sodexho is the exclusive owner of the Tradename in the United States, Canada and certain other territories outside the United States. SMS agrees that, except for the limited licensed right to use the Tradename as provided in this Agreement, SMS has no right, title or interest in or to the 4 Tradename. SMS agrees that all uses of the Tradename by SMS and the goodwill associated with such uses shall inure solely to the benefit of Sodexho, and upon termination of its rights to use the Tradename as provided in this Agreement, all right and interest of SMS in and to the Tradename shall revert fully to Sodexho. (b) SMS agrees to cooperate fully with Sodexho in recording appropriate assignment and other documents evidencing Sodexho's ownership of the Tradename. SMS agrees to take no action inconsistent with Sodexho's ownership of and interest in the Tradename. Sodexho agrees to cooperate fully with SMS in recording appropriate documents evidencing the License to SMS. (c) SMS shall not (i) attack or challenge in any manner whatsoever the validity of the Tradename, Sodexho's ownership thereof or any of the terms of this Agreement, or (ii) assist any third party in doing any of the same. SMS hereby waives any right to contest the validity of the Tradename. 6. Limitations on Use of the Tradename. The License to use the Tradename described in Section 2 of this Agreement is expressly subject to the following conditions: (a) All displays of the Tradename by SMS shall bear such copyright, trademark, service mark and other notices as Sodexho shall reasonably require, and SMS shall adhere to any other reasonable and customary posting requirements developed by Sodexho with respect to the Tradename. (b) SMS shall not use the Tradename or any confusingly similar name, mark, term or design, except as expressly authorized in this Agreement or consented to by Sodexho in writing, and SMS shall not attempt to register or aid any third party in using or attempting to register any such name, mark, term or design in any jurisdiction or locale. (c) SMS shall not use the Tradename in any manner that is inconsistent with the fact that it is using the Tradename as a licensee of Sodexho. (d) SMS shall not use the Tradename in any manner that may tend to: (i) disparage the image or reputation of the Tradename, and/or (ii) dilute the distinctiveness of the Tradename. Any breach of the foregoing provisions may be remedied by the remedies set forth in Section 14 of this Agreement as applicable. 7. Quality Control. (a) Sodexho is familiar with the general quality of the goods and services now provided by SMS (through MMS, MMS Canada, ICC, Sodexho Canada, and their respective subsidiaries) in the SMS Business and finds, at the present time, the quality of such goods and services to be acceptable. All goods and services to be provided by SMS under the Tradename shall be provided in accordance with the quality standards of SMS now in place and such other quality standards that Sodexho may reasonably impose from time to time; provided that such other quality standards shall not be higher than the standard then prevailing in the industry for similar services and products in similar markets, unless a higher standard is required by law. 5 (b) Sodexho shall have the right, at reasonable times and with prior notice, to inspect any facility operated by SMS, and any goods provided by SMS, at any time for the purpose of determining whether they have met or are meeting the quality standards required under this Agreement. SMS shall promptly produce and deliver (at its own expense) to Sodexho such examples of the use of the Tradename by SMS as Sodexho shall reasonably request. Any breach of the foregoing provisions discovered by inspection or otherwise may be remedied by the remedies set forth in Section 14 of this Agreement. 8. Limitation of Liability; Indemnity. (a) IN NO EVENT SHALL SODEXHO BE LIABLE FOR ANY MATTER WHATSOEVER RELATING TO THE USE BY SMS OF THE TRADENAME EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS SECTION 8. (b) SMS shall indemnify, defend and hold harmless Sodexho and its employees, representatives, directors, officers and agents from and against any and all costs, judgments, liabilities and expenses, including interest, penalties, attorneys' and third party fees, and all other amounts paid in the investigation, litigation, defense and/or settlement (collectively, "Expenses") resulting from any actual or potential claim, demand, dispute, notice, lawsuit, administrative proceeding or other action (collectively, "Dispute") that relates in any way to the exercise of the rights granted in this Agreement to SMS or any other usage by SMS of the Tradename. (c) Sodexho shall indemnify, defend and hold harmless SMS and its employees, representatives, directors, officers and agents from and against any and all Expenses resulting from any Dispute that relates to a third party claim that the Tradename infringes any other trademark, tradename or service mark. (d) The parties agree that Disputes arising hereunder shall be governed by the procedures set forth in Section 4.4 and 4.5 of the Distribution Agreement. (e) SMS shall maintain a third party liability insurance policy during the term of this Agreement and for two years after its termination, in amounts and coverages and with deductibles customary for businesses of SMS's nature and size, to which policy Sodexho shall be named as an additional insured to the full extent of the insurance carried by SMS. 9. Infringement Proceedings. Sodexho shall take those steps it deems necessary, in its reasonable judgment, to protect its rights and interests in the Tradename. Promptly upon receiving notice or knowledge thereof, SMS shall provide Sodexho with written notice of any unauthorized use or potentially infringing use by third parties of the Tradename or any confusingly similar trademarks, service marks, trade names, terms or designs. Sodexho shall have the right, in its sole discretion and at its sole cost and expense, to commence infringement, unfair competition or other actions regarding any such use by third parties of the Tradename or confusingly similar marks. SMS, at Sodexho's expense, shall cooperate with and assist Sodexho in its investigation and prosecution of any of the foregoing. 6 10. Assignment and Sublicense. Except as set forth in Section 3, SMS may not assign its rights under this Agreement or sublicense its rights to use the Tradename licensed to it pursuant to Section 2 of this Agreement, in whole or in part, to any third party. Any purported assignment or sublicense by SMS not in compliance with the terms of this Agreement shall be null and void. Subject to the foregoing, this Agreement shall be binding upon and inure to the benefit of the parties and their successors and assigns. No third party beneficiaries are intended by execution and delivery of this Agreement. 11. Term. The License to use the Tradename will extend from the Distribution Date until the tenth anniversary of the Distribution Date, unless earlier terminated as provided in Section 12. 12. Termination of License. (a) Sodexho may terminate this Agreement prior to the expiration of the term as follows: (i) upon (A) filing of a voluntary bankruptcy petition by SMS; (B) filing of an involuntary bankruptcy petition against SMS which is not vacated, stayed or dismissed within ninety (90) days after filing thereof and results in the entry of an order for relief; (C) assignment for the benefit of creditors made by SMS; or (D) appointment of a receiver for SMS; (ii) if SMS attempts to transfer or license any rights to the Tradename in violation of this Agreement; or (iii) if SMS breaches any term of this Agreement and such breach is not cured within thirty (30) days following provision of written notice of such breach by Sodexho to SMS. SMS hereby agrees to notify Sodexho in writing immediately upon the occurrence of any such event. (b) If Sodexho ceases to own 10% or more of the outstanding common stock of SMS, SMS may terminate this Agreement upon 180 days' prior written notice to Sodexho. 13. Effect of Termination. For a period of 180 days after the earlier of the termination of this Agreement or the giving of notice of termination under Section 12(b) (but in any event not beyond the expiration of the term set forth in Section 11), SMS shall be entitled to continue to use the Tradename in accordance with the terms of this Agreement, but only for the purpose of effecting an orderly transition to the use of new marks or names. No use whatsoever is permitted after the expiration of the term set forth in Section 11. Upon the expiration of the earlier of the term set forth in Section 11 or of such 180 day period, as applicable, SMS shall: (a) immediately discontinue use of the Tradename, and not use any confusingly similar names, marks, terms or designs; take all steps necessary to remove the Tradename from its corporate name; and eliminate all uses of the Tradename, including destroying all unused 7 materials bearing the Tradename such as stationery and forms, and changing all signage that bears the Tradename; (b) if Sodexho requires, cooperate with Sodexho to apply to the appropriate authorities to cancel from all governmental records the recording of this Agreement; (c) permit Sodexho to inspect any of SMS's premises to ensure compliance with this Section 13; and (d) upon request, provide Sodexho with evidence that SMS has changed its corporate name and any d/b/a names to eliminate all uses of the Tradename and otherwise complied with this Section 13. Notwithstanding any termination of this Agreement and/or the License, the provisions of Sections 5, 6(b), 8 and 13 of this Agreement shall remain in full force and effect in perpetuity. 14. Remedies. (a) SMS and Sodexho acknowledge and agree that money damages would be inadequate relief for any breach or threatened breach by the other of its obligations hereunder, and that upon such breach, the non-breaching party shall be entitled to injunctive or other equitable relief for any breach or threatened breach thereof. (b) SMS acknowledges that the failure by SMS to cease use of the Tradename after termination of the License, the use by SMS of the Tradename in any way that disparages such Tradename, or the attempt by SMS to assign its rights in violation of this Agreement will result in immediate and irreparable damage to Sodexho. SMS acknowledges and admits that there is no adequate remedy at law for such breaches of this Agreement, and SMS agrees that in the event of such breaches (individually or collectively), Sodexho shall be entitled to equitable relief by way of a preliminary injunction and such other relief as any court with jurisdiction may deem just and proper. 15. Severability. The invalidity or partial invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provisions. 16. Choice of Law. This Agreement shall be construed under and enforced in accordance with the internal laws of the State of New York without giving effect to conflict of law principles. 17. Attorneys' Fees. If any party commences an action against another party with respect to this Agreement, the prevailing party in such action shall be entitled to an award of reasonable costs and expenses of litigation, including reasonable attorneys' fees, to be paid by the non-prevailing party. 18. Entire Agreement; Termination of Prior Agreement. (a) This Agreement (together with the other Transaction Documents) constitutes the entire agreement and understanding among the parties with respect to its subject matter and is 8 intended as a complete and exclusive statement of the terms of their agreement. To the extent that this Agreement conflicts with any prior or contemporaneous agreement or understanding related to the subject matter hereof, the terms of this Agreement shall control. (b) Sodexho agrees that, effective as of the date hereof, the Royalty Agreement dated as of September 1, 1994 between Sodexho and Sodexho USA, Inc. shall terminate pursuant to the Termination attached as Appendix B hereto. 19. Amendments. This Agreement may not be amended, supplemented or modified in any respect except by written agreement between the parties, duly signed by their respective authorized representatives. In addition, any material amendment, supplement or modification to this Agreement shall require the approval of the Independent Directors. 20. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, and all such counterparts together shall constitute but one and the same instrument. 21. Consent to Jurisdiction. Each of the parties hereto hereby consents to the exclusive jurisdiction of a federal court of the United States of America sitting in the City of New York, Borough of Manhattan, or, if subject matter jurisdiction is unavailable, a New York state court sitting in the City of New York, Borough of Manhattan (each a "New York Court"), over any suit, action or proceeding arising out of or relating to this Agreement. Each party hereto irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of venue in any such New York Court or that any such proceeding which is brought in accordance with this Section has been brought in an inconvenient forum. Subject to applicable law, process in any such proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such New York Court. Without limiting the foregoing and subject to applicable law, each party agrees that service of process on such party as provided in Section 23 shall be deemed effective service of process on such party. Nothing herein shall affect the right of any party to serve legal process in any other manner permitted by law or at equity or to enforce in any lawful manner a judgment obtained in one jurisdiction in any other jurisdiction. Each party hereby agrees to waive its respective rights to a jury trial of any claim or cause of action based upon or arising out of this Agreement. 22. Waiver. SMS may specifically waive any breach of this Agreement by Sodexho and Sodexho may waive any breach of this Agreement by SMS; provided, however, that no such waiver shall be deemed effective unless in writing, signed by the waiving party, and specifically designating the breach waived. No waiver shall constitute a continuing waiver of similar or other breaches. 23. Notices. All notices and other communications hereunder shall be in writing and shall be delivered by hand, by facsimile, delivered by nationally recognized overnight courier, or mailed by registered or certified mail (return receipt requested) to the parties at the following addresses (or at such other addresses for a party as shall be specified by like notice) and shall be deemed given on the date on which such notice is received: 9 To SMS: Sodexho Marriott Services, Inc. 10400 Fernwood Road Bethesda, Maryland 20817 Telecopier: (301) 380-8150 Attention: Chief Financial Officer with a copy to: Sodexho Marriott Services, Inc. 10400 Fernwood Road Bethesda, Maryland 20817 Telecopier: (301) 380-6727 Attention: General Counsel To Sodexho: Sodexho Alliance, S.A. 3, avenue Newton 78180 Montigny-Le-Bretonneux France Telecopier: 011-331-3085-5005 Attention: Bernard Carton with a copy to: Davis Polk & Wardwell 450 Lexington Avenue New York, New York 10017 Telecopier: 212-450-4800 Attention: Paul R. Kingsley 24. Relationship to Parties. It is understood and agreed that nothing in this Agreement shall be deemed or construed by the parties or any third party as creating an employer-employee principal/agent, partnership or joint venture relationship between the parties. 25. Headings. The descriptive headings of the several sections of this Agreement are for convenience only and do not constitute a part of the Agreement or affect its meaning or interpretation. 26. Voluntary Execution. This Agreement is executed voluntarily and without any duress or undue influence on the parties or their officers, employees, agents, or attorneys, and no 10 party is relying on any inducement, promises or representations made by any other party or any of its officers, employees, agents or attorneys other than as set forth herein. The parties hereto acknowledge that they have been represented in the negotiations for and in the preparation of this Agreement by counsel, that they have had this Agreement fully explained to them by such counsel, and that they are aware of the contents of this Agreement and of its legal effect. 11 IN WITNESS WHEREOF, a duly authorized representative of each party has executed this Agreement as of the date first written above. SODEXHO ALLIANCE, S.A. By: /s/ Bernard Carton ------------------------------ Name: Bernard Carton Title: Senior Vice President and Chief Financial Officer MARRIOTT INTERNATIONAL, INC. (to be renamed "Sodexho Marriott Services, Inc.") By: /s/ Lawrence E. Hyatt ------------------------------ Name: Lawrence E. Hyatt Title: Vice President The Appendices to this Royalty Agreement are not included in this Form 10-K/A. The Registrant will provide a copy of such Appendices upon the request of the Securities and Exchange Commission. 12 EX-10.22 4 EXHIBIT 10.22 EXHIBIT 10.22 STOCKHOLDER AGREEMENT dated as of March 27, 1998 between SODEXHO MARRIOTT SERVICES, INC. and SODEXHO ALLIANCE, S.A. TABLE OF CONTENTS --------------
Page ---- ARTICLE 1 Definitions Section 1.01. Definitions........................................... 1 ARTICLE 2 Corporate Governance; Covenants Section 2.01. Composition of the Board.............................. 4 Section 2.02. Vacancies............................................. 5 Section 2.03. Removal............................................... 6 Section 2.04. Compensation Committee................................ 6 Section 2.05. Audit Committee....................................... 7 Section 2.06. Determination as to Breach............................ 7 Section 2.07. Termination of Article 2.............................. 7 ARTICLE 3 Legends Section 3.01. Legend on Share Certificates.......................... 7 ARTICLE 4 Registration Rights Section 4.01. Demand Registration................................... 8 Section 4.02. Incidental Registration............................... 10 Section 4.03. Holdback Agreements................................... 11 Section 4.04. Registration Procedures............................... 12 Section 4.05. Indemnification by SMS................................ 15 Section 4.06. Indemnification by Sodexho of Registrable Securities.. 15 Section 4.07. Conduct of Indemnification Proceedings................ 16 Section 4.08. Contribution.......................................... 17 Section 4.09. Participation in Public Offering...................... 18 Section 4.10. Termination of Registration Rights.................... 18 ARTICLE 5 Miscellaneous Section 5.01. Headings.............................................. 19 Section 5.02. No Inconsistent Agreements............................ 19
Section 5.03. Entire Agreement...................................... 19 Section 5.04. Notices............................................... 19 Section 5.05. Applicable Law; Submission to Jurisdiction............ 20 Section 5.06. Severability.......................................... 21 Section 5.07. Termination........................................... 21 Section 5.08. Successors; Assigns; Transferees...................... 21 Section 5.09. Amendments; Waivers................................... 21 Section 5.10. Counterparts.......................................... 22 Section 5.11. Recapitalization, Etc................................. 22 Section 5.12. Remedies.............................................. 22 Section 5.13. Confidentiality....................................... 22
STOCKHOLDER AGREEMENT STOCKHOLDER AGREEMENT dated as of March 27, 1998 between Sodexho Marriott Services, Inc., a Delaware corporation ("SMS"), and Sodexho Alliance, S.A., a societe anonyme organized under the laws of France ("SODEXHO"). WHEREAS, pursuant to the Agreement and Plan of Merger dated as of September 30, 1997, as amended (the "MERGER AGREEMENT"), by and among SMS, Marriott -- ICC Merger Corp., New Marriott MI, Inc. ("NEW MARRIOTT"), Sodexho and International Catering Corporation ("ICC"), the parties thereto agreed that SMS would acquire ICC and Sodexho Financiere du Canada, Inc. from Sodexho and Sodexho would pay $304 million to SMS, and in consideration therefor Sodexho would receive approximately 49% of the outstanding common stock of SMS; and WHEREAS, the parties hereto wish to enter into this Agreement to govern certain of their rights and obligations after consummation of the transactions contemplated by the Merger Agreement and certain related agreements. NOW THEREFORE, in consideration of the mutual promises set forth below (the mutuality, adequacy and sufficiency of which are hereby acknowledged), the parties hereto agree as follows: ARTICLE 1 Definitions Section 1.1. Definitions. (a) The following terms, as used herein, have the following meanings: "AFFILIATE" means, with respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with such Person. For the purposes of this definition, the term "CONTROL", as used with respect to any Person, means the power to direct or cause the direction of the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "CONTROLLING" and "CONTROLLED" shall have meanings correlative to the foregoing. "BOARD" means the Board of Directors of SMS. "BUSINESS DAY" means any day except a Saturday, Sunday or other day on which commercial banks in the City of New York are authorized by law to close. "COMMON STOCK" means the common stock, par value $1.00 per share, of SMS. "COMMISSION" means the Securities and Exchange Commission and any successor commission or agency having similar powers. "CONTROLLED ENTITY" means, with respect to any Person, any entity of which more than 50% of the capital stock or other equity interest is owned, directly or indirectly, by such Person. For the avoidance of doubt, neither the Universal Services Partnership nor the Universal/Doyon Joint Venture shall constitute a "Controlled Entity" of Sodexho. "DISTRIBUTION AGREEMENT" means the Distribution Agreement dated as of September 30, 1997 between SMS and New Marriott, as amended. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended from time to time. "PERSON" means an individual, corporation, partnership, limited liability company, association, trust or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof. "PUBLIC OFFERING" means any public offering of equity securities (or securities convertible into equity securities) of SMS pursuant to an effective registration statement under the Securities Act other than pursuant to a registration statement on Form S-4 or Form S-8 or any successor or similar form. "REGISTRABLE SECURITIES" means any shares of Common Stock held by Sodexho at any time; provided that such shares shall cease to be Registrable Securities if and when (i) a registration statement with respect to the disposition of such shares shall have become effective under the Securities Act and such shares shall have been disposed of pursuant to such effective registration statement, (ii) such shares are sold under circumstances in which all of the applicable provisions of Rule 144 (or any similar provisions then in force) are met, or (iii) such shares are otherwise transferred, if (x) SMS has delivered a new certificate or other evidence of ownership for such shares not bearing the legend required pursuant to this Agreement and (y) such shares may be resold without subsequent registration under the Securities Act. "REGISTRATION EXPENSES" means all (i) registration and filing fees, (ii) fees and expenses of compliance with securities or blue sky laws (including reasonable fees and disbursements of a qualified independent underwriter, if any, and counsel in connection therewith and the reasonable fees and disbursements of counsel in connection with blue sky qualifications of the Registrable Securities), (iii) printing expenses, (iv) internal expenses of SMS (including without limitation all salaries and expenses of officers and employees performing legal or accounting duties), (v) fees and disbursements of counsel for SMS, (vi) customary fees and expenses for independent certified public accountants retained by SMS (including without limitation the expenses of any comfort letters or costs associated with the delivery by independent certified public accountants of a comfort letter or comfort letters), (vii) fees and expenses of any special experts retained by SMS in connection with such registration and (viii) fees and expenses of listing the Registrable Securities on a securities exchange; but shall not include (a) any underwriting fees or discounts or commissions attributable to the sale of Registrable Securities, (b) any fees and disbursements of special counsel designated to represent Sodexho in connection with such registration, (c) out-of-pocket expenses of Sodexho or (d) any transfer taxes. 2 "ROYALTY AGREEMENT" means the Royalty Agreement dated as of the date hereof between SMS and Sodexho. "RULE 144" means Rule 144 under the Securities Act, as such Rule may be amended from time to time, or any other similar rule or regulation hereafter adopted by the Commission. "SECURITIES ACT" means the Securities Act of 1933, as amended from time to time. "SUBSIDIARY" means, with respect to any Person, any entity of which securities or other ownership interests having ordinary voting power to elect a majority of the board of directors or other persons performing similar functions are at the time directly or indirectly owned by such Person. (b) Each of the following terms is defined in the Section set forth opposite such term:
TERM SECTION ---- ------- Cause 2.03 Disadvantageous Condition 4.01(a)(ii) ICC recitals Indemnified Party 4.07 Indemnifying Party 4.07 Independent Director 2.01(c) Inspectors 4.04(g) Maximum Offering Size 4.01(e) Merger Agreement recitals New Marriott recitals New Marriot Directors 2.01(d) Priority Securities 4.02(a) Records 4.04(g) Representatives 5.13 SMS preamble Sodexho preamble Sodexho Designees 2.01(b)
ARTICLE 2 Corporate Governance; Covenants Section 2.1. Composition of the Board. (a) The Board shall consist of eight members as follows: three Sodexho Designees (as defined below), two Independent Directors (as defined below), the person who is then serving as the Chief Executive Officer of SMS (subject to Section 2.01(g)) and two New Marriott Directors (as defined below). 3 (b) So long as Sodexho and its Affiliates own at least 20% of the outstanding Common Stock, Sodexho shall be entitled to designate three members of the Board. At such time as Sodexho and its Affiliates own less than 20% of the outstanding Common Stock, Sodexho shall be entitled to designate two members of the Board so long as either (i) Sodexho and its Affiliates own at least 10% of the outstanding Common Stock or (ii) the Royalty Agreement remains in full force and effect. At such time as Sodexho and its Affiliates own less than 10% of the outstanding Common Stock and the Royalty Agreement has terminated, Sodexho's right to designate members of the Board pursuant to this Section 2.01(b) shall terminate. Members of the Board that Sodexho is entitled to designate pursuant to this Section 2.01(b) shall constitute "SODEXHO DESIGNEES". In the event that after the third anniversary of the date hereof the total Board does not consist of eight members, the number of Board members that Sodexho shall have the right to designate shall be adjusted as follows: (i) in lieu of three members, the lowest number of members that would result Sodexho Designees representing at least 37.5% of the total Board and (ii) in lieu of two members, the lowest number of members that would result in Sodexho Designees representing at least 25% of the Board. Initially the Sodexho Designees shall be Pierre Bellon, Bernard Carton and Edouard de Royere. (c) A person will qualify as an "INDEPENDENT DIRECTOR" if he or she (i) is not an employee of SMS, Sodexho, New Marriott or any of their Subsidiaries, (ii) is not otherwise receiving, directly or indirectly, compensation for services that is material to such person from SMS, Sodexho, New Marriott or any of their Subsidiaries and (iii) is not a member of the immediate family (as defined in Item 404(a) of Regulation S-K under the Securities Act) of any person described in clauses (i) and (ii) above. Initially, the Independent Directors shall be Doctor R. Crants and Daniel J. Altobello. (d) "NEW MARRIOTT DIRECTORS" shall mean (i) initially, William J. Shaw and John W. Marriott III and (ii) thereafter, any Board members who fill the Board positions initially filled by such persons. (e) SMS and Sodexho shall use their best efforts (including using their best efforts to cause SMS to call a special meeting of stockholders) in order to ensure that the composition of the Board is as set forth in any provisions of Sections 2.01 and 2.02 then in force. (f) Sodexho may at any time revoke the designation as to a particular individual who is a Sodexho Designee, in which case Sodexho and SMS will take all actions reasonably necessary to effect the removal of such individual from the Board as promptly as practicable. (g) In the event that the Chief Executive Officer of SMS is (x) an employee of Sodexho or any of its Subsidiaries, (y) otherwise receiving, directly or indirectly, compensation for services that is material to such person from Sodexho or any of its Subsidiaries or (z) a member of the immediate family (as defined in Item 404(a) of Regulation S-K of the Securities Act) of any person described in clauses (x) or (y) above: 4 (i) such Chief Executive Officer shall not be eligible to serve as a director in the Board seat otherwise intended for the Chief Executive Officer pursuant to Section 2.01(a) hereof; and (ii) the individual that fills the vacancy on the Board created thereby shall be chosen according to SMS's Bylaws and shall be a person who qualifies as an Independent Director. For the avoidance of doubt, this Section 2.01(g) shall not prohibit Sodexho from designating such Chief Executive Officer to the Board as a Sodexho Designee. Section 2.2. Vacancies. In the event that, as a result of death, disability, retirement, resignation, removal (with or without cause) or otherwise, there shall exist or occur any vacancy of the Board, the provisions of Section 2.01(g)(ii) and this Section 2.02 shall apply. (a) If the director whose death, disability, retirement, resignation or removal resulted in such vacancy was a Sodexho Designee, Sodexho may designate another individual to fill such position and serve as a director of SMS. (b) If the director whose death, disability, retirement, resignation or removal resulted in such vacancy was an Independent Director, the individual that fills such position and serves as a director of SMS shall be chosen according to SMS's Bylaws and shall be a person who qualifies as an Independent Director. (c) If the director whose death, disability, retirement, resignation or removal resulted in such vacancy was a New Marriott Director, the remaining New Marriott Director (or the departing New Marriott Director causing such vacancy, if each New Marriott Director resigns or otherwise no longer serves effective on or about the same date) may designate another individual to fill such position and serve as a director of SMS. If such designation is not made within 15 days after the vacancy occurs, the individual that fills such position and serves as a director of SMS shall be chosen according to SMS's Bylaws and shall be a person who qualifies as an Independent Director. Section 2.3. Removal. Sodexho agrees that if, at any time, it is then entitled to vote for the removal of directors of SMS, it will not take such action by written consent unless such removal shall be for Cause. Removal for "CAUSE" shall mean removal of a director because of such director's (a) willful and continued failure to substantially perform his or her duties as a director of SMS, (b) willful and continued conduct inconsistent with the good faith exercise of his or her fiduciary obligations and which is significantly injurious to SMS, monetarily or otherwise, or (c) conviction for, or guilty plea to, a felony. Notwithstanding the foregoing, if the person serving as Chief Executive Officer of SMS is removed from such position in accordance with SMS's Bylaws, Sodexho shall be permitted to take action by written consent to remove such person as a director of SMS. 5 Section 2.4. Compensation Committee. The Board will create a three- member Compensation Committee which shall have the duties specified in SMS's Bylaws. The Compensation Committee shall consist of one Independent Director who will serve as the Chairman of the committee, one Sodexho Designee and one New Marriott Director. The initial members of the Compensation Committee shall be Doctor R. Crants (Chairman), Bernard Carton and William J. Shaw. Section 2.5. Audit Committee. The Board will create a three-member Audit Committee which shall have the duties specified in SMS's Bylaws. The initial members of the Audit Committee shall be Daniel J. Altobello (Chairman), Doctor R. Crants and Edouard de Royere. Section 2.6. Determination as to Breach. Any determination as to whether Sodexho is in breach of this Article 2, and whether SMS should as a result thereof pursue any remedies available to it under this Agreement or otherwise, shall be made on behalf of SMS solely by the Independent Directors. Section 2.7. Termination of Article 2. Except for Sections 2.01(b), 2.01(e), 2.01(f) and 2.02(a), the provisions of this Article 2 shall terminate and have no further force or effect on the third anniversary of the date hereof. ARTICLE 3 Legends Section 3.1. Legend on Share Certificates. (a) In addition to any other legend that may be required, each certificate for Registrable Securities that is issued to Sodexho shall bear a legend in substantially the following form: "THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAW. NO TRANSFER OR SALE OF THESE SECURITIES OR ANY INTEREST THEREIN MAY BE MADE WITHOUT SUCH REGISTRATION AND QUALIFICATION UNLESS THE ISSUER RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO THE ISSUER STATING THAT SUCH TRANSFER OR SALE DOES NOT REQUIRE REGISTRATION OR QUALIFICATION UNDER APPLICABLE LAW. THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE ALSO SUBJECT TO RESTRICTIONS AS SET FORTH IN THE STOCKHOLDER AGREEMENT DATED AS OF MARCH 27, 1998, COPIES OF WHICH MAY BE OBTAINED UPON REQUEST FROM SODEXHO MARRIOTT SERVICES, INC. AND ANY SUCCESSOR THERETO." 6 (b) If any shares of Common Stock shall cease to be Registrable Securities, SMS shall, upon the written request of the holder thereof, issue to such holder a new certificate evidencing such shares without the first two sentences of the legend required by Section 3.01(a) endorsed thereon. ARTICLE 4 Registration Rights Section 4.1. Demand Registration. (a) Registration on Request of Sodexho. Upon the written request of Sodexho that SMS effect the registration under the Securities Act of Registrable Securities having a fair market value of not less than $50 million and specifying the intended method of disposition thereof, SMS will thereupon will use its best efforts to effect, as promptly as practicable, the registration under the Securities Act of such Registrable Securities to the extent necessary to permit the disposition (in accordance with the intended methods for such disposal) of such Registrable Securities; provided that: (i) SMS shall not be obligated to file a registration statement relating to a registration request pursuant to this Section 4.01 at any time during the one-year period immediately following the effective date of another registration statement filed pursuant to this Section 4.01(a); and (ii) with respect to any registration statement filed or to be filed pursuant to this Section 4.01 and not yet effective, if the Board (which for this purpose shall not include the Sodexho Designees) shall determine, in its good faith judgment, that to permit such registration statement to become effective (or, if no registration statement has yet been filed, to file such a registration statement) would be significantly disadvantageous (a "DISADVANTAGEOUS CONDITION") to SMS or its stockholders in light of the existence, or in anticipation, of any acquisition or financing activity involving SMS or the unavailability for reasons beyond SMS's control of any required financial statements, SMS may, for the shortest possible period (but in no event to exceed 180 days from the date of the Board's determination), cause such registration statement to be withdrawn or, if no registration statement has yet been filed, to delay the filing of such registration statement. Unless Sodexho shall consent in writing, no other party, including SMS, shall be permitted to offer securities under any registration pursuant to this Section 4.01(a). Sodexho may, at any time prior to the effective date of the registration statement relating to such registration, revoke such request, without liability (except as set forth in Section 4.01(c)) by providing a written notice to SMS revoking such request. If SMS determines to take any action pursuant to clause (ii) above, SMS shall deliver a notice to Sodexho to such effect, and furnish to Sodexho a certified copy of the resolution of the Board authorizing such action, together with a general description of the applicable Disadvantageous Condition. If any Disadvantageous Condition shall cease to exist SMS shall promptly notify Sodexho to such effect. SMS shall, if any registration statement shall have been withdrawn, at the end of the period (not to exceed 180 7 days) referred to in clause (ii) above (or, if earlier, at such time as it in good faith deems appropriate) file a new registration statement covering the Registrable Securities that were covered by such withdrawn registration statement, and the effectiveness of such registration statement shall be maintained for such time as may be necessary so that the period of effectiveness of such new registration statement, when aggregated with the period during which such withdrawn registration statement was effective, shall be such time as may be otherwise required by this Agreement. (b) Registration Statement Form. Registrations under this Section 4.01 shall be on such appropriate registration form of the Commission (i) as shall be selected by SMS and as shall be reasonably acceptable to Sodexho and (ii) as shall permit the disposition of such Registrable Securities in accordance with the method or methods of disposition intended on the part of Sodexho. Notwithstanding anything herein to the contrary, if, pursuant to a registration request under this Section 4.01, (x) SMS proposes to effect registration by filing a registration statement on Form S-3 (or any successor or similar short- form registration statement), (y) such registration is in connection with an underwritten Public Offering and (z) the managing underwriter shall advise SMS in writing that, in its opinion, the use of another form of registration statement is of material importance to the success of such proposed offering, then such registration shall be effected on such other form. (c) Expenses. SMS shall pay all Registration Expenses in connection with the registrations which are requested and become effective pursuant to this Section 4.01, provided that after four such registrations have been requested and become effective, Sodexho shall pay all Registration Expenses in connection with subsequent registrations pursuant to this Section 4.01. Sodexho shall pay all underwriting discounts and commissions, the fees and disbursements of special counsel designated to represent Sodexho, its out-of-pocket expenses and transfer taxes, if any, relating to the sale or disposition of Sodexho's Registrable Securities pursuant to a registration statement requested pursuant to this Section 4.01. SMS shall not be liable for Registration Expenses in connection with a registration that shall not have become effective due to a revocation by Sodexho requesting such registration under this Section 4.01, and such Registration Expenses shall be borne by Sodexho. (d) Effective Registration Statement. A registration requested pursuant to this Section 4.01 shall not be deemed to have been effected unless the registration statement relating thereto has been effective (and not subject to any stop order, injunction or other order or requirement of the Commission or other governmental agency or court for any reason) for a period of 180 days following the date on which such registration statement was declared effective or such shorter period which will terminate when all Registrable Securities covered by such registration statement have been sold. (e) Priority Participation in Requested Registrations. If a registration pursuant to this Section 4.01 involves an underwritten Public Offering and the managing underwriter shall advise SMS that, in its view, the number or proposed mix of equity securities requested to be included in such registration (including securities which SMS requests to be included which are not 8 Registrable Securities) exceeds the largest number or appropriate mix of securities which can be sold without having an adverse effect on such offering (the "MAXIMUM OFFERING SIZE"), including the price at which such securities can be sold, SMS will include in such registration, in the priority listed below, securities up to the Maximum Offering Size: (i) first, the Registrable Securities requested to be included in such registration pursuant to Sections 4.01(a)(i) by Sodexho; and (ii) second, securities to be sold for the account of other Persons (including SMS), with such priorities among them as the SMS shall determine. Section 4.2. Incidental Registration. (a) If SMS at any time proposes to register any of its equity securities (the "PRIORITY SECURITIES") under the Securities Act (other than a registration (i) on Form S-8 or S-4 or any successor or similar forms, (ii) relating to Common Stock issuable upon exercise of employee stock options or in connection with any employee benefit or similar plan of SMS, (iii) in connection with a direct or indirect acquisition by SMS of another Person or (iv) pursuant to a shelf registration of securities pursuant to Rule 415 under the Securities Act), whether or not for sale for its own account, in a manner which would permit registration of Registrable Securities for sale to the public under the Securities Act, it will each such time, subject to the provisions of Section 4.02(b), give prompt written notice to Sodexho of its intention to do so at least 30 days prior to the anticipated filing date of the registration statement relating to such registration. Any such notice shall offer Sodexho the opportunity to include in such registration such number of Registrable Securities as Sodexho may request. Upon the written request of Sodexho within 15 days after the receipt of notice from SMS (which request shall specify the number of Registrable Securities intended to be disposed of and the intended method of disposition thereof), SMS will use its best efforts to effect the registration under the Securities Act of all Registrable Securities which SMS has been so requested to register by Sodexho, to the extent required to permit the disposition (in accordance with such intended methods thereof) of the Registrable Securities so to be registered; provided that (i) if such registration involves an underwritten Public Offering, Sodexho must sell its Registrable Securities to the underwriters selected by SMS on the same terms and conditions as apply to SMS and (ii) if, at any time after giving written notice of its intention to register any securities pursuant to this Section 4.02(a) and prior to the effective date of the registration statement filed in connection with such registration, SMS shall determine for any reason not to register such securities, SMS shall give written notice to Sodexho and shall be relieved of its obligation to register any Registrable Securities in connection with such registration. If a registration pursuant to this Section 4.02(a) involves an underwritten Public Offering, Sodexho may elect, in writing not less than 5 Business Days prior to the effective date of the registration statement filed in connection with such registration, not to register such securities in connection with such registration. No registration effected under this Section 4.02 shall relieve SMS of its obligations to effect registrations upon request under Section 4.01. SMS will pay all Registration Expenses in connection with each registration of Registrable Securities requested pursuant to this Section 4.02, and Sodexho shall pay all underwriting discounts and commissions, the fees and disbursements of special counsel designated to represent Sodexho, its out-of- pocket expenses and 9 transfer taxes, if any, relating to the sale or disposition of Sodexho's Registrable Securities pursuant to a registration statement effected pursuant to this Section 4.02. (b) Priority in Incidental Registrations. If a registration pursuant to this Section 4.02 involves an underwritten Public Offering and the managing underwriter shall advise SMS that, in its view, the number or proposed mix of equity securities (including all Registrable Securities) which SMS, Sodexho and any other Persons, intend to include in such registration exceeds the Maximum Offering Size, SMS will include in such registration, in the priority listed below, securities up to the Maximum Offering Size: (i) first, securities to be sold for SMS's own account; (ii) second, Registrable Securities requested to be included in such registration by Sodexho pursuant to Section 4.02(a). Section 4.3. Holdback Agreements. (a) If any registration of Registrable Securities shall be in connection with an underwritten Public Offering, Sodexho agrees not to effect any public sale or distribution, including any sale pursuant to Rule 144, of any Registrable Securities, (other than as part of such Public Offering) during the 14 days prior to, and during the 90 day period beginning on, the effective date of such registration statement (except as part of such registration); provided that Sodexho has received written notice of such registration at least 2 Business Days prior to the anticipated beginning of the 14 day period referred to above. (b) If any registration of Registrable Securities shall be in connection with an underwritten Public Offering, SMS agrees (i) not to effect any public sale or distribution of any of its securities during the 14 days prior to, and during the 90 day period beginning on, the effective date of such registration statement (except as part of such registration) and (ii) that any agreement entered into after the date of this Agreement pursuant to which SMS issues or agrees to issue any privately placed securities shall contain a provision under which holders of such securities agree not to effect any public sale or distribution of any such securities during the periods described in (i) above, in each case including a sale pursuant to Rule 144 (except as part of any such registration, if permitted); provided that the provisions of this paragraph (b) shall not prevent the conversion or exchange of any securities pursuant to their terms into or for other securities. Section 4.4. Registration Procedures. Whenever Sodexho requests that any Registrable Securities be registered pursuant to Section 4.01 or 4.02, SMS shall, subject to the provisions of such Sections, use its best efforts to effect the registration and the sale of such Registrable Securities in accordance with the intended method of disposition thereof as quickly as practicable, and in connection with any such request: (a) SMS will as expeditiously as possible prepare and file with the Commission a registration statement on the requisite form, subject to Section 4.01(b), and use its best efforts to cause such filed registration statement to become and remain effective for the period set forth in Section 4.01(d). 10 (b) SMS will, if requested, prior to filing a registration statement or prospectus or any amendment or supplement thereto, furnish to Sodexho and each underwriter, if any, of the Registrable Securities covered by such registration statement copies of such registration statement as proposed to be filed, and thereafter SMS will furnish to Sodexho and such underwriter, if any, such number of copies of such registration statement, each amendment and supplement thereto (in each case including all exhibits thereto and documents incorporated by reference therein), the prospectus included in such registration statement (including each preliminary prospectus) and such other documents as Sodexho or such underwriter may reasonably request in order to facilitate the disposition of the Registrable Securities owned by Sodexho. Sodexho shall have the right to request that SMS modify any information contained in such registration statement, amendment and supplement thereto pertaining to Sodexho and SMS shall use all reasonable efforts to comply with such request; provided that SMS shall not have any obligation to so modify any information if so doing would cause the prospectus to contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading. (c) After the filing of the registration statement, SMS will promptly notify Sodexho of any stop order issued or threatened by the Commission and take all reasonable actions required to prevent the entry of such stop order or to remove it if entered. (d) SMS will use its best efforts (i) to register or qualify the Registrable Securities under such other securities or blue sky laws of such jurisdictions in the United States as Sodexho (in light of its intended plan of distribution) requests and (ii) to cause such Registrable Securities to be registered with or approved by such other governmental agencies or authorities as may be necessary by virtue of the business and operations of SMS and do any and all other acts and things that may be reasonably necessary or advisable to enable Sodexho to consummate the disposition of its Registrable Securities; provided that SMS will not be required (x) to qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this paragraph (d), (y) to subject itself to taxation in any such jurisdiction or (z) to consent to general service of process in any such jurisdiction. (e) SMS will immediately notify Sodexho, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the occurrence of an event requiring the preparation of a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus will not contain an untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading and promptly make available to Sodexho and file with the Commission any such supplement or amendment. (f) SMS will enter into customary agreements (including an underwriting agreement in customary form) and take such other actions as are reasonably required in order to expedite or facilitate the disposition of such Registrable Securities. 11 (g) Upon execution of confidentiality agreements in form and substance reasonably satisfactory to SMS, SMS will make available for inspection by Sodexho, any underwriter participating in any disposition pursuant to such registration statement and any attorney, accountant or other professional retained by Sodexho or such underwriter (collectively, the "INSPECTORS"), all financial and other records, pertinent corporate documents and properties of SMS (collectively, the "RECORDS") as shall be reasonably necessary to enable them to exercise their due diligence responsibility, and cause SMS's officers, directors and employees to supply all information reasonably requested by any Inspectors in connection with such registration statement. (h) SMS will furnish to Sodexho and to each underwriter, if any, a signed counterpart of a comfort letter or comfort letters from SMS's independent public accountants, each in customary form and covering such matters of the type customarily covered by comfort letters as Sodexho or the managing underwriter therefor reasonably requests. (i) SMS will otherwise use its best efforts to comply with all applicable rules and regulations of the Commission, and make available to Sodexho, as soon as reasonably practicable, an earnings statement covering a period of 12 months, beginning within three months after the effective date of the registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act. (j) SMS will use its best efforts to cause all such Registrable Securities to be listed on each securities exchange on which similar securities issued by SMS are then listed. SMS may require Sodexho promptly to furnish in writing to SMS such information regarding the distribution of the Registrable Securities as SMS may from time to time reasonably request and such other information as may be legally required in connection with such registration. Sodexho agrees that, upon receipt of any notice from SMS of the happening of any event of the kind described in Section 4.04(e), Sodexho will forthwith discontinue disposition of Registrable Securities pursuant to the registration statement covering such Registrable Securities until Sodexho's receipt of the copies of the supplemented or amended prospectus contemplated by Section 4.04(e), and, if so directed by SMS, Sodexho will deliver to SMS all copies of the most recent prospectus covering such Registrable Securities at the time of receipt of such notice. In the event SMS shall give such notice, SMS shall extend the period during which the effectiveness of such registration statement shall be maintained (including the period referred to in Section 4.04(a) hereof) by the number of days during the period from and including the date of the giving of notice pursuant to Section 4.04(e) to the date when SMS shall make available to Sodexho a prospectus supplemented or amended to conform with the requirements of Section 4.04(e). SMS shall not be liable for the failure of any such registration to become effective provided that SMS complies with its obligations hereunder. 12 Section 4.5. Indemnification by SMS. SMS agrees to indemnify and hold harmless Sodexho, its officers, directors and agents, and each Person, if any, who controls Sodexho within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act from and against any and all losses, claims, damages, liabilities and expenses caused by any untrue statement or alleged untrue statement of a material fact contained in any registration statement or prospectus relating to the Registrable Securities (as amended or supplemented if SMS shall have furnished any amendments or supplements thereto) or any preliminary prospectus, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such losses, claims, damages, liabilities or expenses are caused by any such untrue statement or omission or alleged untrue statement or omission based upon information furnished in writing to SMS by Sodexho or on Sodexho's behalf expressly for use therein; provided that with respect to any untrue statement or omission or alleged untrue statement or omission made in any preliminary prospectus, or in any prospectus, as the case may be, the indemnity agreement contained in this Section 4.05 shall not apply to the extent that any such loss, claim, damage, liability or expense results from the fact that a current copy of the prospectus (or, in the case of a prospectus, the prospectus as amended or supplemented) was not sent or given to the Person asserting any such loss, claim, damage, liability or expense at or prior to the written confirmation of the sale of the Registrable Securities concerned to such Person if it is determined that SMS has provided such prospectus to Sodexho and it was the responsibility of Sodexho to provide such Person with a current copy of the prospectus (or such amended or supplemented prospectus, as the case may be) and such current copy of the prospectus (or such amended or supplemented prospectus, as the case may be) would have cured the defect giving rise to such loss, claim, damage, liability or expense. SMS also agrees to indemnify any underwriters of the Registrable Securities, their officers and directors and each Person who controls such underwriters on substantially the same basis as that of the indemnification of Sodexho provided in this Section 4.05, or on any other basis agreed to by such underwriters. Section 4.6. Indemnification by Sodexho of Registrable Securities. Sodexho agrees to indemnify and hold harmless SMS, its officers, directors and agents and each Person, if any, who controls SMS within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act to the same extent as the foregoing indemnity from SMS to Sodexho, but only (i) with respect to information furnished in writing by Sodexho or on Sodexho's behalf expressly for use in any registration statement or prospectus relating to the Registrable Securities, or any amendment or supplement thereto, or any preliminary prospectus or (ii) to the extent that any loss, claim, damage, liability or expense described in Section 4.05 results from the fact that a current copy of the prospectus (or, in the case of a prospectus, the prospectus as amended or supplemented) was not sent or given to the Person asserting any such loss, claim, damage, liability or expense at or prior to the written confirmation of the sale of the Registrable Securities concerned to such Person if it is determined that it was the responsibility of Sodexho to provide such Person with a current copy of the prospectus (or such amended or supplemented prospectus, as the case may be) and such current copy of the prospectus (or such amended or supplemented prospectus, as the case may be) would have cured the defect giving rise to such loss, claim, damage, liability or expense. Sodexho also agrees to indemnify and hold harmless underwriters 13 of the Registrable Securities, their officers and directors and each Person who controls such underwriters on substantially the same basis as that of the indemnification of SMS provided in this Section 4.06. Notwithstanding anything herein to the contrary, in no event shall Sodexho be liable under the provisions of this Section 4.06 for an amount in excess of the aggregate net proceeds of the sale of its Registrable Securities received by it. Section 4.7. Conduct of Indemnification Proceedings. In case any proceeding (including any governmental investigation) shall be instituted involving any Person in respect of which indemnity may be sought pursuant to Section 4.05 or 4.06, such Person (an "INDEMNIFIED PARTY") shall promptly notify the Person against whom such indemnity may be sought (the "INDEMNIFYING PARTY") in writing and the Indemnifying Party shall assume the defense thereof, including the employment of counsel reasonably satisfactory to such Indemnified Party, and shall assume the payment of all fees and expenses. In any such proceeding, any Indemnified Party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party unless (i) the Indemnifying Party and the Indemnified Party shall have mutually agreed to the retention of such counsel or (ii) representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood that the Indemnifying Party shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees and expenses of more than one separate firm of attorneys (in addition to any local counsel) at any time for all such Indemnified Parties, and that all such fees and expenses shall be reimbursed as they are incurred. In the case of any such separate firm for the Indemnified Parties, such firm shall be designated in writing by the Indemnified Parties. The Indemnifying Party shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent, or if there be a final judgment for the plaintiff, the Indemnifying Party shall indemnify and hold harmless such Indemnified Parties from and against any loss or liability (to the extent stated above) by reason of such settlement or judgment. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Party is or could have been a party and indemnity could have been sought hereunder by such Indemnified Party, unless such settlement includes an unconditional release of such Indemnified Party from all liability arising out of such proceeding. Section 4.8. Contribution. If the indemnification provided for in this Article 4 is unavailable to the Indemnified Parties in respect of any losses, claims, damages or liabilities referred to herein, then each 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 (i) as between SMS and Sodexho on the one hand and the underwriters on the other, in such proportion as is appropriate to reflect the relative benefits received by SMS and Sodexho on the one hand and the underwriters on the other from the offering of the Registrable Securities, or if such allocation is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits but also the relative fault of SMS and Sodexho on the one hand and of the underwriters on the other in connection with the statements or omissions which resulted in such losses, claims, damages or liabilities, as well as 14 any other relevant equitable considerations and (ii) as between SMS on the one hand and Sodexho, in such proportion as is appropriate to reflect the relative fault of SMS and Sodexho in connection with such statements or omissions, as well as any other relevant equitable considerations. The relative benefits received by SMS and Sodexho on the one hand and the underwriters on the other shall be deemed to be in the same proportion as the total proceeds from the offering (net of underwriting discounts and commissions but before deducting expenses) received by SMS and Sodexho bear to the total underwriting discounts and commissions received by the underwriters, in each case as set forth in the table on the cover page of the prospectus. The relative fault of SMS and Sodexho on the one hand and of the underwriters on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by SMS and Sodexho or by the underwriters. The relative fault of SMS on the one hand and Sodexho on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by such party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. SMS and Sodexho agree that it would not be just and equitable if contribution pursuant to this Section 4.08 were determined by pro rata allocation (even if the underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an Indemnified Party as a result of the losses, claims, damages or liabilities referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such Indemnified Party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 4.08, no underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Registrable Securities underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages which such underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission, and Sodexho shall not be required to contribute any amount in excess of the amount by which the total price at which its Registrable Securities were offered to the public exceeds the amount of any damages which Sodexho has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. Section 4.9. Participation in Public Offering. Sodexho may not participate in any underwritten Public Offering hereunder unless Sodexho (i) agrees to sell its Registrable Securities on the basis provided in any underwriting arrangements approved by the Persons entitled hereunder to approve such arrangements and (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements and this Article 4. 15 Section 4.10. Termination of Registration Rights. The registration rights for the Registrable Securities pursuant to this Article 4 shall terminate when Sodexho shall be able to sell its shares of Common Stock under section (k) of Rule 144 (or any similar provision then in force permitting the sale of restricted securities without limitation on the amount of securities sold or the manner of sale, and without requirements as to current public information about the issuer thereof or notice of the proposed sale). ARTICLE 5 Miscellaneous Section 5.1. Headings. The headings in this Agreement are for convenience of reference only and shall not control or affect the meaning or construction of any provisions hereof. Section 5.2. No Inconsistent Agreements. SMS will not hereafter enter into any agreement with respect to its securities which is inconsistent with, or grant rights superior to the rights granted to Sodexho pursuant to, this Agreement. Section 5.3. Entire Agreement. This Agreement, the Merger Agreement, the Distribution Agreement and the other Transaction Documents (as defined in the Merger Agreement) to which SMS and Sodexho are party constitute the entire agreement and understanding of the parties hereto or thereto in respect of the subject matter contained herein, and there are no restrictions, promises, representations, warranties, covenants, or undertakings with respect to the subject matter hereof or thereof, other than those expressly set forth or referred to herein. This Agreement, the Merger Agreement, the Distribution Agreement and the other Transaction Documents to which SMS and Sodexho are party supersede all prior agreements and understandings between the parties hereto with respect to the subject matter hereof. Section 5.4. Notices. All notices, requests and other communications to any party hereunder shall be in writing (including facsimile) and shall be deemed to have been duly given or made if sent by facsimile (with confirmation in writing), delivered personally or sent by registered or certified mail (postage prepaid, return receipt requested) to such party at its address or telecopier number set forth below or such other address or telecopier number as such party may hereinafter specify for the purpose to the party giving such notice: If to SMS, to: Sodexho Marriott Services, Inc. 10400 Fernwood Road Bethesda, Maryland 20817 Attention: Chief Financial Officer Telecopy: 301-380-8150 16 with a copy to: Sodexho Marriott Services, Inc. 10400 Fernwood road Bethesda, Maryland 20817 Attention: General Counsel Telecopy: 301-380-6727 If to Sodexho, to: Sodexho Alliance, S.A. 3, Avenue Newton 78180 Montigny - le - Bretonneux France Attention: Denis Robin Telecopy: 011-331-3085-5088 with a copy to: Davis Polk & Wardwell 450 Lexington Avenue New York, New York 10017 Attention: Paul R. Kingsley Telecopy: 212-450-4800 All such notices, requests and other communications shall be deemed received on the date of receipt by the recipient thereof if received prior to 5 p.m. in the place of receipt and such day is a Business Day in the place of receipt. Otherwise, any such notice, request or communication shall be deemed not to have been received until the next succeeding Business Day in the place of receipt. Section 5.5. Applicable Law; Submission to Jurisdiction. This Agreement shall be construed in accordance with and governed by the laws of the State of New York, without regard to the conflicts of law rules of such state. Each party hereto agrees that any legal action or proceeding arising out of or relating to this Agreement shall be instituted in any State or Federal court sitting in New York City, Borough of Manhattan (and each party agrees not to commence any legal action or proceeding except in such courts) and each party irrevocably submits to jurisdiction of such courts in such action or proceeding. Subject to applicable law, process in any such action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court. Without limiting the foregoing and subject to applicable law, each party agrees that service of process on such party as provided in Section 5.04 shall be deemed effective service of process on such party. Nothing herein shall affect the right of any party to serve legal process in any other manner permitted by law or at equity or to enforce in any lawful manner a judgment obtained in one jurisdiction in any other jurisdiction. 17 WITH RESPECT TO A PROCEEDING IN ANY SUCH COURT, EACH PARTY IRREVOCABLY WAIVES AND RELEASES TO THE OTHER PARTIES ITS RIGHT TO A TRIAL BY JURY, AND AGREES THAT IT WILL NOT SEEK A TRIAL BY JURY IN ANY SUCH PROCEEDING. Section 5.6. Severability. The invalidity or unenforceability of any provisions of this Agreement in any jurisdiction shall not affect the validity, legality or enforceability of the remainder of this Agreement in such jurisdiction or the validity, legality or enforceability of this Agreement, including any such provision, in any other jurisdiction, it being intended that all rights and obligations of the parties hereunder shall be enforceable to the fullest extent permitted by law. Section 5.7. Termination. Subject to Sections 2.07 and 4.10, this Agreement shall terminate and be of no further force or effect with respect to Sodexho when Sodexho ceases to hold any shares of Common Stock; provided that the provisions of Sections 5.05 and 5.12 shall survive any termination hereof. Section 5.8. Successors; Assigns; Transferees. The provisions of this Agreement shall be binding upon and accrue to the benefit of the parties hereto and their respective successors and permitted assigns. If Sodexho shall transfer the Registrable Securities (other than pursuant to a public sale), (i) it may assign to the acquiror of such securities any of its rights under this Agreement and (ii) the acquiror shall agree in writing to bound by the terms and conditions of this Agreement. Except as set forth in the preceding sentence, neither this Agreement nor any right, remedy, obligation or liability arising hereunder or by reason hereof shall be assignable by either party. Nothing in this Agreement, expressed or implied, is intended to confer on any Person other than the parties hereto, and their respective successors and permitted assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement. Section 5.9. Amendments; Waivers. No failure or delay on the part of either party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. No provision of this Agreement may be waived except by an instrument in writing executed by the party or parties against whom the waiver is to be effective. No provision of this Agreement may be amended or otherwise modified except (i) by an instrument in writing executed by each party hereto and (ii) during the period from the date hereof until the third anniversary of the date hereof, with the approval of a majority of the directors of SMS who are not Sodexho Designees or employees of SMS. Section 5.10. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original with the same effect as if the signatures thereto and hereto were upon the same instrument. Section 5.11. Recapitalization, Etc. In the event that any capital stock or other securities are issued in respect of, in exchange for, or in substitution of, any shares of Common Stock by reason of any reorganization, recapitalization, reclassification, merger, consolidation, 18 spin-off, partial or complete liquidation, stock dividend, split-up, sale of assets, distribution to stockholders or combination of shares of Common Stock or any other change in capital structure of SMS, appropriate adjustments shall be made with respect to the relevant provisions of this Agreement so as to fairly and equitably preserve, as far as practicable, the original rights and obligations of the parties hereto under this Agreement. Section 5.12. Remedies. Each party hereto acknowledges that the remedies at law of the other parties for a breach or threatened breach of this Agreement would be inadequate and, in recognition of this fact, any party to this Agreement, without posting any bond, and in addition to all other remedies which may be available, shall be entitled to obtain equitable relief in the form of specific performance, a temporary restraining order, a temporary or permanent injunction or any other equitable remedy which may then be available. Section 5.13. Confidentiality. Sodexho will hold, and will use its best efforts to cause its officers, directors, employees, accountants, counsel, consultants, advisors and agents (all such persons being collectively referred to as "REPRESENTATIVES"), to hold, in confidence, unless compelled to disclose by judicial or administrative process or by other requirements of law, all confidential information concerning SMS and its Subsidiaries, except to the extent that such information can be shown to have been (i) previously known on a nonconfidential basis by Sodexho, (ii) in the public domain through no fault of Sodexho or (iii) later lawfully acquired by Sodexho from sources other than SMS who, to the actual knowledge of the recipient, are not subject to a confidentiality agreement; provided that Sodexho and its Representatives may disclose such information (x) to any Controlled Entity of Sodexho or (y) to any other Person (other than the Universal Services Partnership and any of its Subsidiaries or Affiliates, including the Universal/Doyon Joint Venture) so long as such Person is advised of the confidential nature of the information and agrees to keep such information confidential on a basis consistent with the provisions hereof. The obligation of Sodexho to hold any such information in confidence shall be satisfied if it exercises the same care with respect to such information as it would take to preserve the confidentiality of its own similar information. 19 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. SODEXHO MARRIOTT SERVICES, INC. By /s/ Lawrence E. Hyatt ----------------------------- Name: Lawrence E. Hyatt Title: Senior Vice President & Chief Financial Officer SODEXHO ALLIANCE, S.A. By /s/ Bernard Carton -------------------------------- Name: Brenard Carton Title: Senior Vice President & Chief Financial Officer 20 -----END PRIVACY-ENHANCED MESSAGE-----