EXHIBIT 10.6
RESTATED NONCOMPETITION AGREEMENT
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THIS RESTATED NONCOMPETITION AGREEMENT ("Agreement") is made and entered
into as of March 3, 1998, by and between HOST MARRIOTT CORPORATION, a Delaware
corporation ("Host Marriott"), NEW MARRIOTT MI, INC., a Delaware corporation (to
be renamed Marriott International, Inc.) ("New Marriott"), and, subject to
Section 5.14 hereof, MARRIOTT INTERNATIONAL, INC., a Delaware corporation (to be
renamed Sodexho Marriott Services, Inc.) ("SMS"). As used in this Agreement,
and subject to the provisions of Section 5.14 hereof with respect to Marriott
International, the terms "Host Marriott" and "Marriott International" shall mean
Host Marriott and New Marriott, respectively, and their respective Subsidiaries
and Affiliates, other than any Subsidiaries and Affiliates in which the
respective direct or indirect ownership interest of Host Marriott or Marriott
International is less than fifty percent (50%).
WHEREAS, SMS and Host Marriott entered into a Noncompetition Agreement
dated as of October 8, 1993, as amended (the "Original Agreement"), in
connection with and pursuant to that certain Distribution Agreement between them
dated as of September 15, 1993, (as thereafter amended from time to time,
"Distribution Agreement").
WHEREAS, on December 29, 1995, Host Marriott spun off certain of the
businesses subject to the Original Agreement through a distribution of the stock
of its then subsidiary, Host Marriott Services Corporation ("HMSC"), to its
shareholders, and accordingly, SMS, Host Marriott and HMSC entered into an
amendment dated as of December 29, 1995 to the Original Agreement which added
HMSC as a party (the Original Agreement, as so amended, the "Existing
Agreement").
WHEREAS, on October 1, 1997, SMS announced its intention to spin off to its
shareholders a new company, New Marriott, which will directly or through
subsidiaries own all or substantially all of Marriott International's lodging,
senior living and distribution services businesses; and to rename SMS, the
corporate entity which will retain its management services business, Sodexho
Marriott Services, Inc.
WHEREAS, as a result of consummation the two spin off transactions
described above, the businesses subject to the Existing Agreement will be owned
by four separate companies, Host Marriott, HMSC, SMS, and Marriott
International; with the result that four companies would need to be participate
in any and every future modification of or waiver under the Existing Agreement,
even though any such waiver or modification would likely have no relevance to
two of the four companies.
WHEREAS, New Marriott, SMS, Host Marriott and HMSC now wish to replace the
Existing Agreement with two bilateral agreements, of which this Agreement is
one, each covering only that subset of the businesses covered by the Existing
Agreement which are germane to such parties and each of which is to be deemed by
the parties thereto to be a continuation of the Original Agreement with respect
to such parties; and accordingly are entering into an Acknowledgment and Release
substantially in the form of Exhibit A attached hereto.
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NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and for other valuable consideration, the receipt and
sufficiency of which are hereby mutually acknowledged, Host Marriott and
Marriott International agree as between themselves to Amend and Restate the
Existing Agreement as follows:
ARTICLE ONE
DEFINITIONS
1. Definitions. The following terms when used herein shall have the meaning
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set forth below:
"Affiliates" shall mean any Person directly or indirectly controlling or
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controlled by, or under direct or indirect common control with, Host Marriott or
Marriott International, as the case may be. For purposes of this definition
"control", when used with respect to any Person, means the power to direct the
management and policies of such Person, directly or indirectly, through the
ownership of voting securities, by contract, or otherwise. Notwithstanding the
foregoing, Host Marriott's Affiliates shall not include Marriott International
or its Subsidiaries or Affiliates, and Marriott International's Affiliates shall
not include Host Marriott or its Subsidiaries or Affiliates.
"Common Name" shall mean any single or multiple hotel management or
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franchise system operating under one or more common brand names.
"Compete" shall mean (i) to conduct or participate or engage in, or bid for
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or otherwise pursue a business, whether as a principal, sole proprietor,
partner, stockholder, or agent of, or consultant to or manager for, any Person
or in any other capacity, or (ii) have any ownership interest in any Person or
business which conducts, participates or engages in, or bids for or otherwise
pursues a business, whether as a principal, sole proprietor, partner,
stockholder, or agent of, or consultant to or manager for, any Person or in any
other capacity.
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"Conference Centers" shall mean the facilities for conferences and meetings
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of groups and associations (together with the lodging, food and other services
related thereto), principally utilized by Persons belonging to or affiliated
with educational, health care, governmental, corporate or other organizations,
or other facilities marketed primarily for such conference and group meeting
business, such as the U.S. Postal Service Conference Center located in Norman,
Oklahoma, substantially as it is being operated by Marriott International as of
October 8, 1993.
"Effective Period" shall mean that period commencing on October 8, 1993 and
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automatically terminating without further documentation on October 8, 2000.
"Hotel Management Business" means the business of managing, operating or
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franchising limited service or full service hotel properties with respect to
matters incident to the operation of such properties including, without
limitation, management services with respect to food, beverages, housekeeping,
laundry, vending, plant and equipment operation and maintenance, grounds care,
gift or merchandise shops within such properties, reservations, sales and
marketing services, conference and meeting facilities, health rooms, swimming
and other sports facilities and all other services related to the operation of
such hotel properties.
"Host Marriott" shall have the meaning set forth in the first paragraph of
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this Agreement.
"Marriott International" shall have the meaning set forth in the first
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paragraph of this Agreement.
"New Marriott" shall have the meaning set forth in the first paragraph of
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this Agreement.
"New Marriott Spinoff" means the spinoff of New Marriott to the
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shareholders of SMS which was announced on October 1, 1997 and is expected to be
consummated on or about March 27, 1998.
"Person" shall mean any person, firm, corporation, general or limited
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partnership, association, or other entity.
"SMS" shall have the meaning set forth in the first paragraph of this
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Agreement.
"Subsidiaries" shall mean corporations or other entities which are more
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than fifty percent (50%) owned, directly or indirectly, by Host Marriott or
Marriott International, as the case may
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be, and partnerships in which Host Marriott or Marriott International, as the
case may be, or a subsidiary corporation, is a general partner.
"Territory" shall mean the United States, Canada, and their respective
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territories and protectorates.
"Transfer" shall mean the sale, conveyance, disposal of or other transfer
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of ownership, title or other interest.
Any capitalized terms defined in the Distribution Agreement and used herein
shall have the meanings ascribed to them in the Distribution Agreement unless
otherwise defined herein. By this reference, the Distribution Agreement is
incorporated in this Agreement.
ARTICLE TWO
NONCOMPETITION WITH RESPECT TO THE MMS BUSINESS
2. [Intentionally deleted].
ARTICLE THREE
NONCOMPETITION WITH RESPECT TO THE HOST BUSINESS
3. [Intentionally deleted].
ARTICLE FOUR
NONCOMPETITION WITH RESPECT TO THE HOTEL MANAGEMENT BUSINESS
4.1 Certain Restrictions on Host Marriott.
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A. Except as provided in Sections 4.1.B., 4.1.C. and 4.1.D., Host Marriott
shall be entitled to (i) own, lease, acquire and develop hotel properties, (ii)
operate or manage (self-managed or managed by a third party) Host Marriott's
hotel properties, and (iii) Compete in the Hotel Management Business.
B. Host Marriott shall not own, lease or subsequently acquire any hotel
properties using the names "Marriott", "Courtyard", "Residence Inn" or
"Fairfield" unless Marriott International
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is operating, managing or franchising such properties pursuant to an agreement
with Host Marriott.
C. Notwithstanding the foregoing Section 4.1.A., during the Effective
Period, but solely with respect to hotel properties acquired subsequent to the
Effective Date, Host Marriott shall comply with the following restrictions:
(i) Host Marriott may operate an unlimited number of hotel
properties so long as Host Marriott does not operate more than ten (10)
such properties under a Common Name.
(ii) Host Marriott may contract with a third party manager for
operation of an unlimited number of hotel properties so long as the number
so operated is not more than the greater of (a) ten (10) such properties
operated under a common name or (b) twenty-five percent (25%) of the system
operated by such manager or managers under a Common Name.
(iii) Host Marriott may franchise as franchisor an unlimited number
of hotel properties so long as Host Marriott is not franchisor for more
than ten (10) such properties under a Common Name.
The foregoing restrictions in this Section 4.1.C. shall not be binding upon a
lender of Host Marriott nor on a purchaser of the aforementioned hotel
properties.
D. Nothing in this Agreement shall give any party the right to be a
franchisee or franchisor of Marriott International without the approval of
Marriott International.
ARTICLE FIVE
MISCELLANEOUS
5.1 [Intentionally deleted].
5.2 Entire Agreement. This Agreement, the Distribution Agreement and the
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Related Documents constitute the entire agreement of the parties concerning the
subject matter hereof. Additional restrictions on competition may be contained
in the Assignment and License Agreement between Host Marriott and Marriott
International of even date herewith, or in certain hotel facility
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management agreements, and restrictions contained therein shall be in addition
to the restrictions contained herein.
5.3 Modification. This Agreement may only be amended, modified or
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supplemented in a written agreement signed by both parties hereto.
5.4 Waiver. No term or condition of this Agreement shall be deemed to
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have been waived, nor shall there be any estoppel against the enforcement of any
provision hereof, except by written instrument of the party charged with such
waiver or estoppel.
5.5 Severability. Host Marriott and Marriott International agree that the
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period of restriction and the geographical area of restriction imposed upon the
parties are fair and reasonable and are reasonably required for the protection
of each of the parties hereto. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect as though the invalid portions were not a part
hereof. If the provisions of this Agreement relating to the area of restriction
or the period of restriction shall be deemed to exceed the maximum area or
period which a court having jurisdiction over the matter would deem enforceable,
such area or period shall, for purposes of this Agreement, be deemed to be the
maximum area or period which such court would deem valid and enforceable.
5.6 Remedies. Marriott International and Host Marriott agree that
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irreparable damage would occur in the event any of the provisions of this
Agreement were not to be performed in accordance with the terms hereof, and that
their remedy at law for any breach of the other party's obligations hereunder
would be inadequate. Marriott International and Host Marriott agree and consent
that temporary and permanent injunctive relief may be granted in any proceeding
which may be brought to enforce any provision hereof without the necessity of
proof of actual damage.
5.7 Enforceability. The terms, conditions and promises contained in this
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Agreement shall be binding upon and shall inure to the benefit of each of the
parties hereto, their heirs, personal representatives, or successors and
assigns. Each of the parties hereto shall cause its subsidiaries to comply with
such party's obligations hereunder. Nothing herein, expressed or implied, shall
be construed to give any other Person any legal or equitable rights hereunder.
5.8 Assignment and Successors and Assigns. Neither party shall, without
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the prior written consent of the other, assign any rights or delegate any
obligations under this Agreement.
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5.9 Consent to Jurisdiction. Subject to Section 5.1 hereof, the parties
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irrevocably submit to the exclusive jurisdiction of (a) the Courts of the State
of Maryland in Montgomery County, and (b) if federal jurisdiction exists, the
United States District Court for the State of Maryland for the purposes of any
suit, action or other proceeding arising out of this Agreement. Each party
hereby irrevocably designates, appoints and empowers Prentice Hall Corporation
System, Inc. as its true and lawful agent and attorney-in-fact in its name,
place, and stead to receive on its behalf service of process in any action,
suit, or proceeding with respect to any matters as to which it has submitted to
jurisdiction as set forth in the immediately preceding sentence.
5.10 Interpretation. When a reference is made in this Agreement to a
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Section, Article, or Schedule, such reference shall be to a Section, Article, or
Schedule of this Agreement unless otherwise indicated. The headings contained
in this Agreement are for reference purposes only and shall neither affect the
meaning or interpretation of this Agreement, nor define or limit the scope or
intent of any provision or part hereof. Whenever the words "include," or
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation."
5.11 Notices. All notices and other communications hereunder shall be in
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writing and shall be delivered by hand, by facsimile 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 Host Marriott:
Host Marriott Corporation
10400 Fernwood Road
Washington, D.C. 20058 (registered or certified mail)
Bethesda, Maryland 20817 (express mail or courier)
Attention: General Counsel
Dept. 72/923
FAX NO.
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To Marriott International:
Marriott International, Inc.
One Marriott Drive
7
Washington, D.C. 20058 (registered or certified mail)
Attention: General Counsel
Dept. 52/923
FAX NO. 301/380-6727
or
10400 Fernwood Road
Bethesda, Maryland 20817 (express mail or courier)
Attention: General Counsel
Dept. 52/923
FAX NO. 301/380-6727
5.12 Governing Law. This Agreement shall be governed by, and construed in
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accordance with, the laws of the State of Maryland, regardless of the laws that
might be applied under applicable principles of conflicts of laws.
5.13 Relationship of Parties. It is understood and agreed that nothing in
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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.
5.14 New Marriott Spinoff; Release of SMS. Until such time as the New
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Marriott Spinoff is consummated, the term"Marriott International" shall mean SMS
and its Subsidiaries (including, without limitation, New Marriott) and
Affiliates, other than any Subsidiaries and Affiliates in which the direct or
indirect ownership interest of SMS is less than fifty percent (50%). Upon
consummation of the New Marriott Spinoff, SMS shall automatically cease to be a
party to this Agreement, and shall have no further rights and be released from
all duties hereunder.
5.15 Effectiveness and Effect on Existing Agreement. This Agreement shall
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not become effective, and the Existing Agreement shall remain in effect, until
such time as New Marriott, Host Marriott, SMS, and HMSC have executed and
delivered an Acknowledgment and Release substantially in the form of Exhibit A
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hereto. Thereafter, as between Marriott International and Host Marriott, this
Agreement shall for all purposes be deemed to be an amendment, restatement and
continuation of the Existing Agreement, which shall then have no further
independent force or effect.
[Signatures on following page]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered, all as of the day and year first above written.
Marriott International:
NEW MARRIOTT MI, INC. (to be renamed
Marriott International, Inc.)
By: /s/ Raymond G. Murphy
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Raymond G. Murphy
Senior Vice President and Treasurer
Host Marriott:
HOST MARRIOTT CORPORATION
By: /s/ C.G. Townsend
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Name: C.G. Townsend
Title: Senior Vice President
SMS [Subject to the provisions of Section 5.14]
MARRIOTT INTERNATIONAL, INC. (to be
renamed Sodexho Marriott Services, Inc.)
By: /s/ Raymond G. Murphy
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Raymond G. Murphy
Senior Vice President and Treasurer
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