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EXHIBIT 2
May 17, 1999, as amended on July 22, 1999.
HOST MARRIOTT SERVICES CORPORATION
CHANGE IN CONTROL PLAN
1. Title.
This Plan shall be entitled the "Host Marriott Services Corporation Change
in Control Plan" (hereinafter "Plan").
2. Effective Date.
The Plan shall be effective when the Secretary of the Board of Directors
shall certify to the Plan Administrator that the Compensation Policy Committee
of Host Marriott Services Corporation has approved all terms and conditions of
the Plan. The Plan shall be immediately effective on certification by the
Secretary.
3. Plan Administrator.
The Administrator of the Plan shall be the Vice President of Compensation
and Benefits of Host Marriott Services Corporation, or such other person as the
Compensation Policy Committee of the Board of Directors shall designate from
time to time. The Administrator of the Plan shall not be a Plan Participant.
4. Plan Sponsor.
The Plan is adopted by the Compensation Policy Committee of the Host
Marriott Services Corporation Board of Directors on behalf of the Plan sponsor,
Host Marriott Services Corporation (hereinafter "Company").
5. Purpose.
The Plan is intended to retain key executives, to the benefit of the
Company, by ensuring that executives covered by the Plan are treated in a fair
and consistent manner, receiving a defined benefit from the Plan in
consideration of their continued employment with the Company after the effective
date of the Plan. The Plan applies only to termination of a Participant in the
event of a change in control.
6. Participants.
The participants ("Participants") in the Plan shall be the President and
Chief Executive Officer ("CEO"), and Senior Corporate Officers who are direct
reports of the CEO, and such other Corporate Officers as the CEO shall
designate, provided, however, that all Participants shall be approved by the
Compensation Policy Committee of the Company. The Participants recommended by
the CEO and approved by the Committee are attached as Schedule I to the Plan.
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7. Conditions Precedent to Receive Payments.
To receive any payments from the Plan, a Participant must:
1. Be an approved Participant and listed on Schedule I to this Plan;
and
2. Be notified of termination from employment, as defined in the Plan;
and
3. Execute a full and complete waiver and release of any legal claims
the Participant may have against the Company, such waiver and
release to be satisfactory to the Company, in its sole discretion;
and
4. Execute an agreement providing that the Participant, following
termination of employment, shall protect all confidential
information, proprietary information, and trade secrets of the
Company and shall not disclose any of such information without the
prior written consent of the Company; and
5. Execute an agreement that the Participant, while receiving payments
from the Plan, shall not directly or indirectly solicit, induce, or
otherwise seek to influence any management employee of the Company
to leave the employment of the Company.
If all such conditions have been satisfied, the Participant shall be
entitled to receive the payments specified in the Plan.
8. Termination of Employment.
For purposes of the Plan, a termination of employment shall mean only the
following and no other events of termination:
A change in control of the Company, in connection with which the
Participant is not continued in his or her same position, reporting
relationship, base salary and norm bonus, and location of work, and
is not offered a comparable alternative position. A change in
control shall have the meaning set forth in Schedule 2 to this Plan.
A comparable alternative position shall mean a position for which
the Participant, in the judgment of the Company, is qualified to
perform; is at the same or greater base salary and bonus of the
Participant; does not involve a change in reporting relationship;
and does not require relocation to an office outside fifty (50)
miles of the Corporate Headquarters of the Company.
9. Plan Payments to Participants.
In the event of a termination of employment, as defined in Section 8 of
the Plan, the following severance payments shall be made:
Level 1: President and Chief Executive Officer: Three (3) years of the
then current base salary and three (3) years of norm bonus.
Level 11: All Executive Vice Presidents and Senior Vice Presidents who
report directly to the Chief Executive Officer at the time the
Plan is effective, or who thereafter
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become approved Participants directly reporting to the CEO:
Two (2) years of their then current base salary and two (2)
years of norm bonus.
Level III: Other Corporate Officers: On e and one-half (1.5) years of
their then base salary and one and one-half (1.5) years of
norm bonus.
Payments shall be made in regular, bi-weekly payments, except for norm
bonus, which shall be paid in a lump sum, each February 15 for the preceding
fiscal year to which the norm bonus relates. All payments are subject to
federal, state, and local income and social security taxes, and deductions for
any benefit plans in which the Participant continues to participate. Any excise
or other special taxes shall be paid by the Company.
10. Participation in Company Employee Benefit Plans.
Participants in the Plan shall continue to participate in all Company
employee benefit plans during their period of severance payments set forth in
Section 9 of the Plan. The termination of the Participant' s employment shall
occur on the last day of the applicable severance period of the Participant. The
employee costs of each benefit plan shall be deducted from the severance
payments received by the Participant.
11. Disputes.
All claims for payments and other benefits under the Plan shall be
determined by the Plan Administrator. The address of the Plan Administrator is:
Plan Administrator
Host Marriott Services Corporation Change in Control
Host Marriott Services Corporation
6600 Rockledge Drive
Bethesda, MD 20817
A final decision of the Plan Administrator may be appealed to the
Compensation Policy Committee of the Host Marriott Services Corporation Board of
Directors. All appeals must be in writing; clearly state the date and decision
of the Plan Administrator from which the appeal is taken; and be post marked not
more than ten (10) days after the final decision of the Plan Administrator. The
address of the Compensation Policy Committee is:
Compensation Policy Committee
Host Marriott Services Corporation Change in Control
Secretary of the Committee
Host Marriott Services Corporation
6600 Rockledge Drive
Bethesda, MD 20817
12. Termination of the Plan.
The Plan shall terminate, unless extended by the Compensation Policy
Committee, on December 31, 2005. The Plan may be terminated earlier by the
Compensation Policy Committee, or the Company's Board of Directors, provided
that each Participant shall consent to the early termination of the Plan.
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13. Beneficiaries of Participants.
In the event of the death of a Participant receiving payments under the
Plan, the then remaining payments due to the Participant shall be paid in a lump
sum, less applicable federal, state and local income and social security taxes,
to the designated beneficiary of the Participant. No payments, benefits, or
rights of any kind apply to a beneficiary in the event the Participant is
deceased prior to the commencement of severance payments to the Participant.
14. Successor to the Company.
This Plan shall be binding on any successor to the Company, and any
subsequent successor to the successor to the Company. A successor shall mean any
person, without regard to whether the person is an individual, or partnership,
corporation, Trustee, or any other form of business or administrative
organization.
15. ERISA Qualification.
The Plan Administrator shall take all necessary steps to qualify the Plan
under ERISA. The Plan shall be effective at all times without regard to whether
the Plan shall eventually become ERISA qualified.
16. Plan Amendment.
The Plan may be amended from time to time by the Compensation Policy
Committee. Any such amendment shall not reduce or otherwise diminish the rights
and benefits of any Plan Participant without the Participant's consent.
17. Gross-Up.
(a) In the event it shall be determined that any payment, benefit or
distribution (or combination or acceleration of rights thereof) provided
(directly or indirectly) by the Company to or for the benefit of any
Participant, whether paid or payable or distributed or distributable pursuant to
the terms of this Plan, or under the terms of any other plan, program, agreement
or arrangement (a "Payment") would be subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code of 1986, as amended (the "Code") or
any interest or penalties are incurred by the Executive with respect to such
excise tax (such excise tax, together with any such interest and penalties,
hereinafter collectively referred to as the "Excise Tax"), the Participant shall
be entitled to receive an additional payment (a "Gross-Up Payment") in an amount
such that after payment by the Executive of all taxes (including any interest or
penalties imposed with respect to such taxes, and the excise tax imposed upon
the Gross-Up Payment), the Executive retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments.
(b) All determinations required to be made under paragraph (a), including
whether and when a Gross-Up Payment is required and the amount of such Gross-Up
Payment and the assumptions to be utilized in arriving at such determination,
shall be made by the Company's independent public accountants, which shall
provide detailed supporting calculations both to the Company and to the
applicable Participant within fifteen (15) business days of the receipt of
notice from the Participant that a payment has been or will be made, or such
earlier time as is requested by the Company. The calculations prepared by such
accounting firm may be reviewed on behalf of the Participant by a reputable
certified accounting firm designated by the Participant. In the event of a
dispute between the Company's accountants and the Participant's accountants,
such firms shall jointly select a third nationally recognized certified public
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accounting firm to resolve the dispute and the decision of such third firm shall
be final, binding and conclusive upon the Participant and the Company. The
reasonable fees and expenses of the accounting firms referenced above shall be
borne by the Company. Any Gross-Up Payment with respect to a Payment shall be
paid by the Company to the Participant at the time the Participant is entitled
to receive the Payment.
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SCHEDULE 1
The following are approved Participants, at the designated levels, in the
Host Marriott Services Corporation Change in Control Plan ("Plan"):
Level 1: William W. McCarten
Level 2: Brian W. Bethers
James A. Boragno
Michelle M. Green
Joe P. Martin
John J. McCarthy
Thomas G. O'Hare
Level 3: Lori A. Cramp
John M. Green
I certify that the above persons are approved Participants in the Plan.
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Joe P. Martin
Secretary of the Board
Date: May 17, 1999
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SCHEDULE 2
CHANGE IN CONTROL
A change in control shall have the following meaning:
1. The acquisition of at least twenty percent (20%) of the common stock of
Host Marriott Services Corporation ("HMS"), or its successor entity, sufficient
to allow a person or persons acting in concert to elect a majority of the Board
of Directors or otherwise effectively control the management of HMS; or
2. A merger, dissolution, or other corporate transaction in which HMS or
its successor-in-interest is not the surviving entity, or HMS or its
successor-in-interest becomes a subsidiary or affiliate or any other corporation
or other entity; or
3. A determination by the Board of Directors of HMS, or a court or
administrative agency with jurisdiction over the matter, that a change of
control has occurred in HMS, or its successor entity; but
4. A change of control shall not occur if Richard E. Marriott or J.W.
Marriott, Jr., shall increase their ownership of HMS common stock.