UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. )*
EXTENDED STAY AMERICA, INC.
--------------------------------------------
(Name of Issuer)
Common Stock, $0.01 Par Value
-----------------------------------
(Title of Class of Securities)
30224P101
------------------------
(CUSIP Number)
Stephen M. Vine, Esq.
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
399 Park Avenue
New York, New York 10022
(212) 872-1000
-----------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
February 6, 1997
----------------------------------
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [_].
Check the following box if a fee is being paid with the statement [_].** (A fee
is not required only if the reporting person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7)
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d- 1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter disclosure
provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
Continued on following page(s)
Page 1 of 38 Pages
Exhibit Index: Page 15
- -----------------
** A filing fee is not being paid with this statement pursuant to SEC
Release No. 33-7331 whereby the filing fee has been eliminated for
Schedule 13D.
<PAGE>
Page 2 of 38 Pages
SCHEDULE 13D
CUSIP No. 30224P101
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Soros Fund Management LLC
2 Check the Appropriate Box If a Member of a Group*
a. [_]
b. [x]
3 SEC Use Only
4 Source of Funds*
AF
5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e) [_]
6 Citizenship or Place of Organization
Delaware
7 Sole Voting Power
Number of 4,200,000
Shares
Beneficially 8 Shared Voting Power
Owned By 0
Each
Reporting 9 Sole Dispositive Power
Person 4,200,000
With
10 Shared Dispositive Power
0
11 Aggregate Amount Beneficially Owned by Each Reporting Person
4,200,000
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares*
[x]
13 Percent of Class Represented By Amount in Row (11)
5.26%
14 Type of Reporting Person*
OO; IA
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
Page 3 of 38 Pages
SCHEDULE 13D
CUSIP No. 30224P101
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
George Soros (in the capacity described herein)
2 Check the Appropriate Box If a Member of a Group*
a. [_]
b. [x]
3 SEC Use Only
4 Source of Funds*
AF
5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e) [_]
6 Citizenship or Place of Organization
United States
7 Sole Voting Power
Number of 0
Shares
Beneficially 8 Shared Voting Power
Owned By 4,200,000
Each
Reporting 9 Sole Dispositive Power
Person 0
With
10 Shared Dispositive Power
4,200,000
11 Aggregate Amount Beneficially Owned by Each Reporting Person
4,200,000
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares*
[x]
13 Percent of Class Represented By Amount in Row (11)
5.26%
14 Type of Reporting Person*
IA
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
Page 4 of 38 Pages
SCHEDULE 13D
CUSIP No. 30224P101
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Stanley F. Druckenmiller (in the capacity described herein)
2 Check the Appropriate Box If a Member of a Group*
a. [_]
b. [x]
3 SEC Use Only
4 Source of Funds*
AF
5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e) [_]
6 Citizenship or Place of Organization
United States
7 Sole Voting Power
Number of 100,000
Shares
Beneficially 8 Shared Voting Power
Owned By 4,200,000
Each
Reporting 9 Sole Dispositive Power
Person 100,000
With
10 Shared Dispositive Power
4,200,000
11 Aggregate Amount Beneficially Owned by Each Reporting Person
4,300,000
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares*
[_]
13 Percent of Class Represented By Amount in Row (11)
5.39%
14 Type of Reporting Person*
IA
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
Page 5 of 38 Pages
SCHEDULE 13D
CUSIP No. 30224P101
1 Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
Duquesne Capital Management, L.L.C.
2 Check the Appropriate Box If a Member of a Group*
a. [_]
b. [x]
3 SEC Use Only
4 Source of Funds*
Not applicable
5 Check Box If Disclosure of Legal Proceedings Is Required Pursuant to
Items 2(d) or 2(e) [_]
6 Citizenship or Place of Organization
Pennsylvania
7 Sole Voting Power
Number of 100,000
Shares
Beneficially 8 Shared Voting Power
Owned By 0
Each
Reporting 9 Sole Dispositive Power
Person 100,000
With
10 Shared Dispositive Power
0
11 Aggregate Amount Beneficially Owned by Each Reporting Person
100,000
12 Check Box If the Aggregate Amount in Row (11) Excludes Certain Shares*
[x]
13 Percent of Class Represented By Amount in Row (11)
0.13%
14 Type of Reporting Person*
OO; IA
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
Page 6 of 38 Pages
This Statement on Schedule 13D relates to shares of Common Stock,
$.01 par value per share (the "Shares"), of Extended Stay America, Inc. (the
"Issuer"). This Statement is being filed by the Reporting Persons (as defined
herein) to report recent acquisitions of Shares of the Issuer as a result of
which certain of the Reporting Persons may be deemed to be the beneficial owners
of more than 5% of the outstanding Shares.
Item 1. Security and Issuer.
This Statement relates to the Shares. The address of the
principal executive offices of the Issuer is 450 E. Las Olas Boulevard, Ft.
Lauderdale, Florida 33301.
Item 2. Identity and Background.
This statement is being filed by Soros Fund Management LLC, a
Delaware limited liability Company ("SFM LLC"), Mr. George Soros ("Mr. Soros"),
Mr. Stanley F. Druckenmiller ("Mr. Druckenmiller") and Duquesne Capital
Management, L.L.C., a Pennsylvania limited liability company ("Duquesne LLC,"
and together with SFM LLC, Mr. Soros and Mr. Druckenmiller, the "Reporting
Persons"). This statement relates to Shares held for the accounts of Quantum
Partners (as defined herein) and the Duquesne LLC Clients (as defined herein).
The business of SFM LLC is managed through a Management Committee
(the "Management Committee") comprised of Mr. Soros, Mr. Druckenmiller and Mr.
Gary Gladstein. SFM LLC, a Delaware limited liability company, has its principal
office at 888 Seventh Avenue, 33rd Floor, New York, New York 10106. Its
principal business is to serve, pursuant to contract, as the principal
investment manager to several foreign investment companies, including Quantum
Partners (the "SFM Clients"). SFM LLC has been granted investment discretion
over portfolio investments, including the Shares, held for the account of
Quantum Partners LDC, a Cayman Islands exempted limited duration company
("Quantum Partners") and Quantum Fund N.V., a Netherlands Antilles company
("Quantum Fund"). Quantum Partners is the principal operating subsidiary of
Quantum Fund. Each of Quantum Fund and Quantum Partners has its principal office
at Kaya Flamboyan 9, Willemstad, Curacao, Netherlands Antilles. SFM LLC's
contracts with SFM Clients generally provide that SFM LLC is responsible for
designing and implementing the SFM Clients' overall investment strategies; for
conducting direct portfolio management strategies to the extent that SFM LLC
determines that it is appropriate to utilize its own portfolio management
capabilities; for selecting, evaluating and monitoring other investment advisors
who manage separate portfolios on behalf of SFM Clients; and for allocating and
reallocating the SFM Clients' assets among the outside managers and itself.
Mr. Soros, as Chairman of SFM LLC, has the ability to direct the
investment decisions of SFM LLC and as such may be deemed to have investment
discretion over the Shares held for the account of Quantum Partners. Mr.
Druckenmiller, as Lead Portfolio Manager of SFM LLC, has the ability to direct
the investment decisions of SFM LLC and as such may be deemed to have investment
discretion over the Shares held for the account of Quantum Partners. Set forth
in Annex A hereto and incorporated by reference in response to this Item 2 and
elsewhere in this Schedule 13D as applicable is a list of the Managing Directors
of SFM LLC (the executive officers of SFM LLC).
The principal occupation of Mr. Soros, a United States citizen,
is his direction of the activities of SFM LLC, which is carried out in his
capacity as Chairman of SFM LLC at SFM LLC's principal office.
<PAGE>
Page 7 of 38 Pages
The principal occupation of Mr. Druckenmiller, a United States
citizen, is his position as Lead Portfolio Manager and a Member of the
Management Committee of SFM LLC, which is carried out at SFM LLC's principal
office. Mr. Druckenmiller also owns a 75% interest in, and is the sole managing
member of, Duquesne LLC, an investment advisory firm. Duquesne LLC, a
Pennsylvania limited liability company, has its principal offices at 2579
Washington Road, Suite 322, Pittsburgh, Pennsylvania 15241-2591. Its principal
business is to serve, pursuant to contract, as a discretionary investment
advisor to a limited number of institutional clients (the "Duquesne LLC
Clients"). Set forth in Annex B hereto and incorporated by reference in response
to this Item 2 and elsewhere in this Schedule 13D as applicable is a list of the
executive officers of Duquesne LLC.
Pursuant to regulations promulgated under Section 13(d) of the
Act, SFM LLC, Mr. Soros, in his capacity as Chairman of SFM LLC, and Mr.
Druckenmiller, in his capacity as Lead Portfolio Manager of SFM LLC, each may be
deemed a beneficial owner of the Shares held for the account of Quantum Partners
as a result of the contractual authority of SFM LLC to exercise voting and
dispositive power with respect to such Shares.
Pursuant to regulations promulgated under Section 13(d) of the
Act, each of Duquesne LLC and Mr. Druckenmiller, by virtue of his interest in,
and position as sole managing member of, Duquesne LLC, may be deemed a
beneficial owner of the Shares held for the accounts of the Duquesne LLC Clients
as a result of the contractual authority of Duquesne LLC to exercise voting and
dispositive power with respect to such Shares.
During the past five years, none of the Reporting Persons,
Quantum Partners and, to the best of the Reporting Persons' knowledge, any other
person identified in response to this Item 2 has been (a) convicted in a
criminal proceeding, or (b) a party to any civil proceeding as a result of which
it or he has been subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws, or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration
Quantum Partners expended approximately $62,011,303 of its
working capital to purchase the Shares reported herein as being acquired in the
last 60 days.
On February 5, 1997 Quantum Partners entered into a Subscription
Agreement (the "Subscription Agreement") with the Issuer, a form of which is
attached hereto as Exhibit D and incorporated herein by reference in response to
this Item 3, pursuant to which Quantum Partners expended approximately
$52,875,000 of its working capital to purchase 3,000,000 Shares. An additional
$9,136,303 was subsequently expended to purchase Shares in the over-the-counter
market.
The Shares held for the accounts of Quantum Partners, other SFM
Clients and/or the Duquesne LLC Clients may be held through margin accounts
maintained with brokers, which extend margin credit as and when required to open
or carry positions in their margin accounts, subject to applicable federal
margin regulations, stock exchange rules and such firms' credit policies. The
Shares which may be held in the margin accounts are pledged as collateral
security for the repayment of debit balances in the respective accounts.
<PAGE>
Page 8 of 38 Pages
Item 4. Purpose of Transaction.
All of the Shares reported herein as having been acquired for or
disposed of from the accounts of Quantum Partners and/or the Duquesne LLC
Clients were acquired or disposed of for investment purposes. Neither Quantum
Partners, the Reporting Persons nor, to the best of their knowledge, any of the
other individuals identified in response to Item 2, has any plans or proposals
that relate to or would result in any of the transactions described in
subparagraphs (a) through (j) of Item 4 of Schedule 13D.
Mr. Soros, Mr. Druckenmiller and SFM LLC reserve the right to
acquire, or cause to be acquired, additional securities of the Issuer, to
dispose of, or cause to be disposed, such securities at any time or to formulate
other purposes, plans or proposals regarding the Issuer or any of its
securities, to the extent deemed advisable in light of general investment and
trading policies of the SFM Clients, market conditions or other factors.
Mr. Druckenmiller and Duquesne LLC reserve the right to acquire,
or cause to be acquired, additional securities of the Issuer, to dispose of, or
cause to be disposed, such securities at any time or to formulate other
purposes, plans or proposals regarding the Issuer or any of its securities, to
the extent deemed advisable in light of general investment and trading policies
of the Duquesne LLC Clients, market conditions or other factors.
Item 5. Interest in Securities of the Issuer.
(a) (i) Each of SFM LLC and Mr. Soros may be deemed the
beneficial owner of the 4,200,000 Shares held for the account of Quantum
Partners (approximately 5.26% of the total number of Shares outstanding).
(ii) Mr. Druckenmiller may be deemed the beneficial owner of
4,300,000 Shares (approximately 5.39% of the total number of Shares
outstanding). This number consists of (A) 4,200,000 Shares held for the account
of Quantum Partners and (B) 100,000 Shares held for the accounts of the Duquesne
LLC Clients.
(iii) Duquesne LLC may be deemed the beneficial owner of the
100,000 Shares held for the accounts of the Duquesne LLC Clients (approximately
0.13% of the total number of Shares outstanding).
(b) (i) Pursuant to the terms of the contract between Quantum
Fund and SFM LLC, SFM LLC may be deemed to have sole power to direct the voting
and disposition of the 4,200,000 Shares held for the account of Quantum
Partners.
(ii) Pursuant to the terms of the contract between Quantum
Fund and SFM LLC and as a result of the positions held by Mr. Soros and Mr.
Druckenmiller with SFM LLC, each of Mr. Soros and Mr. Druckenmiller may be
deemed to have shared power to direct the voting and disposition of the
4,200,000 Shares held for the account of Quantum Partners.
(iii) Pursuant to contracts with the Duquesne LLC Clients,
and as a result of the position held by Mr. Druckenmiller with Duquesne LLC,
each of Duquesne LLC and Mr. Druckenmiller may be deemed to have the sole power
to direct the voting and disposition of the 100,000 Shares held for the accounts
of the Duquesne LLC Clients.
<PAGE>
Page 9 of 38 Pages
(c) Except for the transactions described in Item 3 and Item 6
and those disclosed on Annex C hereto, there have been no transactions with
respect to the Shares since December 14, 1996 (60 days prior to the date hereof)
by any of the Reporting Persons, Quantum Partners or the Duquesne LLC Clients.
(d) (i) The shareholders of Quantum Partners, including Quantum
Fund, have the right to participate in the receipt of dividends from, or
proceeds from the sale of, the Shares held for the account of Quantum Partners
in accordance with their ownership interests in Quantum Partners.
(ii) The Duquesne LLC Clients have the right to participate
in the receipt of dividends from, or proceeds from the sale of, the Shares held
for their accounts.
(e) Not applicable.
SFM LLC and Mr. Soros expressly disclaim beneficial ownership of
any Shares not held for the accounts of the SFM Clients. Duquesne LLC expressly
disclaims beneficial ownership of any Shares not held for the accounts of the
Duquesne LLC Clients.
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer.
In connection with its acquisition of securities reported herein,
Quantum Partners entered into the Subscription Agreement which is incorporated
herein by reference. The description of the terms of the Subscription Agreement
below is qualified in its entirety by reference to the specific provisions of
such agreement, which provisions are incorporated herein by reference.
Pursuant to the terms of the Subscription Agreement, Quantum
Partners agreed not to sell or otherwise dispose of any of the Shares purchased
under the Subscription Agreement unless such sale or disposition is registered
under the Securities Act of 1933, as amended (the "Act"), or, in the opinion of
counsel of the Issuer, is exempt from registration under the Act and has been
registered or qualified or, in the opinion of such counsel, is exempt from
registration or qualification under applicable state securities laws.
Section 6.2 of the Subscription Agreement provides that the
Issuer shall register all of the Shares purchased pursuant to the Subscription
Agreement in a registration statement on Form S-3, as promptly as possible after
the Closing (as defined in the Subscription Agreement). Provisions regarding the
Issuer's obligations to maintain the effectiveness of the such registration
statement are also described in such Section 6.2. The holder of Shares purchased
pursuant to the Subscription Agreement may assign the registration rights with
respect to such Shares to any party or parties to which it may from time to time
transfer such Shares provided that the transferee agrees in writing with Issuer
to be bound by the applicable provisions of the Subscription Agreement regarding
such registration rights and indemnification relating thereto.
From time to time each of the Reporting Persons, Quantum
Partners, other SFM Clients and/or Duquesne LLC Clients may lend portfolio
securities to brokers, banks or other financial institutions. These loans
typically obligate the borrower to return the securities, or an equal amount of
securities of the same class, to the lender and typically provide that the
borrower is entitled to exercise voting rights and to retain dividends during
the term of the loan. From time to time to the extent permitted by applicable
<PAGE>
Page 10 of 38 Pages
law, each of such persons or entities may borrow securities, including the
Shares, for the purpose of effecting, and may effect, short sale transactions,
and may purchase securities for the purpose of closing out short positions in
such securities.
Except as set forth herein, the Reporting Persons, Quantum
Partners and/or the other SFM Clients do not have any contracts, arrangements,
understandings or relationships with respect to any securities of the Issuer.
Item 7. Material to be Filed as Exhibits.
A. Power of Attorney dated as of January 1, 1997 granted by Mr. Soros
in favor of Mr. Sean C. Warren and Mr. Michael C. Neus.
B. Power of Attorney dated as of January 1, 1997 granted by Mr.
Druckenmiller in favor of Mr. Sean C. Warren and Mr. Michael C. Neus.
C. Joint Filing Agreement dated February 12, 1997 by and among SFM
LLC, Mr. Soros, Mr. Druckenmiller and Duquesne LLC.
D. Form of Subscription Agreement entered into between the Issuer and
Quantum Partners.
<PAGE>
Page 11 of 38 Pages
SIGNATURES
After reasonable inquiry and to the best of my knowledge and belief,
the undersigned certifies that the information set forth in this statement is
true, complete and correct.
Date: February 12, 1997
SOROS FUND MANAGEMENT LLC
By: /S/ MICHAEL C. NEUS
---------------------------------------
Michael C. Neus
Assistant General Counsel
GEORGE SOROS
By: /S/ MICHAEL C. NEUS
---------------------------------------
Michael C. Neus
Attorney-in-Fact
STANLEY F. DRUCKENMILLER
By: /S/ MICHAEL C. NEUS
---------------------------------------
Michael C. Neus
Attorney-in-Fact
DUQUESNE CAPITAL MANAGEMENT, L.L.C.
By: /S/ GERALD KERNER
---------------------------------------
Gerald Kerner
Managing Director
<PAGE>
Page 12 of 38 Pages
ANNEX A
The following is a list of all of the persons (other than Stanley
Druckenmiller) who serve as Managing Directors of SFM LLC:
Scott K. H. Bessent
Walter Burlock
Brian J. Corvese
Jeffrey L. Feinberg
Arminio Fraga
Gary Gladstein
Robert K. Jermain
David N. Kowitz
Alexander C. McAree
Paul McNulty
Gabriel S. Nechamkin
Steven Okin
Dale Precoda
Lief D. Rosenblatt
Mark D. Sonnino
Filiberto H. Verticelli
Sean C. Warren
Each of the above-listed persons is a United States citizen whose principal
occupation is serving as Managing Director of SFM LLC, and each has a business
address c/o Soros Fund Management LLC, 888 Seventh Avenue, 33rd Floor, New York,
New York 10106.
To the best of the Reporting Persons' knowledge:
(a) None of the above persons hold any Shares.
(b) None of the above persons has any contracts, arrangements,
understandings or relationships with respect to the Shares.
<PAGE>
Page 13 of 38 Pages
ANNEX B
The following is a list of all of the persons who serve as executive
officers of Duquesne LLC (other than Stanley F. Druckenmiller):
Michael A. Shay ("Mr. Shay")
Gerald Kerner ("Mr. Kerner")
Mr. Shay is a United States citizen whose principal occupation is
serving as a Managing Director of Duquesne LLC. Mr. Shay's business address is
Duquesne Capital Management, L.L.C., 2579 Washington Road, Suite 322,
Pittsburgh, Pennsylvania 15241.
Mr. Kerner is a United States citizen whose principal occupation is
serving as a Managing Director of Duquesne LLC. Mr. Kerner's business address is
Duquesne Capital Management, L.L.C., 888 Seventh Avenue, 32nd Floor, New York,
New York 10106.
To the best of the Reporting Persons' knowledge:
(a) None of the above persons hold any Shares.
(b) None of the above persons has any contracts, arrangements,
understandings or relationships with respect to the Shares.
<PAGE>
Page 14 of 38 Pages
<TABLE>
<CAPTION>
ANNEX C
RECENT TRANSACTION IN THE COMMON STOCK OF
EXTENDED STAY AMERICA, INC.
Date of Nature of Number Price
For the Account of Transaction Transaction of Shares Per Share
- ------------------ ----------- ----------- --------- ---------
<S> <C> <C> <C> <C>
Quantum Partners /1/ 2/05/97 Buy 3,000,000 17.625 /2/
2/06/97 Buy 150,000 18.125 /3/
2/06/97 Buy 185,000 18.023 /3/
2/07/97 Buy 47,700 18.280 /3/
2/07/97 Buy 50,000 18.312 /3/
2/10/97 Buy 34,500 18.500 /3/
2/11/97 Buy 34,000 19.338 /3/
/1/ All of the transactions reported herein effected at the direction of SFM LLC.
/2/ These Shares were acquired pursuant to the Subscription Agreement.
/3/ These Shares were acquired in the over-the-counter market in routine brokerage
transactions.
</TABLE>
<PAGE>
Page 15 of 38 Pages
EXHIBIT INDEX
Page No.
---------
A. Power of Attorney dated as of January 1, 1997 granted
by Mr. George Soros in favor of Mr. Sean C. Warren and
Mr. Michael C. Neus..................................................16
B. Power of Attorney dated as of January 1, 1997 granted
by Mr. Stanley F. Druckenmiller in favor of Mr. Sean C.
Warren and Mr. Michael C. Neus.......................................17
C. Joint Filing Agreement dated February 12, 1997 by and
among Soros Fund Management LLC, Mr. George Soros, Mr.
Stanley F. Druckenmiller and Duquesne Capital
Management, L.L.C....................................................18
D. Form of Subscription Agreement entered into between the
Issuer and Quantum Partners LDC......................................19
Page 16 of 38 Pages
EXHIBIT A
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, GEORGE SOROS, hereby make, constitute
and appoint each of SEAN C. WARREN and MICHAEL C. NEUS, acting individually, as
my agent and attorney-in-fact for the purpose of executing in my name, (a) in my
personal capacity or (b) in my capacity as Chairman of, member of or in other
capacities with Soros Fund Management LLC, all documents, certificates,
instruments, statements, filings and agreements ("documents") to be filed with
or delivered to any foreign or domestic governmental or regulatory body or
required or requested by any other person or entity pursuant to any legal or
regulatory requirement relating to the acquisition, ownership, management or
disposition of securities or other investments, and any other documents relating
or ancillary thereto, including but not limited to, all documents relating to
filings with the United States Securities and Exchange Commission (the "SEC")
pursuant to the Securities Act of 1933 or the Securities Exchange Act of 1934
(the "Act") and the rules and regulations promulgated thereunder, including: (1)
all documents relating to the beneficial ownership of securities required to be
filed with the SEC pursuant to Section 13(d) or Section 16(a) of the Act
including, without limitation: (a) any acquisition statements on Schedule 13D or
Schedule 13G and any amendments thereto, (b) any joint filing agreements
pursuant to Rule 13d-1(f) and (c) any initial statements of, or statements of
changes in, beneficial ownership of securities on Form 3, Form 4 or Form 5 and
(2) any information statements on Form 13F required to be filed with the SEC
pursuant to Section 13(f) of the Act.
All past acts of the attorney-in-fact in furtherance of the foregoing are hereby
ratified and confirmed.
This power of attorney shall be valid from the date hereof until revoked by me.
IN WITNESS WHEREOF, I have executed this instrument as of the 1st day of
January, 1997.
/s/ George Soros
-----------------------------
GEORGE SOROS
Page 17 of 38 Pages
EXHIBIT B
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that I, STANLEY F. DRUCKENMILLER, hereby make,
constitute and appoint each of SEAN C. WARREN and MICHAEL C. NEUS, acting
individually, as my agent and attorney-in-fact for the purpose of executing in
my name, (a) in my personal capacity or (b) in my capacity as Lead Portfolio
Manager of, member of or in other capacities with Soros Fund Management LLC, all
documents, certificates, instruments, statements, filings and agreements
("documents") to be filed with or delivered to any foreign or domestic
governmental or regulatory body or required or requested by any other person or
entity pursuant to any legal or regulatory requirement relating to the
acquisition, ownership, management or disposition of securities or other
investments, and any other documents relating or ancillary thereto, including
but not limited to, all documents relating to filings with the United States
Securities and Exchange Commission (the "SEC") pursuant to the Securities Act of
1933 or the Securities Exchange Act of 1934 (the "Act") and the rules and
regulations promulgated thereunder, including: (1) all documents relating to the
beneficial ownership of securities required to be filed with the SEC pursuant to
Section 13(d) or Section 16(a) of the Act including, without limitation: (a) any
acquisition statements on Schedule 13D or Schedule 13G and any amendments
thereto, (b) any joint filing agreements pursuant to Rule 13d-1(f) and (c) any
initial statements of, or statements of changes in, beneficial ownership of
securities on Form 3, Form 4 or Form 5 and (2) any information statements on
Form 13F required to be filed with the SEC pursuant to Section 13(f) of the Act.
All past acts of the attorney-in-fact in furtherance of the foregoing are hereby
ratified and confirmed.
This power of attorney shall be valid from the date hereof until revoked by me.
IN WITNESS WHEREOF, I have executed this instrument as of the 1st day of
January, 1997.
/s/ Stanley F. Druckenmiller
-----------------------------
STANLEY F. DRUCKENMILLER
Page 18 of 38 Pages
EXHIBIT C
JOINT FILING AGREEMENT
The undersigned hereby agree that the statement on Schedule 13D with
respect to the Common Stock of Extended Stay America, Inc. dated February 12,
1997 is, and any amendments thereto signed by each of the undersigned shall be,
filed on behalf of each of us pursuant to and in accordance with the provisions
of Rule 13d-1(f) under the Securities Exchange Act of 1934.
Date: February 12, 1997
SOROS FUND MANAGEMENT LLC
By: /S/ MICHAEL C. NEUS
---------------------------------------
Michael C. Neus
Assistant General Counsel
GEORGE SOROS
By: /S/ MICHAEL C. NEUS
---------------------------------------
Michael C. Neus
Attorney-in-Fact
STANLEY F. DRUCKENMILLER
By: /S/ MICHAEL C. NEUS
---------------------------------------
Michael C. Neus
Attorney-in-Fact
DUQUESNE CAPITAL MANAGEMENT, L.L.C.
By: /S/ GERALD KERNER
---------------------------------------
Gerald Kerner
Managing Director
Page 19 of 38 Pages
SUBSCRIPTION AGREEMENT
This Subscription Agreement (the "Agreement") is entered into as of
the date set forth on the signature page hereof by and between Extended Stay
America, Inc., a Delaware corporation (together with its successors and
permitted assigns, "Issuer"), and the undersigned investor (together with its
successors and permitted assigns, "Investor"). Capitalized terms used but not
otherwise defined herein shall have the meanings set forth in Section 9.1.
RECITALS
Subject to the terms and conditions of this Agreement, Investor
desires to subscribe for and purchase, and Issuer desires to issue and sell to
Investor, certain shares of Issuer's common stock, par value $.01 per share (the
"Common Stock"). The Issuer is offering an aggregate of not more than thirteen
million, five hundred thousand (13,500,000) shares of Common Stock in a private
placement to the Investor and other investors at a purchase price of $17.625 per
share and on the other terms and conditions contained in this Agreement.
TERMS OF AGREEMENT
In consideration of the mutual representations, warranties, covenants
and agreements contained herein, the parties hereto agree as follows:
ARTICLE I
SUBSCRIPTION AND ISSUANCE OF COMMON STOCK
1.1 Subscription and Issuance of Common Stock. Subject to the terms
------------------------------------------
and conditions of this Agreement, Issuer will issue and sell to Investor and
Investor subscribes for and will purchase from Issuer the number of shares of
Common Stock set forth on the signature page hereof (the "Shares") for the
aggregate purchase price set forth on the signature page hereof, which shall be
equal to the product of the number of Shares subscribed for by Investor times
the per share purchase price specified in the above Recitals to this Agreement
(the "Purchase Price").
1.2 Legend. Any certificate or certificates representing the Shares
------
shall bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), AND MAY NOT BE SOLD,
TRANSFERRED, OR OTHERWISE DISPOSED OF BY THE
HOLDER EXCEPT PURSUANT TO (1) AN EFFECTIVE
REGISTRATION STATEMENT FILED UNDER THE ACT OR (2)
AN EXEMPTION FROM REGISTRATION UNDER THE ACT AND
IN ACCORDANCE WITH AN OPINION OF COUNSEL IN FORM
AND SUBSTANCE SATISFACTORY TO THE ISSUER THAT AN
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Page 20 of 38 Pages
EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
SUCH SHARES ALSO MAY NOT BE SOLD, TRANSFERRED, OR
OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE WITH
ANY APPLICABLE STATE SECURITIES LAWS.
ARTICLE II
CLOSING
2.1 Closing. The closing of the transactions contemplated herein (the
-------
"Closing") shall take place on a date designated by Issuer, which date shall be
on or before February 5, 1997 (unless such date is extended by Issuer, after
consultation with Allen & Company Incorporated, to a date not later than
February 28, 1997). The Closing shall take place at the offices of Allen &
Company Incorporated, 711 Fifth Avenue, New York, New York 10022. To effect the
Closing, unless the Investor and the Issuer otherwise agree (i) Investor shall
pay the Purchase Price to Issuer, by wire transfer of immediately available
funds to an account designated in writing by Issuer against delivery by Issuer
to Investor of certificates for the Shares duly issued and registered in the
name of Investor; and (ii) all other agreements and other documents referred to
in this Agreement which are required for the Closing shall be executed and
delivered (to the extent not done prior to the Closing).
2.2 Termination. This Agreement may be terminated at any time prior to
-----------
the Closing:
(a) by mutual written consent of Issuer and Investor;
(b) by Investor, upon a material breach of any material
representation, warranty, covenant or agreement on the part of Issuer set forth
in this Agreement, or if any material representation or warranty of Issuer shall
have become untrue in any material respect, in either case such that the
conditions in Section 8.1 would be incapable of being satisfied by the date of
the Closing; and
(c) by Issuer, upon a material breach of any material
representation, warranty, covenant or agreement on the part of Investor set
forth in this Agreement, or if any material representation or warranty of
Investor shall have become untrue in any material respect, in either case such
that the conditions in Section 8.2 would be incapable of being satisfied by the
date of the Closing.
2.3 Effect of Termination. In the event of termination of this
-----------------------
Agreement pursuant to Section 2.2, this Agreement shall forthwith become void,
there shall be no liability on the part of Issuer or Investor to each other and
all rights and obligations of any party hereto shall cease; provided, however,
that nothing herein shall relieve any party from liability for the willful
breach of any of its representations, warranties, covenants or agreements set
forth in this Agreement.
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Page 21 of 38 Pages
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE ISSUER
As a material inducement to Investor entering into this Agreement and
subscribing for the Shares, Issuer represents and warrants to Investor as
follows:
3.1 Corporate Status. The Issuer is a corporation duly organized,
-----------------
validly existing and in good standing under the laws of the State of Delaware.
3.2 Corporate Power and Authority. The Issuer has the corporate power
-----------------------------
and authority to execute and deliver this Agreement and to perform its
obligations hereunder and consummate the transactions contemplated hereby. The
Issuer has taken all necessary corporate action to authorize the execution,
delivery and performance of this Agreement and the transactions contemplated
hereby.
3.3 Enforceability. This Agreement has been duly executed and
--------------
delivered by the Issuer and constitutes a legal, valid and binding obligation of
the Issuer, enforceable against the Issuer in accordance with its terms, except
as the same may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors' rights
generally and general equitable principles regardless of whether such
enforceability is considered in a proceeding at law or in equity.
3.4 No Violation. The execution and delivery by the Issuer of this
-------------
Agreement, the consummation of the transactions contemplated hereby, and the
compliance by Issuer with the terms and provisions hereof (including, without
limitation, the Issuer's issuance to Investor of the Shares as contemplated by
and in accordance with this Agreement), will not result in a default under (or
give any other party the right, with the giving of notice or the passage of time
(or both), to declare a default or accelerate any obligation under) or violate
the Certificate of Incorporation or Bylaws of the Issuer or any material
Contract to which the Issuer is a party (except to the extent such a default
would not, in the case of a Contract, have a Material Adverse Effect on the
Issuer), or any Requirement of Law applicable to the Issuer, or result in the
creation or imposition of any material Lien upon any of the capital stock,
properties or assets of the Issuer or any of its Subsidiaries (except where such
Lien would not have a Material Adverse Effect on Issuer). No consents, filings,
authorizations or other actions of any Governmental Authority are required for
the Issuer's execution, delivery and performance of this Agreement. No consent,
approval, waiver or other action by any Person under any Contract to which the
Issuer is a party or by which the Issuer or any of its properties or assets are
bound is required or necessary for the execution, delivery or performance by the
Issuer of this Agreement and the consummation of the transactions contemplated
hereby, except where the failure to obtain such consents would not have a
Material Adverse Effect on Issuer.
3.5 Valid Issuance. Upon payment of the Purchase Price by Investor and
--------------
delivery to Investor of the certificates for the Shares, such Shares will be
validly issued, fully paid and non- assessable.
3.6 SEC Reports and Nasdaq Compliance. Since January 1, 1996, the
-----------------------------------
Issuer has made all filings required to be made by it under the Securities Act,
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Page 22 of 38 Pages
the Exchange Act and the securities laws of any state, and any rules and
regulations promulgated thereunder and pursuant to any Requirements of Law (the
"SEC Reports"). The SEC Reports, when filed, complied in all material respects
with all applicable requirements of the Securities Act, the Exchange Act or
other Requirements of Law. None of the SEC Reports, at the time of filing,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein not misleading in light of the circumstances in which they were made.
Issuer has delivered or made accessible to Investor true, accurate and complete
copies of the SEC Reports, as amended, which were filed with the SEC since
January 1, 1996, and as in effect as of the date hereof. The Issuer has taken
all necessary actions to ensure its continued inclusion in, and the continued
eligibility of the Common Stock for trading on, The Nasdaq National Market under
all currently effective and currently proposed inclusion requirements. Each
balance sheet included in the SEC Reports (including any related notes and
schedules) fairly presents in all material respects the consolidated financial
position of the Issuer and its Subsidiaries as of its date, and each of the
other financial statements included in the SEC Reports (including any related
notes and schedules) fairly presents in all material respects the consolidated
results of operations or other information therein of Issuer and its
Subsidiaries for the periods or as of the dates therein set forth in accordance
with GAAP consistently applied during the periods involved (except (i) for any
pro forma financial information, (ii) that the interim reports are subject to
adjustments which might be required as a result of year end audit, and (iii) as
otherwise stated therein).
3.7 Governing Documents. Issuer has delivered or made available to
--------------------
Investor true, accurate and complete copies of Issuer's Certificate of
Incorporation and Bylaws in effect as of the date hereof.
3.8 Commissions. In connection with the purchase and sale of Shares
-----------
hereunder, Issuer has agreed to pay Allen & Company Incorporated and/or its
designated sub-agents a placement fee. Issuer has not incurred any other
obligation for any finder's or broker's or agent's fees or commissions in
connection with the transactions contemplated hereby.
3.9 Use of Proceeds. The proceeds of the offering and sale of Common
----------------
Stock of the Issuer offered hereby, net of payment of placement fees and
expenses, will be used by Issuer for general corporate purposes, including, but
not limited to, financing possible acquisitions and the construction of extended
stay lodging facilities.
3.10 SEC Registration. As of the date hereof and based upon the rules
----------------
and regulations of the SEC, Issuer meets all of the requirements for the use
generally of a Form S-3 registration statement under the Securities Act.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF INVESTOR
As a material inducement to Issuer entering into this Agreement and
issuing the Shares, Investor represents and warrants to the Issuer as follows:
4.1 Power and Authority. The Investor, if other than a natural person,
-------------------
is an entity duly organized, validly existing and in good standing under the
<PAGE>
Page 23 of 38 Pages
laws of the state of its incorporation or organization. The Investor has the
corporate, partnership or other power and authority under applicable law to
execute and deliver this Agreement and consummate the transactions contemplated
hereby, and has all necessary authority to execute, deliver and perform its
obligations under this Agreement and consummate the transactions contemplated
hereby. The Investor has taken all necessary corporate or other action to
authorize the execution, delivery and performance of this Agreement and the
transactions contemplated hereby.
4.2 No Violation. The execution and delivery by Investor of this
-------------
Agreement, the consummation of the transactions contemplated hereby, and the
compliance by Investor with the terms and provisions hereof, will not result in
a default under (or give any other party the right, with the giving of notice or
the passage of time (or both), to declare a default or accelerate any obligation
under) or violate any charter or similar documents of Investor, if other than a
natural person, or any Contract to which the Investor is a party or by which it
or its properties or assets are bound, or violate any Requirement of Law
applicable to Investor, other than such violations or defaults which,
individually and in the aggregate, do not and will not have a Material Adverse
Effect on the Investor. The Investor is familiar with Rule 10b-6 promulgated
under the Exchange Act, a copy of which is attached hereto as Exhibit A, and is
in full compliance with the provisions thereof with respect to the transactions
contemplated hereby.
4.3 Consents/Approvals. No consents, filings, authorizations or
------------------
actions of any Governmental Authority are required for Investor's execution,
delivery and performance of this Agreement. No consent, approval, waiver or
other actions by any Person under any Contract to which Investor is a party or
by which the Investor or any of its properties or assets are bound is required
or necessary for the execution, delivery and performance by Investor of this
Agreement and the consummation of the transactions contemplated hereby.
4.4 Enforceability. This Agreement has been duly executed and
--------------
delivered by Investor and constitutes a legal, valid and binding obligation of
Investor, enforceable against the Investor in accordance with its terms, except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditor's rights generally and general equitable principles regardless of
whether enforceability is considered in a proceeding at law or in equity.
4.5 No Distribution. Investor is acquiring the Shares hereunder for
----------------
its own account and with no present intention of distributing or selling such
Shares and further agrees not to transfer such Shares in violation of the
Securities Act or any applicable state securities law, and no one other than
Investor has any beneficial interest in the Shares. Investor agrees that it will
not sell or otherwise dispose of any of the Shares unless such sale or other
disposition has been registered under the Securities Act or, in the opinion of
counsel, is exempt from registration under the Securities Act and has been
registered or qualified or, in the opinion of such counsel, is exempt from
registration or qualification under applicable state securities laws. Investor
understands that the offer and sale by Issuer of the Shares being acquired by
Investor hereunder has not been registered under the Securities Act by reason of
their contemplated issuance in transactions exempt from the registration and
prospectus delivery requirements of the Securities Act pursuant to Section 4(2)
thereof, and that the reliance of the Issuer on such exemption from registration
is predicated in part on these representations and warranties of Investor.
<PAGE>
Page 24 of 38 Pages
Investor acknowledges that pursuant to Section 1.2 of this Agreement a
restrictive legend consistent with the foregoing has been or will be placed on
the certificates for the Shares.
4.6 Accredited Investor. Investor is an "accredited investor" as such
-------------------
term is defined in Rule 501(a) of Regulation D under the Securities Act ( a copy
of which is attached hereto as Exhibit B), and has such knowledge and experience
---------
in financial and business matters that it is capable of evaluating the merits
and risks of the investment to be made by it hereunder.
4.7 Adequate Information. Investor has received from Issuer, and has
---------------------
reviewed, such information which Investor considers necessary or appropriate to
evaluate the risks and merits of an investment in the Shares, including without
limitation, the documents listed on Exhibit C. Investor acknowledges that the
---------
information set forth under the heading of "RISK FACTORS" in Exhibit D hereto is
---------
specifically incorporated herein by reference and forms an integral part of this
Agreement.
4.8 Opportunity to Question. Investor has had the opportunity to
-------------------------
question, and has questioned, to the extent deemed necessary or appropriate,
representatives of Issuer so as to receive answers and verify information
obtained in Investor's examination of Issuer, including the information that
Investor has received and reviewed as referenced in Section 4.7 hereof in
relation to its investment in the Shares.
4.9 No Other Representations. No oral or written representations have
------------------------
been made to Investor in connection with Investor's acquisition of the Shares
which were in any way inconsistent with the information reviewed by Investor.
Investor acknowledges that no representations or warranties of any type or
description have been made to it by any Person with regard to the Issuer, any of
its Subsidiaries, any of their respective businesses, properties or the
investment contemplated herein, other than the representations and warranties
set forth in Article III hereof.
4.10 Knowledge and Experience. Investor has such knowledge and
--------------------------
experience in financial, tax and business matters, including substantial
experience in evaluating and investing in common stock and other securities
(including the common stock and other securities of new and speculative
companies), so as to enable Investor to utilize the information referred to in
Section 4.7 hereof and any other information made available by Issuer in order
to evaluate the merits and risks of an investment in the Shares and to make an
informed investment decision with respect thereto.
4.11 Independent Decision. Investor is not relying on Issuer or on any
--------------------
legal or other opinion in the materials reviewed by Investor with respect to the
financial or tax considerations of Investor relating to its investment in the
Shares. Investor has relied solely on the representations, warranties, covenants
and agreements of Issuer in this Agreement (including the Exhibits hereto) and
on Investor's examination and independent investigation in making its decision
to acquire the Shares.
4.12 Commissions. Investor has not incurred any obligation for any
-----------
finder's or broker's or agent's fees or commissions in connection with the
transactions contemplated hereby.
<PAGE>
Page 25 of 38 Pages
ARTICLE V
COVENANTS
5.1 Public Announcements. Investor agrees not to make any public
---------------------
announcement or issue any press release or otherwise publicly disseminate any
information about the subject matter of this Agreement. Issuer shall have the
right to make such public announcements and shall control, in its sole and
absolute discretion, the timing, form and content of all press releases or other
public communications of any sort relating to the subject matter of this
Agreement, and the method of their release, or publication thereof.
5.2 Further Assurances. Each party shall execute and deliver such
-------------------
additional instruments and other documents and shall take such further actions
as may be necessary or appropriate to effectuate, carry out and comply with all
of the terms of this Agreement and the transactions contemplated hereby. Each of
Investor and Issuer shall make on a prompt and timely basis all governmental or
regulatory notifications and filings required to be made by it with or to any
Governmental Authority in connection with the consummation of the transactions
contemplated hereby. Issuer and Investor each agree to cooperate with the other
in the preparation and filing of all forms, notifications, reports and
information, if any, required or reasonably deemed advisable pursuant to any
Requirement of Law or the rules of The Nasdaq National Market in connection with
the transactions contemplated by this Agreement and to use their respective best
efforts to agree jointly on a method to overcome any objections by any
Governmental Authority to any such transactions. Except as may be specifically
required hereunder, neither of the parties hereto or their respective Affiliates
shall be required to agree to take any action that in the reasonable opinion of
such party would result in or produce a Material Adverse Effect on such party.
5.3 Notification of Certain Matters. Each party hereto shall give
---------------------------------
prompt notice to the other party of the occurrence, or non-occurrence, of any
event which would be likely to cause any representation or warranty herein to be
untrue or inaccurate, or any covenant, condition or agreement herein not to be
complied with or satisfied.
ARTICLE VI
REGISTRATION RIGHTS
Investor shall have the following registration rights with respect to
the Registrable Securities owned by it:
6.1 Transfer of Registration Rights. Investor may assign the
-----------------------------------
registration rights with respect to the Shares to any party or parties to which
it may from time to time transfer the Shares, provided that the transferee
agrees in writing with Issuer to be bound by the applicable provisions of this
Agreement regarding such registration rights and indemnification relating
thereto. Upon assignment of any registration rights pursuant to this Section
6.1, Investor shall deliver to Issuer a notice of such assignment which includes
the identity and address of any assignee and such other information reasonably
requested by Issuer in connection with effecting any such registration
(collectively, Investor and each such subsequent holder is referred to as a
"Holder").
<PAGE>
Page 26 of 38 Pages
6.2 Required Registration. As promptly as practicable after the Closing,
---------------------
Issuer agrees to register all of the Shares pursuant to a registration statement
on Form S-3, or, if Issuer is not then eligible to use Form S-3, such other form
as may be appropriate (the "Shelf Registration"). Issuer shall maintain the
effectiveness of the Shelf Registration until such time as Issuer reasonably
determines based on an opinion of counsel that the Holders will be eligible to
sell all of the Shares then owned by the Holders without the need for continued
registration of the Shares in the three month period immediately following the
termination of the effectiveness of the Shelf Registration. Issuer's obligations
contained in this Section 6.2 shall terminate on the second anniversary of the
date on which the Shares are issued hereunder. Notwithstanding the foregoing,
Issuer may delay filing the Shelf Registration, and may withhold efforts to
cause the Shelf Registration to become effective, if Issuer determines in good
faith that such registration might (i) interfere with or affect the negotiation
or completion of any transaction that is being contemplated by Issuer (whether
or not a final decision has been made to undertake such transaction) at the time
the right to delay is exercised, or (ii) involve initial or continuing
disclosure obligations that might not be in the best interest of Issuer's
stockholders. If, after the Shelf Registration becomes effective, Issuer advises
the Holders that Issuer considers it appropriate for the Shelf Registration to
be amended, the Holders shall suspend any further sales of their registered
shares until Issuer advises them that an amendment to the Shelf Registration has
been declared effective.
6.3 Registration Procedures.
-----------------------
(a) In case of each registration effected by the Issuer subject to
this Article VI, the Issuer shall keep each Holder advised in writing as to the
initiation of each such registration and as to the completion thereof. In
addition, the Issuer shall at its own expense:
(i) prepare and file with the SEC such amendments and supplements
to such registration statement as may be necessary to keep such registration
effective and comply with provisions of the Securities Act with respect to the
disposition of all securities covered thereby during such period;
(ii) update, correct, amend and supplement such registration as
necessary;
(iii) if an offering under the Shelf Registration is to be
underwritten, in whole or in part, enter into a written agreement in form and
substance reasonably satisfactory to the Issuer, the managing underwriter and
the registering Holder;
(iv) notify Holder when the Shelf Registration is declared
effective by the SEC and furnish such number of prospectuses, including
preliminary prospectuses, and other documents incident thereto as Holder may
reasonably request from time to time;
(v) register or qualify such Registrable Securities under such
other securities or blue sky laws of such jurisdictions of the United States as
Holder may reasonably request to enable it to consummate the disposition in such
jurisdiction of the Registrable Securities (provided that Issuer will not be
required to (i) qualify generally to do business in any jurisdiction where it
would not otherwise be required to qualify but for this provision, or (ii)
consent to general service of process in any such jurisdiction);
<PAGE>
Page 27 of 38 Pages
(vi) notify Holder at any time when a prospectus relating to the
Registrable Securities is required to be delivered under the Securities Act, of
the happening of any event as a result of which the prospectus included in such
registration statement contains an untrue statement of a material fact or omits
any fact necessary to make the statement therein not misleading, and at the
request of Holder, Issuer will prepare a supplement or amendment to such
prospectus, so that, as thereafter delivered to purchasers of such shares, such
prospectus will not contain any untrue statements of a material fact or omit to
state any fact necessary to make the statements therein not misleading;
(vii) cause all such Registrable Securities to be listed on each
securities exchange or automated quotation system on which similar securities
issued by Issuer are then listed or quoted and obtain all necessary approvals
for trading thereon;
(viii) provide a transfer agent and registrar for all such
Registrable Securities not later than the effective date of such registration
statement; and
(ix) upon the sale of any Registrable Securities pursuant to such
registration statement, remove all restrictive legends from all certificates or
other instruments evidencing the Registrable Securities.
(b) Notwithstanding anything stated or implied to the contrary in
Section 6.3(a) above, the Issuer shall not be required to consent to any
underwritten offering of the Registrable Securities or to any specific
underwriter participating in any underwritten public offering of the Registrable
Securities.
(c) Except as required by law, all expenses incurred by the Issuer in
complying with this Article VI, including but not limited to, all registration,
qualification and filing fees, printing expenses, fees and disbursements of
counsel and accountants for the Issuer, blue sky fees and expenses (including
fees and disbursements of counsel related to all blue sky matters)
("Registration Expenses") incurred in connection with any registration pursuant
to this Article VI shall be borne by the Issuer. All underwriting discounts and
selling commissions applicable to a sale incurred in connection with any
registration of Registrable Securities and the legal fees and other expenses of
Holder shall be borne by Holder.
6.4 Further Information. If Registrable Securities owned by a Holder
-------------------
are included in any registration, such Holder shall furnish the Issuer such
information regarding itself as the Issuer may reasonably request and as shall
be required in connection with any registration referred to in this Agreement
and Holder shall indemnify the Issuer with respect thereto in accordance with
Article VII hereof. Investor hereby represents and warrants to Issuer that it
has accurately and completely provided the requested information and answered
questions (a) through (d) on the signature pages of this Agreement, and Investor
agrees and acknowledges that Issuer may rely on such information as being true
and correct for purposes of preparing and filing the Shelf Registration at the
time of filing thereof and at the time it is declared effective, unless Investor
has notified Issuer in writing to the contrary prior to such time.
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Page 28 of 38 Pages
ARTICLE VII
INDEMNIFICATION
7.1 Indemnification Generally. Issuer, on the one hand, and Investor,
-------------------------
on the other hand, (each an "Indemnifying Party"), shall indemnify the other
from and against any and all losses, damages, liabilities, claims, charges,
actions, proceedings, demands, judgments, settlement costs and expenses of any
nature whatsoever (including, without limitation, reasonable attorneys' fees and
expenses) or deficiencies resulting from any breach of a representation,
warranty or covenant by the Indemnifying Party and all claims, charges, actions
or proceedings incident to or arising out of the foregoing.
7.2 Indemnification Relating to Registration Rights.
-----------------------------------------------
(a) With respect to any registration effected or to be effected
pursuant to Article VI of this Agreement, the Issuer shall indemnify each Holder
of Registrable Securities whose securities are included or are to be included
therein, each of such Holder's directors and officers, each underwriter (as
defined in the Securities Act) of the securities sold by such Holder (if any),
and each Person who controls (within the meaning of the Securities Act) any such
Holder or underwriter (a "Controlling Person") from and against all losses,
damages, liabilities, claims, charges, actions, proceedings, demands, judgments,
settlement costs and expenses of any nature whatsoever (including, without
limitation, attorneys' fees and expenses) or deficiencies of any such Holder or
any such underwriter or Controlling Person caused by:
(i) 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
the Issuer shall have furnished any amendments or supplements thereto)
or any preliminary prospectus;
(ii) any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the
statement therein, in the light of the circumstances under which it
was made, not misleading; or
(iii) any violation by the Issuer of the Securities Act or any
rule or regulation promulgated thereunder applicable to the Issuer, or
of any blue sky or other state securities laws or any rule or
regulation promulgated thereunder applicable to the Issuer,
in each case, relating to any action or inaction required of the Issuer in
connection with any such registration, and, subject to Section 7.3 below, will
reimburse each such Person entitled to indemnity under this Section 7.2 for all
legal and other expenses reasonably incurred in connection with investigating or
defending any such loss, damage, liability, claim, charge, action, proceeding,
demand, judgment, settlement or deficiency; provided, however, that the
foregoing indemnity and reimbursement obligation shall not be applicable to the
extent that any such matter arises out of or is based on any untrue statement
(or alleged untrue statement) or omission (or alleged omission) made in reliance
upon and in conformity with written information furnished to the Issuer by an
authorized officer of such Holder or by or on behalf of such an underwriter
specifically for use in such registration statement or prospectus.
<PAGE>
Page 29 of 38 Pages
(b) With respect to any registration effected or to be effected
pursuant to this Agreement, each Holder of Registrable Securities whose
securities are included or are to be included therein, shall indemnify the
Issuer from and against all losses, damages, liabilities, claims, charges,
actions, proceedings, demands, judgments, settlement costs and expenses of any
nature whatsoever (including, without limitation, reasonable attorneys' fees and
expenses) or deficiencies of the Issuer caused by:
(i) 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
the Issuer shall have furnished any amendments or supplements thereto)
or any preliminary prospectus;
(ii) any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the
statement therein, in the light of the circumstances under which it
was made, not misleading; or
(iii) any violation by such Holder of the Securities Act or any
rule or regulation promulgated thereunder applicable to the Issuer or
such Holder or of any blue sky or other state securities laws or any
rule or regulation promulgated thereunder applicable to the Issuer or
such Holder,
in each case, relating to any action or inaction required of such Holder in
connection with any such registration, and, subject to Section 7.3 below, will
reimburse the Issuer for all legal and other expenses reasonably incurred in
connection with investigating or defending any such loss, damage, liability,
claim, charge, action, proceeding, demand, judgment, settlement or deficiency;
provided, however, that the foregoing indemnity and reimbursement obligation
- --------
shall only be applicable to the extent that any such matter arises out of or is
based on any untrue statement (or alleged untrue statement) or omission (or
alleged omission) made in reliance upon and in conformity with written
information furnished to the Issuer by an authorized officer of the Holder
specifically for use in such prospectus; provided, further, that the obligation
-------- -------
of the Holder hereunder shall be limited to an amount equal to the proceeds to
the Holder of Registrable Securities sold as contemplated hereunder.
7.3 Indemnification Procedures. Each Person entitled to
-----------------------------
indemnification under this Section (an "Indemnified Party") shall give notice as
promptly as reasonably practicable to each party required to provide
indemnification under this Section (an "Indemnifying Party") of any action
commenced against or by it in respect of which indemnity may be sought
hereunder, but failure to so notify an Indemnifying Party shall not relieve such
Indemnifying Party from any liability that it may have otherwise than on account
of this indemnity agreement so long as such failure shall not have materially
prejudiced the position of the Indemnifying Party. Upon such notification, the
Indemnifying Party shall assume the defense of such action if it is a claim
brought by a third party, and after such assumption the Indemnifying Party shall
not be entitled to reimbursement of any expenses incurred by it in connection
with such action. In any such action, 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 contrary or (ii) the named
parties in any such action (including any impleaded parties) include both the
<PAGE>
Page 30 of 38 Pages
Indemnifying Party and the Indemnified Party and representation of both parties
by the same counsel would be inappropriate due to actual or potential differing
or conflicting interests between them. The Indemnifying Party shall not be
liable for any settlement of any proceeding effected without its written consent
(which shall not be unreasonably withheld or delayed by such Indemnifying
Party), but if settled with such consent or if there be final judgment for the
plaintiff, the Indemnifying Party shall indemnify the Indemnified Party from and
against any loss, damage or liability by reason of such settlement or judgment.
ARTICLE VIII
CONDITIONS TO CLOSING
8.1 Conditions to the Obligation of Investor. The obligation of
-------------------------------------------
Investor to proceed with the Closing is subject to the following conditions, any
and all of which may be waived, in whole or in part, to the extent permitted by
applicable law:
(a) Representations and Warranties. Each of the representations
-------------------------------
and warranties of Issuer contained in this Agreement shall be true and correct
in all material respects as of the Closing as though made on and as of the
Closing, except (i) for changes specifically permitted by this Agreement, and
(ii) that those representations and warranties which address matters only as of
a particular date shall remain true and correct as of such date, except in any
case for such failures to be true and correct which would not, individually or
in the aggregate, have a Material Adverse Effect on the Issuer. Allen and
Company Incorporated shall have received a certificate of an executive officer
of Issuer to such effect on behalf of Investor.
(b) Agreement and Covenants. The Issuer shall have performed or
------------------------
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by it on or prior to the
Closing. Allen and Company Incorporated shall have received a certificate of an
executive officer of Issuer to such effect on behalf of Investor.
(c) No Order. No governmental authority or other agency or
---------
commission or federal or state court of competent jurisdiction shall have
enacted, issued, promulgated, enforced or entered any statute, rule, regulation,
executive order, decree, injunction, or other order (whether temporary,
preliminary or permanent) which is in effect and which materially restricts,
prevents or prohibits consummation of the Closing or any transaction
contemplated by this Agreement.
8.2 Conditions to the Obligation of Issuer. The obligation of the
----------------------------------------
Issuer to proceed with the Closing is subject to the following conditions, any
and all of which may be waived, in whole or in part, to the extent permitted by
applicable law:
(a) Representations and Warranties. Each of the representations
-------------------------------
and warranties of Investor contained in this Agreement shall be true and correct
as of the Closing as though made on and as of the Closing, except (i) for
changes specifically permitted by this Agreement, and (ii) that those
representations and warranties which address matters only as of a particular
date shall remain true and correct as of such date, except in any case for such
failures to be true and correct which would not, individually or in the
aggregate, have a Material Adverse Effect on the Investor. Unless the Issuer
<PAGE>
Page 31 of 38 Pages
receives written notification to the contrary at the Closing, the Issuer shall
be entitled to assume that the preceding is accurate in all respects at the
Closing.
(b) Agreement and Covenants. The Investor shall have performed or
-----------------------
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by it on or prior to the
Closing. Unless the Issuer receives written notification to the contrary at the
Closing, the Issuer shall be entitled to assume that the preceding is accurate
in all respects at the Closing.
(c) No Order. No governmental authority or other agency or
---------
commission or federal or state court of competent jurisdiction shall have
enacted, issued, promulgated, enforced or entered any statute, rule, regulation,
executive order, decree, injunction, or other order (whether temporary,
preliminary or permanent) which is in effect and which materially restricts,
prevents or prohibits consummation of the Closing or any transaction
contemplated by this Agreement.
ARTICLE IX
MISCELLANEOUS
9.1 Defined Terms. As used herein the following terms shall have the
-------------
following meanings:
"Affiliate" shall have the meaning ascribed to it in Rule 12b-2
of the General Rules and Regulations under the Exchange Act, as in effect on the
date hereof.
"Certificate of Incorporation" means the Issuer's Restated
Certificate of Incorporation, as the same may be supplemented, amended or
restated from time to time.
"Closing" has the meaning in Section 2.1 of this Agreement.
"Common Stock" has the meaning specified in the Recitals to this
Agreement.
"Contract" means any indenture, lease, sublease, loan agreement,
mortgage, note, restriction, commitment, obligation or other contract, agreement
or instrument.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"GAAP" means generally accepted accounting principles in effect
in the United States of America from time to time.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof, and any entity or official
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Issuer" means Extended Stay America, Inc., a Delaware
corporation.
<PAGE>
Page 32 of 38 Pages
"Lien" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any conditional sale or other
title retention agreement, any lease in the nature thereof, and the filing of or
agreement to give any financing statement under the Uniform Commercial Code or
comparable law or any jurisdiction in connection with such mortgage, pledge,
security interest, encumbrance, lien or charge).
"Material Adverse Change (or Effect)" means a change (or effect),
in the condition (financial or otherwise), properties, assets, liabilities,
rights, obligations, operations, business or prospects, which change,
individually or in the aggregate, is materially adverse to such condition,
properties, assets, liabilities, rights, obligations, operations, business or
prospects.
"Person" means an individual, partnership, corporation, business
trust, joint stock company, estate, trust, unincorporated association, joint
venture, Governmental Authority or other entity, of whatever nature.
"Purchase Price" has the meaning specified in Section 1.1 of this
Agreement.
"Register", "registered" and "registration" refer to a
registration of the offering and sale of Common Stock effected by preparing and
filing a registration statement in compliance with the Securities Act and the
declaration or ordering of the effectiveness of such registration statement.
"Registrable Common Stock" shall mean and include (a) the Common
Stock of the Issuer, as authorized on the date of this Agreement, (b) any other
capital stock of any class or classes (however designated) of the Issuer,
authorized on or after the date hereof, the holders of which shall have the
right either to all or a share of the balance of current dividends and
liquidating distributions after the preference of any preferred stock, or the
holders of which shall ordinarily, in the absence of contingencies, be entitled
to vote for the election of a majority of directors of the Issuer (even though
the right so to vote has been suspended by the happening of such a contingency)
and (c) any other securities into which or for which any of the securities
described in (a) or (b) may be converted or exchanged pursuant to a plan of
recapitalization, reorganization, merger, sale of assets or otherwise.
"Registrable Securities" means all Shares of Common Stock
acquired by Investor pursuant to this Agreement and any other shares of
Registrable Common Stock or other securities issued in respect of such Shares by
way of a stock dividend or stock split or in connection with a combination or
subdivision of Issuer's Common Stock or by way of a recapitalization, merger or
consolidation or reorganization of Issuer; provided, however, that as to any
particular securities, such securities will cease to be Registrable Securities
when they have been sold (i) pursuant to a registration statement covering such
securities or (ii) in a transaction exempt from the registration and prospectus
delivery requirements of the Securities Act under Section 4(1) thereof, and the
certificate or other evidence of ownership of such securities that is issued
upon consummation of the transfer set forth in (i) or (ii) above does not bear
the restrictive legend required pursuant to Section 1.2 of this Agreement and
such securities may be resold without subsequent registration under the
Securities Act.
"Requirements of Law" means as to any Person, the articles of
<PAGE>
Page 33 of 38 Pages
incorporation, by-laws or other organizational or governing documents of such
person, and any domestic or foreign and federal, state or local law, rule,
regulation, statute or ordinance or determination of any arbitrator or a court
or other Governmental Authority, in each case applicable to or binding upon such
Person or any of its properties or to which such Person or any of its property
is subject.
"SEC" means the Securities and Exchange Commission.
"SEC Reports" has the meaning specified in Section 3.6 of this
Agreement.
"Securities Act" means the Securities Act of 1933, as amended.
"Shares" has the meaning specified in Section 1.1 of this
Agreement.
"Subsidiary" means as to any Person, a corporation of which more
than 50% of the outstanding capital stock having full voting power is at the
time directly or indirectly owned or controlled by such Person.
9.2 Other Definitional Provisions.
-----------------------------
(a) All terms defined in this Agreement shall have the defined
meanings when used in any certificates, reports or other documents made or
delivered pursuant hereto or thereto, unless the context otherwise requires.
(b) Terms defined in the singular shall have a comparable meaning
when used in the plural, and vice versa.
(c) All accounting terms shall have a meaning determined in
accordance with GAAP.
(d) As used herein, the neuter gender shall also denote the
masculine and feminine, and the masculine gender shall also denote the neuter
and feminine, where the context so permits.
(e) The words "hereof", and "hereunder", and words of similar
import, when used in this Agreement shall refer to this Agreement as a whole
(including any Exhibits hereto) and not to any particular provision of this
Agreement.
9.3 Notices. All notices, requests, demands, claims, and other
-------
communications hereunder shall be in writing and shall be delivered by certified
or registered mail (first class postage pre-paid), guaranteed overnight
delivery, or facsimile transmission if such transmission is confirmed by
delivery by certified or registered mail (first class postage pre-paid) or
guaranteed overnight delivery, to the following addresses and telecopy numbers
(or to such other addresses or telecopy numbers which such party shall
subsequently designate in writing to the other party):
(a) if to Issuer to:
Extended Stay America, Inc.
<PAGE>
Page 34 of 38 Pages
450 East Las Olas Blvd., Suite 1100
Ft. Lauderdale, Florida 33301
Attention: Robert A. Brannon, Secretary
Facsimile: (954) 713-1650
with a copy to:
Bell, Boyd & Lloyd
Three First National Plaza
Suite 3300
Chicago, Illinois 60602
Attention: D. Mark McMillan, Esq.
Facsimile: (312) 372-2098
(b) if to Investor to the address set forth next to its name on
the signature page hereto.
with a copy to:
Werbel & Carnelutti
711 Fifth Avenue - 5th Floor
New York, New York 10022-3194
Attention: Guy N. Molinari, Esq.
Telecopy: (212) 832-3353
<PAGE>
Page 35 of 38 Pages
9.4 Remedies.
--------
(a) Each of the Investor and Issuer acknowledge that the other
party would not have an adequate remedy at law for money damages in the event
that any of the covenants or agreements of such party in this Agreement was not
performed in accordance with its terms, and it is therefore agreed that each of
Investor and Issuer in addition to and without limiting any other remedy or
right such party may have, shall have the right to an injunction or other
equitable relief in any court of competent jurisdiction, enjoining any such
breach and enforcing specifically the terms and provisions hereof, and each of
Investor and Issuer hereby waive any and all defenses such party may have on the
ground of lack of jurisdiction or competence of the court to grant such an
injunction or other equitable relief.
(b) All rights, powers and remedies under this Agreement or
otherwise available in respect hereof at law or in equity shall be cumulative
and not alternative, and the exercise or beginning of the exercise of any
thereof by any party shall not preclude the simultaneous or later exercise of
any other such right, power or remedy by such party.
9.5 Entire Agreement. This Agreement (including the Exhibits attached
----------------
hereto) and other documents delivered at the Closing pursuant hereto, contains
the entire understanding of the parties in respect of its subject matter and
supersedes all prior agreements and understandings between or among the parties
with respect to such subject matter. The Exhibits constitute a part hereof as
though set forth in full above.
9.6 Expenses; Taxes. Except as otherwise provided in this Agreement,
----------------
the parties shall pay their own fees and expenses, including their own counsel
fees, incurred in connection with this Agreement or any transaction contemplated
hereby. Any sales tax, stamp duty, deed transfer or other tax (except taxes
based on the income of Investor) arising out of the issuance of the Shares by
Issuer to Investor and consummation of the transactions contemplated by this
Agreement shall be paid by the Issuer.
9.7 Amendment; Waiver. This Agreement may not be modified, amended,
------------------
supplemented, canceled or discharged, except by written instrument executed by
both parties. No failure to exercise, and no delay in exercising, any right,
power or privilege under this Agreement shall operate as a waiver, nor shall any
single or partial exercise of any right, power or privilege hereunder preclude
the exercise of any other right, power or privilege. No waiver of any breach of
any provision shall be deemed to be a waiver of any preceding or succeeding
breach of the same or any other provision, nor shall any waiver be implied from
any course of dealing between the parties. No extension of time for performance
of any obligations or other acts hereunder or under any other agreement shall be
deemed to be an extension of the time for performance of any other obligations
or any other acts. The rights and remedies of the parties under this Agreement
are in addition to all other rights and remedies, at law or equity, that they
may have against each other.
9.8 Binding Effect; Assignment. The rights and obligations of this
----------------------------
Agreement shall bind and inure to the benefit of the parties and their
respective successors and legal assigns. The rights and obligations of this
Agreement may not be assigned by any party without the prior written consent of
the other party.
<PAGE>
Page 36 of 38 Pages
9.9 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be an original but all of which together shall
constitute one and the same instrument.
9.10 Headings. The headings contained in this Agreement are for
--------
convenience of reference only and are not be given any legal effect and shall
not affect the meaning or interpretation of this Agreement.
9.11 Governing Law; Interpretation. This Agreement shall be construed
-----------------------------
in accordance with and governed for all purposes by the laws of the State of
Delaware applicable to contracts executed and to be wholly performed within such
State.
9.12 Severability. The parties stipulate that the terms and provisions
------------
of this Agreement are fair and reasonable as of the date of this Agreement.
However, if any provision of this Agreement shall be determined by a court of
competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated. If, moreover, any of those provisions shall for any reason be
determined by a court of competent jurisdiction to be unenforceable because it
is excessively broad or vague as to duration, activity or subject, it shall be
construed by limiting, reducing or defining it so as to be enforceable.
9.13 Limitation of Trustee, Officer and Shareholder Liability. The
----------------------------------------------------------
following shall apply to the undersigned only if the Investor is a series of a
Massachusetts business trust (the "Trust"). The Issuer hereby acknowledges that
this Agreement and any agreements, documents, and instruments executed in
connection herewith (collectively, the "Documents") relate solely to the
undersigned and not to any other series of the Trust. The Issuer hereby agrees
that, in seeking to enforce any of its rights under any of the Documents, it
will look solely to the undersigned, and not to any other series of the Trust,
and that all such other series shall have no liabilities or obligations under
the Documents. Additionally, notice is hereby given that the Documents are
executed on behalf of the trustees of the Trust as trustees and not
individually, and that the obligations set forth in the Documents are not
binding upon any of the trustees, officers or shareholders of the Trust
individually, but are binding only upon the assets and property of the
undersigned Trust.
[SIGNATURES AND OTHER INFORMATION ON NEXT TWO PAGES]
<PAGE>
Page 37 of 38 Pages
IN WITNESS WHEREOF, the parties hereto have caused this Subscription
Agreement to be duly executed and delivered as of the date set forth below.
NAME OF INVESTOR: ADDRESS FOR NOTICES (Please Print):
- ------------------------------------ ----------------------------------
----------------------------------
SIGNATURE: ----------------------------------
Attention:
------------------------
By: Telecopy:
---------------------------------- ------------------------
Printed Name:
Title: Tax Identification #:
-------------
Exact Name to appear on Stock Certificate:
------------------------------------
Number of Shares Subscribed For:
---------------------
Aggregate Purchase Price (see Section 1.1): $
--------------------
Investor hereby provides the following additional information:
(a) Excluding the shares of Common Stock subscribed for above,
set forth below is the number of shares of Common Stock and options ("Options")
and warrants ("Warrants" and, together with Common Stock and Options,
"Securities") which Investor beneficially owns or of which Investor is the
------------------
record owner on the date hereof. Please refer to the definition of beneficial
----------
ownership on Exhibit E attached hereto. If none, please so state.
- --------- ---------
Number of Shares: (excluding the Shares subscribed for above)
----------------
Number of Options:
----------------
Number of Warrants:
----------------
Please indicate by an asterisk (*) above if Investor disclaims "beneficial
----------
ownership" of any of the above listed Securities, and indicate in response to
- ---------
question (b) below who has beneficial ownership.
(b) If Investor disclaims "beneficial ownership" in question (a),
--------------------
please furnish the following information with respect to the person(s) other
than Investor who is the beneficial owner(s) of the Securities in question. If
not applicable, please check box:
Name of Beneficial Owner:
------------------------------------
Relationship to Investor:
------------------------------------
Number of Securities Beneficially Owned:
---------------------
<PAGE>
Page 38 of 38 Pages
NAME OF INVESTOR:
------------------------------
(c) Are any of the Securities listed in response to question (a)
the subject of a voting agreement, contract, or other arrangement whereby others
have voting control over, or any other interest in, any of Investor's
Securities?
Yes [ ] No [ ]
If the answer is "Yes", please give details:
----------------------------------
(d) Please describe each position, office or other material
relationship which Investor has had with the Issuer or any of its affiliates,
including any Subsidiary of Issuer, within the past three years. Please include
a description of any loans or other indebtedness, and any contracts or other
arrangements or transactions involving a material amount, payable by Investor to
the Issuer or any of its affiliates, including its Subsidiaries, or by the
Issuer or any of its affiliates, including its Subsidiaries, to Investor.
"Affiliates" of the Issuer include its directors and executive officers, and any
other person controlling or controlled by the Issuer. If none, please so state.
Answer:
(e) Please provide the name and address of other person(s), if
any, to whom any proxy statements, registration statements (including notice of
effectiveness thereof), prospectuses or similar documents and information should
be delivered by Issuer on behalf of the Investor in the future, with respect to
the Investor's shares:
- ------------------------------------ --------------------------------------
- ------------------------------------ --------------------------------------
- ------------------------------------ --------------------------------------
- ------------------------------------ --------------------------------------
(f) Please advise of special stock certificate delivery
requirements for closing, if any:
_______________________________________________________________________________
_______________________________________________________________________________
ACCEPTED: EXTENDED STAY AMERICA, INC.
By: Dated: February ____, 1997
--------------------------
Robert A. Brannon,
Senior Vice President
