Exhibit 10.15
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made and entered into as of June 8, 2004 (the
"Effective Date"), by and between ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (the "Executive") and
STRATEGIC HOTEL CAPITAL, INC. (the "Company");
WITNESSETH THAT:
WHEREAS, Strategic Hotel Capital, L.L.C. ("SHC LLC") and the
Executive are parties to an Employment Agreement dated as of November 30, 2000
(the "2000 Employment Agreement"), pursuant to which the terms and conditions of
the Executive's employment were set forth; and
WHEREAS, certain of SHC LLC operations, management and payroll
have been assigned to the Company, SHC LLC, the Company and Executive have
agreed to assign the 2000 Employment Agreement to the Company, and the Company
and the Executive have agreed to amend and restate the 2000 Employment
Agreement.
NOW THEREFORE, the Company and the Executive hereby agree that
the 2000 Employment Agreement shall be amended and restated as set forth herein
effective as of the Effective Date:
1. Performance of Services. The Executive's employment with the
Company shall be subject to the following:
(a) Subject to the terms of this Agreement, the Company hereby
agrees to employ the Executive as its chief executive officer,
with the titles of President and Chief Executive Officer
during the Agreement Term (as defined below), and the
Executive hereby agrees to accept such employment during the
Agreement Term. During the Agreement Term, while he is
employed by the Company, the Executive shall be nominated for
election to the Board of Managers of the Company (the
"Board"), so long as he is Chief Executive Officer. If elected
to and serving on the Board, the Executive agrees to resign
from the Board effective on his Date of Termination (as
defined in paragraph 3(j)), unless the Executive and the Board
otherwise agree. The "Agreement Term" shall initially be the
period beginning on the Effective Date and ending on December
31, 2005. Thereafter, the Agreement Term will be automatically
extended for 12-month periods, unless either the Company or
the Executive shall give the other party notice of the
intention to not extend the Agreement by October 1, 2005 or by
October 1 of any succeeding year, if applicable, except that
upon a Change in Control (as defined in paragraph 3(h)) the
remaining Agreement Term shall be 24 months from the date the
Change in Control occurred.
(b) During the Agreement Term, while the Executive is employed by
the Company, the Executive shall devote his full time,
energies and talents to serving as its President and Chief
Executive Officer.
(c) The Executive agrees that he shall perform his duties
faithfully and to the best of his abilities subject to the
directions of the Board. The Executive's duties may include
providing services for both the Company and the Subsidiaries
(as defined below), as determined by the Board; provided,
however, that the Executive shall not, without his consent, be
assigned tasks that would be inconsistent with those of
president and chief executive officer of the Company. The
Executive will have such authority, power, responsibilities
and duties as are inherent to his positions (and the
undertakings applicable to his positions) and necessary to
carry out his responsibilities and the duties required of him
hereunder. For purposes of this Agreement, the term
"Subsidiary" shall mean any corporation, partnership, joint
venture or other entity during any period, in which at least a
majority interest in such entity is owned, directly or
indirectly, by the Company (or a successor to the Company).
(d) Notwithstanding the foregoing provisions of this paragraph 1,
during the Agreement Term, the Executive may devote reasonable
time to activities other than those required under this
Agreement, including management of his personal investments
and activities involving professional, charitable,
educational, religious and similar types of organizations, to
the extent that such other activities do not, in the
reasonable judgment of the Board, inhibit or prohibit the
performance of the Executive's duties under this Agreement, or
conflict in any material way with the business of the Company
or any Subsidiary; provided, however, that the Executive shall
obtain approval of the Board prior to nomination or seeking
election to the board of directors of any other company
(except that the Executive may continue to serve as a member
of the board of ▇▇▇▇▇▇▇ Entertainment), and such approval
shall not be unreasonably withheld.
(e) The Company shall, to the maximum extent permitted by
applicable law, protect, defend, indemnify and hold harmless
the Executive against any costs, losses, expenses, claims,
suits, proceedings, investigations, damages or liabilities to
which the Executive may become subject which arise out of, are
based upon or relate to, or are alleged to so arise, be based
upon or to relate to the Executive's employment by the Company
(and any Subsidiary) or the Executive's service to the Company
(and any Subsidiary) as an employee, officer or member of the
Board, including, without limitation, reimbursement on a
current basis, upon submission of invoices, for any legal or
other expenses reasonably incurred by the Executive in
connection with investigation and defending against any such
costs, losses, expenses, claims, suits, proceedings,
investigations, damages or liabilities; provided, however,
that the Company shall not be required to pay any amounts
under this paragraph except upon receipt of an unsecured
undertaking by the Executive to repay any such amounts as to
which it shall ultimately be determined by a court of
competent jurisdiction that the Executive is not entitled to
indemnification by the Company. The Executive will be covered
under the Company's directors and officers insurance policy
during the Agreement Term and for such period following the
Date of Termination during which any action may be brought
against the Executive related to the matters above, so long as
the Company maintains such coverage for any director or
officer of the Company.
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2. Compensation. Subject to the terms of this Agreement, during
the Agreement Term, while the Executive is employed by the Company, the Company
shall compensate him for his services as follows:
(a) Salary and Bonus.
(i) During the Agreement Term, the Executive shall
receive an annual base salary (the "Salary") of
$400,000, subject to annual review by the Executive
Compensation Committee of the Board (the
"Committee"), which, in the discretion of such
Committee, may be increased from time to time. Once
increased, such Salary may not be decreased. Such
Salary shall be payable in arrears, in accordance
with the payroll practices of the Company.
(ii) For fiscal year 2004 and each subsequent fiscal year
of the Company during the Agreement Term, the
Executive shall be eligible to receive an annual cash
performance-based bonus (the "Bonus") from the
Company. For each fiscal year, the Executive shall
have the opportunity to earn a bonus determined by
the Committee in its sole discretion, taking into
consideration the relative contribution by the
Executive to the business of the Company, general
economic conditions, and such other performance goals
and factors as the Committee deems relevant with the
following targets: threshold target - $400,000;
mid-point target- $500,000; and above target -
$600,000; provided, however that, no minimum bonus
amount is guaranteed.
(b) Benefits. The Executive shall be eligible to participate in
any employee pension and welfare benefit plans and programs
made available to the Company's senior level executives, on
terms which are no less favorable than the terms provided
generally for the Company's senior level executives from time
to time, including, without limitation, pension, profit
sharing, savings and other retirement plans or programs,
medical, dental, hospitalization, short-term and long-term
disability and life insurance plans, accidental death and
dismemberment protection, travel accident insurance, and any
other pension or retirement plans or programs and any other
employee welfare benefit plans or programs that may be
sponsored by the Company from time to time, including any
plans that supplement the above-listed types of plans or
programs, whether funded or unfunded.
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(c) Vacation. The Executive shall be entitled to four weeks of
paid vacation each calendar year (or a pro rata portion
thereof with respect to any period during the Agreement Term
which does not encompass a full calendar year). Any unused
vacation may be rolled over to the next calendar year, if
permitted under the Company's regular vacation policy as in
effect from time to time.
(d) Business Expenses. The Company will reimburse the Executive
for reasonable expenses incurred by the Executive on company
business, pursuant to the Company's standard expense
reimbursement policy as in effect from time to time, so long
as the Executive provides proper documentation establishing
the amount, date and business purpose of those expenses.
(e) Stock-Based Compensation.
(i) Annual Awards
The Company shall adopt, and Executive shall receive
awards from time to time as determined by the
Committee under a restricted stock unit plan or other
comparable equity arrangement. As of the
effectiveness of the initial public offering of the
Company's common stock (the "IPO"), the Executive
shall receive an annual award of restricted stock
units for the 2004 fiscal year based on a number of
shares of the Company's common stock ("Common Stock")
equal to $800,000 divided by the price for the
Company's common stock established for the IPO. Such
restricted stock units shall vest in four equal
annual installments commencing December 31, 2004 and
on the succeeding three anniversaries thereof. For
each fiscal year thereafter, the Executive shall
receive an annual restricted stock unit award (or
other equity-based award of equivalent economic
value) having a targeted face value at one of the
following levels, based on the Executive's
performance in the prior fiscal year: (A) threshold -
not less than 1 times the Executive's Base Salary,
(B) mid-point - 1.5 times the Executive's Base
Salary, and (C) above target - not less than 2 times
the Executive's Base Salary; provided, however that
no minimum annual award is guaranteed.
(ii) IPO Award
Upon the IPO, the Executive will receive an award of
such number of restricted stock units, subject to the
terms and conditions of the Company's Stock Incentive
Plan (except as provided in this Agreement), equal
to: (x) $1,600,000 divided by (y) the price for a
share of Common Stock established for the IPO. Such
restricted stock units shall vest in four equal
annual installments commencing December 31, 2004 and
on the succeeding three anniversaries thereof.
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(iii) UAR Conversion
Upon the effectiveness of the IPO, all of the
Executive's outstanding awards of Unit Appreciation
Rights granted by SHC, LLC shall be converted into
such number of fully vested restricted stock units
under the Company's Stock Incentive Plan equal to (x)
$1,431,750 divided by (y) the price for a share of
Common Stock established for the IPO. Upon such
conversion, all Unit Appreciation Rights shall be
cancelled. The shares underlying the restricted stock
units shall be delivered to the Executive according
to the following table, whether or not the Executive
is then employed by the Company.
Time Percent of Shares Delivered
---- ---------------------------
Upon effectiveness of IPO 50.4%
January, 1 2005 23.3%
January, 1 2006 16.7%
January 1, 2007 9.6%
(iv) Dividend Equivalents
Each restricted stock unit award under this paragraph
2(e) shall provide for accrual of dividend
equivalents, as follows. As of each dividend date
with respect to shares of Common Stock, a dollar
amount equal to the amount of the dividend that would
have been paid on the number of shares of Common
Stock equal to the number of restricted stock units
held by the Executive as of the close of business on
the record date for such dividend shall be converted
into a number of restricted stock units equal to the
number of whole and fractional shares of Common Stock
that could have been purchased at the closing price
on the dividend payment date with such dollar amount.
In the case of any dividend declared on shares of
Common Stock which is payable in shares of Common
Stock, Executive shall be credited with an additional
number of restricted stock units equal to the product
of (x) the number of his restricted stock units then
held on the related dividend record date and the (y)
the number of shares of Common Stock (including any
fraction thereof) distributable as a dividend on a
share of Common Stock. Such dividend equivalents
shall be paid to the Executive in shares of Common
Stock, at such time as shares are delivered for
payment of restricted stock units.
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(v) Timing of Delivery of Shares
For all vested restricted stock units and other
equity awards (other than restricted stock units
delivered pursuant to the UAR conversion described in
paragraph 2(e)(iii) above), the underlying shares
shall vest and be delivered, and all stock options
and stock appreciation rights shall be exercisable,
at the time specified in, and in accordance with the
Company's standard form of award agreement under the
Company's Stock Incentive Plan, except as follows:
(A) All equity awards described in this paragraph
2(e) shall immediately vest and all restricted stock
units and other similar awards shall be deliverable
upon the Date of Termination for a termination of the
Executive's employment under the circumstances
described in paragraphs 3(a) (death) or 3(b)
(Disability), or under the circumstances described in
paragraph 3(e) (voluntary resignation) at or after
the Executive attains age 62 or a termination of the
Executive's employment after the Executive attains
age 62 due to a non-renewal of the Agreement Term by
the Company (either such termination defined for
purposes of this Agreement as "retirement"), and all
stock options and stock appreciation rights held by
the Executive, if any, shall be exercisable for
twelve months following the Date of Termination in
the case of a termination under paragraph 3(a) or
3(b) and shall be exercisable for the unexpired
stated term of each such option and stock
appreciation right in the case of a retirement.
(B) All equity awards described in this paragraph
2(e) shall immediately vest and all restricted stock
units and other similar awards shall be deliverable
only to the extent such awards would have vested or
been deliverable had the Executive's employment
continued for two years following the Date of
Termination, upon a termination of the Executive's
employment under the circumstances described in
paragraphs 3(d) (Constructive Termination) or 3(g)
(termination by the Company for reasons other than
Cause, death or Disability) or due to non-renewal of
the Agreement Term by the Company prior to the
Executive attaining age 62 and all stock options and
stock appreciation rights held by the Executive, if
any, shall be exercisable for three years following
the Date of Termination.
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(C) The foregoing to the contrary notwithstanding,
all equity awards shall immediately vest and all
restricted stock units and other similar awards shall
be deliverable upon the occurrence of a Change in
Control.
(D) For the avoidance of doubt, all unvested equity
awards shall be forfeited upon a termination of the
Executive's employment under the circumstances
described in paragraph 3(e) (voluntary resignation)
prior to Executive attaining age 62 (including such a
resignation due to a non-renewal of the Agreement
Term by the Executive), or paragraph 3(c)
(termination by Company for Cause).
3. Termination The Executive's employment with the Company during
the Agreement Term may be terminated by the Company or the Executive without any
breach of this Agreement under the circumstances described in paragraphs 3(a)
through 3(g):
(a) Death. The Executive's employment hereunder will terminate
upon his death.
(b) Disability. The Company may terminate the Executive's
employment due to the Executive's Disability. For purposes of
this Agreement "Disability" means the absence of the Executive
from the Executive's duties with the Company on a full-time
basis for ninety (90) days (which need not be continuous)
during any consecutive twelve-month period as a result of
incapacity due to a physical or mental illness which, in the
opinion of the Board, renders the Executive incapable, after
reasonable accommodation, of performing his duties under this
Agreement. If the Executive disputes the Company's
determination of Disability, the Executive (or his designated
physician) and the Company (or its designated physician) shall
jointly appoint a third-party physician to examine the
Executive and determine whether the Executive has a
Disability.
(c) Termination by Company for Cause. The Company may terminate
the Executive's employment hereunder at any time for Cause.
For purposes of this Agreement, the term "Cause" shall mean:
(i) the willful and continued failure by the Executive,
after reasonable notice and opportunity to cure, to
substantially perform his duties with the Company
(other than any such failure resulting from the
Executive's Disability);
(ii) willful gross misconduct involving serious moral
turpitude, or breach of his duty of loyalty to the
Company;
(iii) conviction (or plea of no contest) of (a) a felony,
(b) a crime involving fraud or (c) other illegal
conduct, other than minor traffic violations, and
with respect to clause (d), which is demonstrably
injurious to the Company's financial position or
reputation;
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(iv) material breach of any of the Company's material
written policies;
(v) willful dishonesty in connection with the Company's
business;
(vi) the Executive willfully (x) impedes, (y) endeavors to
influence, obstruct or impede or (z) fails to
materially cooperate with an investigation authorized
by the Board (an "Investigation"); or
(vii) the Executive willfully withholds, removes, conceals,
destroys, alters or by other means falsifies any
material which is requested in connection with an
Investigation, or attempts to do so or solicits
another to do so.
For purposes of this provision, no act or omission on the part
of the Executive shall be considered "willful" unless it is
done or omitted in bad faith and without reasonable belief
that such conduct was in the best interests of the Company.
The cessation of employment of the Executive shall not be
deemed to be for Cause unless and until there shall have been
delivered to the Executive a copy of a resolution duly adopted
by the affirmative vote of not less than a majority of the
entire membership of the Board (excluding the Executive),
after reasonable notice is provided to the Executive and the
Executive is given an opportunity, together with counsel, to
be heard before the Board, finding that, in the good faith
opinion of the Board, the Executive is guilty of conduct
described above, and specifying the particulars thereof in
detail.
(d) Constructive Termination. The Executive shall be considered to
have terminated his employment as a result of a "Constructive
Termination" if, without the written consent of the Executive,
(i) the Company reduces Executive's Salary or bonus
opportunity or the Company materially breaches this
Agreement;
(ii) the Company materially reduces the Executive's duties
or authority, fails to nominate the Executive to the
Board, or requires the Executive to report other than
to the Board or a committee of the Board;
(iii) the Company relocates its principal offices, or the
Executive's principal place of employment, outside
the Chicago metropolitan area; or
(iv) any successor to the Company (or the Company itself,
following a Change in Control as defined in paragraph
3(h)) fails to assume this Agreement or affirm its
obligations hereunder in any material respect.
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Notwithstanding the foregoing, at the direction of the Board,
certain of the Executive's duties may be reassigned to another
director or officer for up to 30 days to permit an
Investigation of whether there is a basis to terminate the
Executive for Cause. Such reassignment shall not constitute
Constructive Termination as long as the reassigned duties are
directly and materially related to the subject of the
Investigation. Further, suspending the Executive's duties,
with full pay, bonus eligibility, welfare benefits and
continued vesting of equity awards and other benefits, after
Executive has provided a notice of non-renewal of this
Agreement shall not constitute Constructive Termination. A
termination by the Executive shall not be deemed to be as a
result of a Constructive Termination unless the Executive
shall have provided notice of the Constructive Termination
event within 90 days of its occurrence and the Company shall
have a reasonable opportunity to cure such conduct or event.
(e) Voluntary Resignation. The Executive may terminate his
employment hereunder at any time for any reason by giving the
Company prior written notice of his resignation, whether
pursuant to the non-renewal provision of paragraph 1(a) or
otherwise, which shall be effective 30 days after receipt
(provided, that, the Company may accelerate the Date of
Termination to an earlier date by providing the Executive with
notice of such action, or, alternatively, the Company may
place the Executive on paid leave during such period). The
Executive shall not be required to specify a reason for any
such termination under this paragraph 3(e) unless the
Executive intends for such termination to be subject to
paragraph 3(d).
(f) Mutual Agreement. This Agreement may be terminated at any time
by the mutual agreement of the parties. Any termination of the
Executive's employment by mutual agreement of the parties will
be memorialized by an agreement which is reduced to writing
and signed by the Executive and a duly appointed officer of
the Company.
(g) Other Termination by Company. The Company may terminate the
Executive's employment hereunder at any time for any reason,
by giving the Executive prior written notice of his
termination, which shall be effective immediately or as of
such later time as is specified in such notice. Termination of
the Executive's employment by the Company shall be deemed to
have occurred under this paragraph 3(g) unless the notice of
termination provided to the Executive by the Company specifies
that the Executive's termination is for reasons described in
paragraphs 3(b), 3(c), or 3(f), or unless the circumstances
described in paragraph 3(h) apply.
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(h) Change in Control. The Executive shall be considered to have
terminated his employment under this paragraph 3(h) if a
"Change in Control" occurs with respect to the Company and
within 24 months thereafter the Executive is terminated by the
Company for any reason other than for Cause or the Executive
terminates his employment as a result of a Constructive
Termination. For purposes of this Agreement the term "Change
in Control" means the happening of any of the following:
(i) Any "Person" (having the meaning ascribed to such
term in Section 3(a)(9) of the Exchange Act and used
in Sections 13(d) and 14(d) thereof, including a
"group" within the meaning of Section 13(d)(3)) has
or acquires Beneficial Ownership of thirty (30%)
percent or more of the combined voting power of the
Company's then outstanding voting securities entitled
to vote generally in the election of directors
("Voting Securities"); provided, however, that in
determining whether a Change in Control has occurred,
Voting Securities which are held or acquired by the
following: (i) the Company or any of its Related
Companies (as defined in paragraph 3(h)(iv) below) or
(ii) an employee benefit plan (or a trust forming a
part thereof) maintained by the Company or any of its
Related Companies (the persons or entities described
in (i) and (ii) shall collectively be referred to as
the "Excluded Group"), shall not constitute a Change
in Control. For purposes of this Agreement,
"Beneficial Ownership" shall mean beneficial
ownership within the meaning of Rule 13d-3
promulgated under the Exchange Act.
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(ii) The individuals who are members of the Incumbent
Board cease for any reason to constitute more than
fifty (50%) percent of the Board. For purposes of
this Agreement, "Incumbent Board" shall mean the
individuals who, as of the beginning of the period
commencing two years prior to the determination date,
constitute the Board; provided, however, that for
purposes of this definition, any individual who
becomes a member of the Board subsequent to the
beginning of such two-year period, whose election, or
nomination for election by the Company's
stockholders, was approved by a vote of at least
two-thirds of those individuals who are members of
the Board and who were also members of the Incumbent
Board (or deemed to be such pursuant to this proviso)
shall be considered as though such individual were a
member of the Incumbent Board; and provided further,
however, that any such individual whose initial
assumption of office occurs as a result of or in
connection with an actual or threatened solicitation
of proxies or consents by or on behalf of a Person
other than the Board shall not be considered a member
of the Incumbent Board.
(iii) A consummation of a merger, consolidation or
reorganization or similar event involving the
Company, whether in a single transaction or in a
series of transactions ("Business Combination"),
unless, following such Business Combination:
(a) the Persons with Beneficial Ownership of
the Company, immediately before such
Business Combination, have Beneficial
Ownership of more than fifty (50%) percent
of the combined voting power of the then
outstanding voting securities entitled to
vote generally in the election of directors
of the corporation (or in the election of a
comparable governing body of any other type
of entity) resulting from such Business
Combination (including, without limitation,
an entity which as a result of such
transaction owns the Company or all or
substantially all of the Company's assets
either directly or through one or more
subsidiaries) (the "Surviving Company") in
substantially the same proportions as their
Beneficial Ownership of the Voting
Securities immediately before such Business
Combination;
(b) the individuals who were members of the
Incumbent Board immediately prior to the
execution of the initial agreement providing
for such Business Combination constitute
more than fifty (50%) percent of the members
of the board of directors (or comparable
governing body of a noncorporate entity) of
the Surviving Company; and
(c) no Person (other than a member of the
Excluded Group or any Person who immediately
prior to such Business Combination had
Beneficial Ownership of thirty percent (30%)
or more of the then Voting Securities) has
Beneficial Ownership of thirty (30%) percent
or more of the then combined voting power of
the Surviving Company's then outstanding
voting securities.
(iv) The assignment, sale, conveyance, transfer, lease or
other disposition of all or substantially all of the
assets of the Company to any Person (other than the
Company, any Related Company or an employee benefit
plan (or related trust) sponsored or maintained by
the Company or any Related Company) unless,
immediately following such disposition, the
conditions set forth in paragraph (iii)(a), (b) and
(c) above will be satisfied with respect to the
entity which acquires such assets. For purposes of
this Agreement, "Related Company" shall mean any
entity that is directly or indirectly controlled by,
in control of or under common control with the
Company.
(v) The occurrence of a liquidation or dissolution of the
Company.
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Notwithstanding the provisions of subparagraphs (i), (ii) and
(iii) of this paragraph (h), the IPO or acquisition of stock
by underwriters in furtherance of a public offering shall not
be considered a Change in Control.
(j) Date of Termination. "Date of Termination" means the last day
the Executive is employed by the Company, whether by reason of
the expiration of the Agreement Term, termination of
employment in accordance with the foregoing provisions of this
paragraph 3, or under any other circumstances.
4. Rights Upon Termination. The rights and obligations of the
Company and the Executive with respect to compensation and benefits under this
Agreement for periods after his Date of Termination shall be determined in
accordance with the following provisions of this paragraph 4:
(a) If the Executive's employment terminates for any reason, the
Company shall pay to the Executive:
(i) The Executive's Salary for the period ending on the
Date of Termination and, if applicable, any earned
but unpaid Bonus for the fiscal year ending on or
before the Date of Termination.
(ii) Payment for unused vacation days, as determined in
accordance with the Company policy as in effect from
time to time.
(iii) Any other payments or benefits to be provided to the
Executive by the Company pursuant to any employee
benefit plans or arrangements adopted by the Company,
to the extent such amounts are due from the Company.
Except as may otherwise be expressly provided to the contrary
in this Agreement, nothing in this Agreement shall be
construed as requiring the Executive to be treated as employed
by the Company for purposes of any employee benefit plan or
arrangement following the date of the Executive's Date of
Termination.
(b) If the Executive's employment terminates under circumstances
described in paragraph 3(c) (termination for Cause), paragraph
3(e) (voluntary resignation), paragraph 3(f) (termination by
mutual agreement), or if the Executive's employment with the
Company terminates at the end of the Agreement Term due to:
(i) non-renewal of the Agreement Term by the Executive or (ii)
non-renewal of the Agreement Term by the Company after
Executive attains age 62, then, except as otherwise expressly
provided in this Agreement or otherwise agreed in writing
between the Executive and the Company, the Company shall have
no obligation to pay any Salary, Bonus, severance or similar
compensation amounts to the Executive under this Agreement for
periods after the Executive's Date of Termination.
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(c) If the Executive's employment terminates under circumstances
described in paragraph 3(a) (relating to the Executive's
death), paragraph 3(b) (relating to the Executive's
Disability), paragraph 3(d) (Constructive Termination),
paragraph 3(g) (termination by the Company for reasons other
than for Cause, death or Disability), or due to non-renewal of
the Agreement Term by the Company prior to Executive attaining
age 62, then, in addition to the amounts payable in accordance
with paragraph 4(a), the Executive (or, in the event of his
death, his estate) shall receive from the Company (i) an
amount equal to his current Salary then in effect, plus
$600,000, payable in 12 equal monthly installments commencing
on the first Company payroll date for senior executives
following the Date of Termination; (ii) a pro-rata midpoint
target Bonus for the elapsed portion of the calendar year
elapsed through the Date of Termination, payable in 12 equal
monthly installments commencing on the first Company payroll
date for senior executives following the Date of Termination;
(iii) during the 12-month period beginning on the Date of
Termination of the Executive's employment pursuant to any of
the reasons listed in this paragraph 4(c), the Executive and
his family members shall be entitled to continued medical
coverage under the Company's medical plan, with benefits no
less favorable in any material respect than the level of
coverage applicable to them immediately prior to such Date of
Termination, and the Company shall pay all premium amounts
therefor. The 12 months of continued medical coverage at the
Company's expense shall run concurrently with the time period
for which the Executive and his family members are entitled to
continued medical coverage under the provisions of section
4980B of the Internal Revenue Code of 1986, as amended (the
"Code"), and section 601 of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), if applicable, or
any similar state law continuation coverage requirements. The
Executive's restricted stock units and other equity awards
shall vest, and any stock options and stock appreciation
rights shall be exercisable after the Date of Termination, as
set forth at paragraph 2(e)(v)(A) or (B) hereof as the case
may be.
(d) If the Executive's employment terminates under the
circumstances described in paragraph 3(h)(certain Change in
Control terminations), then, in addition to the amounts
payable in accordance with paragraph 4(a), but in lieu of any
amounts payable in accordance with paragraph 4(c), the
Executive shall receive from the Company a lump sum cash
payment, payable within 30 days of such termination, equal to
(i) three (3) times the total of (A) and (B), where (A) is his
Salary then in effect, and (B) is the higher of $600,000 or
the highest annual Bonus earned by the Executive within the
preceding 3 years; and (ii) a pro-rata Bonus for the portion
of the calendar year elapsed through the Date of Termination
based on the amount set forth in clause (B) of this paragraph
4(d). During the 36-month period beginning on the Date of
Termination of the
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Executive's employment pursuant to paragraph 3(h), the
Executive and his family members shall be entitled to
continued medical coverage under the Company's medical plan,
with benefits no less favorable in any material respect than
the level of coverage applicable to them immediately prior to
the Date of Termination, and the Company shall pay all premium
amounts therefor. The 36 months of continued medical coverage
at the Company's expense shall run concurrently with the time
period for which the Executive and his family members are
entitled to continued medical coverage under the provisions of
section 4980B of the Code and section 601 of ERISA, if
applicable, or any similar state law continuation coverage
requirements. The Executive's restricted stock units and other
equity awards shall vest, and any stock options and stock
appreciation rights shall be exercisable after the Date of
Termination, as set forth at paragraph 2(e)(v)(A) or (B)
hereof as the case may be.
(e) In the event of the Executive's death before payment of any
amount that had become due and payable to or on behalf of the
Executive pursuant to the terms of this Agreement, payment of
that amount shall be made to the Executive's estate.
(f) The Company shall not be required to make the payments and
provide the benefits specified in paragraph 4(c) or 4(d)
unless the Executive executes and delivers to the Company an
agreement releasing the Company, its affiliates and its
officers, directors and employees from all liability (other
than the payments and benefits under this Agreement)
substantially in the form set forth attached hereto as Exhibit
A and such agreement has become effective and irrevocable.
5. Duties on Termination. Subject to the terms and conditions of
this Agreement, during the period beginning on the date of delivery of a notice
of resignation by the Executive or notice of termination of the Executive's
employment by the Company, and ending on the Date of Termination, the Executive
shall continue to perform his duties as set forth in this Agreement, and during
such period shall also perform such reasonable services for the Company as are
necessary and appropriate for a smooth transition to the Executive's successor,
if any. Notwithstanding the foregoing provisions of this paragraph 5, the
Company may suspend the Executive from performing his duties under this
Agreement following the delivery of any such notice of resignation or
termination; provided, however, that during the period of suspension (which
shall end on the Date of Termination), the Executive shall continue to be
treated as employed by the Company for other purposes, and his rights to
compensation or benefits shall not be reduced by reason of the suspension.
6. Non-competition and Non-solicitation.
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(a) Except as otherwise permitted under paragraph 1(d) of this
Agreement, while the Executive is employed by the Company, he
agrees that he will not directly or indirectly (without prior
written consent of the Company) engage in, assist, perform
services for, establish or open, or have any equity interest
(other than ownership of 5% or less of the outstanding stock
of any corporation listed on the New York or American Stock
Exchange or included in the National Association of Securities
Dealers Automated Quotation System) in any person, firm,
corporation, or business entity (whether as an employee,
officer, director, agent, security holder, creditor,
consultant, or otherwise) that engages in any activity which
is directly competitive with the business of the Company. In
addition, for an 18-month period after the Executive's Date of
Termination under the circumstances described in paragraphs
3(c) or 3(e), or for a 12-month period after the Executive's
Date of Termination due to non-renewal of the Agreement Term
by the Company before the Executive attains age 62, the
Executive agrees that he will not actively engage in the
business of the acquisition of hotel properties by acting as
an investor, principal, broker or intermediary with respect to
hotel property acquisitions or by soliciting or otherwise
identifying specific acquisition opportunities, but the
provisions of this sentence are not to be construed so as to
otherwise prevent the Executive from engaging in hotel asset
management or consulting activities. The restrictions in this
paragraph 6(a) are intended to apply on a worldwide basis.
Nothing in this paragraph 6 or paragraph 7 shall be construed
as limiting the Executive's duty of loyalty to the Company
while he is employed by the Company, or any other duty he may
otherwise have to the Company while he is employed by the
Company.
(b) While the Executive is employed by the Company, and for a
period of 12 months after the Executive's Date of Termination,
the Executive agrees that he will not in any manner, directly
or indirectly (without prior written consent of the Company)
employ or solicit for employment for himself or any other
business entity (other than the Company and its Subsidiaries)
any individual who was, during the period of the Executive's
employment with the Company or the 12-month period following
the Executive's Date of Termination, an employee, officer,
agent or representative of the Company (or any successor
corporation into which the Company may be merged or
consolidated).
7. Confidential Information. The Executive agrees that:
(a) Except as may be required by the lawful order of a court or
agency of competent jurisdiction, or except to the extent that
the Executive has express authorization from the Company, the
Executive agrees to keep secret and confidential indefinitely
all non-public information (including, without limitation,
information regarding litigation and pending litigation)
concerning the Company and the Subsidiaries which was acquired
by or disclosed to the Executive during the course of his
employment with or negotiations for employment with the
Company, or during the course of any consultation with the
Company following his termination of employment pursuant to
paragraph 8, and not to disclose the same, either directly or
indirectly, to any other person, firm, or business entity, or
to use it in any way.
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(b) To the extent that any court or agency seeks to have the
Executive disclose confidential information, he shall promptly
inform the Company, and he shall take such reasonable steps to
prevent disclosure of confidential information until the
Company has been informed of such requested disclosure, and
the Company has an opportunity to respond to such court or
agency. To the extent that the Executive obtains information
on behalf of the Company or any of the Subsidiaries that may
be subject to attorney-client privilege as to the Company's
attorneys, the Executive shall take reasonable steps to
maintain the confidentiality of such information and to
preserve such privilege.
(c) Nothing in the foregoing provisions of this paragraph 7 shall
be construed so as to prevent the Executive from using, in
connection with his employment for himself or an employer
other than the Company or any of the Subsidiaries, knowledge
which is generally known (other than by reason of a violation
of this paragraph 7) to persons of his experience in other
companies in the same industry.
8. Defense of Claims. The Executive agrees that, for the period
beginning the Effective Date, and continuing for a reasonable period after the
Executive's termination of employment with the Company, the Executive will
cooperate with the Company in defense of any claims that may be made against the
Company, and will cooperate with the Company in the prosecution of any claims
that may be made by the Company, to the extent that such claims may relate to
services performed by the Executive for the Company. The Executive agrees to
promptly inform the Company if he becomes aware of any lawsuits involving such
claims that may be filed against the Company. The Company agrees to reimburse
the Executive, for all of the Executive's reasonable out-of-pocket expenses and,
if any such cooperation is requested after Executive's termination of employment
with the Company, to compensate the Executive for his time associated with such
cooperation at an hourly rate based on the Executive's Salary in effect
immediately prior to the Date of Termination divided by 2,000. The Executive
also agrees to promptly inform the Company if he is asked to assist in any
investigation of the Company (or its actions) that may relate to services
performed by the Executive for the Company, regardless of whether a lawsuit has
then been filed against the Company with respect to such investigation.
16
9. Equitable Remedies. The Executive acknowledges that the
Company would be irreparably injured by a violation of paragraphs 6, 7 or 8, and
he agrees that the Company, in addition to any other remedies available to it
for such breach or threatened breach, shall be entitled to a preliminary
injunction, temporary restraining order, or other equivalent relief, restraining
the Executive from any actual or threatened breach of any of paragraphs 6, 7 or
8. If a bond is required to be posted in order for the Company to secure an
injunction or other equitable remedy, the parties agree that said bond need not
be more than a nominal sum. The parties hereto acknowledge that the potential
restrictions on the Executive's future employment imposed by paragraphs 6, 7 and
8 are reasonable in duration and all other respects. If for any reason any court
of competent jurisdiction shall find paragraphs 6, 7, or 8 unreasonable in
duration or otherwise, the Executive and the Company agree that the restrictions
and prohibitions contained herein shall be effective to the fullest extent
allowed under applicable law in such jurisdiction.
10. Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary notwithstanding and
except as set forth below, in the event it shall be determined
that any payment or distribution by the Company to or for the
benefit of the Executive (whether paid or payable or
distributed or distributable pursuant to the terms of this
Agreement or otherwise, but determined without regard to any
additional payments required under this paragraph 10) (a
"Payment") would be subject to the excise tax imposed by
Section 4999 of 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, are hereinafter collectively referred to as the
"Excise Tax"), then the Executive 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),
including, without limitation, any income and employment taxes
(and any interest and penalties imposed with respect thereto)
and 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) Subject to the provisions of paragraph 10(a), all
determinations required to be made under this paragraph 10,
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 a
certified public accounting firm reasonably acceptable to the
Executive as may be designated by the Company (the "Accounting
Firm") which shall provide detailed supporting calculations
both to the Company and the Executive within 15 business days
of the receipt of notice from the Executive that there has
been a Payment, or such earlier time as is requested by the
Company. If the Accounting Firm determines that no Excise Tax
is payable by the Executive, it shall furnish the Executive
with a written opinion, based on "substantial authority"
(within the meaning of Section 6662 of the Code), that the
failure to report the Excise Tax on the Executive's individual
income tax return would not result in the imposition of a
negligence or other accuracy-related penalty. All fees and
expenses of the Accounting Firm shall be borne solely by the
Company. Any Gross-Up Payment, as determined pursuant to this
paragraph 10, shall be paid by the Company to the Executive
within five days of the earlier of (i) the due date for the
payment of any Excise Tax or (ii) the issuance by the Internal
Revenue Service (the "IRS") of notice to the effect that an
Excise Tax is due in connection with a Payment. Subject to a
determination by the IRS, any determination by the Accounting
Firm shall be binding upon the Company and the Executive,
absent manifest error.
17
11. Non-alienation. The interests of the Executive under this
Agreement are not subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, attachment, or garnishment by
creditors of the Executive or the Executive's estate.
12. Mitigation and Set-Off. The Executive shall not be required to
mitigate the amount of any payment provided for in this Agreement by seeking
other employment or otherwise. The Company shall not be entitled to set off
against the amounts payable to the Executive under this Agreement any amounts
earned by the Executive in other employment after termination of his employment
with the Company, or any amounts which might have been earned by the Executive
in other employment had he sought such other employment.
13. Amendment. This Agreement may be amended or canceled only by
mutual agreement of the parties in writing. So long as the Executive lives, no
person, other than the parties hereto, shall have any rights under or interest
in this Agreement or the subject matter hereof.
14. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD
TO THE PRINCIPLES OF CONFLICT OF LAWS.
15. Severability. The invalidity or non-enforceability of any
provision of this Agreement will not affect the validity or enforceability of
any other provision of this Agreement, and this Agreement will be construed as
if such invalid or unenforceable provision were omitted (but only to the extent
that such provision cannot be appropriately reformed or modified).
16. Waiver of Breach. No waiver by either party hereto of a breach
of any provision of this Agreement by the other party, or of compliance with any
condition or provision of this Agreement to be performed by such other party,
will operate or be construed as a waiver of any subsequent breach by such other
party or any similar or dissimilar provisions and conditions at the same or any
prior or subsequent time. The failure of any party hereto to take any action by
reason of such breach will not deprive such party of the right to take action at
any time while such breach continues.
18
17. Successors. This Agreement shall be binding upon, and inure to
the benefit of, the Company and its successors and assigns and upon any person
acquiring, whether by merger, consolidation, purchase of assets or otherwise,
all or substantially all of the Company's assets and business.
18. Notices. Notices and all other communications provided for in
this Agreement shall be in writing and shall be delivered personally or sent by
registered or certified mail, return receipt requested, postage prepaid, or sent
by facsimile or prepaid overnight courier to the parties at the addresses set
forth below (or such other addresses as shall be specified by the parties by
like notice). Such notices, demands, claims and other communications shall be
deemed given: (x) when received if given in person or by courier service, (y) on
the date of transmission if sent by telex, facsimile or other wire transmission
or (z) three business days after being deposited in the U.S. mail, certified or
registered mail, postage prepaid:
(a) If to the Company, addressed as follows:
Strategic Hotel Capital, Inc.
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Attention: General Counsel
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) If to the Executive, addressed as follows:
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19. Waiver of Jury Trial. TO THE EXTENT PERMITTED BY APPLICABLE
LAW, THE PARTIES HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
20. Costs of Disputes. The Company shall reimburse the Executive's
reasonable expenses, including legal fees (i) to negotiate and prepare this
Agreement up to a maximum of $50,000; (ii) in any dispute under this Agreement
in which the Executive prevails on at least one material claim.
21. Survival of Agreement. Except as otherwise expressly provided
in this Agreement, the rights and obligations of the parties to this Agreement
shall survive the termination of the Executive's employment with the Company.
22. Entire Agreement. Except as otherwise noted herein this
Agreement constitutes the entire agreement between the parties concerning the
subject matter hereof and supersedes all prior and contemporaneous agreements,
if any, between the parties relating to the subject matter hereof.
19
23. Acknowledgement by Executive. The Executive represents to the
Company that he is knowledgeable and sophisticated as to business matters,
including the subject matter of this Agreement, that he has read this Agreement
and that he understands its terms. The Executive acknowledges that, prior to
assenting to the terms of this Agreement; he has been given a reasonable time to
review it, to consult with counsel of his choice, and to negotiate at
arm's-length with the Company as to the contents. The Executive and the Company
agree that the language used in this Agreement is the language chosen by the
parties to express their mutual intent, and that no rule of strict construction
is to be applied against any party hereto. The Executive represents and warrants
that he is not, and will not become a party to any agreement, contract,
arrangement or understanding, whether of employment or otherwise, that would in
any way restrict or prohibit him from undertaking or performing his duties in
accordance with this Agreement.
24. Inconsistency. In the event of any inconsistency between this
Agreement and any plan, program or practice of the Company, the terms of this
Agreement shall control.
20
IN WITNESS THEREOF, the Executive has hereunto set his hand, and
the Company has caused these presents to be executed in its name and on its
behalf, all as of the day and year first written above.
--------------------------------------------
Executive
STRATEGIC HOTEL CAPITAL, INC.
By:
-----------------------------------
Name:
Title:
21
EXHIBIT A
RELEASE AND WAIVER OF CLAIMS
THIS RELEASE is made as of this ___ day of __________, ____, by
and between Strategic Hotels, Inc. (the "Company") and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
("Executive").
WHEREAS, Executive and the Company entered into that certain
Amended and Restated Employment Agreement, dated _______________, 2004
("Agreement");
WHEREAS, Executive's employment with the Company as Chief
Executive Officer has terminated; and
WHEREAS, in connection with the termination of Executive's
employment, under the Agreement, Executive is entitled to certain payments and
other benefits.
NOW, THEREFORE, in consideration of the severance payments and
other benefits due Executive under the Agreement ("Severance Payments"):
1. Executive hereby for himself, and his heirs, agents, executors,
successors, assigns and administrators (collectively, the "Related Parties"),
intending to be legally bound, does hereby REMISE, RELEASE AND FOREVER DISCHARGE
the Company, its affiliates, subsidiaries, parents, joint ventures, and its and
their officers, directors, shareholders, employees, predecessors, and partners,
and its and their respective successors and assigns, heirs, executors, and
administrators (collectively, "Releasees") from all causes of action, suits,
debts, claims and demands whatsoever in law or in equity, which Executive ever
had, now has, or hereafter may have, or which the Related Parties may have, by
reason of any matter, cause or thing whatsoever, from the beginning of his
initial dealings with the Company to the date of this Release, and particularly,
but without limitation of the foregoing general terms, any claims arising from
or relating in any way to his employment relationship with Company, the terms
and conditions of that employment relationship, and the termination of that
employment relationship, including, but not limited to, any claims arising under
the Age Discrimination in Employment Act ("ADEA"), as amended, 29 U.S.C. ss. 621
et seq., the Older Worker's Benefit Protection Act, 29 U.S.C. ss. 626(f)(1),
Title VII of The Civil Rights Act of 1964, as amended, 42 U.S.C. ss. 2000e et
seq., the Civil Rights Act of 1871, the Civil Rights Act of 1991, the Americans
with Disabilities Act, 42 U.S.C. ss. 12101-12213, the Rehabilitation Act, the
Family and Medical Leave Act of 1993 ("FMLA"), 29 U.S.C. ss. 2601 et seq., the
Fair Labor Standards Act, and any other claims under any federal, state or local
common law, statutory, or regulatory provision, now or hereafter recognized, and
any claims for attorneys' fees and costs, but not including such claims to
payments, benefits and other rights provided Executive under the Agreement and
any employee benefit plan of the Company in which Executive is a participant.
This Release is effective without regard to the legal nature of the claims
raised and without regard to whether any such claims are based upon tort,
equity, implied or express contract or discrimination of any sort. Except as
specifically provided herein, it is expressly understood and agreed that this
Release shall operate as a clear and unequivocal waiver by Executive of any
claim for accrued or unpaid wages, benefits or any other type of payment other
than as provided under the Agreement and any employee benefit plan of the
Company in which Executive is a participant. It is the intention of the parties
to make this release as broad and as general as the law permits as to the claims
released hereunder.
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2. Executive further agrees and recognizes that he has
permanently and irrevocably severed his employment relationship with the
Company, that he shall not seek employment with the Company or any affiliated
entity at any time in the future, and that the Company has no obligation to
employ him in the future.
3. The parties agree and acknowledge that the Agreement, and the
settlement and termination of any asserted or unasserted claims against the
Releasees pursuant to the Agreement, are not and shall not be construed to be an
admission of any violation of any federal, state or local statute or regulation,
or of any duty owed by any of the Releasees to Executive.
4. Executive certifies and acknowledges as follows:
a. That he has read the terms of this Release, and that he
understands its terms and effects, including the fact that he has agreed to
RELEASE AND FOREVER DISCHARGE all Releasees from any legal action or other
liability of any type related in any way to the matters released pursuant to
this Release other than as provided in the Agreement and in this Release;
b. That he has signed this Release voluntarily and knowingly in
exchange for the consideration described herein, which he acknowledges is
adequate and satisfactory to him and which he acknowledges is in addition to any
other benefits to which he is otherwise entitled;
c. That he has been and is hereby advised in writing to consult
with an attorney prior to signing this Release;
d. That he does not waive rights or claims that may arise after
the date this Release is executed;
e. That he has been informed that he has the right to consider
this Release and Waiver of Claims for a period of 21 days from receipt, and he
has signed on the date indicated below after concluding that this Release and
Waiver of Claims is satisfactory to him; and
f. That neither the Company, nor any of its directors, employees,
or attorneys, has made any representations to him concerning the terms or
effects of this Release and Waiver of Claims other than those contained herein.
g. That he has not filed, and will not hereafter file, any claim
against the Company relating to his employment and/or cessation of employment
with the Company, or otherwise involving facts that occurred on or prior to the
date that Executive has signed this Release and Waiver of Claims, other than a
claim that the Company has failed to pay Executive the Severance Payments or
benefits due under any employee benefit plan of the Company in which Executive
is a participant.
23
h. That if he commences, continues, joins in, or in any other
manner attempts to assert any claim released herein against the Company, or
otherwise violates the terms of this Release and Waiver of Claims, (i) the
Executive will cease to have any further rights to Severance Payments from the
Company, and (ii) the Executive shall be required to return any Severance
Payments made to the Executive by the Company (together with interest thereon).
i. Executive acknowledges that he may later discover facts
different from or in addition to those which he knows or believes to be true
now, and he agrees that, in such event, this Release and Waiver of Claims shall
nevertheless remain effective in all respects, notwithstanding such different or
additional facts or the discovery of those facts.
5. This Release and Waiver of Claims may not be introduced in any
legal or administrative proceeding, or other similar forum, except one
concerning a breach of this Release and Waiver of Claims.
6. This Release and Waiver of Claims and the Agreement constitute
the complete understanding between Executive and the Company concerning the
subject matter hereof. No other promises or agreements will be binding unless
signed by Executive and the Company.
7. In the event that any provision or portion of this Release and
Waiver of Claims shall be determined to be invalid or unenforceable for any
reason, the remaining provisions or portions of this Release and Waiver of
Claims shall be unaffected thereby and shall remain in full force and effect to
the fullest extent permitted by law.
8. The respective rights and obligations of the parties hereunder
shall survive termination of this Release and Waiver of Claims to the extent
necessary for the intended preservation of such rights and obligations.
9. This Release and Waiver of Claims shall be governed by and
construed and interpreted in accordance with the laws of the State of Delaware
without reference to the principles of conflict of law.
10. Executive also understands that he has the right to revoke
this Release and Waiver of Claims within 7 days after execution, and that this
Release and Waiver of Claims will not become effective or enforceable until the
revocation period has expired, by giving written notice to the following:
Strategic Hotel Capital, Inc.
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Attention: General Counsel
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
24
IN WITNESS WHEREOF, and intending to be legally bound hereby, the
parties execute the foregoing Release and Waiver of Claims:
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