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EXHIBIT 10.1
March 21, 2001
CONFIDENTIAL
Xx. Xxxx X. Xxxxxx
00 Xxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
RE: EMPLOYMENT AGREEMENT
Dear Glyn:
It is my pleasure to confirm to you in this Employment Agreement ("Agreement")
the terms of your employment with Interstate Hotels Corporation ("Interstate"),
a Maryland corporation (the "Company") as Executive Vice President, Business
Development and Acquisitions.
TERM OF AGREEMENT
This Employment Agreement commences on March 29, 2001, and shall continue at the
will of the Company in accordance with the section of this Agreement captioned
Termination.
DUTIES AND RESPONSIBILITIES
As Executive Vice President, Business Development and Acquisitions, you will
report to the Vice Chairman and Chief Financial Officer and be a member of the
Executive Committee of the Company. You will perform such duties assigned to you
by the Vice Chairman and Chief Financial Officer or other executive officers of
the Company. The Company may change or modify your duties and responsibilities
with good reason.
While employed by the Company, you shall faithfully and diligently perform your
duties. At all times you shall exhibit the highest level of professional loyalty
for the Company, its shareholders, directors, officers, and employees.
COMPENSATION
Your compensation shall consist of the following:
1. Base Salary. It is understood that your Base Salary will be Eight
Thousand Four Hundred Sixty-one and 53/100 Dollars ($8,461.53)
bi-weekly. At the Company's discretion, the Base Salary may be adjusted
to reflect merit increases based on your performance and other relevant
circumstances. The Company will recognize
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a March __, 2002 review date, which will be a review of performance
and/or merit.
2. Cash Performance Bonus. You shall be eligible for a Performance Bonus
based upon the Schedule attached to this Agreement as Exhibit "A". The
payment of any bonus is subject to, and contingent upon, the approval
of the Board of Directors. The precise method of the bonus
calculations, and specific amount of the bonus shall be at the sole
discretion of the Company and the Company has the right to alter, amend
or terminate the bonus plan.
3. Stock Options. Upon your commencement of employment with the Company,
you will receive thirty thousand (30,000) stock option shares of the
Company's common stock with an exercise price of $2.25 per option
share. The option shares shall vest to the extent of one-third of the
option shares on each of the first three anniversaries of your
employment with the Company. All aspects of the vesting, issuance and
administration of the option shares will be subject to the terms of the
Company's Equity Incentive Plan.
BENEFITS
1. Health and Welfare. While employed by The Company, you shall be
eligible to participate in any of The Company's health, dental and
other insurance programs applicable to salaried employees. The Company
shall pay a portion of the health care premium and you shall pay the
remainder. If you are currently enrolled in any of The Company's health
care plans, your current benefits will remain in effect with no lapse
in coverage. If you are currently employed by The Company and are not
enrolled in any of The Company's health care plans, you may apply as a
late entrant in November each year. If you apply as a Late Entrant
prior to the deadline in November, your coverage would become effective
on the subsequent January 1. You may also apply as a Special Enrollee
if you apply within thirty (30) days of either the involuntary loss of
other health care coverage or within thirty (30) days of acquiring a
new dependent as a result of marriage, birth, adoption or placement for
adoption.
For all new enrollees, the plan imposes a preexisting condition
limitation. For New Enrollees and Special Enrollees, expenses related
to a preexisting condition will not be considered if they are incurred
within the first consecutive twelve (12) months beginning with the
earlier of the first day of your waiting period or the first day of
participation on the plan. For Late Entrants, expenses related to a
pre-existing condition will not be considered if the expenses are
incurred within the first consecutive eighteen (18) months beginning
with the first day of your participation on the plan. The period of any
preexisting exclusion that would otherwise apply to you or your
dependents under the health care plan is reduced by the number of days
of creditable coverage you or your dependants have as of the enrollment
date in the plan.
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The current rate for employee contributions for family coverage under
the highest level plan is approximately Fifty Five Dollars and Seventy
Five Cents ($55.75) per week. Associate coverage under the highest
level plan is approximately Twenty-Eight Dollars and Sixty Cents
($28.60) per week. For associates covering themselves plus one or two
children, the highest level plan is approximately Forty-Five Dollars
and Thirty Cents ($45.30) per week.
2. Life and Accidental Death and Dismemberment Insurance. You
automatically receive Life and Accidental Death and Dismemberment
Insurance at no additional cost UPON COMMENCEMENT OF YOUR PARTICIPATION
IN ONE OF THE COMPANY'S HEALTH PLANS. Both Life and Accidental Death
and Dismemberment Insurance are in the amount of $500,000.
3. Long-Term Disability (LTD) Insurance. You are eligible to purchase
Long-Term Disability Insurance beginning the first day of the month
after you complete ninety (90) days of full-time service. You shall pay
the premium for Long-Term Disability Insurance in accordance with the
terms and provisions of the applicable policies.
4. Salary Continuance. If you become medically disabled, you will receive
Salary Continuance in accordance with the terms and provisions of the
applicable policies. No additional cost will be incurred UPON
COMMENCEMENT OF YOUR PARTICIPATION IN THE LONG-TERM DISABILITY PLAN.
5. Travel Accident Insurance. You are eligible to receive Travel Accident
Insurance in accordance with the terms and provisions of the applicable
policies. Your position entitles you to additional optional air travel
benefits (for a nominal personal cost). An enrollment form is enclosed.
You must complete this form, even if it is just to decline this
additional coverage.
6. Car Allowance. You shall receive a bi-weekly car allowance of Three
Hundred Thirty-six Dollars and Ninety-two Cents ($336.92). This
allowance shall be processed through payroll and subject to all
applicable taxes.
7. Executive Retirement Plan. Your position entitles you to participate in
the Interstate Hotels Executive Retirement Plan. Under the current
Plan, the annual contribution to your account will equal 8% of your
Base Salary earned during the year. All aspects of the contribution,
vesting, distribution, and administration of the Plan will be governed
by the terms of the Plan then in effect.
8. Additional Benefits. With the approval of the Board of Directors, new
or enhanced programs such as Stock Options Stock Purchase Programs may
be made available. At such time, you will be eligible to participate at
the Vice President level. All aspects of the contributions, vesting
distribution, and administration of such plans will be governed by the
terms of the plans if and when in effect.
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9. Vacation. You will be entitled to not less than twenty days of paid
vacation per year. However, you may take a reasonable amount of paid
vacation in addition to that provided by the foregoing, consistent with
your personal needs, and the requirements of your job subject to the
approval of your supervisor.
CONFIDENTIALITY
You acknowledge and agree that any and all Intellectual Property and Proprietary
Information of the Company or which relates to, directly or indirectly, the
business or operations of the Company, is and shall be the exclusive property of
the Company. You shall not disclose such Proprietary Information or any other
confidential information to anyone not employed by the Company without the
express written permission of the Company. You agree that this obligation will
continue after the expiration of this Agreement until such Proprietary
Information becomes public information as a result of having been publicized by
the Company. Proprietary Information is defined as all papers, books and records
of every kind and description relating to the business affairs of the Company,
whether or not prepared by you, shall be the sole and exclusive property of the
Company, and you shall surrender them to the Company at any time upon request of
the Company.
For the purposes of the Agreement, the term "Intellectual Property" shall be
defined as suggestions, patents, plans, proposals, inventions, improvements,
processes, designs, logos, symbols, trademarks, service marks, trade names,
writings, documents, notes, sketches, manuals, graphics, marketing materials,
and any copyrighted materials.
NONSOLICITATION, NONPIRACY AND NONCOMPETITION
During a period which ends six (6) months after the termination of this
Agreement, you shall not (i) directly or indirectly, either yourself or anyone
else solicit any customer of the Company or any hotel managed or owned by the
Company for the purpose of selling to such customer any services provided by the
Company or any hotel managed or owned by the Company or (ii) solicit or endeavor
to cause any employee of the Company or any affiliated or related entity to
leave his/her employment with the Company or induce or attempt to induce any
such employee to breach any employment agreement with the Company or any
affiliated or related entity or otherwise interfere with the employment of any
such employee or (iii) work for any company that competes with the Company.
TERMINATION
1. Termination Provisions. Notwithstanding anything herein to the
contrary, both you and the Company have the right to terminate your
employment at any time, with or without cause, and with or without
notice during the term of this Employment Agreement. The term "Cause"
shall include, but is not limited to: breach of this Agreement; theft;
drunkenness; drug use; fraud; harassment; conflict of interest; gross
negligence; willful misconduct; insubordination; or any
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other act
constituting "gross misconduct" as defined from time to time in the
Company's Associate Handbook.
2. No-Fault Separation. If the Company separates your employment without
Cause, including as a result of change of control (as defined below in
Section 3 hereof), you will receive no-fault separation pay ("No-Fault
Separation Pay"), as a full settlement of any and all of the Company's
obligations to you. However, you will not receive No-Fault Separation
pay if your employment ends with the Company due to cause or as a
result of the progressive discipline policy contained within the
Company's Associate Handbook. The provisions of your No-Fault
Separation Pay are described as follows:
(a) Commencing the week following the date of termination, the
Company will pay to you a lump sum equal to your Base Salary
for a period of six (6) months.
(b) The Company will reimburse you the cost of your COBRA coverage
for a period of six (6) months.
(c) The Company will pay to you your car allowance for a period of
six (6) months.
(d) In no event will you be reimbursed for any of your vested or
unvested sick days or vacation.
(e) You will receive a pro-rata payment (based upon the date of
separation of employment) of any portion of your Performance
Bonus relating to previously completed transactions and
allocable to the then-current calendar year.
You agree to accept your No-Fault Separation Pay as your complete and exclusive
relief for a breach or termination of this Employment Agreement by the Company.
3. Change of Control. In the event that a change of control of the Company
results in the termination of your employment, without cause, and such
termination occurs within one year after such change of control, you
shall receive from the Company a lump sum payment equal to your Base
Salary for the six month period immediately preceding such termination
of employment.
"Change of Control" shall mean the occurrence of any one of the
following events:
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(i) any Person, as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the "Act")
(other than the Company, any of its subsidiaries, or any trustee,
fiduciary or other person or entity holding securities under any
employee benefit plan or trust of the Company or any of its
subsidiaries), together with all "affiliates" and "associates" (as such
terms are defined in Rule 12b-2 under the Act) of such person, shall
become the "beneficial owner" (as such term is defined in Rule 13d-3
under the Act), directly or indirectly, of securities of the Company
representing fifty percent (50%) or more of the combined voting power
of the Company's then outstanding securities having the right to vote
in an election of the Company's Board of Directors ("Voting
Securities") (in such case other than as a result of an acquisition of
securities directly from the Company); or
(ii) the stockholders of the Company shall approve (A) any
consolidation or merger of the Company where the stockholders of the
Company, immediately prior to the consolidation or merger, would not,
immediately after the consolidation or merger, beneficially own (as
such term is defined in Rule 13d-3 under the Act), directly or
indirectly, shares representing in the aggregate more than 50 percent
of the voting shares of the corporation issuing cash or securities in
the consolidation or merger (or of its ultimate parent corporation, if
any), (B) any sale, lease, exchange or other transfer (in one
transaction or a series of transactions contemplated or arranged by any
party as a single plan) of all or substantially all of the assets of
the Company or (C) any plan or proposal for the liquidation or
dissolution of the Company.
Notwithstanding the foregoing, a "Change of Control" shall not be
deemed to have occurred for purposes of the foregoing clause (i) solely as the
result of an acquisition of securities by the Company which, by reducing the
number of shares of Voting Securities outstanding, increases the proportionate
number of shares of Voting Securities beneficially owned by any person to 50
percent or more of the combined voting power of all then outstanding Voting
Securities; provided, however, that if any person referred to in this sentence
shall thereafter become the beneficial owner of any additional shares of Voting
Securities (other than pursuant to a stock split, stock dividend, or similar
transaction or as a result of an acquisition of securities directly from the
Company), then a "Change of Control" shall be deemed to have occurred for
purposes of the foregoing clause (i).
ARBITRATION
If a dispute arises between you and the Company regarding your employment, you
and the Company agree that the dispute shall be submitted to arbitration by the
American Arbitration Association according to the following procedures:
1. Selection of an Arbitrator. The Company shall request from the American
Arbitration Association a list of the names of five (5) impartial
arbitrators. The
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arbitrator shall be chosen by the Company and you, in turn, striking a
name from the list until one name remains. The expenses of the
arbitrator shall be borne equally by the Company and you, and each
party shall bear its own preparation and presentation expenses.
2. Arbitrator Limited to Terms of the Agreement. The arbitrator shall not
have the power to add to, ignore, or modify any of the terms or
conditions of this Employment Agreement.
The arbitrator's decisions shall not go beyond what is necessary for
the interpretation and application of this Agreement in the case of the
specific termination at issue. The arbitrator shall not substitute
his/her judgment for that of the parties in the exercise of rights
granted or retained by this Agreement. An award by the arbitrator shall
not exceed the specific provisions for No-Fault Separation Pay. The
arbitrator's award and decision shall be based upon the issue as
drafted and submitted by the Company and the relevant and competent
evidence adduced at the hearing. The arbitrator's written decision
shall be rendered within sixty (60) days of the hearing.
3. Final and Binding. The decision reached by the arbitrator concerning
the termination shall be final and binding upon the parties as to the
matter in dispute. The parties agree that the decision shall be
enforceable in a court of law, and that this arbitration procedure
shall be the exclusive procedure for challenging the exercise of the
termination section of this Agreement.
4. Locale. The arbitration shall take place in Pittsburgh, Pennsylvania.
NO VESTED INTEREST
You shall acquire no vested interest in any rights or benefits granted in this
Employment Agreement which are not subject to being changed, revised, or
divested in accordance with this Employment Agreement, the rules of the Board of
Directors of the Company or the decision of the shareholders of the Company. All
rights or benefits which you acquire under the terms of this Employment
Agreement shall extend only for the duration of this Employment Agreement.
CITIZENSHIP VERIFICATION
You will provide to the Company verification of your eligibility to work in the
United States in accordance with the Immigration Reform and Control Act of 1986.
ENTIRE AGREEMENT
This Employment Agreement represents the entire agreement between you and the
Company and shall supersede any and all previous verbal or written contracts,
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arrangements or understandings between the parties. Your acceptance of this
Agreement will confirm your acknowledgement that no representations or
commitments regarding the terms of your employment by the Company have been made
by or on behalf of the Company except as expressly provided in this Employment
Agreement. The terms of your employment may only be modified by me or another
executive officer of the Company in writing.
Please acknowledge your acceptance of the foregoing by executing the enclosed
copy of this Agreement at the place indicated below and returning it in the
enclosed envelope no later than five (5) days upon receipt of this Agreement.
Sincerely,
INTERSTATE HOTELS CORPORATION
/s/ J. Xxxxxxx Xxxxxxxxxx
------------------------------------
J. Xxxxxxx Xxxxxxxxxx
Vice Chairman and Chief Financial Officer
JWR/khp
Attachment
c: Xxx Xxxxxx
Xxx Xxxxx
Xxxxx Xxxxxxx
Xxxx Xxxxxx
ACCEPTED AND AGREED TO:
By: /s/ Xxxx X. Xxxxxx Dated: March 29, 2001
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Xxxx X. Xxxxxx
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EXHIBIT A
EXECUTIVE VICE PRESIDENT, BUSINESS DEVELOPMENT AND ACQUISITIONS
BONUS CRITERIA
Bonus will be paid on all deals closed by the Company after commencement of
employment except for the Host transaction and any transactions that are in very
advanced stages of closing.
The following will be the formula for bonus payments:
1. New Management Contracts - No Investment by IHC - A bonus payment of 5%
of fees collected. The bonus will be paid for 3 years or the term of
the contract, whichever is shorter.
2. Management Contracts with Investments - Paid as in #1 above but the
bonus percentage is 3%.
3. Minority Investments for IHC - A bonus of 10% of IHC cash flows will be
paid after IHC receives a 12% return on its investment. This will be
paid for 5 years or the term of the equity investment, whichever is
shorter.
4. A phantom tracking interest tied to capital events will exist relative
to IHC's interest in the joint venture with the investor group. All
costs of capital that IHC incurs will be a deduct in arriving at the
payout. The interest will be 1.5% of IHC's returns until IHC achieves a
30% IRR, 2% thereafter.
5. In addition to the above, you will be eligible for an annual bonus
payment (the plan to be determined) from 0-25% of base salary. This
payment will be at the sole discretion of the Company.
