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Exhibit 10.59
SEVERANCE AGREEMENT
THIS AGREEMENT, dated June 9, 2000 (the "Effective Date"), is
made by and between Starwood Hotels and Resorts Worldwide, Inc., a Maryland
corporation (the "Company"), and Xxxxx Xxxxxx (the "Executive").
WHEREAS, the Executive is employed by the Company as Executive
Vice President, Human Resources; and
WHEREAS, the Company considers it essential to the best
interests of its stockholders to xxxxxx the continued employment of key
management personnel; and
WHEREAS, the Board recognizes that, as is the case with many
publicly held corporations, the possibility of a Change in Control exists and
that such possibility, and the uncertainty and questions which it may raise
among management, may result in the departure or distraction of senior
management personnel to the detriment of the Company and its stockholders; and
WHEREAS, the Board has determined that appropriate steps
should be taken to reinforce and encourage the continued attention and
dedication of members of the Company's senior management, including the
Executive, to their assigned duties without distraction in the face of
potentially disturbing circumstances arising from the possibility of a Change in
Control.
NOW, THEREFORE, the Company and the Executive hereby agree as
follows:
1. Defined Terms. The definitions of capitalized terms used in this
Agreement are provided in the last Section hereof.
2. Term of Agreement. The Term of this Agreement shall commence on the
Effective Date and shall continue in effect through the third anniversary of the
Effective Date; provided, however, that on each anniversary of the Effective
Date during the Term of this Agreement, the Term shall automatically be extended
for one additional year unless, not later than 90 days prior to any such
anniversary, the Company or the Executive shall have given notice not to extend
the Term; and further provided, however, that if a Change in Control or a
Potential Change in Control shall have occurred during the Term, the Term shall
expire no earlier than twenty-four (24) months beyond the month in which such
Change in Control or a Potential Change in Control occurred.
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3. Company's Covenants Summarized. In order to induce the Executive to
remain in the employ of the Company and in consideration of the Executive's
covenants set forth in Section 4 hereof, the Company agrees, under the
conditions described herein, to pay the Executive the Severance Payments and the
other payments and benefits described herein. Except as provided in Section 10
hereof, no Severance Payments shall be payable under this Agreement unless
during the Term there shall have been (or, under the terms of the second
sentence of Section 6 hereof, there shall be deemed to have been) a termination
of the Executive's employment with the Company following a Change in Control.
This Agreement shall not be construed as creating an express or implied contract
of employment and, except as otherwise agreed in writing between the Executive
and the Company, the Executive shall not have any right to be retained in the
employ of the Company.
4. The Executive's Covenants. The Executive agrees that, subject to the
terms and conditions of this Agreement, in the event a Potential Change in
Control occurs during the Term, the Executive will remain in the employ of the
Company until the earliest of (i) a date which is six (6) months from the date
of such Potential Change of Control, (ii) the date of a Change in Control, (iii)
the date of termination by the Executive of the Executive's employment for Good
Reason or by reason of death, Disability or Retirement, or (iv) the termination
by the Company of the Executive's employment for any reason.
5. Compensation Other Than Severance Payments.
a. Payment of Salary During Disability. Following a Change in
Control and during the Term, during any period that the Executive is unable to
perform the Executive's full-time duties with the Company as a result of
incapacity due to physical or mental illness, the Company shall pay to the
Executive the full salary to which the Executive is entitled at the rate in
effect at the commencement of any such period, together with all compensation
and benefits payable to the Executive under the terms of any compensation or
benefit plan, program or arrangement maintained by the Company during such
period, until the Executive's employment is terminated by the Company for
Disability.
b. Accrued Salary. If the Executive's employment shall be
terminated for any reason following a Change in Control and during the Term, the
Company shall pay to the Executive such Executive's full salary through the Date
of Termination at the rate in effect immediately prior to the Date of
Termination or, if higher, the rate in effect immediately prior to the first
occurrence of an event or circumstance constituting Good Reason, together with
all compensation and benefits payable to the Executive through the Date of
Termination under the terms of the Company's compensation and benefit plans,
programs or arrangements as in effect immediately prior to the Date of
Termination or, if more favorable to the Executive, as in effect immediately
prior to the first occurrence of an event or circumstance constituting Good
Reason.
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c. Post-Termination Benefits. If the Executive's employment
shall be terminated for any reason following a Change in Control and during the
Term, the Company shall pay to the Executive the Executive's normal
post-termination compensation and benefits as such payments become due. Such
post-termination compensation and benefits shall be determined under, and paid
in accordance with, the Company's retirement, insurance and other compensation
or benefit plans, programs and arrangements as in effect immediately prior to
the Date of Termination or, if more favorable to the Executive, as in effect
immediately prior to the occurrence of the first event or circumstance
constituting Good Reason.
6. Severance Payments.
a. If the Executive's employment is terminated following a
Change in Control and during the Term, other than (A) by the Company for Cause,
(B) by reason of death or Disability, or (C) by the Executive without Good
Reason, then, in any such case, the Company shall pay the Executive the amounts,
and provide the Executive the benefits, described in this Section 6 ("Severance
Payments") and Section 7, in addition to any payments and benefits to which the
Executive is entitled under Section 5 hereof. For purposes of this Agreement,
the Executive's employment shall be deemed to have been terminated following a
Change in Control by the Company without Cause or by the Executive with Good
Reason, if (i) the Executive's employment is terminated by the Company without
Cause prior to a Change in Control (whether or not a Change in Control ever
occurs) and such termination was at the request or direction of a Person who has
entered into an agreement with the Company the consummation of which would
constitute a Change in Control (an "Acquiring Person"), (ii) the Executive
terminates his employment for Good Reason prior to a Change in Control (whether
or not a Change in Control ever occurs) and the circumstance or event which
constitutes Good Reason occurs at the request or direction of an Acquiring
Person, or (iii) the Executive's employment is terminated by the Company without
Cause or by the Executive for Good Reason and such termination or the
circumstance or event which constitutes Good Reason is otherwise in connection
with or in anticipation of a Change in Control (whether or not a Change in
Control ever occurs). For purposes of any determination regarding the
applicability of the immediately preceding sentence, any position taken by the
Executive shall be presumed to be correct unless the Company establishes to the
Board by clear and convincing evidence that such position is not correct.
(1) Lump Sum Payment. In lieu of any further salary
payments to the Executive for periods subsequent to the Date of
Termination and in lieu of any severance benefit otherwise payable to
the Executive, the Company shall pay to the Executive a lump sum
severance payment, in cash, equal to two times the sum of (i) the
Executive's base salary as in effect immediately prior to the Date of
Termination or, if higher, in effect
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immediately prior to the first occurrence of an event or circumstance
constituting Good Reason, and (ii) the average of the annual bonuses
earned by the Executive in the three fiscal years ending immediately
prior to the fiscal year in which occurs the Date of Termination or, if
higher, immediately prior to the fiscal year in which occurs the first
event or circumstance constituting Good Reason. For purposes of the
preceding sentence, in determining any bonus amount for any fiscal
year, bonuses paid with respect to any year in which employment of the
Executive commenced shall be annualized based on the number of days
employed by the Company during such year.
(2) Continuation of Welfare Benefits. For the twenty-four
(24) month period immediately following the Date of Termination, the
Company shall arrange to provide the Executive and his dependents
life, disability, accident and health insurance benefits and other
benefits and perquisites (including employee stay rates) substantially
similar to those provided to the Executive and his dependents
immediately prior to the Date of Termination or, if more favorable to
the Executive, those provided to the Executive and his dependents
immediately prior to the first occurrence of an event or circumstance
constituting Good Reason, at no greater cost to the Executive than the
cost to the Executive immediately prior to such date or occurrence.
Benefits otherwise receivable by the Executive pursuant to this
Section 6(a)(2) shall be reduced to the extent benefits of the same
type are received by the Executive from another employer during the
twenty-four (24) month period following the Executive's termination of
employment; provided, however, that the Company shall reimburse the
Executive for the excess, if any, of the cost of such benefits to the
Executive over such cost immediately prior to the Date of Termination
or, if more favorable to the Executive, the first occurrence of an
event or circumstance constituting Good Reason.
(3) Incentive Compensation. Notwithstanding any provision
of any annual or long-term incentive plan to the contrary, the Company
shall pay to the Executive a lump sum amount, in cash, equal to the
sum of (i) any unpaid incentive compensation which has been allocated
or awarded to the Executive for a completed fiscal year or other
measuring period preceding the Date of Termination under any such plan
and which, as of the Date of Termination, is contingent only upon the
continued employment of the Executive to a subsequent date, and (ii)
the aggregate value of all contingent incentive compensation awards
allocated or awarded to the Executive for all then uncompleted periods
under any such plan that the Executive would have earned on the last
day of the performance award period, assuming the achievement, at the
target level, of the individual and corporate performance goals
established with respect to such award. Awards
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for uncompleted periods shall be prorated based upon the number of days
the Executive is employed by the Company during such year.
(4) Accelerated Vesting of Stock Options. All stock
options and restricted stock held by the Executive under any stock
option or incentive plan maintained by the Company (including the
Company's 1995 and 1999 Long-Term Incentive Plans) shall immediately
vest and become exercisable as of the Date of Termination, to be
exercised in accordance with the terms of the applicable plan.
(5) Outplacement Services. The Company shall provide the
Executive with outplacement services suitable to the Executive's
position for a period of two (2) years or, if earlier, until the first
acceptance by the Executive of an offer of employment. The cost of
such outplacement services shall not exceed twenty percent (20%) of
the Executive's base salary.
(6) Deferred Compensation. The Company shall pay the
Executive a lump sum payment of any of the Executive's deferred
compensation.
(7) 401(k) Contributions. All unvested 401(k)
contributions in the Executive's 401(k) account shall immediately vest
or the Company shall pay the Executive an amount equal to any such
unvested amounts that are forfeited by reason of the Executive's
termination of employment.
(8) Loans. The Company shall forgive in full any home,
relocation and other loans from the Company to the Executive,
identified on Schedule A hereto, that are outstanding as of the Date
of Termination and execute and record any investments and documents
necessary or desirable to evidence the satisfaction in full of such
loans and the release of any lien securing such loan. In addition, the
Company shall pay to Executive an amount required, in the good faith
estimate of Executive's tax advisor, to permit Executive to pay any
income tax incurred by Executive as a result of such loan forgiveness
and the payment of such additional amounts by the Company.
7. 280G Cap.
a. Notwithstanding any other provisions of this Agreement, in
the event that any payment or benefit received or to be received by the
Executive in
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connection with a Change in Control or the termination of the
Executive's employment (whether pursuant to the terms of this Agreement
or any other plan, arrangement or agreement with the Company, any
Person whose actions result in a Change in Control or any Person
affiliated with the Company or such Person) (all such payments and
benefits, including the Severance Payments, being hereinafter called
"Total Payments") would not be deductible (in whole or part), by the
Company, an affiliate or Person making such payment or providing such
benefit as a result of section 280G of the Code, then, to the extent
necessary to make such portion of the Total Payments deductible (and
after taking into account any reduction in the Total Payments provided
by reason of section 280G of the Code in such other plan, arrangement
or agreement), the cash Severance Payments shall first be reduced (if
necessary, to zero), and all other Severance Payments shall thereafter
be reduced (if necessary, to zero); provided, however, that the
Executive may elect to have the noncash Severance Payments reduced (or
eliminated) prior to any reduction of the cash Severance Payments.
b. For purposes of this limitation, (i) no portion of the
Total Payments the receipt or enjoyment of which the Executive shall
have waived at such time and in such manner as not to constitute a
"payment" within the meaning of section 280G(b) of the Code shall be
taken into account, (ii) no portion of the Total Payments shall be
taken into account which, in the opinion of tax counsel ("Tax Counsel")
reasonably acceptable to the Executive and selected by the accounting
firm which was, immediately prior to the Change in Control, the
Company's independent auditor (the "Auditor"), does not constitute a
"parachute payment" within the meaning of section 280G(b)(2) of the
Code, including by reason of section 280G(b)(4)(A) of the Code, (iii)
the Severance Payments shall be reduced only to the extent necessary so
that the Total Payments (other than those referred to in clauses (i) or
(ii)) in their entirety constitute reasonable compensation for services
actually rendered within the meaning of section 280G(b)(4)(B) of the
Code or are otherwise not subject to disallowance as deductions by
reason of section 280G of the Code, in the opinion of Tax Counsel, and
(iv) the value of any noncash benefit or any deferred payment or
benefit included in the Total Payments shall be determined by the
Auditor in accordance with the principles of sections 280G(d)(3) and
(4) of the Code.
c. If it is established pursuant to a final determination of a
court or an Internal Revenue Service proceeding that, notwithstanding
the good faith of the Executive and the Company in applying the terms
of this Section 7(c), the Total Payments paid to or for the Executive's
benefit are in an amount that would result in any portion of such Total
Payments being subject to the Excise Tax, then, if such repayment would
result in (i) no portion of the remaining Total Payments being subject
to the Excise Tax and (ii) a dollar-for-dollar reduction in the
Executive's taxable income and wages for purposes of federal, state and
local income and employment taxes, the Executive shall have an
obligation to pay the Company upon demand an amount equal to the sum of
(i) the excess of the Total Payments paid to or for the Executive's
benefit over the Total Payments that could have been paid to or
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for the Executive's benefit without any portion of such Total Payments
being subject to the Excise Tax; and (ii) interest on the amount set
forth in clause (i) of this sentence at the rate provided in section
1274(b)(2)(B) of the Code from the date of the Executive's receipt of
such excess until the date of such payment.
8. Termination Procedures and Compensation During Dispute.
a. Notice of Termination. After a Change in Control and during
the Term, any purported termination of the Executive's employment
(other than by reason of death) shall be communicated by written Notice
of Termination from one party hereto to the other party hereto in
accordance with Section 12 hereof. For purposes of this Agreement, a
"Notice of Termination" shall mean a notice which shall indicate the
specific termination provision in this Agreement relied upon and shall
set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's employment under the
provision so indicated. Further, a Notice of Termination for Cause is
required to include a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters (3/4) of the entire
membership of the Board at a meeting of the Board which was called and
held for the purpose of considering such termination (after reasonable
notice to the Executive and an opportunity for the Executive, together
with the Executive's counsel, to be heard before the Board) finding
that, in the good faith opinion of the Board, the Executive was guilty
of conduct set forth in clause (i) or (ii) of the definition of Cause
herein, and specifying the particulars thereof in detail.
b. Date of Termination. "Date of Termination," with respect to
any purported termination of the Executive's employment after a Change
in Control and during the Term, shall mean (i) if the Executive's
employment is terminated for Disability, thirty (30) days after Notice
of Termination is given (provided that the Executive shall not have
returned to the full-time performance of the Executive's duties during
such thirty (30) day period), and (ii) if the Executive's employment is
terminated for any other reason, the date specified in the Notice of
Termination (which, in the case of a termination by the Company, shall
not be less than thirty (30) days (except in the case of a termination
for Cause) and, in the case of a termination by the Executive, shall
not be less than fifteen (15) days nor more than sixty (60) days,
respectively, from the date such Notice of Termination is given).
c. Dispute Concerning Termination. If within fifteen (15) days
after any Notice of Termination is given, or, if later, prior to the
Date of Termination (as determined without regard to this Section
8(c)), the party receiving such Notice of Termination notifies the
other party that a dispute exists concerning the termination, the Date
of Termination shall be extended until the earlier of (i) the date on
which the Term ends or (ii) the date on which the dispute is finally
resolved, either by mutual written agreement of the parties or by a
final judgment, order or decree of an arbitrator or a court of
competent jurisdiction (which is not appealable or with respect to
which the time for appeal therefrom has expired and no appeal has been
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perfected); provided, however, that the Date of Termination shall be
extended by a notice of dispute given by the Executive only if such
notice is given in good faith and the Executive pursues the resolution
of such dispute with reasonable diligence.
d. Compensation During Dispute. If a purported termination
occurs following a Change in Control and during the Term and the Date
of Termination is extended in accordance with Section 8(c) hereof, the
Company shall continue to pay the Executive the full compensation in
effect when the notice giving rise to the dispute was given (including,
but not limited to, salary) and continue the Executive as a participant
in all compensation, benefit and insurance plans in which the Executive
was participating when the notice giving rise to the dispute was given,
until the Date of Termination, as determined in accordance with Section
8(c) hereof. Amounts paid under this Section 8(d) are in addition to
all other amounts due under this Agreement (other than those due under
Section 5(b) hereof) and shall not be offset against or reduce any
other amounts due under this Agreement.
9. No Mitigation. The Company agrees that, if the Executive's
employment with the Company terminates during the Term, the Executive is not
required to seek other employment or to attempt in any way to reduce any amounts
payable to the Executive by the Company pursuant to Section 6 hereof or Section
8(d) hereof. Further, the amount of any payment or benefit provided for in this
Agreement (other than Section 6(a)(2) hereof) shall not be reduced by any
compensation earned by the Executive as the result of employment by another
employer, by retirement benefits, by offset against any amount claimed to be
owed by the Executive to the Company, or otherwise.
10. Successors; Binding Agreement.
a. In addition to any obligations imposed by law upon any
successor to the Company, the Company will require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. Failure of the Company to obtain such assumption and agreement
prior to the effectiveness of any such succession shall be a breach of this
Agreement and shall entitle the Executive to compensation from the Company in
the same amount and on the same terms as the Executive would be entitled to
hereunder if the Executive were to terminate the Executive's employment for Good
Reason after a Change in Control, except that, for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination.
b. This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive shall die while
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any amount would still be payable to the Executive hereunder (other than amounts
which, by their terms, terminate upon the death of the Executive) if the
Executive had continued to live, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Agreement to the
executors, personal representatives or administrators of the Executive's estate.
11. Indemnification. The Company shall indemnify and hold Executive
harmless for acts and omissions in his capacity as an officer, director or
employee of the Company to the maximum extent permitted under applicable law.
The Company shall maintain a Director's and Officer's Liability Insurance
Policy, which shall provide liability coverage for Executive's benefit, and the
Executive shall remain covered under such policy for a period of at least six
(6) years following the earlier of termination of employment or the occurrence
of a Change in Control.
12. Notices. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed, if to the
Executive, to the address inserted below the Executive's signature on the final
page hereof and, if to the Company, to the address set forth below, or to such
other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon actual receipt:
To the Company:
Starwood Hotels and Resorts Worldwide, Inc.
000 Xxxxxxxxxxx Xxxxxx
Xxxxx Xxxxxx, XX 00000
Attention: General Counsel
13. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the Executive and such officer as may be specifically
designated by the Board. No waiver by either party hereto at any time of any
breach by the other party hereto of, or of any lack of compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. This Agreement supersedes any other
agreements or representations, oral or otherwise, express or implied, with
respect to the subject matter hereof which have been made by either party;
provided, however, that this Agreement shall supersede any agreement setting
forth the terms and conditions of the Executive's employment with the Company
only in the event that the Executive's employment with the Company is terminated
on or following a Change in Control, by the Company other than for Cause or by
the Executive other than for Good Reason. The validity, interpretation,
construction and performance of this
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Agreement shall be governed by the laws of the State of New York. All references
to sections of the Exchange Act or the Code shall be deemed also to refer to any
successor provisions to such sections. Any payments provided for hereunder shall
be paid net of any applicable withholding required under federal, state or local
law and any additional withholding to which the Executive has agreed. The
obligations of the Company and the Executive under this Agreement which by their
nature may require either partial or total performance after the expiration of
the Term (including, without limitation, those under Sections 6, 7, 8, and 9
hereof) shall survive such expiration.
14. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
15. Settlement of Disputes; Arbitration.
a. All claims by the Executive for benefits under this
Agreement shall be directed to and determined by the Board and shall be in
writing. Any denial by the Board of a claim for benefits under this Agreement
shall be delivered to the Executive in writing and shall set forth the specific
reasons for the denial and the specific provisions of this Agreement relied
upon. The Board shall afford a reasonable opportunity to the Executive for a
review of the decision denying a claim and shall further allow the Executive to
appeal to the Board a decision of the Board within sixty (60) days after
notification by the Board that the Executive's claim has been denied.
b. Any further dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
New York, in accordance with the rules of the American Arbitration Association
then in effect; provided, however, that the evidentiary standards set forth in
this Agreement shall apply. Judgment may be entered on the arbitrator's award in
any court having jurisdiction. Notwithstanding any provision of this Agreement
to the contrary, the Executive shall be entitled to seek specific performance of
the Executive's right to be paid until the Date of Termination during the
pendency of any dispute or controversy arising under or in connection with this
Agreement.
16. Definitions. For purposes of this Agreement, the following terms
shall have the meanings indicated below:
a. "Affiliate" shall have the meaning set forth in Rule 12b-2
promulgated under Section 12 of the Exchange Act.
b. "Auditor" shall have the meaning set forth in Section 7
hereof.
c. "Base Amount" shall have the meaning set forth in section
280G(b)(3) of the Code.
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d. "Beneficial Owner" shall have the meaning set forth in Rule
13d-3 under the Exchange Act.
e. "Board" shall mean the Board of Directors of the Company.
f. "Cause" for termination by the Company of the Executive's
employment shall mean (i) the willful and continued failure by the Executive to
substantially perform the Executive's duties with the Company after a written
demand for substantial performance is delivered to the Executive by the Board,
which demand specifically identifies the manner in which the Board believes that
the Executive has not substantially performed the Executive's duties, and
Executive has not cured any such failure that is capable of being cured in all
material respects within ten (10) days of receiving such written demand, or (ii)
the willful engaging by the Executive in conduct which is demonstrably and
materially injurious to the Company or its subsidiaries, monetarily or
otherwise. For purposes of clauses (i) and (ii) of this definition, (x) no act,
or failure to act, on the Executive's part shall be deemed "willful" unless
done, or omitted to be done, by the Executive not in good faith and without
reasonable belief that the Executive's act, or failure to act, was in the best
interest of the Company and (y) in the event of a dispute concerning the
application of this provision, no claim by the Company that Cause exists shall
be given effect unless the Company establishes to the Board by clear and
convincing evidence that Cause exists.
g. A "Change in Control" shall be deemed to have occurred if
the event set forth in any one of the following paragraphs shall have occurred:
(1) any Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company (not including in the
securities beneficially owned by such Person any securities acquired directly
from the Company or its affiliates) representing 25% or more of the combined
voting power of the Company's then outstanding securities, excluding any Person
who becomes such a Beneficial Owner in connection with a transaction described
in clause (i) of paragraph (3) below; or
(2) the following individuals cease for any reason to
constitute a majority of the number of directors then serving: individuals who,
on the date hereof, constitute the Board and any new director (other than a
director whose initial assumption of office is in connection with an actual or
threatened election contest, including but not limited to a consent
solicitation, relating to the election of directors of the Company) whose
appointment or election by the Board or nomination for election by the Company's
stockholders was approved or recommended by a vote of at least two-thirds (2/3)
of the directors then still in office who either were directors on the date
hereof or whose appointment, election or nomination for election was previously
so approved or recommended; or
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(3) there is consummated a merger or consolidation of the
Company or any direct or indirect subsidiary of the Company with any other
corporation, other than (i) a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior to such merger or
consolidation continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity or any parent
thereof), in combination with the ownership of any trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any
subsidiary of the Company, at least 70% of the combined voting power of the
securities of the Company or such surviving entity or any parent thereof
outstanding immediately after such merger or consolidation and in proportion to
their relative voting power immediately prior to such merger or consolidation,
or (ii) a merger or consolidation effected to implement a recapitalization of
the Company (or similar transaction) in which no Person is or becomes the
Beneficial Owner, directly or indirectly, of securities of the Company
representing 25% or more of the combined voting power of the Company's then
outstanding securities; or
(4) the stockholders of the Company approve a plan of
complete liquidation or dissolution of the Company or there is consummated an
agreement for the sale or disposition by the Company of all or substantially all
of the Company's assets, other than a sale or disposition by the Company of all
or substantially all of the Company's assets to an entity, at least 70% of the
combined voting power of the voting securities of which are owned by
stockholders of the Company in substantially the same proportions as their
ownership of the Company immediately prior to such sale. Notwithstanding the
foregoing, a "Change in Control" shall not be deemed to have occurred by virtue
of the consummation of any transaction or series of integrated transactions
immediately following which the record holders of the common stock of the
Company immediately prior to such transaction or series of transactions continue
to have substantially the same proportionate ownership in an entity which owns
all or substantially all of the assets of the Company immediately following such
transaction or series of transactions.
h. "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
i. "Company" shall mean Starwood Hotels and Resorts Worldwide,
Inc., and, except in determining under Section 17(g) hereof whether or not any
Change in Control of the Company has occurred, shall include any successor to
its business and/or assets which assumes and agrees to perform this Agreement by
operation of law, or otherwise.
j. "Date of Termination" shall have the meaning set forth in
Section 8 hereof.
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k. "Disability" shall be deemed the reason for the termination
by the Company of the Executive's employment, if, as a result of the Executive's
incapacity due to physical or mental illness, the Executive shall have been
absent from the full-time performance of the Executive's duties with the Company
for a period of six (6) consecutive months, the Company shall have given the
Executive a Notice of Termination for Disability, and, within thirty (30) days
after such Notice of Termination is given, the Executive shall not have returned
to the full-time performance of the Executive's duties.
l. "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended from time to time.
m. "Excise Tax" shall mean any excise tax imposed under
section 4999 of the Code.
n. "Executive" shall mean the individual named in the first
paragraph of this Agreement.
o. "Good Reason" for termination by the Executive of the
Executive's employment shall mean the occurrence (without the Executive's
express written consent) after any Change in Control, or prior to a Change in
Control under the circumstances described in clauses (ii) and (iii) of the
second sentence of Section 6(a) hereof (treating all references in paragraphs
(1) through (7) below to a "Change in Control" as references to a "Potential
Change in Control"), of any one of the following acts by the Company, or
failures by the Company to act, unless, in the case of any act or failure to act
described in paragraph (1), (5), (6) or (7) below, such act or failure to act is
corrected prior to the Date of Termination specified in the Notice of
Termination given in respect thereof:
(1) the assignment to the Executive of any duties
inconsistent with the Executive's status as a senior executive
officer of the Company or a substantial adverse alteration in
the nature or status of the Executive's responsibilities from
those in effect immediately prior to the Change in Control;
(2) a reduction by the Company in the Executive's
annual base salary as in effect on the date hereof or as the
same may be increased from time to time;
(3) the relocation of the Executive's principal place
of employment to a location more than 35 miles from the
Executive's principal place of employment immediately prior to
the Change in Control or the Company's requiring the Executive
to be based anywhere other than such principal place of
employment (or permitted relocation thereof) except for
required travel on the Company's
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business to an extent substantially consistent with the
Executive's present business travel obligations;
(4) the failure by the Company to pay to the
Executive any portion of the Executive's current compensation,
or to pay to the Executive any portion of an installment of
deferred compensation under any deferred compensation program
of the Company, within seven (7) days of the date such
compensation is due;
(5) the failure by the Company to continue in effect
any compensation plan in which the Executive participates
immediately prior to the Change in Control which is material
to the Executive's total compensation, including but not
limited to the Company's stock option, bonus and other plans
or any substitute plans adopted prior to the Change in
Control, unless an equitable arrangement (embodied in an
ongoing substitute or alternative plan) has been made with
respect to such plan, or the failure by the Company to
continue the Executive's participation therein (or in such
substitute or alternative plan) on a basis not materially less
favorable, both in terms of the amount or timing of payment of
benefits provided and the level of the Executive's
participation relative to other participants, as existed
immediately prior to the Change in Control;
(6) the failure by the Company to continue to provide
the Executive with benefits substantially similar to those
enjoyed by the Executive under any of the Company's pension,
savings, life insurance, medical, health and accident, or
disability plans in which the Executive was participating
immediately prior to the Change in Control, the taking of any
other action by the Company which would directly or indirectly
materially reduce any of such benefits or deprive the
Executive of any material fringe benefit enjoyed by the
Executive at the time of the Change in Control, or the failure
by the Company to provide the Executive with the number of
paid vacation days to which the Executive is entitled on the
basis of years of service with the Company in accordance with
the Company's normal vacation policy or any employment
agreement in effect at the time of the Change in Control; or
(7) any purported termination of the Executive's
employment which is not effected pursuant to a Notice of
Termination satisfying the requirements of Section 8(a)
hereof; for purposes of this Agreement, no such purported
termination shall be effective.
The Executive's right to terminate the Executive's employment
for Good Reason shall not be affected by the Executive's incapacity due to
physical or
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mental illness. The Executive's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any act or failure to act
constituting Good Reason hereunder.
For purposes of any determination regarding the existence of
Good Reason, any claim by the Executive that Good Reason exists shall be
presumed to be correct unless the Company establishes to the Board by clear and
convincing evidence that Good Reason does not exist.
p. "Notice of Termination" shall have the meaning set forth in
Section 8 hereof.
q. "Person" shall have the meaning given in Section 3(a)(9) of
the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof,
except that such term shall not include (i) the Company or any of its
subsidiaries, (ii) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any of its Affiliates, (iii) an
underwriter temporarily holding securities pursuant to an offering of such
securities, or (iv) a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company.
r. "Potential Change in Control" shall be deemed to have
occurred if the event set forth in any one of the following paragraphs shall
have occurred:
(8) the Company enters into an agreement, the
consummation of which would result in the occurrence of a
Change in Control;
(9) the Company or any Person publicly announces an
intention to take or to consider taking actions which, if
consummated, would constitute a Change in Control;
(10) any Person becomes the Beneficial Owner,
directly or indirectly, of securities of the Company
representing 15% or more of either the then outstanding shares
of common stock of the Company or the combined voting power of
the Company's then outstanding securities (not including in
the securities beneficially owned by such Person any
securities acquired directly from the Company or its
affiliates); or
(11) the Board adopts a resolution to the effect
that, for purposes of this Agreement, a Potential Change in
Control has occurred.
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s. "Retirement" shall be deemed the reason for the termination
by the Executive of the Executive's employment if such employment is terminated
in accordance with the Company's retirement policy, including early retirement,
generally applicable to its salaried employees.
t. "Severance Payments" shall have the meaning set forth in
Section 6 hereof.
u. "Tax Counsel" shall have the meaning set forth in Section 7
hereof.
v. "Term" shall mean the period of time described in Section 2
hereof (including any extension, continuation or termination described therein).
w. "Total Payments" shall mean those payments so described in
Section 7 hereof.
STARWOOD HOTELS AND RESORTS
WORLDWIDE, INC.
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President
and General Counsel
Dated: June 12, 2000
EXECUTIVE
/s/ Xxxxx Xxxxxx
--------------------------------
Xxxxx Xxxxxx
Dated: June 9, 2000
Address:
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(Please print carefully)
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