EMPLOYMENT AGREEMENT
Exhibit 10.5
THIS EMPLOYMENT AGREEMENT (“Agreement”) is made by and between STARWOOD HOTELS & RESORTS
WORLDWIDE, INC., a Maryland corporation (the “Company”), and XXXXX X. XXXXXX (“Executive”), and is
dated as of August 2, 2007.
WHEREAS, the Company wishes to employ Executive, and Executive wishes to be employed by the
Company on the terms and conditions hereinafter set forth.
NOW, THEREFORE, for and in consideration of the mutual promises, covenants and obligations
contained herein, the Company and Executive agree as follows:
ARTICLE 1:
EMPLOYMENT AND DUTIES
1.1 Employment; Effective Date. The Company agrees to employ Executive and Executive
agrees to be employed by the Company on an interim basis, beginning as of April 1, 2007 (the
“Effective Date”) and continuing for the period of time set forth in Article 2 of this Agreement,
subject to the terms and conditions of this Agreement.
1.2 Position. From and after the Effective Date, the Company shall employ Executive
in the position of Chief Executive Officer, or in such other position as the parties mutually may
agree. The Executive acknowledges that his prospective employment will be subject to all policies
and practices of the Company as may currently exist or as may be curtailed, modified or implemented
from time to time. As Chief Executive Officer, Executive shall be the senior-most executive
officer of the Company, reporting directly to the Board, with the duties, responsibilities and
authority customarily associated with and consistent with such position
1.3 Duties and Services. Executive agrees to serve in the position referred to in
paragraph 1.2 and to perform diligently and to the best of his abilities the duties and services
appertaining to such offices as well as such additional duties and services appropriate to such
offices which the parties mutually may agree upon from time to time.
1.4 Executive Obligations. Executive shall devote his full business time, attention
and best efforts to the performance of his duties under this Agreement and shall not engage in any
other business activities except with the prior written approval of the Board; provided, however,
that Executive may engage in other activities that do not conflict with or interfere with the
performance of his duties and responsibilities hereunder, including, without limitation, (a)
investing his assets and funds, so long as the business of any such entity in which he shall make
his investments shall not be in direct competition with that of the Company (except that Executive
may invest in an entity in competition with the Company if its stock is listed for trading on a
national stock exchange or traded in the over-the-counter market and Executive’s holdings have an
original cost less than $5,000,000 and represent less than five percent of its outstanding stock)
and (b) being involved in educational, civic and charitable activities which do not unreasonably
interfere with the services to be rendered by Executive hereunder. It is acknowledged and agreed
that Executive may not serve during the Term (as defined in Section
2) as a director of any board of which he is not already a member without the prior written
approval of the Board; however, Executive may continue to serve on any board of which he was
already a member as of the Effective Date of this Agreement.
1.5 Chicago Office. In addition to Executive’s office at the Company’s headquarters
in White Plains, New York (the “Company’s Headquarters Office”), the Company agrees to maintain an
office in the Chicago area (the “Chicago Office”), which office shall be in a location reasonably
acceptable to Executive. In addition to Executive, the Chicago Office shall be staffed with an
executive secretary to support Executive. Executive agrees and acknowledges that the headquarters
of the Company shall remain in White Plains, New York and that no corporate functions, other than
those related to Executive as provided herein, will be moved from the White Plains corporate
headquarters, except as may otherwise be approved by the Board.
ARTICLE 2:
TERM AND TERMINATION OF EMPLOYMENT
2.1 Term. Unless sooner terminated, the term of this Agreement shall commence on the
Effective Date and shall end on March 31, 2008 (the “Term”). It is understood and agreed that
Executive’s appointment is intended to be on an interim basis.
2.2 Company’s Right to Terminate.
(a) Notwithstanding the provisions of paragraph 2.1 and 4.1, the Company shall have the
right to terminate Executive’s employment under this Agreement at any time for any of the
following reasons:
(i) upon Executive’s death;
(ii) upon Executive’s becoming incapacitated for a period of at least 180 days
by accident, sickness or other circumstance which renders him mentally or physically
incapable of performing the essential functions of the duties and services required
of him hereunder, with or without reasonable accommodation, on a full-time basis
during such period;
(iii) for Cause;
(iv) without Cause, which shall include the Company’s appointment of a
successor Chief Executive Officer, in the sole discretion of the Board.
(b) As used in this Agreement, the term “Cause” shall mean any one or more of the
following: (i) fraud, misappropriation, embezzlement, or sexual (or other forms of)
harassment in connection with Executive’s duties for the Company or any affiliate; (ii) the
Executive’s (a) intentional misconduct in connection with the Company’ business, (b) refusal
to follow the reasonable directions of the Company or (c) breach of the terms of this
Agreement, provided that the Company shall notify the Executive of the acts deemed to
constitute such intentional misconduct, refusal or breach in writing; (iii) a conviction or
plea of guilty or nolo contendere to a felony (other than one arising from the operation of
a motor vehicle that does not involve an accident involving injury to a third party); (iv)
engaging in an act of gross negligence in connection with the Company’s business (which
term shall not include good faith business judgments made in the normal course of the
Executive’s duties); or (v) the Executive’s failure to observe and comply with the Company’s
policies, codes and/or Executive’s covenants contained in this Agreement, including, but not
limited to, Executive’s confidentiality and non-solicitation obligations.
2.3 Executive’s Right to Terminate. Notwithstanding the provisions of paragraph 2.1,
Executive shall have the right to terminate his employment under this Agreement as follows:
(a) for “Good Reason”, which shall mean a reduction in the Executive’s Base Salary as
provided for under this Agreement, provided that Good Reason shall not include an act which
is cured by the Company within 30 days after receipt by the Company of written notice from
Executive identifying in reasonable detail the acts or failures allegedly constituting Good
Reason hereunder, provided further that if Executive does not deliver to the Company a
notice of termination within the sixty (60) day period after Executive has knowledge that an
event constituting Good Reason has occurred, such event will no longer constitute Good
Reason.
(b) without Good Reason, in the sole discretion of Executive.
2.4 Notice of Termination. If the Company or Executive desires to terminate
Executive’s employment hereunder at any time prior to expiration of the Term as provided above in
this Article 2, it or he shall do so by giving no less than 15 days written notice to the other
party that it or he has elected to terminate Executive’s employment hereunder and stating the
effective date (which shall not be December 31 of any year) and reason for such termination,
provided that no such action shall alter or amend any other provisions hereof or rights arising
hereunder. Upon any termination of Executive’s employment hereunder for whatever reason, Executive
shall, if and to the extent requested to do so by the Board, forthwith resign any and all positions
he may then be holding with the Company or any subsidiary of the Company other than his position on
the Board of Directors.
ARTICLE 3:
COMPENSATION AND BENEFITS
3.1 Base Salary. Commencing on the Effective Date, during the period of this
Agreement, Executive shall receive an annual base salary (“Base Salary”) equal to $1,000,000
(partial years pro rated). Executive’s annual Base Salary shall be paid in equal installments in
accordance with the Company’s standard policy regarding payment of compensation to executives but
no less frequently than semi-monthly. Executive shall not be eligible to receive any compensation
for his services as a member of the Company’s Board of Directors during the Term of the Agreement.
3.2 Annual Incentive Program, Restricted Stock Awards and Stock Option Grants.
(a) Annual Incentive Plan. During the Term, Executive also shall be eligible
to receive cash incentive compensation (“Bonus”) as follows: Executive shall participate in
the Starwood Annual Incentive Plan (AIP) or, at the election of the Board’s
compensation committee, the Annual Incentive Plan for Certain Executives (AIPCE)
maintained by the Company for senior executive officers on and after the Effective Date. In
either case, Executive shall participate at a level which is not less than the maximum
participation level made available to any Company senior executive (determined without
regard to period of service or similar criteria that might otherwise be necessary to entitle
Executive to such level of participation); provided, however, that conditioned upon
attainment of target performance measure requirements based on one or more performance
measures set forth in the AIP, the target Bonus (“Target Bonus”) for each calendar year
during the Term for which Executive shall be eligible shall be $2,000,000 (partial years pro
rated). In the event that changes are made to any of the incentive plans, the changes will
apply to the Executive as they do other employees of the Company. The Executive
acknowledges and agrees that the AIP and AIPCE provide that a portion of the Executive’s
annual bonus will be deferred and payable in stock or stock units of the Company and that a
portion of the Executive’s annual Bonus will be deferred in accordance with the then current
practices of the Company and shall vest pursuant to plan provisions applicable to Directors.
The Executive and the Company agree that payment of the Executive’s 2007 bonus will be
delivered according to the regular annual incentive plan payout schedule and his bonus will
assume he was employed with the Company for the full year. An annual bonus shall not be
deemed earned by the Executive until the Company has determined his entitlement to such
bonus. The Executive acknowledges and agrees that, subject to Paragraph 4.1 below, under no
circumstances would the Company pay a pro-rata bonus upon departure.
(b) Long Term Incentive Compensation. On May 24, 2007, the Company awarded
Executive, pursuant to the terms of the Company’s 2004 Long-Term Incentive Compensation Plan
(the “2004 LTIP”), 14,742 shares of restricted stock and 44,225 options to purchase shares
of common stock. The terms and conditions governing such awards are set forth in the award
agreements delivered to Executive.
(c) Nothing in the foregoing provisions of this Paragraph 3.2 shall be deemed to
prevent the Board in its sole discretion from awarding any additional or other amounts of
cash, restricted stock units or options or other equity based awards in respect of any whole
or partial year during the Term.
3.3 Vacation and Sick Leave. During each year of his employment, Executive shall be
entitled to vacation and sick leave benefits under the Company’s policies equal to the maximum
available to any Company senior executive, determined without regard to the period of service that
might otherwise be necessary to entitle Executive to such vacation or sick leave under standard
Company policy.
3.4 Other Benefits.
(a) Other Company Benefits. The Executive shall be eligible to participate in the
Company’s “StarShare” employee benefit programs and the Company 401(k) plan on the first day
of the month following 90 days of employment. The Executive and his eligible dependents will
be covered by these benefits as per the Executive’s coverage
elections. Following the termination of this Agreement by the Company without cause or
by the Executive for good reason, Executive shall be permitted to participate in the
Company’s retiree welfare benefit plans, as may be provided by the Company to other retired
executive employees from time to time pursuant to the terms and conditions of such welfare
benefit plans, as though he had satisfied any otherwise applicable eligibility provisions of
such plans.
(b) Driver and Car Service. The Company will provide Executive the use of a driver and
car service in New York for business purposes.
(c) Business and Entertainment Expenses. Subject to the Company’s standard policies
and procedures with respect to expense reimbursement as applied to its senior executive
employees generally, the Company shall reimburse Executive for, or pay on behalf of
Executive, reasonable and appropriate expenses incurred by Executive for business-related
purposes, including reasonable dues and fees to industry and professional organizations,
costs of entertainment and business development and business-related travel and to other
locations on Company business. The Executive shall be entitled to use first-class travel
accommodations for such business-related travel.
(d) Company Aircraft. The Company shall make available to Executive a Company-owned or
leased private aircraft for business-related travel, including for travel to and from
Executive’s primary residence in Chicago, Illinois. The use by Executive of any Company
aircraft shall at all times be subject to Company policies and procedures and to the
availability of such aircraft.
(e) Income Tax. The Company shall reimburse Executive for any additional personal
income tax liability, on a grossed-up basis, related to or resulting from payments to
Executive during the Term to the extent that in executing his duties under this Agreement,
Executive’s tax residency status is deemed changed, in accordance with applicable law, from
Illinois to New York (or Connecticut, if applicable).
(f) Temporary Housing. The Company shall provide temporary housing in or around the
New York/Connecticut area during the Term, which may include accommodations at a hotel that
is owned, managed or franchised by the Company.
3.5 Withholding. The Base Salary and all other payments, grants and awards to
Executive for his services to the Company shall be subject to all withholding and deductions
required by federal, state or other law (including those authorized by Executive but not otherwise
required by law), including but not limited to state, federal and local income taxes, unemployment
tax, Medicare and FICA, together with such deductions as Executive may from time to time
specifically authorize under any employee benefit program which may be adopted by the Company for
the benefit of its senior executives or Executive.
ARTICLE 4:
EFFECT OF TERMINATION ON COMPENSATION
4.1 Severance Package.
(a) In the event Executive’s employment under this Agreement is terminated either (A)
by the Company without Cause under Paragraph 2.2(a)(iv) or (B) by Executive for Good Reason
under Paragraph 2.3(a), then, subject to Paragraph 4.2, as and for a severance package the
Company shall provide to the Executive (i) Executive’s Base Salary through the date of
termination, (ii) provided that Executive has served as Chief Executive Officer of the
Company for at least three (3) months prior to his termination, a pro rated portion of
Executive’s Target Bonus through the date of termination, payable in accordance with, and
subject to, the terms of the applicable bonus plan and (iii) 50% of Executive’s then
unvested stock options and restricted stock shall immediately vest as of the date of
termination. The remaining 50% of Executive’s then unvested stock options and restricted
stock shall vest in accordance with the plan provisions applicable to Directors.
(b) In the event Executive’s employment under this Agreement is terminated because of
the death or permanent disability of the Executive under Paragraph 2.2(a)(i) or 2.2(a)(ii),
then, subject to Paragraph 4.2, as and for a severance package the Company shall provide to
the Executive (i) Executive’s Base Salary through the date of termination, (ii) Executive’s
Base Salary for a period of three (3) months following the date of termination, (iii) a pro
rated portion of Executive’s then Target Bonus and (iv) all of Executive’s unvested
restricted stock and stock options shall immediately vest as of the date of termination.
(c) In the event Executive’s employment under this Agreement is terminated by the
Company without Cause or by Executive for Good Reason within 12 months after a Change in
Control (as defined below), then, subject to Paragraph 4.2, as and for a severance package
the Company shall provide to the Executive (i) Executive’s Base Salary through the date of
termination, (ii) a lump sum payment equal to one times the sum of Executive’s (a) Base
Salary and (b) Target Bonus and (iii) all of Executive’s unvested restricted stock and stock
options shall immediately vest as of the date of termination.
(d) As used in this Agreement, “Change in Control” means:
(i) Any individual, entity or group (a “Person”), including any “person” within
the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the “Act”), is or becomes the beneficial owner within the meaning of
Rule 13d-3 promulgated under the Act (but without regard to any time period
specified in Rule 13d-3(d)(1)(i)), of 33-1/3 percent or more of either (i) then
outstanding shares of common stock, par value $.01 per share, of the Company
(“Common Stock”), the “Outstanding Shares”) or (ii) the combined voting power of
then outstanding securities of the Company entitled to vote generally in the
election of Directors (the “Outstanding Company Voting Securities”); excluding,
however, (A) any acquisition by the Company or (B) any acquisition by an employee
benefit plan (or related trust) sponsored or maintained by the Company or any
corporation controlled by the Company;
(ii) Individuals who, as of the Effective Date, constitute the Board (the
“Incumbent Board”) cease for any reason to constitute at least a majority of such
Board; provided that any individual who becomes a Director of the Company subsequent
to the Effective Date whose election, or nomination for election by the Company’s
stockholders, was approved by the vote of at least a majority of the Directors then
comprising the Incumbent Board shall be deemed a member of the Incumbent Board; and
provided further, that any individual who was initially elected as a Director of the
Company as a result of an actual or threatened solicitation by a Person other than
the Board for the purpose of opposing a solicitation by any other Person with
respect to the election or removal of directors, or any other actual or threatened
solicitation of proxies or consents by or on behalf of any Person other than the
Board shall not be deemed a member of the Incumbent Board;
(iii) Consummation by the Company of a reorganization, merger, or consolidation
or sale of all or substantially all of the assets of the Company (a “Corporate
Transaction”); excluding, however, a Corporate Transaction pursuant to which (1) all
or substantially all of the individuals or entities who are the beneficial owners,
respectively, of the Outstanding Shares and the Outstanding Company Voting
Securities immediately prior to such Corporate Transaction will beneficially own,
directly or indirectly, more than 66-2/3 percent of, respectively, the outstanding
shares of common stock, and the combined voting power of the outstanding securities
of such corporation entitled to vote generally in the election of directors, as the
case may be, of the corporation resulting from such Corporate Transaction
(including, without limitation, a corporation which as a result of such transaction
owns the Company or all or substantially all of the Company’s assets either directly
or indirectly) in substantially the same proportions relative to each other as their
ownership, immediately prior to such Corporate Transaction, of the Outstanding
Shares and the Outstanding Company Voting Securities, as the case may be, (2) no
Person (other than: the Company, any employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation controlled by the Company,
the corporation resulting from such Corporate Transaction, and any Person which
beneficially owned, immediately prior to such Corporate Transaction, directly or
indirectly, 33-1/3 percent or more of the Outstanding Shares or the Outstanding
Company Voting Securities, as the case may be) will beneficially own, directly or
indirectly, 33-1/3 percent or more of, respectively, the outstanding shares of
common stock of the corporation resulting from such Corporate Transaction or the
combined voting power of the outstanding securities of such corporation entitled to
vote generally in the election of directors and (3) individuals who were members of
the Incumbent Board will constitute at least a majority of the members of the board
of directors of the corporation resulting from such Corporate Transaction; or
(iv) Approval by the stockholders of the Company of a plan of complete
liquidation or dissolution of the Company.
4.2 Liquidated Damages. The parties agree that the above severance package shall be
Executive’s sole and exclusive monetary remedy under this Agreement by reason of termination of
Executive’s employment by the Company other than for Cause or by Executive for Good Reason, it
being agreed that as his actual damages under this Agreement would be difficult to measure or
quantify and would be impracticable to determine, such amount shall constitute liquidated damages
under this Agreement for Executive by reason of such termination by Executive or the Company. Any
such payments shall not be reduced or limited by amounts Executive might earn or be able to earn
from other employment or ventures. Notwithstanding the foregoing, upon any termination of
Executive’s employment and the Company’s payment to Executive of the amounts required to be paid
under Paragraph 4.1, Executive shall execute a release of claims arising out of Executive’s
employment with, and termination of employment from, the Company in the form attached hereto a
Exhibit 4.2 (adjusted as necessary to conform to then existing legal requirements); and all
payments and benefits provided under the above Paragraph 4.1 shall be subject to Executive’s
execution and non-revocation of such a release.
4.3 Rights on Termination for Cause or Without Good Reason. No severance payments
shall be due or owing to Executive in the event that the Company shall fully terminate Executive’s
employment for Cause or Executive shall terminate his employment without Good Reason; provided,
however, that Executive shall be paid all accrued but unpaid Base Salary through the date of such
termination of employment.
4.4 Certain Additional Payments by the Company. Notwithstanding anything to the
contrary in this Agreement, if any payment, distribution or provision of a benefit by the Company
to or for the benefit of Executive, whether paid or payable, distributed or distributable or
provided or to be provided pursuant to the terms of Section 4.1(c) of this Agreement (a “Payment”),
would be subject to an excise or other special additional tax that would not have been imposed
absent such Payment (including, without limitation, any excise tax imposed by Section 4999 of the
Internal Revenue Code of 1986, as amended), or any interest or penalties with respect to such
excise or other additional tax (such excise or other additional tax, together with any such
interest or penalties, are hereinafter collectively referred to as the “Excise Tax”), the Company
shall pay to Executive an additional payment (a “Gross-up Payment”) in an amount such that after
payment by Executive of all taxes (including any interest or penalties imposed with respect to such
taxes), including any income taxes and Excise Taxes imposed on any Gross-up Payment, Executive
retains an amount of the Gross-up Payment (taking into account any similar gross-up payments to
Executive under any stock incentive or other benefit plan or program of the Company) equal to the
Excise Tax imposed upon the Payments. The Company and Executive shall make an initial
determination as to whether a Gross-up Payment is required and the amount of any such Gross-up
Payment. Executive shall notify the Company in writing of any claim by the Internal Revenue
Service which, if successful, would require the Company to make a Gross-up Payment (or a Gross-up
Payment in excess of that, if any, initially determined by the Company and Executive) within ten
business days after the receipt of such claim. The Company shall notify Executive in writing at
least ten business days prior to the due date of any response required with respect to such claim
if it plans to contest the claim. If the Company decides to contest such claim, Executive shall
cooperate fully with the Company in such action; provided, however, the Company shall bear and pay
directly or indirectly all costs and expenses (including additional interest and penalties)
incurred in connection with such action and shall indemnify and hold Executive harmless, on an
after-tax basis, for any Excise Tax or income tax,
including interest and penalties with respect thereto, imposed as a result of the Company’s
action. If Executive receives a refund of any amount paid by the Company with respect to such
claim, Executive shall promptly pay such refund to the Company. If the Company fails to timely
notify Executive whether it will contest such claim or the Company determines not to contest such
claim, then the Company shall immediately pay to Executive the portion of such claim, if any, which
it has not previously paid to Executive.
ARTICLE 5:
REPRESENTATIONS AND WARRANTIES;
NON-COMPETE AND NON-SOLICITATION
5.1 Representations and Warranties.
(a) Representation and Warranty of Executive. Executive hereby represents and
warrants to the Company that he is not aware of any presently existing fact, circumstance or
event (including, but without limitation, any health condition or legal constraint) which is
not known to the Company which would preclude or restrict him from providing to the Company
the services contemplated by this Agreement, or which would give rise to any breach of any
term or provision hereof, or which could otherwise result in the termination of his
employment hereunder for Cause (as such term is herein defined).
(b) Representation and Warranty of the Company. The Company hereby represents
and warrants to Executive that (i) it is not aware of any fact, circumstance or event which
is not known to Executive which would give rise to any breach of any term or provision of
this Agreement, or which would form the basis for any claim or allegation that Executive’s
employment hereunder could be terminated for Cause hereunder; and (ii) it has received all
authorizations and has taken all actions, necessary or appropriate for the due execution,
delivery and performance of this Agreement, and all options and restricted stock units
described in Article 3.
5.2 Non-Compete and Non-Solicitation.
(a) General. Executive acknowledges that in the course of Executive’s
employment with the Company the Executive will become familiar with trade secrets and other
confidential information concerning the Company and its subsidiaries and that Executive’s
services will be of special, unique and extraordinary value to the Company and its
subsidiaries.
(b) Noncompetition. Executive agrees that during the period of Executive’s
employment with the Company and for a period of one year thereafter (the “Noncompetition
Period”), the Executive shall not, without the express written consent of the Board of
Directors of the Company, directly or indirectly, whether for his own account or for the
account of any other person or entity, engage, participate or make any financial investment
in, become employed by or render advisory services or otherwise assist in or be interested
in any capacity to any business (a “Competing Business”) in which Executive was involved or
had knowledge was being conducted or planned by the
Company or any of its subsidiaries, as of the termination of Executive’s employment, in
any geographic area in which the Company or any of its subsidiaries is then conducting such
business; provided, however, that after termination of employment nothing in this paragraph
5.2(b) shall prevent Executive from being employed as Chief Executive Officer of an
enterprise which is engaged in a Competing Business if such enterprise is not one of those
set forth in Exhibit 5.2.
(c) Nonsolicitation. Executive further agrees that during the Noncompetition
Period, Executive shall not, without the express written consent of the Board of Directors
of the Company, directly or indirectly, whether for his own account or for the account of
any other person or entity, other than the Company, hire, employ, retain or solicit the
hire, employment or retention of any employee of the Company or its affiliates, or any
person who was such an employee at any time during the twelve (12) month period preceding
the Executive’s termination of employment with the Company or its affiliates, or otherwise
persuade, induce or encourage, or attempt to persuade, induce or encourage any such person
or consultant to the Company to terminate his, her or its relationship with the Company.
(d) Exceptions. Nothing in this Paragraph 5.2 shall prohibit Executive from
being (i) a stockholder in a mutual fund or a diversified investment company; (ii) an owner
of not more than five percent of the outstanding stock of any class of a corporation whose
securities are publicly traded so long as Executive has no active participation in the
business of such corporation.; and (iii) an owner of any single asset hotels.
(e) Reformation. If, at any time of enforcement of this Paragraph 5.2 the
Arbitrator (as defined in Paragraph 6.1(a)) holds that the restrictions stated herein are
unreasonable under circumstances then existing, the parties hereto agree that the maximum
period, scope or geographical area reasonable under such circumstances shall be substituted
for the stated period, scope or area and that the Arbitrator shall be allowed to revise the
restrictions contained herein to cover the maximum period, scope and area permitted by law.
This Agreement shall not authorize the Arbitrator to increase or broaden any of the
restrictions in this Paragraph 5.2.
5.3 Confidentiality. Executive shall not, at any time during the Term or thereafter,
make use of or disclose, directly or indirectly, any (i) trade secret or other confidential or
secret information of the Company or of any of its subsidiaries or (ii) other technical, business,
proprietary or financial information of the Company or of any of its subsidiaries not available to
the public generally or to the competitors of the Company or to the competitors of any of its
subsidiaries (“Confidential Information”), except to the extent that such Confidential Information
(a) becomes a matter of public record or is published in a newspaper, magazine or other periodical
or on electronic or other media available to the general public, other than as a result of any act
or omission of Executive, (b) is required to be disclosed by any law, regulation or order of any
court or regulatory commission, department or agency, provided that Executive gives prompt notice
of such requirement to the Company to enable the Company to seek an appropriate protective order,
or (c) is required to be used or disclosed by Executive to perform properly Executive’s duties
under this Agreement. Promptly following the end of the Term, Executive shall surrender to the
Company all records, memoranda, notes, plans, reports,
computer tapes and software and other documents and data which constitute Confidential
Information which Executive may then possess or have under Executive’s control (together with all
copies thereof).
5.4 Intellectual Property. Executive shall not, at any time, have or claim any right,
title or interest in any trade name, patent, trademark, copyright, trade secret, intellectual
property, methodologies, technologies or other similar rights relating to the Company’s business
(collectively, “Intellectual Property”) belonging to the Company or any of its affiliates and shall
not have or claim any right, title or interest in or to any material or matter of any kind prepared
for or used in connection with the business or promotion of the Company or any of its affiliates,
whether produced, prepared or published in whole or in part by Executive or by the Company or any
of its affiliates. All Intellectual Property that is conceived, devised, made, developed or
perfected by Executive, alone or with others, during Executive’s employment that is related in any
way to the Company’s or any of its affiliates’ business or is devised, made, developed or perfected
utilizing equipment or facilities of the Company or its affiliates shall be promptly disclosed to
the Board, are works for hire and become the sole, absolute and exclusive property of the Company.
If and to the extent that any of such Intellectual Property should be determined for any reason not
to be a work for hire, Executive hereby assigns to the Company all of Executive’s right, title and
interest in and to such Intellectual Property. At the reasonable request and expense of the
Company but without charge to the Company, whether during or at any time after Executive’s
employment with the Company, Executive shall cooperate fully with the Company and its affiliates in
the securing of any trade name, patent, trademark, copyright or intellectual property protection or
other similar rights in the United States and in foreign countries, including without limitation,
the execution and delivery of assignments, patent applications and other documents or papers.
5.5 Enforcement. The parties hereto agree that the Company and its subsidiaries would
be damaged irreparably in the event that any provision of Paragraphs 5.2, 5.3 or 5.4 of this
Agreement were not performed in accordance with its terms or were otherwise breached and that money
damages would be an inadequate remedy for any such nonperformance or breach. Accordingly, the
Company and its successors and permitted assigns shall be entitled, in addition to other rights and
remedies existing in their favor, to seek an injunction or injunctions to prevent any breach or
threatened breach of any of such provisions and to enforce such provisions specifically (without
posting a bond or other security). Executive agrees that Executive will submit to the personal
jurisdiction of the courts of the State of New York in any action by the Company to enforce an
arbitration award against Executive or to obtain interim injunctive or other relief pending an
arbitration decision.
ARTICLE 6:
ARBITRATION
6.1 Arbitration. In the event of any controversy, dispute or claim arising out of or
related to this Agreement or Executive’s employment by the Company, the parties shall negotiate in
good faith in an attempt to reach a mutually acceptable settlement of such dispute. If
negotiations in good faith do not result in a settlement of any such controversy, dispute or claim,
it shall, except as otherwise provided for herein be finally settled by expedited arbitration
conducted by a single arbitrator selected as hereinafter provided (the “Arbitrator”) in accordance
with the National Rules of the American Arbitration Association (“National Rules”), subject to
the following (the parties hereby agreeing that, notwithstanding the provisions of Rule 1 of the
National Rules, in the event that there is a conflict between the provisions of the National Rules
and the provisions of this Agreement, the provisions of this Agreement shall control):
(a) The Arbitrator shall be determined from a list of names of five impartial
arbitrators each of whom shall be an attorney experienced in arbitration matters concerning
executive employment disputes, supplied by the AAA chosen by Executive and the Company each
in turn striking a name from the list until one name remains (with the Company being the
first to strike a name).
(b) The expenses of the arbitration shall be borne by the Company; and the Company
shall bear its own legal fees and expenses and pay, at least monthly, all of Executive’s
legal fees and expenses incurred in connection with such arbitration, except that Executive
shall have to reimburse the Company for his legal fees and expenses if the arbitrator finds
that Executive brought an action in bad faith.
(c) The Arbitrator shall determine whether and to what extent any party shall be
entitled to damages under this Agreement; provided that no party shall be entitled to
punitive or consequential damages (including, in the case of the Company, any claim for
alleged lost profits or other damages that would have been avoided had Executive remained an
employee), and each party waives all such rights, if any.
(d) The Arbitrator shall not have the power to add to nor modify any of the terms or
conditions of this Agreement. The Arbitrator’s decision shall not go beyond what is
necessary for the interpretation and application of the provision(s) of this Agreement in
respect of the issue before the Arbitrator. The Arbitrator shall not substitute his or her
judgment for that of the parties in the exercise of rights granted or retained by this
Agreement. The Arbitrator’s award or other permitted remedy, if any, and the decision shall
be based upon the issue as drafted and submitted by the respective parties and the relevant
and competent evidence adduced at the hearing.
(e) The Arbitrator shall have the authority to award any remedy or relief (including
provisional remedies and relief) that a court of competent jurisdiction could order or
grant. The Arbitrator’s written decision shall be rendered within sixty days of the closing
of the hearing. The decision reached by the Arbitrator shall be final and binding upon the
parties as to the matter in dispute. To the extent that the relief or remedy granted by the
Arbitrator is relief or remedy on which a court could enter judgment, a judgment upon the
award rendered by the Arbitrator shall be entered in any court having jurisdiction thereof
(unless in the case of an award of damages, the full amount of the award is paid within 10
days of its determination by the Arbitrator). Otherwise, the award shall be binding on the
parties in connection with their continuing performances of this Agreement and, in any
subsequent arbitral or judicial proceedings between the parties.
(g) The arbitration and all filing, testimony, documents and information relating to or
presented during the arbitration proceeding shall be disclosed exclusively for the purpose
of facilitating the arbitration process and in any court proceeding relating to the
arbitration, and for no other purpose, and shall be deemed to be information subject to the
confidentiality provisions of this Agreement.
(h) The parties shall continue performing their respective obligations under this
Agreement notwithstanding the existence of a dispute while the dispute is being resolved
unless and until such obligations are terminated or expire in accordance with the provisions
hereof.
(i) The parties may obtain a pre-hearing exchange of information including depositions,
interrogatories, production of documents, exchange of summaries of testimony or exchange of
statements of position, and the Arbitrator shall limit such disclosure to avoid unnecessary
burden to the parties and shall schedule promptly all discovery and other procedural steps
and otherwise assume case management initiative and control to effect an efficient and
expeditious resolution of the dispute. At any oral hearing of evidence in connection with an
arbitration proceeding, each party and its counsel shall have the right to examine its
witness and to cross-examine the witnesses of the other party. No testimony of any witness,
or any evidence, shall be introduced by affidavit, except as the parties otherwise agree in
writing.
(j) Notwithstanding the dispute resolution procedures contained in this Paragraph 6.1,
either party may apply to any court sitting in the County, City and State of New York (i) to
enforce this agreement to arbitrate, (ii) to seek provisional injunctive relief so as to
maintain the status quo until the arbitration award is rendered or the dispute is otherwise
resolved, (iii) to confirm any arbitration award, or (iv) to challenge or vacate any final
judgment, award or decision of the Arbitrator that does not comport with the express
provisions of this Article 6.
ARTICLE 7:
MISCELLANEOUS
7.1 Notices. All notices, requests or other communications provided for in this
Agreement shall be made, if to the Company, to the Secretary of the Company at the Company’s
principal executive office, and if to Executive, to his address on the books of the Company (or to
such other address as the Company or Executive may give to the other in writing for purposes of
notice hereunder).
Copies of all notices given to Executive shall be sent to:
Xxxx X. Xxxxxxxx
Xxxxxxx & Xxxxxx LLP
00 X. Xxxxxx Xxxxx
Xxxxxxx, XX 00000-0000
Direct: 000-000-0000
Fax: 000-000-0000
Xxxxxxx & Xxxxxx LLP
00 X. Xxxxxx Xxxxx
Xxxxxxx, XX 00000-0000
Direct: 000-000-0000
Fax: 000-000-0000
Copies of all notices given to the Company shall be sent to:
Starwood Hotels & Resorts Worldwide, Inc.
0000 Xxxxxxxxxxx Xxxxxx
Xxxxx Xxxxxx, Xxx Xxxx 00000
Attention: Chief Administrative Officer and General Counsel
Facsimile: (000) 000-0000
0000 Xxxxxxxxxxx Xxxxxx
Xxxxx Xxxxxx, Xxx Xxxx 00000
Attention: Chief Administrative Officer and General Counsel
Facsimile: (000) 000-0000
All notices, requests or other communications required or permitted by this Agreement shall be
made in writing either (a) by personal delivery to the party entitled thereto, (b) by mailing via
certified mail, postage prepaid, return receipt requested, in the United States mails to the last
known address of the party entitled thereto, (c) by reputable overnight courier service, or (d) by
facsimile with confirmation or receipt. The notice, request or other communication shall be deemed
to be received upon actual receipt by the party entitled thereto; provided, however, that if a
notice, request or other communication is received after regular business hours, it shall be deemed
to be received on the next succeeding business day of the Company.
7.2 Applicable Law. This contract is entered into under, and shall be governed for
all purposes by, the laws of the State of New York.
7.3 No Waiver. No failure by either party hereto at any time to give notice of any
breach by the other party of, or to require compliance with, any condition or provision of this
Agreement shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or
at any prior or subsequent time.
7.4 Severability. If a court of competent jurisdiction determines that any provision
of this Agreement is invalid or unenforceable, then the invalidity or unenforceability of that
provision shall not affect the validity or enforceability of any other provision of this Agreement
and all other provisions shall remain in full force and effect.
7.5 Counterparts. This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original, but all of which together will constitute one and the same
Agreement.
7.6 Headings. The paragraph headings have been inserted for purposes of convenience
and shall not be used for interpretive purposes.
7.7 Gender and Plurals. Wherever the context so requires, the masculine gender
includes the feminine or neuter, and the singular number includes the plural and conversely.
7.8 Successors. This Agreement shall be binding upon and inure to the benefit of the
Company and any successor of the Company, including without limitation any person, association or
entity which may hereafter acquire or succeed to all or substantially all of the business or assets
of the Company by any means whether direct or indirect, by purchase, merger,
consolidation, or otherwise. The Company shall require any such successor to the Company to
expressly assume, in writing, satisfaction in form and substance to Executive all of the Company’s
obligations to Executive hereunder and otherwise. Except as provided in the preceding sentences,
this Agreement and the rights and obligations of the parties hereunder are personal, and neither
this Agreement nor any right, benefit or obligation of either party hereto shall be subject to
voluntary or involuntary assignment, alienation or transfer, whether by operation of law or
otherwise, without the prior written consent of the other party.
7.9 Entire Agreement. Any modification of this Agreement shall be effective only if
it is in writing and signed by the party to be charged.
7.10 Deemed Resignations. Except as provided in the last sentence of this paragraph
with respect to service on the Company’s Board of Directors, any termination of Executive’s
employment shall constitute an automatic resignation of Executive as an officer of the Company and
each affiliate of the Company, and from the board of directors or any similar governing body of any
corporation, trust, limited liability company or other entity in which the Company or any affiliate
holds an equity interest and with respect to which board or similar governing body Executive serves
as the Company’s or such affiliate’s designee or other representative. Executive shall cooperate
with the Company and execute all such formal resignations and other documents as the Company may
reasonably request in furtherance of the foregoing. Notwithstanding the foregoing, upon any
termination of Executive’s employment hereunder (unless termination shall be for Cause), Executive
agrees to continue to serve on the Company’s Board of Directors, subject to the Company’s customary
procedures and requirements of Board membership, including nomination and election.
7.11 Indemnification.
(a) In addition to any additional benefits provided under applicable state law, as a
Director and officer of the company, Executive shall be entitled to the benefits of: (1)
those provisions of the Articles of Incorporation of the Company, as amended, and of the
by-laws of the Company as amended, which provide for indemnification of officers and
Directors of the Company (and no such provision shall be amended in any way to limit or
reduce the extent of indemnification available to Executive as an officer of the Company),
(ii) the Indemnification Agreement between the Company and Executive (the ‘Indemnification
Agreement”).
(b) The rights of Executive under such indemnification obligations shall survive the
termination of this Agreement and be applicable for so long as Executive may be subject to
any claim, demand, liability, cost or expense, which the indemnification obligations
referred to in this Paragraph 7.11 are intended to protect and indemnify him against.
(c) The Company shall, at no cost to Executive, use its reasonable best efforts to at
all times include Executive, during the term of Executive’s employment hereunder and for so
long thereafter as Executive may be subject to any such claim, as an insured under any
directors’ and officers’ liability insurance policy maintained by the Company,
which policy shall provide such coverage in such amounts as the Board shall deem
appropriate for coverage for all directors and officers of the Company.
IN WITNESS WHEREOF, the Company has caused this Agreement to be signed by its duly authorized
officer and Executive has signed this Agreement as of the day and year first above written.
| STARWOOD HOTELS & RESORTS WORLDWIDE, INC., a Maryland corporation | ||||
| By: | /s/ Xxxxxxx X. Xxxxxx | |||
| Name: Xxxxxxx X. Xxxxxx | ||||
| Its: Chief Administrative Officer and General Counsel | ||||
| EXECUTIVE | ||||
| /s/ Xxxxx X. Xxxxxx | ||||
| Xxxxx X. Xxxxxx | ||||
