Exhibit 10.57
SEVERANCE AGREEMENT
THIS AGREEMENT, dated October , 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 President, S.T.A.R.S.;
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.
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
2
Executive, as in effect immediately prior to the first occurrence of an event
or circumstance constituting Good Reason.
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 Termina-
3
tion 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
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
4
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 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 Option. 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 the Date of
Termination, to be exercised in accordance with the terms of the application
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.
5
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 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
6
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 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," which 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
7
(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 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
8
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 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
0
Xxxxx Xxxxxx, XX 00000
Attention: Executive Vice President, Human Resources
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 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
counter-parts, 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.
10
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.
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.
11
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
(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
12
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.
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
13
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 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
14
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 the benefits substantially similar to those enjoyed by the Executive
under any of the Company's pension, saving, 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
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
15
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:
(1) the Company enters into an agreement, the consummation
of which would result in the occurrence of a Change in Control;
(2) 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;
(3) 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
(4) the Board adopts a resolution to the effect that, for
purposes of this Agreement, a Potential Change in Control has
occurred.
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.
16
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/ Xxxxx Xxxxxx
------------------------------------
Name: Xxxxx Xxxxxx
Title: Executive Vice President,
Human Resources
Dated: 1-3 , 2001
--------------
EXECUTIVE
/s/ Xxxxx Xxxxxx
---------------------------------------
Xxxxx Xxxxxx
Dated: 12-31 , 2000
-----------------
Address:
000 X. 00xx Xx Xxx 0X
------------------------------
XX NY 10024
------------------------------
------------------------------
(Please print carefully)
17
