EXHIBIT 10.3
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made this 24th day of
October, 2003, by Highland Hospitality, L.P., a Delaware limited partnership
(the "Company"), and Highland Hospitality Corporation, a Maryland corporation
(the "REIT"), each with its principal place of business at 0000 Xxxxxxxxxx
Xxxxx, Xxxxx 000, XxXxxx, XX 00000 (the "Company") and Xxxxxxx X. Xxxxxxxx,
residing at 0000 Xxxxxxxxx Xxxxx, Xxxxxx, Xxxxxxxx 00000 (the "Executive").
WHEREAS, the REIT is the general partner of the Company; and
WHEREAS, the parties desire to enter into this agreement to reflect the
Executive's executive capacities in the REIT's business and to provide for the
Company's and the REIT's employment of the Executive; and
WHEREAS, the parties wish to set forth the terms and conditions of that
employment;
NOW THEREFORE, in consideration of the mutual covenants and promises
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, the parties
agree as follows:
1. Term of Employment
The Company and the REIT hereby employ the Executive, and the Executive
hereby accepts employment with the Company and the REIT, upon the terms and
conditions set forth in this Agreement. Unless terminated earlier pursuant to
Section 5, the Executive's employment pursuant to this Agreement shall be for
the two (2) year period commencing on the date of closing of the initial public
offering of the REIT's common stock pursuant to the REIT's registration
statement on Form S-11 filed with the Securities and Exchange Commission (the
"Commencement Date") and ending on the second anniversary of the Commencement
Date (the "Initial Term"). The Initial Term shall be extended for an additional
twelve (12) months on each anniversary of the Commencement Date unless the
Company or the Executive provides written notice to the contrary at least six
(6) months before the applicable anniversary of the Commencement Date. The
Initial Term, together with any such extensions, shall be referred to herein as
the "Employment Period." In the event that the Board of Directors of the REIT
(the "Board of Directors") determines that active efforts to complete the
closing of the initial public offering have been abandoned, this Agreement shall
become null and void.
2. Title; Duties
The Executive shall be employed as Executive Vice President and Chief
Investment Officer of the REIT. The Executive shall report to the Board of
Directors, who shall have the authority to direct, control and supervise the
activities of the Executive. The Executive shall perform such services
consistent with his position as may be assigned to him from time to time by the
Board of Directors and are consistent with the bylaws of the REIT and the
Agreement of Limited Partnership of the Company as it may be amended from time
to time, including, but not limited to, managing the affairs of the REIT and the
Company.
3. Extent of Services
(a) General. The Executive agrees not to engage in any business activities
during the Employment Period except those which are for the sole benefit of
the Company or the REIT and their subsidiaries (the Company and the REIT
are hereinafter referred to as the "Company Group"), and to devote his
entire business time, attention, skill and effort to the performance of his
duties under this Agreement. Notwithstanding the foregoing, the Executive
may, without impairing or otherwise adversely affecting the Executive's
performance of his duties to the Company Group, (i) engage in personal
investments and charitable, professional and civic activities, and (ii)
with the prior approval of the Board of Directors, serve on the boards of
directors of corporations other than the REIT, provided, however, that no
such approval shall be necessary for the Executive's continued service on
any board of directors on which he was serving on the date of this
Agreement, all of which have been previously disclosed to the Board of
Directors in writing and provided further, that in no event shall the
Executive be permitted to serve on the board of directors of any other
entity that owns, operates, acquires, sells, develops and/or manages any
hotel or similar asset in the lodging industry. The Executive shall perform
his duties to the best of his ability, shall adhere to the Company Group's
published policies and procedures, and shall use his best efforts to
promote the Company Group's interests, reputation, business and welfare.
(b) Corporate Opportunities. The Executive agrees that he will not take
personal advantage of any business opportunities which arise during his
employment with the Company Group and which may be of benefit to the
Company Group. All material facts regarding such opportunities must be
promptly reported by the Executive to the Board of Directors for
consideration by the Company Group.
4. Compensation and Benefits
(a) Salary. The Company shall pay the Executive a gross base annual salary
("Base Salary") of $240,000. The salary shall be payable in arrears in
approximately equal semi-monthly installments (except that the first and
last such semi-monthly installments may be prorated if necessary) on the
Company's regularly scheduled payroll dates, minus such deductions as may
be required by law or reasonably requested by the Executive. The REIT's
Compensation Policy Committee (the "Compensation Committee") shall review
his Base Salary annually in conjunction with its regular review of employee
salaries and may increase (but not decrease) his Base Salary as in effect
from time to time as the Compensation Committee shall deem appropriate.
(b) Other Benefits. The Executive shall be entitled to paid time off and
holiday pay in accordance with the Company Group's policies in effect from
time to time and shall be eligible to participate in such life, health, and
disability insurance, pension, deferred compensation and incentive plans,
stock options and awards, performance bonuses and other benefits as the
Company Group extends, as a matter of policy, to its executive employees.
The Company Group shall maintain a disability insurance policy or plan
covering the Executive during the Employment Period.
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(c) Reimbursement of Business Expenses. The Company shall reimburse the
Executive for all reasonable travel, entertainment and other expenses
incurred or paid by the Executive in connection with, or related to, the
performance of his duties, responsibilities or services under this
Agreement, upon presentation by the Executive of documentation, expense
statements, vouchers, and/or such other supporting information as the
Company may reasonably request.
5. Termination
(a) Termination by the Company for Cause. The Company may terminate the
Executive's employment under this Agreement at any time for Cause, upon
written notice by the Company to the Executive. For purposes of this
Agreement, "Cause" for termination shall mean any of the following: (i) the
conviction of the Executive of, or the entry of a plea of guilty or nolo
contendere by the Executive to, any felony; (ii) fraud, misappropriation or
embezzlement by the Executive; (iii) the Executive's willful failure or
gross negligence in the performance of his assigned duties for the Company
Group, which failure or negligence continues for more than fifteen (15)
calendar days following the Executive's receipt of written notice of such
willful failure or gross negligence; (iv) the Executive's breach of any of
his fiduciary duties to the Company Group; (v) any act or omission of the
Executive that has a demonstrated and material adverse impact on the
Company Group's reputation for honesty and fair dealing; or (vi) the breach
by the Executive of any material term of this Agreement.
(b) Termination by the Company Without Cause or by the Executive Without
Good Reason. Either party may terminate this Agreement at any time without
Cause (in the case of the Company) or without Good Reason (in the case of
the Executive), upon giving the other party sixty (60) days' written
notice. At the Company's sole discretion, it may substitute sixty (60)
days' salary in lieu of notice. Any salary paid to the Executive in lieu of
notice shall not be offset against any entitlement the Executive may have
to the Severance Payment pursuant to Section 6(c).
(c) Termination by Executive for Good Reason. The Executive may terminate
his employment under this Agreement at any time for Good Reason, upon
written notice by the Executive to the Company. For purposes of this
Agreement, "Good Reason" for termination shall mean, without the
Executive's consent, (i) the assignment to the Executive of substantial
duties or responsibilities inconsistent with the Executive's position at
the Company Group, or any other action by the Company Group which results
in a substantial diminution of the Executive's duties or responsibilities
other than any such reduction which is remedied by the Company Group within
30 days of receipt of written notice thereof from the Executive; (ii) a
requirement that the Executive work principally from a location outside the
fifty (50) mile radius from the Company's address first written above;
(iii) the Company's failure to pay the Executive any Base Salary or other
compensation to which he becomes entitled, other than an inadvertent
failure which is remedied by the Company within thirty (30) days after
receipt of written notice thereof from the Executive (or ten (10) days for
failure to pay Base Salary); or (iv) a substantial reduction in the
Executive's aggregate Base Salary and other compensation taken as a whole,
excluding any reductions caused by the failure to achieve performance
targets.
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(d) Executive's Death or Disability. The Executive's employment shall
terminate immediately upon his death or, upon written notice as set forth
below, his Disability. As used in this Agreement, "Disability" shall mean
such physical or mental impairment as would render the Executive eligible
to receive benefits under the long-term disability insurance policy or plan
then made available by the Company Group to the Executive. If the
Employment Period is terminated by reason of the Executive's Disability,
either party shall give thirty (30) days' advance written notice to that
effect to the other.
6. Effect of Termination
(a) General. Regardless of the reason for any termination of this
Agreement, the Executive (or the Executive's estate if the Employment
Period ends on account of the Executive's death) shall be entitled to (i)
payment of any unpaid portion of his Base Salary through the effective date
of termination; (ii) reimbursement for any outstanding reasonable business
expense he has incurred in performing his duties hereunder; (iii) continued
insurance benefits to the extent required by law; (iv) payment of any
vested but unpaid rights as required independent of this Agreement by the
terms of any bonus or other incentive pay or stock plan, or any other
employee benefit plan or program of the Company Group; and (v) except in
the case of "Termination by the Company for Cause," any bonus or incentive
compensation that was approved but not paid.
(b) Termination by the Company for Cause or by Executive Without Good
Reason. If the Company terminates the Executive's employment for Cause or
the Executive terminates his employment without Good Reason, the Executive
shall have no rights or claims against the Company Group except to receive
the payments and benefits described in Section 6(a).
(c) Termination by the Company Without Cause or by Executive for Good
Reason. Except as provided in Section 6(d), if the Company terminates the
Executive's employment without Cause pursuant to Section 5(b), or the
Executive terminates his employment for Good Reason pursuant to Section
5(c), the Executive shall be entitled to receive, in addition to the items
referenced in Section 6(a), the following:
(i) continued payment of his Base Salary, at the rate in effect on
his last day of employment, for a period of twelve (12) months (the
"Severance Payment"). The Severance Payment shall be paid in
approximately equal installments on the Company's regularly scheduled
payroll dates, subject to all legally required payroll deductions and
withholdings for sums owed by the Executive to the Company Group;
(ii) continued payment by the Company for the Executive's life,
health and disability insurance coverage during the twelve (12) month
severance period referenced in Section 6(c)(i) to the same extent that
the Company paid for such coverage immediately prior to the
termination of the Executive's employment and subject to the
eligibility requirements and other terms and conditions of such
insurance coverage, provided that if any such insurance coverage shall
become unavailable during the twelve (12) month severance period, the
Company
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thereafter shall be obliged only to pay to the Executive an amount
which, after reduction for income and employment taxes, is equal to
the employer premiums for such insurance for the remainder of such
severance period;
(iii) vesting as of the last day of his employment in any unvested
portion of any stock option and any restricted stock previously issued
to the Executive by the Company Group; and
(iv) a bonus equal to the greater of (x) the average of all bonuses
paid to the Executive (taking into account a payment of no bonus or a
payment of a bonus of $0) over the preceding thirty-six (36) months
(or the period of the Executive's employment if shorter), and (y) the
most recent bonus paid to the Executive. Such bonus shall be paid to
the Executive within sixty (60) days following the end of the fiscal
year in which such termination occurs.
None of the benefits described in this Section 6(c) will be payable unless
the Executive has signed a general release which has become irrevocable,
satisfactory to the Company in the reasonable exercise of its discretion,
releasing the Company, its affiliates, including the REIT, and their officers,
directors and employees, from any and all claims or potential claims arising
from or related to the Executive's employment or termination of employment.
(d) Termination Following Change in Control. If, (x) during the Employment
Period and within twelve (12) months following a Change in Control, the
Company (or its successor) terminates the Executive's employment without
Cause pursuant to Section 5(b) or the Executive terminates his employment
for Good Reason pursuant to Section 5(c), or (y) the Executive, by notice
given under this clause (y) of this Section 6(d) on or before the tenth
(10th) business day following the Change in Control, terminates his
employment for any reason, which termination shall be effective on the
sixtieth (60th) day following a Change in Control, the Executive shall be
entitled to receive, in addition to the items referenced in Section 6(a),
the following:
(i) continued payment of his Base Salary, at the rate in effect on
his last day of employment, for a period of twenty-four (24) months
(the "Control Change Severance Payment"). The Control Change Severance
Payment shall be paid in approximately equal installments on the
Company's regularly scheduled payroll dates, subject to all legally
required payroll deductions and withholdings for sums owed by the
Executive to the Company Group;
(ii) continued payment by the Company for the Executive's life,
health and disability insurance coverage during the twenty-four (24)
month severance period referenced in Section 6(d)(i) to the same
extent that the Company paid for such coverage immediately prior to
the termination of the Executive's employment and subject to the
eligibility requirements and other terms and conditions of such
insurance coverage, provided that if any such insurance coverage shall
become unavailable during the twenty-four (24) month severance period,
the Company thereafter shall be obliged only to pay to the Executive
an amount which, after reduction for income and employment taxes, is
equal to the employer premiums
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for such insurance for the remainder of such severance period;
(iii) vesting as of the last day of his employment in any unvested
portion of any stock option and any restricted stock previously issued
to the Executive by the Company Group; and
(iv) a bonus equal to two (2) times the greater of (x) the average
of all bonuses paid to the Executive (taking into account a payment of
no bonus or a payment of a bonus of $0) over the preceding thirty-six
(36) months (or the period of the Executive's employment if shorter),
and (y) the most recent bonus paid to the Executive. Such bonus shall
be paid to the Executive within sixty (60) days following the end of
the fiscal year in which such termination occurs.
(v) (A) In the event that any Control Change Severance Payment,
insurance benefits, accelerated vesting, pro-rated bonus or other
benefit payable to the Executive (under this Agreement or otherwise),
shall (1) constitute "parachute payments" within the meaning of
Section 280G (as it may be amended or replaced) of the Internal
Revenue Code (the "Code") ("Parachute Payments") and (2) be subject to
the excise tax imposed by Section 4999 (as it may be amended or
replaced) of the Code ("the Excise Tax"), then the Company shall pay
to the Executive an additional amount (the "Gross-Up Amount") such
that the net benefits retained by the Executive after the deduction of
the Excise Tax (including interest and penalties) and any federal,
state or local income and employment taxes (including interest and
penalties) upon the Gross-Up Amount shall be equal to the benefits
that would have been delivered hereunder had the Excise Tax not been
applicable and the Gross-Up Amount not been paid.
(B) For purposes of determining the Gross-Up Amount:
(1) Parachute Payments provided under arrangements with the Executive
other than under any bonus or other incentive pay or stock plan or
program of the Company (collectively, the "Plan") and this Agreement,
if any, shall be taken into account in determining the total amount of
Parachute Payments received by the Executive so that the amount of
excess Parachute Payments that are attributable to provisions of the
Plan and Agreement is maximized; and (2) the Executive shall be deemed
to pay federal, state and local income taxes at the highest marginal
rate of taxation for the Executive's taxable year in which the
Parachute Payments are includable in the Executive's income for
purposes of federal, state and local income taxation.
(C) The determination of whether the Excise Tax is payable,
the amount thereof, and the amount of any Gross-Up Amount shall be
made in writing in good faith by a nationally recognized independent
certified public accounting firm selected by the Company and approved
by the Executive, such approval not to be unreasonably withheld (the
"Accounting Firm"). If such determination is not finally accepted by
the Internal Revenue Service (or state or local revenue authorities)
on audit,
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then appropriate adjustments shall be computed based upon the amount
of Excise Tax and any interest or penalties so determined; provided,
however, that the Executive in no event shall owe the Company any
interest on any portion of the Gross-Up Amount that is returned to the
Company. For purposes of making the calculations required by this
Section 6(d)(v), to the extent not otherwise specified herein,
reasonable assumptions and approximations may be made with respect to
applicable taxes and reasonable, good faith interpretations of the
Code may be relied upon. The Company and the Executive shall furnish
such information and documents as may be reasonably requested in
connection with the performance of the calculations under this Section
6(d)(v). The Company shall bear all costs incurred in connection with
the performance of the calculations contemplated by this Section
6(d)(v). The Company shall pay the Gross-Up Amount to the Executive no
later than sixty (60) days following receipt of the Accounting Firm's
determination of the Gross-Up Amount.
(vi) None of the benefits described in this Section 6(d) will be
payable unless the Executive has signed a general release which has
become irrevocable, satisfactory to the Company in the reasonable
exercise of its discretion, releasing the Company, its affiliates,
including the REIT, and their officers, directors and employees, from
any and all claims or potential claims arising from or related to the
Executive's employment or termination of employment.
(vii) For purposes of this Agreement, a "Change in Control" shall
mean any of the following events:
(A) The ownership or acquisition (whether by a merger
contemplated by Section 6(d)(vii)(B) below, or otherwise) by any
Person (other than a Qualified Affiliate), in a single transaction or
a series of related or unrelated transactions, of Beneficial Ownership
of more than fifty percent (50%) of (1) the REIT's outstanding common
stock (the "Common Stock") or (2) the combined voting power of the
REIT's outstanding securities entitled to vote generally in the
election of directors (the "Outstanding Voting Securities");
(B) The merger or consolidation of the REIT with or into any
other Person other than a Qualified Affiliate, if, immediately
following the effectiveness of such merger or consolidation, Persons
who did not Beneficially Own Outstanding Voting Securities immediately
before the effectiveness of such merger or consolidation directly or
indirectly Beneficially Own more than fifty percent (50%) of the
outstanding shares of voting stock of the surviving entity of such
merger or consolidation (including for such purpose in both the
numerator and denominator, shares of voting stock issuable upon the
exercise of then outstanding rights (including conversion rights),
options or warrants) ("Resulting Voting Securities"), provided that,
for purposes of this Section 6(d)(vii)(B), if a
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Person who Beneficially Owned Outstanding Voting Securities
immediately before the merger or consolidation Beneficially Owns a
greater number of the Resulting Voting Securities immediately after
the merger or consolidation than the number the Person received solely
as a result of the merger or consolidation, that greater number will
be treated as held by a Person who did not Beneficially Own
Outstanding Voting Securities before the merger or consolidation, and
provided further that such merger or consolidation would also
constitute a Change in Control if it would satisfy the foregoing test
if rights, options and warrants were not included in the calculation;
(C) Any one or a series of related sales or conveyances to
any Person or Persons (including a liquidation) other than any one or
more Qualified Affiliates of all or substantially all of the assets of
the Company;
(D) Incumbent Directors cease to be a majority of the members
of the Board of Directors, where an "Incumbent Director" is (1) an
individual who is a member of the Board of Directors on the effective
date of this Agreement or (2) any new director whose appointment by
the Board of Directors or whose nomination for election by the
stockholders was approved by a majority of the persons who were
already Incumbent Directors at the time of such appointment, election
or approval, other than any individual who assumes office initially as
a result of an actual or threatened election contest with respect to
the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other
than the Board of Directors or as a result of an agreement to avoid or
settle such a contest or solicitation; or
(E) A Change in Control shall also be deemed to have occurred
immediately before the completion of a tender offer for the REIT's
securities representing more than fifty percent (50%) of the
Outstanding Voting Securities, other than a tender offer by a
Qualified Affiliate.
(F) For purposes of this Agreement, the following definitions
shall apply:
(a) "Beneficial Ownership," "Beneficially Owned" and
"Beneficially Owns" shall have the meanings provided in
Exchange Act Rule 13d-3;
(b) "Exchange Act" shall mean the Securities Exchange
Act of 1934, as amended;
(c) "Person" shall mean any individual, entity, or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of
the Exchange Act), including any natural person,
corporation, trust, association, company, partnership,
joint venture,
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limited liability company, legal entity of any kind,
government, or political subdivision, agency or
instrumentality of a government, as well as two or more
Persons acting as a partnership, limited partnership,
syndicate or other group for the purpose of acquiring,
holding or disposing of the REIT's securities; and
(d) "Qualified Affiliate" shall mean (i) any directly or
indirectly wholly owned subsidiary of the REIT or the
Company, (ii) any employee benefit plan (or related
trust) sponsored or maintained by the REIT or the Company
or by any entity controlled by the REIT or the Company;
or (iii) any Person consisting in whole or in part of the
Executive or one or more individuals who are then the
REIT's Chief Executive Officer or any other named
executive officer (as defined in Item 402 of Regulation
S-K under the Securities Act of 1933) of the REIT as
indicated in its most recent securities filing made
before the date of the transaction.
(e) Termination In the Event of Death or Disability.
(i) If the Executive's employment terminates because of his death,
any unvested portion of any stock option and any restricted stock
previously issued to the Executive by the Company Group shall become
fully vested as of the date of his death. In addition, the Executive's
estate shall be entitled to receive a pro-rata share of any
performance bonus to which he otherwise would have been entitled for
the fiscal year in which his death occurs.
(ii) In the event the Executive's employment terminates due to his
Disability, he shall be entitled to receive his Base Salary until such
date as he shall commence receiving disability benefits pursuant to
any long-term disability insurance policy or plan provided to him by
the Company Group. In addition, as of the effective date of the
termination notice specified in Section 5(d), the Executive shall vest
in any unvested portion of any stock option and any restricted shares
previously granted to him by the Company Group. The Executive also
shall be entitled to receive a pro-rata share of any performance bonus
to which he otherwise would have been entitled for the fiscal year in
which his employment terminates due to his Disability.
7. Confidentiality
(a) Definition of Proprietary Information. The Executive acknowledges that
he may be furnished or may otherwise receive or have access to confidential
information which relates to the Company Group's past, present or future
business activities, strategies, services or products, research and
development; financial analysis and data; improvements, inventions,
processes, techniques, designs or other technical data; profit
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margins and other financial information; fee arrangements; terms and
contents of leases, asset management agreements and other contracts; tenant
and vendor lists or other compilations for marketing or development;
confidential personnel and payroll information; or other information
regarding administrative, management, financial, marketing, leasing or
sales activities of the Company Group, or of a third party which provided
proprietary information to the Company Group on a confidential basis. All
such information, including any materials or documents containing such
information, shall be considered by the Company Group and the Executive as
proprietary and confidential (the "Proprietary Information").
(b) Exclusions. Notwithstanding the foregoing, Proprietary Information
shall not include information in the public domain not as a result of a
breach of any duty by the Executive or any other person.
(c) Obligations. Both during and after the Employment Period, the
Executive agrees to preserve and protect the confidentiality of the
Proprietary Information and all physical forms thereof, whether disclosed
to him before this Agreement is signed or afterward. In addition, the
Executive shall not (i) disclose or disseminate the Proprietary Information
to any third party, including employees of the Company Group (or their
affiliates) without a legitimate business need to know; (ii) remove the
Proprietary Information from the Company Group's premises without a valid
business purpose; or (iii) use the Proprietary Information for his own
benefit or for the benefit of any third party.
(d) Return of Proprietary Information. The Executive acknowledges and
agrees that all the Proprietary Information used or generated during the
course of working for the Company Group is the property of the Company
Group. The Executive agrees to deliver to the Company Group all documents
and other tangibles (including diskettes and other storage media)
containing the Proprietary Information at any time upon request by the
Board of Directors during his employment and immediately upon termination
of his employment.
8. Noncompetition
(a) Restriction on Competition. For the period of the Executive's
employment with the Company Group and for twelve (12) months following the
expiration or termination of the Executive's employment by the Company
Group (the "Restricted Period"), the Executive agrees not to engage,
directly or indirectly, as an owner, director, trustee, manager, member,
employee, consultant, partner, principal, agent, representative,
stockholder, or in any other individual, corporate or representative
capacity, in any of the following: (i) any public or private lodging
company, or (ii) any other business that the Company Group conducts as of
the date of the Executive's termination of employment. Notwithstanding the
foregoing, the Executive shall not be deemed to have violated this Section
8(a) solely by reason of his passive ownership of 1% or less of the
outstanding stock of any publicly traded corporation or other entity.
(b) Non-Solicitation of Clients. During the Restricted Period, the
Executive agrees not to solicit, directly or indirectly, on his own behalf
or on behalf of any other person(s),
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any client of the Company Group to whom the Company Group had provided
services at any time during the Executive's employment with the Company
Group in any line of business that the Company Group conducts as of the
date of the Executive's termination of employment or that the Company Group
is actively soliciting, for the purpose of marketing or providing any
service competitive with any service then offered by the Company Group.
(c) Non-Solicitation of Employees. During the Restricted Period, the
Executive agrees that he will not, directly or indirectly, hire or attempt
to hire or cause any business, other than an affiliate of the Company
Group, to hire any person who is then or was at any time during the
preceding six (6) months an employee of the Company Group and who is at the
time of such hire or attempted hire, or was at the date of such employee's
separation from the Company Group a vice president, senior vice president
or executive vice president or other senior executive employee of the
Company Group.
(d) Acknowledgement. The Executive acknowledges that he will acquire much
Proprietary Information concerning the past, present and future business of
the Company Group as the result of his employment, as well as access to the
relationships between the Company and the REIT and their clients and
employees. The Executive further acknowledges that the business of the
Company Group is very competitive and that competition by him in that
business during his employment, or after his employment terminates, would
severely injure the Company Group. The Executive understands and agrees
that the restrictions contained in this Section 8 are reasonable and are
required for the Company Group's legitimate protection, and do not unduly
limit his ability to earn a livelihood.
(e) Rights and Remedies upon Breach. The Executive acknowledges and agrees
that any breach by him of any of the provisions of Sections 7 and 8 (the
"Restrictive Covenants") would result in irreparable injury and damage for
which money damages would not provide an adequate remedy. Therefore, if the
Executive breaches, or threatens to commit a breach of, any of the
provisions of the Restrictive Covenants, the Company and its affiliates,
including the REIT, shall have the following rights and remedies, each of
which rights and remedies shall be independent of the other and severally
enforceable, and all of which rights and remedies shall be in addition to,
and not in lieu of, any other rights and remedies available to the Company
and its affiliates, including the REIT, under law or in equity (including,
without limitation, the recovery of damages):
(i) The right and remedy to have the Restrictive Covenants
specifically enforced (without posting bond and without the need to
prove damages) by any court of competent jurisdiction, including,
without limitation, the right to an entry against the Executive of
restraining orders and injunctions (preliminary, mandatory, temporary
and permanent) against violations, threatened or actual, and whether
or not then continuing, of such covenants; and
(ii) The right and remedy to require the Executive to account for
and pay over to the Company and its affiliates all compensation,
profits, monies, accruals,
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increments or other benefits (collectively, "Benefits") derived or
received by him as the result of any transactions constituting a
breach of the Restrictive Covenants, and the Executive shall account
for and pay over such Benefits to the Company and, if applicable, its
affected affiliates.
(f) Without limiting Section 11(i), if any court or other decision-maker
of competent jurisdiction determines that any of the Restrictive Covenants,
or any part thereof, is unenforceable because of the duration or
geographical scope of such provision, then, after such determination has
become final and unappealable, the duration or scope of such provision, as
the case may be, shall be reduced so that such provision becomes
enforceable and, in its reduced form, such provision shall then be
enforceable and shall be enforced.
9. Executive Representation
The Executive represents and warrants to the Company Group that he is not
now under any obligation of a contractual or other nature to any person,
business or other entity which is inconsistent or in conflict with this
Agreement or which would prevent him from performing his obligations under this
Agreement.
10. Arbitration
(a) Except as provided in Section 10(b), any disputes between the Company
Group and the Executive in any way concerning the Executive's employment,
the termination of his employment, this Agreement or its enforcement shall
be submitted at the initiative of either party to mandatory arbitration in
Maryland before a single arbitrator pursuant to the Commercial Arbitration
Rules of the American Arbitration Association, or its successor, then in
effect. The decision of the arbitrator shall be rendered in writing, shall
be final, and may be entered as a judgment in any court in the State of
Maryland. The parties irrevocably consent to the jurisdiction of the
federal and state courts located in Maryland for this purpose. Each party
shall be responsible for its or his own costs incurred in such arbitration
and in enforcing any arbitration award, including attorneys' fees and
expenses.
(b) Notwithstanding the foregoing, the Company or the REIT, in its sole
discretion, may bring an action in any court of competent jurisdiction to
seek injunctive relief and such other relief as the Company or the REIT
shall elect to enforce the Restrictive Covenants. If the courts of any one
or more of such jurisdictions hold the Restrictive Covenants wholly
unenforceable by reason of breadth of scope or otherwise it is the
intention of the Company Group and the Executive that such determination
not bar or in any way affect the Company Group's right, or the right of any
of its affiliates, to the relief provided in Section 8(e) above in the
courts of any other jurisdiction within the geographical scope of such
Restrictive Covenants, as to breaches of such Restrictive Covenants in such
other respective jurisdictions, such Restrictive Covenants as they relate
to each jurisdiction being, for this purpose, severable, diverse and
independent covenants, subject, where appropriate, to the doctrine of res
judicata. The parties hereby agree to waive any right to a trial by jury
for any and all disputes hereunder (whether or
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not relating to the Restrictive Covenants).
11. Miscellaneous
(a) Notices. All notices required or permitted under this Agreement shall
be in writing and shall be deemed effective (i) upon personal delivery,
(ii) upon deposit with the United States Postal Service, by registered or
certified mail, postage prepaid, or (iii) in the case of facsimile
transmission or delivery by nationally recognized overnight delivery
service, when received, addressed as follows:
(i) If to the Company or the REIT, to:
Highland Hospitality Corporation
0000 Xxxxxxxxxx Xxxxx
Xxxxx 000
XxXxxx, XX 00000
Attention: General Counsel
Fax No. 571/000-0000
(ii) If to the Executive, to:
Xxxxxxx X. Xxxxxxxx
0000 Xxxxxxxxx Xxxxx
Xxxxxx, XX 00000
or to such other address or addresses as either party shall
designate to the other in writing from time to time by like notice.
(b) Pronouns. Whenever the context may require, any pronouns used in this
Agreement shall include the corresponding masculine, feminine or neuter
forms, and the singular forms of nouns and pronouns shall include the
plural, and vice versa.
(c) Entire Agreement. This Agreement constitutes the entire agreement
between the parties and supersedes all prior agreements and understandings,
whether written or oral, relating to the subject matter of this Agreement.
(d) Amendment. This Agreement may be amended or modified only by a written
instrument executed by both the Company and the Executive, which amendment
or modification is consented to by the REIT.
(e) Governing Law. This Agreement shall be construed, interpreted and
enforced in accordance with the laws of the State of Maryland, without
regard to its conflicts of laws principles.
(f) Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of both parties and their respective successors and assigns,
including any entity with which or into which the Company or the REIT may
be merged or which may succeed to its assets or business or any entity to
which the Company or the REIT may
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assign its rights and obligations under this Agreement; provided, however,
that the obligations of the Executive are personal and shall not be
assigned or delegated by him.
(g) Waiver. No delays or omission by the Company, the REIT or the
Executive in exercising any right under this Agreement shall operate as a
waiver of that or any other right. A waiver or consent by the Company shall
not be effective unless consented to by the REIT. A waiver or consent given
by the Company or the Executive on any one occasion shall be effective only
in that instance and shall not be construed as a bar or waiver of any right
on any other occasion.
(h) Captions. The captions appearing in this Agreement are for convenience
of reference only and in no way define, limit or affect the scope or
substance of any section of this Agreement.
(i) Severability. In case any provision of this Agreement shall be held by
a court or arbitrator with jurisdiction over the parties to this Agreement
to be invalid, illegal or otherwise unenforceable, such provision shall be
restated to reflect as nearly as possible the original intentions of the
parties in accordance with applicable law, and the validity, legality and
enforceability of the remaining provisions shall in no way be affected or
impaired thereby.
(j) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
HIGHLAND HOSPITALITY, L.P.
By: Highland Hospitality Corporation, its
general partner
By: /s/ Xxxxx X. Xxxxxxx
------------------------------------------
Xxxxx X. Xxxxxxx
President and Chief Executive Officer
XXXXXXX X. XXXXXXXX
/s/ Xxxxxxx X. Xxxxxxxx
-----------------------------------------------
HIGHLAND HOSPITALITY CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
------------------------------------------
Xxxxx X. Xxxxxxx
President and Chief Executive Officer
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