REUNION HOSPITALITY TRUST, INC. EMPLOYMENT AGREEMENT
Exhibit 10.5
EMPLOYMENT AGREEMENT (this “Agreement”),
dated as
of ,
2010, between Reunion Hospitality Trust, Inc., a Maryland
corporation, its successors or assigns (the
“Company”), and E. Xxxxxxxx Xxxxx (the
“Employee”).
W
I T N E S S E
T H
WHEREAS, the Company intends to complete an initial
public offering and a concurrent private placement (the
“Offering”) of its common stock;
WHEREAS, the Company desires to employ the Employee as
Chief Executive Officer of the Company following the
Company’s Offerings;
WHEREAS, the Company and the Employee desire to enter
into this Agreement as to the terms of the Employee’s
employment as the Chief Executive Officer of the Company;
WHEREAS, the Employee’s agreement to be employed by
the Company as of the Effective Date (as defined in
Section 2 hereof) is a material inducement to the Company
to enter into this Agreement as of the date hereof and the date
of the Offering;
NOW, THEREFORE, in consideration of the foregoing, of the
mutual promises contained herein and of other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
| 1. | POSITION AND DUTIES. |
(a) During the Employment Term (as defined in Section 2
hereof), the Employee shall serve as the Chief Executive Officer
of the Company. In this capacity, the Employee shall have all
duties, authorities and responsibilities commensurate with the
duties, authorities and responsibilities of persons in similar
capacities in similarly sized companies, and such other duties,
authorities and responsibilities as the Executive Chairman (the
“Chairman”) of the Board of Directors of the
Company (the “Board”) shall designate from time
to time that are not inconsistent with the Employee’s
position as the Chief Executive Officer of the Company. The
Employee shall report to the Chairman and the Board.
(b) During the Employment Term, the Employee shall devote all of
the Employee’s business time, energy and skill and the
Employee’s best efforts to the performance of the
Employee’s duties with the Company; provided, that
the foregoing shall not prevent the Employee from
(i) serving on the boards of directors of non-profit
organizations and, with the prior written approval of the Board
(or the applicable committee(s) thereof) in each instance, other
for-profit companies, (ii) participating in charitable,
civic, educational, professional, community or industry affairs
or serving on advisory boards and committees, and
(iii) managing the Employee’s passive personal
investments; provided further that without
derogating from the foregoing, in no event shall the Employee be
obligated to devote any specific portion of his time to the
Company’s affairs.
2. EMPLOYMENT TERM. The Company agrees to
employ the Employee pursuant to the terms of this Agreement, and
the Employee agrees to be so employed, from the period
commencing as of the Effective Date and ending on
December 31, 2014 (the “Initial Term”).
Notwithstanding anything herein to the contrary, the Employee
agrees that he shall not terminate this Agreement prior to the
Effective Date. In addition, prior to the Effective Date, the
Employee shall agree to cooperate and permit the Company to use
his name in regulatory filings that he has approved, which
approval shall not unreasonably be withheld or delayed. Upon the
expiration of the Initial Term and each Renewal Term (as defined
below), as the case
1
may be, the term of this Agreement shall be automatically
extended for successive one-year periods (each, a
“Renewal Term”), provided,
however, that either party hereto may elect not to extend
the term of this Agreement by giving written notice to the other
party at least 90 days prior to the expiration of the
Initial Term or any Renewal Term. Notwithstanding the foregoing,
the Employee’s employment hereunder may be earlier
terminated at any time during the Initial Term or any Renewal
Term in accordance with Section 8 hereof, subject to
Section 9 hereof. The period of time between the Effective
Date and the termination of the Employee’s employment
hereunder for any reason shall be referred to herein as the
“Employment Term.” For purposes of this
Agreement, “Effective Date” means the date upon
which the Offering is consummated.
3. INITIAL BASE SALARY. From the Effective
Date until the occurrence of the earlier of (x) the
satisfaction of the Capital Deployment Hurdle (as defined
herein) or (y) 12 months from the Effective Date, the
Company agrees to pay the Employee an annual base salary that
initially shall be $150,000 (the “Initial Base
Salary”). The Initial Base Salary shall be payable in
accordance with the regular payroll practices of the Company.
4. CONTINUING BASE SALARY. Upon the occurrence
of the earlier of (x) the satisfaction of the Capital
Deployment Hurdle or (y) 12 months from the Effective
Date, the Employee’s base salary shall be increased to
$500,000 (the “Continuing Base Salary”). The
Continuing Base Salary shall be subject to annual review by the
Board (or a committee thereof), and, subject to Section 5
below, may be increased, but not decreased below its then
current level, from time to time by the Board.
For purposes of this Agreement, the “Capital Deployment
Hurdle” means the threshold at which the PI Transaction
Value of all completed Permitted Investments exceeds 75% of the
Escrow Proceeds. For purposes of this Agreement, “Escrow
Proceeds” means 98% of the Net Proceeds, which will be
placed in escrow with The Bank of New York Mellon, as escrow
agent, solely for use in connection with Permitted Investments.
For purposes of this Agreement, “PI Transaction
Value” means, without duplication, the sum of
(i) the cost of such Permitted Investment, whether
consummated or subject to definitive documentation pursuant to
which the Company provides a commitment of capital to consummate
such Permitted Investment; (ii) the amount of debt which is
senior in the capital structure to, or pari passu with, each
Permitted Investment (such as, in the event the Company makes a
mezzanine loan to a hotel owner, the amount of any mortgage loan
encumbering the hotel), only to the extent such Permitted
Investment, after consultation with third party accountants,
would reasonably be expected to be required to be consolidated
on the Company’s balance sheet pursuant to
U.S. generally accepted accounting principles
(“GAAP”); (iii) any equity with a
liquidation preference which is senior to, or pari passu with,
each Permitted Investment (such as, in the event the Company
purchases common equity in an entity that owns hotel properties,
any outstanding preferred equity issued by such entity which has
a liquidation preference senior in priority to the
Company’s investment), only to the extent such Permitted
Investment, after consultation with third party accountants,
would reasonably be expected to be required to be consolidated
on the Company’s balance sheet pursuant to GAAP;
(iv) estimated closing costs, due diligence costs and
applicable transaction expenses; and (v) estimated amounts
needed to cover future capital and funding commitments relating
to such Permitted Investment (as set forth in a written
agreement or budget) including, without limitation, capital
expenditures, escrows and follow-on investments or advances.
For purposes of this Agreement, “Permitted
Investment” means hospitality and related investments,
with a focus on distressed opportunities primarily in the United
States and Canada. For purposes of this Agreement, “Net
Proceeds” means the gross proceeds from the Offering
less the underwriting discounts and commissions and estimated
offering and organizational costs and offering expenses.
5. ANNUAL SALARY INCREASE; ANNUAL BONUS.
During the Employment Term, Employee shall receive an annual
salary increase equal to the greater of (i) 3% of
Employee’s Initial Base Salary or Continuing Base Salary,
as the case may be, or (ii) the annual percentage increase
cost of living in the city of New York as determined by the
Compensation Committee of the Board. In addition, during the
Employment Term, the Employee shall be eligible to receive an
annual discretionary incentive payment under the Company’s
annual bonus plan as in effect from time to time equal to either
50%, 75% or 125%
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of Employee’s Initial Base Salary or Continuing Base
Salary, as the case may be (the “Annual
Bonus”), upon the attainment of one or more
pre-established performance goals established by the
Company’s Compensation Committee and approved by the
Company’s Board of Directors, which shall include, but not
be limited to, operating the Company in a safe and sound manner
and complying with all federal or state laws, rules and
regulations.
6. EQUITY AWARDS. During the Employment Term,
the Employee shall be eligible to receive equity and long-term
incentive awards under any equity-based incentive compensation
plan adopted by the Company during the Employment Term for which
the Company’s senior executives are generally eligible. The
level of the Employee’s participation in any such plan, if
any, shall be determined in the sole discretion of the Board
from time to time.
| 7. | EMPLOYEE BENEFITS; CHANGE IN CONTROL BENEFITS. |
(a) BENEFIT PLANS. During the Employment Term, the
Employee shall be entitled to participate, in accordance with
the Company’s policies, in any employee benefit plan that
the Company has adopted or may adopt, maintain or contribute to
for the benefit of its employees generally from time to time
including health, vision, dental, disability, and life in a
manner commensurate with other employees of the Company, and in
accordance with, and subject to, the terms and conditions
thereof, including satisfying the applicable eligibility
requirements. Notwithstanding the foregoing, the Company may in
its sole discretion modify or terminate any employee benefit
plan at any time.
(b) VACATIONS; SICK LEAVE. During the Employment Term,
the Employee shall be entitled to four weeks of paid vacation
per calendar year (as prorated for partial years) in accordance
with the Company’s policy on accrual and use applicable to
employees as in effect from time to time. The Employee agrees
that any vacation taken by the Employee during the Employment
Term shall be taken at times which are mutually determined by
the Chairman and the Employee not to interfere, in any material
respect, with the Employee’s performance of his duties
hereunder. During the Employment Term, the Employee shall be
entitled to up to 30 days of sick leave per calendar year
for use in accordance with the Company’s policy on accrual
and use applicable to employees as in effect from time to time.
(c) BUSINESS AND ENTERTAINMENT EXPENSES. Upon
presentation of appropriate documentation, the Employee shall be
reimbursed in accordance with the Company’s expense
reimbursement policy, for all reasonable business and
entertainment expenses reasonably incurred in connection with
the performance of the Employee’s duties hereunder and the
Company’s policies with regard thereto.
(d) CHANGE IN CONTROL PAYMENT. If there is a Change in
Control during the Employment Terms and the Employee is
terminated without Cause or the Employee resigns for Good Reason
(as defined herein) within six months following such Change in
Control, the Employee shall be entitled to (a) (x) payment
of any accrued but unpaid Initial Base Salary or Continuing Base
Salary, as the case may be, through the date of termination,
paid in accordance with the regular payroll practices of the
Company; (y) reimbursement for any outstanding reasonable
business expenses and (z) 100% vesting of any unvested
securities previously awarded to the Employee using a time-based
method of vesting (collectively, the “CIC Accrued
Benefits”), (b) within 10 days of termination, a
single lump sum payment in an amount equal to (x) three
times the Employee’s Initial Base Salary or Continuing Base
Salary, as the case may be, plus (y) three times the
Employee’s average Annual Bonus paid over the prior three
years or such lesser period a bonus has been paid and
(c) retain any Company provided mobile phone. For purposes
of this Agreement, a “Change in Control” means
a change in control of the Company which will be deemed to have
occurred after the date hereof if:
(i) any “person” as such term is used 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 (A) the Company or any of its
subsidiaries, (B) any trustee or other fiduciary holding
securities under an employee benefit plan of the Company or any
of its affiliates, (C) an underwriter temporarily holding
securities pursuant
3
to an offering of such securities, (D) any corporation
owned, directly or indirectly, by the shareholders of the
Company in substantially the same proportions as their ownership
of the Company’s common shares, or (E) any person or
group as used in Rule
13d-1(b)
under the Exchange Act, is or becomes the Beneficial Owner, as
such term is defined in
Rule 13d-3
under the Exchange Act, directly or indirectly, of securities of
the Company representing at least 50% of the combined voting
power or common shares of the Company;
(ii) during any period of two consecutive years, individuals who
at the beginning of such period constitute the Board or whose
election by the Board or nomination for election by the
Company’s shareholders was approved by a vote of at least
two-thirds of the Board then still in office cease for any
reason to constitute at least a majority thereof;
(iii) 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 a merger or consolidation
which would result in the voting securities of the Company
outstanding immediately prior thereto 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, more than 50% of
the combined voting power and common shares of the Company or
such surviving entity or any parent thereof outstanding
immediately after such merger or consolidation; or
(iv) there is consummated an agreement for the sale or
disposition by the Company of all or substantially all of the
Company’s assets (or any transaction having a similar
effect, including a liquidation) other than a sale or
disposition by the Company of all or substantially all of the
Company’s assets to an entity, more than 50% of the
combined voting power and common shares of which is owned by
shareholders of the Company in substantially the same
proportions as their ownership of the common shares of the
Company immediately prior to such sale.
8. TERMINATION. The Employee’s employment
under this Agreement
and/or the
Employment Term shall terminate on the first of the following to
occur, whether before or after the Effective Date:
(a) DISABILITY. Upon the Employee’s receipt of
written notice from the Company of termination due to
Disability. For purposes of this Agreement,
“Disability” shall be defined as the inability
of the Employee to have performed the Employee’s material
duties hereunder due to a physical or mental injury, infirmity
or incapacity for 180 consecutive or non-consecutive days
(including weekends and holidays) in any
365-day
period. Disability shall be determined by the Board, in its
discretion, and any such determination shall be final and
binding on all parties.
(b) DEATH. Automatically on the date of death of the
Employee.
(c) CAUSE. Cause, as determined in this Section. The
Company shall not allege the existence of Cause without the
determination of such by the affirmative vote of a majority of
the entire Board. The Employee shall be entitled to written
notice from the Company of, together with a reasonably detailed
description of the basis for, any such determination that Cause
exists with respect to the Employee. The Employee’s
employment under this Agreement
and/or the
Employment Term shall terminate for Cause upon the 30th calendar
day following the Employee’s receipt of such written notice
from the Company, unless within such
30-day
period, the Employee has (x) cured such Cause (subject to
any limitations below) or (y) given written notice to the
Company of the Employee’s claim that Cause does not exist,
together with a reasonably detailed description of the basis for
such claim; provided, that if the Company and the Employee are
unable to resolve such claim within such
30-day
period, then such claim shall be submitted for resolution by
arbitration to be held in the City and County of New York in
accordance with the rules of the American Arbitration
Association then in effect (before a panel of three arbitrators
chosen in accordance with such rules), but in any event
providing for discovery on the same basis as if the dispute were
being litigated under the Federal Rules of Civil Procedure. If
the final outcome of any such arbitration is that Cause does
exist, then the Employee’s
4
employment
and/or the
Employment Term shall terminate for Cause within 30 additional
days after the Employee’s receipt of written notice of such
outcome, unless the Employee has cured such Cause within such
additional
30-day
period; provided, that repetition of the same refusal or failure
that has previously been determined hereunder to have
constituted Cause under subsection (ii) below may not be
cured. “Cause” shall mean any of the following:
(i) the Employee’s willful misconduct or gross negligence
in the performance of the Employee’s duties to the Company
that has or could reasonably be expected to have an adverse
effect on the Company;
(ii) the Employee’s refusal or failure to follow the written lawful directives of the Board (other than as a result of death
or a physical or mental incapacity);
(iii) indictment for, conviction of, or pleading of guilty or
nolo contendere to, a felony or any crime involving moral
turpitude (none of which shall be subject to cure as provided
above);
(iv) the Employee’s embezzlement or misappropriation of
corporate funds or other acts of theft, fraud, malfeasance,
self-dealing, dishonesty or breach of fiduciary duty in
connection with the performance of the Employee’s duties to
the Company;
(v) breach of Section 11 of this Agreement; or
(vi) material breach of any other Section of this Agreement or
any other agreement with the Company or a violation of the
Company’s code of conduct or other written policy.
(d) WITHOUT CAUSE. Immediately upon the Employee’s
receipt of written notice from the Company of an involuntary
termination without Cause (other than for death or Disability).
(e) GOOD REASON. Good Reason as determined in this
Section. The Company shall be entitled to written notice from
the Employee of, together with a reasonably detailed description
of the basis for, any allegation by the Employee that Good
Reason exists. Any claim that Good Reason exists shall be deemed
irrevocably waived by the Employee unless the Board receives
such written notice from the Employee within 60 days
following the date on which the Employee first becomes aware of
the event the Employee claims constitutes Good Reason. The
Employee’s employment under this Agreement
and/or the
Employment Term shall terminate for Good Reason upon the 30th
calendar day following the Employee’s receipt of such
written notice from the Employee, unless within such
30-day
period, the Company has (x) cured such Good Reason or
(y) given written notice to the Employee of the
Company’s claim that Good Reason does not exist, together
with a reasonably detailed description of the basis for such
claim; provided, that if the Company and the Employee are unable
to resolve such claim within such
30-day
period, then such claim shall be submitted for resolution by
arbitration to be held in the City and County of New York in
accordance with the rules of the American Arbitration
Association then in effect (before a panel of three arbitrators
chosen in accordance with such rules), but in any event
providing for discovery on the same basis as if the dispute were
being litigated under the Federal Rules of Civil Procedure. If
the final outcome of any such arbitration is that Good Reason
does exist, then the Employee’s employment
and/or the
Employment Term shall terminate for Good Reason within 30
additional days after the Company’s receipt of written
notice of such outcome, unless the Company has cured the
circumstances that gave rise to such Good Reason within such
additional
30-day
period.; provided, that repetition of the same diminution,
action or inaction that has previously been determined hereunder
to constitute Good Reason under any of clauses (i) through
(iii) below may not be cured. “Good
Reason” shall mean the occurrence of any of the
following events without the written consent of the Employee:
(i) diminution in the Employee’s Initial Base Salary or
Continuing Base Salary, as the case may be;
(ii) a material diminution of the Employee’s authority,
duties and responsibilities; or
5
(iii) any other action or inaction that constitutes a breach by
the Company of a material provision of this Agreement.
(f) RESIGNATION. Ninety days following the Company’s
receipt of a written notice setting forth the Employee’s
resignation without Good Reason; provided, that upon
receipt of such notice the Company may, in its sole discretion,
make such termination effective at an earlier date and the
termination shall still be treated as a voluntary termination by
the Employee without Good Reason.
(g) EXPIRATION OF EMPLOYMENT TERM; NON-EXTENSION OF
AGREEMENT. Upon the expiration of the Employment Term due to
a non-extension of the Agreement by the Company or the Employee
pursuant to the provisions of Section 2 hereof.
| 9. | CONSEQUENCES OF TERMINATION. |
(a) DEATH. In the event that the Employee’s
employment and the Employment Term ends on or after the
Effective Date on account of the Employee’s death, the
Employee’s estate shall be entitled to the following:
(i) a lump sum payment equal to the sum of (x) any unpaid
Initial Base Salary or Continuing Base Salary, as the case may
be, through the date of termination, plus (y) the Initial
Base Salary or Continuing Base Salary payable for the remainder
of the Employment Term then in effect, plus (z) the
Employee’s average Annual Bonus paid over the prior three
years (or such lesser period during which an Annual Bonus has
been paid), paid on the 60th day from the date of termination;
(ii) reimbursement for any reasonable business expenses incurred
through the date of termination pursuant to, and paid in
accordance with, Sections 7(c) and 24(b)(iii) of this
Agreement;
(iii) any accrued but unused vacation time or sick leave days
paid in accordance with Company policy;
(iv) such vested accrued benefits, if any, as to which the
Employee may be entitled under the Company’s employee
benefit plans and programs applicable to the Employee as of the
date of termination, which shall be paid or provided in
accordance with the terms of the applicable plan or
program; and
(v) the vesting as of the date of termination of any unvested
securities previously issued to the Employee using a time-based
method of vesting (collectively, Sections 9(a)(i) through
9(a)(v) hereof shall be hereafter referred to as the
“Accrued Benefits”).
(b) DISABILITY. In the event that the Employee’s
employment
and/or
Employment Term ends on or after the Effective Date on account
of the Employee’s Disability, the Company shall pay or
provide the Employee with the Accrued Benefits.
(c) TERMINATION FOR CAUSE OR AS A RESULT OF NON-EXTENSION OF
THIS AGREEMENT. If the Employee’s employment is
terminated (i) by the Company for Cause or (ii) as a
result of the non-extension of the Employment Term as provided
in Section 2 hereof, the Company shall pay to the Employee
any accrued but unpaid Initial Base Salary or Continuing Base
Salary, as the case may be, from the Effective Date through the
date of termination, paid in accordance with the regular payroll
practices of the Company, except as required otherwise by law.
Employee’s access to the Company’s employee benefit
plans and programs applicable to the Employee shall terminate as
of the date of termination, except as required otherwise by law.
(d) TERMINATION WITHOUT CAUSE OR FOR GOOD REASON. If the
Employee’s employment by the Company is terminated on or
after the Effective Date (x) by the Company without Cause
(other than for death or Disability), or (y) by the
Employee for Good Reason, the Company shall pay or provide the
Employee with the CIC Accrued Benefits and, subject to the
Employee’s compliance with
6
the obligations in Sections 10, 11 and 12 hereof, the
following, subject to the provisions of Section 24 hereof:
(i) a lump sum payment equal to (x) three times the
Employee’s Initial Base Salary or Continuing Base Salary
Rate, as the case may be, plus (y) three times the
Employee’s average Annual Bonus paid over the prior three
years (or over such lesser period in which the Annual Bonus was
paid), paid on the 60th day following the termination of
employment; and
(ii) subject to (A) the Employee’s timely election of
continuation coverage under the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended
(“COBRA”), and (B) the Employee’s
continued co-payment of premiums at the same level and cost to
the Employee as if the Employee were an employee of the Company
(excluding, for purposes of calculating cost, an employee’s
ability to pay premiums with pre-tax dollars) (the “active
employee rate”), continued participation in the
Company’s group health plan and life insurance plan (to the
extent permitted under applicable law and the terms of such
plan), which covers the Employee for a period of up to
12 months at the Company’s expense (other than as set
forth in
sub-section
(B)), provided, that the Employee is eligible and remains
eligible for COBRA coverage; and provided,
further, that in the event that the Employee obtains
other employment that offers group health benefits,
Company’s contribution to the coverage under this
Section 9(d)(ii) shall immediately cease and thereafter
shall be the sole responsibility of the Employee.
Notwithstanding the foregoing, if the benefits under the
Company’s group health plan will be taxable to the
Employee, then in lieu of the Company’s payments for such
continued participation, the Company shall reimburse the
Employee, subject to the terms herein, for his premiums for
continued coverage under such plan in the amount that the cost
of such coverage exceeds the active employee rate (as determined
based on the Employee’s premium rate in effect on the date
of termination).
Payments and benefits provided in this Section 9(d)(ii)
shall be in lieu of any termination or severance payments or
benefits for which the Employee may be eligible under any of the
plans, policies or programs of the Company.
(e) RESIGNATION. In the event that the Employee’s
employment and the Employment Term ends on or after the
Effective Date on account of the Employee’s resignation,
the Employee shall be entitled to the following:
(i) any unpaid Initial Base Salary or Continuing Base Salary, as
the case may be, from the Effective Date through the date of
termination, paid in accordance with the regular payroll
practices of the Company;
(ii) reimbursement for any unreimbursed business expenses
incurred through the date of termination pursuant to, and paid
in accordance with, Sections 7(c) and 24(b)(iii) of this
Agreement;
(iii) any accrued but unused vacation time or sick leave days
paid in accordance with Company policy; and
(iv) such vested accrued benefits, if any, as to which the
Employee may be entitled under the Company’s employee
benefit plans and programs applicable to the Employee as of the
date of termination (other than any severance pay plan), which
shall be paid or provided in accordance with the terms of the
applicable plan or program.
(f) OTHER OBLIGATIONS. Upon any termination of the
Employee’s employment with the Company, the Employee shall
promptly resign from any other position as an officer, director
or fiduciary of any Company-related entity.
10. RELEASE; NO MITIGATION. Any and all
amounts payable and benefits or additional rights provided to
the Employee upon a termination of his employment pursuant to
Section 9 shall only be payable or provided if the Employee
delivers to the Company and does not revoke a general release of
claims in favor of the Company and certain related parties in
the form attached hereto as Exhibit A, which
7
the Company shall provide to the Employee within seven days
following the date of termination. Such release shall be
executed and delivered (and no longer subject to revocation, if
applicable) within 60 days following termination. In no
event shall the Employee be obligated to seek other employment
or take any other action by way of mitigation of the amounts
payable to the Employee under any of the provisions of this
Agreement, nor shall the amount of any payment hereunder be
reduced by any compensation earned by the Employee as a result
of employment by a subsequent employer, except as provided in
Section 9(d)(ii) hereof. The Employee shall not be entitled
to any release of claims from the Company in favor of the
Employee.
| 11. | RESTRICTIVE COVENANTS. |
(a) CONFIDENTIALITY. The Employee agrees that the
Employee shall not, directly or indirectly, use, make available,
sell, disclose or otherwise communicate to any person, other
than in the course of the Employee’s assigned duties and
for the benefit of the Company, following the date of this
Agreement, any business and technical information or trade
secrets, nonpublic, proprietary or confidential information,
knowledge or data relating to the Company, any of its
subsidiaries, affiliated companies or businesses, which shall
have been obtained by the Employee following the date of this
Agreement. The foregoing shall not apply to information that
(A) was known to the public prior to its disclosure to the
Employee; (B) becomes generally known to the public
subsequent to disclosure to the Employee through no wrongful act
of the Employee or any representative of the Employee; or
(C) the Employee is required to disclose by applicable law,
regulation or legal process (provided, that the Employee
provides the Company with prior notice of the contemplated
disclosure and cooperates with the Company at its expense in
seeking a protective order or other appropriate protection of
such information).
(b) NONCOMPETITION. The Employee acknowledges that during
the Employment Term, the Employee’s performance of the same
services he provides for the Company for any Competing Business
will result in irreparable harm to the Company. Accordingly,
during the Employee’s employment hereunder and for a period
of one year after such employment terminates, the Employee
agrees that the Employee will not, directly or indirectly, own,
manage, operate, control, be employed by (whether as an
employee, consultant, independent contractor or otherwise, and
whether or not for compensation) or render services to any
person, firm, corporation or other entity in whatever form,
except for those set forth in Section 1(b), with respect to
the conduct of a Competing Business; provided,
however, that the Employee shall not be subject to the
provisions of this Section 11(b) to the extent the Employee
elects to forego the receipt of any severance payments or
benefits the Employee is otherwise entitled to receive pursuant
to this Agreement upon or following termination. Notwithstanding
the foregoing, nothing herein shall prohibit the Employee from
being, either directly or indirectly, a passive owner of not
more than 4.9% of the equity securities of a publicly traded
corporation the principal business of which is a Competing
Business. For purposes of this Agreement, “Competing
Business” means any person or entity that, as a
principal or substantial part of its business, invests in and
acquires hospitality and related investments, primarily in the
United States and Canada, or any other material business in
which the Company or any of its subsidiaries or affiliates are
engaged on the date of termination or have expended substantial
resources to investigate and have determined to engage on or
after such date, but does not mean any business that principally
invests in or acquires gaming or restaurant investments.
(c) NONSOLICITATION; NONINTERFERENCE. From the date of
this Agreement through and including the six months following
the termination of the Employee’s employment with the
Company, the Employee agrees that the Employee shall not, except
in the furtherance of the Employee’s duties hereunder,
directly or indirectly, individually or on behalf of any other
person, firm, corporation or other entity: (A) solicit, aid
or induce any customer of the Company or its subsidiaries or
affiliates that is then paying or has agreed in writing to pay
the Company not less than $250,000 per year); (B) solicit,
aid or induce any employee, representative or agent of the
Company or any of its subsidiaries or affiliates to leave such
employment or retention or to accept employment with or render
services to or with any other person, firm, corporation or other
entity unaffiliated with the Company or hire or retain any such
employee,
8
representative or agent, or take any action to materially assist
or aid any other person, firm, corporation or other entity in
identifying, hiring or soliciting any such employee,
representative or agent; or (C) interfere, or aid or induce
any other person or entity in interfering, with the relationship
between the Company or any of its subsidiaries or affiliates and
any of their respective vendors, joint venturers or licensors.
(d) RETURN OF COMPANY PROPERTY. Except as otherwise
provided herein, on the date of the Employee’s termination
of employment with the Company for any reason (or at any time
prior thereto at the Company’s request), the Employee shall
return all property belonging to the Company or its affiliates
(including, but not limited to, any Company-provided equipment,
or documents and property belonging to the Company).
(e) REFORMATION. If it is determined by a court of
competent jurisdiction in any state that any restriction in this
Section 11 is excessive in duration or scope or is
unreasonable or unenforceable under the laws of that state, it
is the intention of the parties that such restriction may be
modified or amended by the court to render it enforceable to the
maximum extent permitted by the laws of that state.
(f) TOLLING. In the event of any violation of the
provisions of this Section 11, the Employee acknowledges
and agrees that the post-termination restrictions contained in
this Section 11 shall be extended by a period of time equal
to the period of such violation, it being the intention of the
parties hereto that the running of the applicable
post-termination restriction period shall be tolled during any
period of such violation.
(g) SURVIVAL OF PROVISIONS. The obligations contained in
Sections 11 and 12 hereof shall survive the termination or
expiration of this Agreement, the Employment Term
and/or the
Employee’s employment with the Company and shall be fully
enforceable thereafter.
12. COOPERATION. Upon the receipt of
reasonable notice from the Company (including its outside
counsel), the Employee agrees that while employed by the Company
and thereafter, the Employee will respond and provide
information with regard to matters in which the Employee has
knowledge as a result of the Employee’s employment with the
Company, and will provide reasonable assistance to the Company,
its affiliates and their respective representatives in defense
of any claims that may be made against the Company or its
affiliates, and will assist the Company and its affiliates in
the prosecution of any claims that may be made by the Company or
its affiliates, to the extent that such claims may relate to the
period of the Employee’s employment with the Company. The
Employee agrees to promptly inform the Company if the Employee
becomes aware of any lawsuits involving such claims that may be
filed or threatened against the Company or its affiliates. The
Employee also agrees to promptly inform the Company (to the
extent that the Employee is legally permitted to do so) if the
Employee is asked to assist in any investigation of the Company
or its affiliates (or their actions), regardless of whether a
lawsuit or other proceeding has then been filed against the
Company or its affiliates with respect to such investigation,
and shall not do so unless legally required. If the Employee is
required to provide services pursuant to this Section 12,
then, in accordance with its reimbursement policies and
procedures as in effect, including the timely submission of
proper documentation supporting such expenses, the Company will
pay (or reimburse the Employee for) reasonable
out-of-pocket
travel, lodging, communication, duplication and legal expenses
incurred in connection with the performance of such services.
13. EQUITABLE RELIEF AND OTHER REMEDIES. The
Employee acknowledges and agrees that the Company’s
remedies at law for a breach or threatened breach of any of the
provisions of Section 11 or Section 12 hereof would be
inadequate and, in recognition of this fact, the Employee agrees
that, in the event of such a breach or threatened breach, in
addition to any remedies at law, the Company, without posting
any bond, shall be entitled to obtain equitable relief in the
form of specific performance, a temporary restraining order, a
temporary or permanent injunction or any other equitable remedy
which may then be available. In the event of a violation by the
Employee of Section 11 or Section 12 hereof, any
severance being paid or provided to the Employee pursuant to
this Agreement or otherwise shall immediately cease, and any
severance previously paid to the Employee shall be immediately
repaid to the Company.
9
14. NO ASSIGNMENTS. This Agreement is personal
to each of the parties hereto. Except as provided in this
Section 14 hereof, no party may assign or delegate any
rights or obligations hereunder without first obtaining the
written consent of the other party hereto. The Employee hereby
acknowledges and agree that the Company may assign this
Agreement (including the provisions of Section 11 and
Section 12) to any successor to all or substantially
all of the business
and/or
assets of the Company. As used in this Agreement,
“Company” shall mean the Company and any
successor to its business
and/or
assets.
15. NOTICE. For purposes of this Agreement,
notices and all other communications provided for in this
Agreement shall be in writing. Each notice and all other
communications shall be delivered either by hand, by confirmed
facsimile or electronic mail (but only if followed by
transmittal by national overnight courier or hand delivered in
person on the next business day), by guaranteed overnight
delivery service, or by United States registered or certified
mail, return receipt requested, postage prepaid, addressed as
follows:
If to the Employee:
At the address (or to the facsimile number) shown
on the records of the Company
If to the Company:
00 Xxxx 00xx Xxxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxx, Executive Chairman
Facsimile:
(000) 000-0000
and
1370 Avenue of the Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: E. Xxxxxxxx Xxxxx, Chief Executive Officer
Facsimile:
(000) 000-0000
with a copy to:
Proskauer Rose LLP
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx
00000-0000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Facsimile:
(000) 000-0000
or to such other address as either party may have furnished to
the other in writing in accordance herewith. Each notice and all
other communications shall be deemed duly given and effective
upon actual receipt (or refusal of receipt).
16. SECTION HEADINGS; INCONSISTENCY. The
section headings used in this Agreement are included solely for
convenience and shall not affect, or be used in connection with,
the interpretation of this Agreement. In the event of any
inconsistency between the terms of this Agreement and any form,
award, plan or policy of the Company, the terms of this
Agreement shall govern and control.
17. SEVERABILITY. The provisions of this
Agreement shall be deemed severable and the invalidity or
unenforceability of any provision shall not affect the validity
or enforceability of the other provisions hereof.
10
18. COUNTERPARTS. This Agreement may be
executed in several counterparts, each of which shall be deemed
to be an original but all of which together will constitute one
and the same instrument.
19. GOVERNING LAW; CONSENT TO JURISDICTION; WAIVER
OF JURY TRIAL. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of
New York, without regard to its principles of conflicts of laws.
Each of the Parties irrevocably submits to the exclusive
jurisdiction of the courts of the State of New York located in
New York City or the United States District Court for the
Southern District of New York for the purpose of any suit,
action, proceeding or judgment relating to or arising out of
this Agreement and the transactions contemplated hereby. Service
of process in connection with any such suit, action or
proceeding may be served on each party hereto anywhere in the
world by the same methods as are specified for the giving of
notices under this Agreement. Each of the parties hereto
irrevocably consents to the jurisdiction of any such court in
any such suit, action or proceeding and to the laying of venue
in such court. Each party hereto irrevocably waives any
objection to the laying of venue of any such suit, action or
proceeding brought in such courts and irrevocably waives any
claim that any such suit, action or proceeding brought in any
such court has been brought in an inconvenient forum. EACH OF
THE PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY
IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT AND REPRESENTS
THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.
20. INDEMNIFICATION. The Company hereby agrees
to indemnify the Employee and hold the Employee harmless to the
extent provided under the By-Laws of the Company and the
Indemnification Agreement, dated as of
[ ],
2010 between the Company and the Employee against and in respect
of any and all actions, suits, proceedings, claims, demands,
judgments, costs, expenses (including reasonable attorney’s
fees), losses, and damages resulting from the Employee’s
good faith performance of the Employee’s duties and
obligations with the Company. This obligation shall survive the
termination of the Employee’s employment with the Company.
21. LIABILITY INSURANCE. From and after the
Effective Date, the Company shall cover the Employee under
directors’ and officers’ liability insurance and
professional liability insurance both during and, while
potential liability exists, after the term of this Agreement in
the same amount and to the same extent as the Company covers its
other officers and directors.
22. 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 Employee and such officer or director as may be
designated by the Board. No waiver by either party hereto at any
time of any breach by the other party hereto of, or 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 together with all
exhibits hereto sets forth the entire agreement of the parties
hereto in respect of the subject matter contained herein and
supersedes any and all prior agreements or understandings,
written or oral, between the Employee and either the Company
with respect to the subject matter hereof. No agreements or
representations, oral or otherwise, express or implied, with
respect to the subject matter hereof have been made by either
party which are not expressly set forth in this Agreement.
23. REPRESENTATIONS. The Employee represents
and warrants to the Company that (a) the Employee has the
legal right to enter into this Agreement and to perform all of
the obligations on the Employee’s part to be performed
hereunder in accordance with its terms, and (b) the
Employee is not a party to any agreement or understanding,
written or oral, and is not subject to any restriction, which,
in either case, could prevent the Employee from entering into
this Agreement or performing all of the Employee’s duties
and obligations hereunder. In addition, the Employee
acknowledges that the Employee is aware of Section 304
(Forfeiture of Certain Bonuses and Profits) of the
Xxxxxxxx-Xxxxx Act of 2002 and the right of the Company to be
reimbursed for certain payments to the Employee in compliance
therewith. In addition, the Employee hereby represents, warrants
and agrees with the Company that: (i) a portion of the
compensation payable to the Employee pursuant to this Agreement
constitutes good and valuable
11
consideration, the receipt and sufficiency of which are hereby
expressly acknowledged, for the covenants and agreements
contained in Section 11 and Section 12; (ii) the
covenants and agreements contained in Section 11 and
Section 12 are reasonable, appropriate and suitable in
their geographic scope, duration and content; the Employee shall
not, directly or indirectly, raise any issue of the
reasonableness, appropriateness and suitability of the
geographic scope, duration or content of such covenants and
agreements in any proceeding to enforce such covenants and
agreements; and such covenants and agreements shall survive the
termination of the Employees employment for the durations set
forth therein; (iii) the enforcement of any remedy under
this Agreement will not prevent the Employee from earning a
livelihood because the Employee’s past work history and
abilities are such that the Employee reasonably can expect to
find work, if he so chooses, in other areas and lines of
business; (iv) the covenants and agreements stated in
Section 11 and Section 12 are essential for the
Employer’s reasonable protection; and (v) the Company
has reasonably relied on these covenants and agreements by the
Employee.
| 24. | TAX MATTERS. |
(a) WITHHOLDING. The Employee shall pay, or make
arrangements satisfactory to the Company to pay, in a manner
satisfactory to the Company, an amount equal to the amount of
all applicable federal, state and local taxes (but not the
Company’ share of Social Security taxes) that the Company
is required to withhold at any time. In the absence of such
arrangements, the Company may withhold from any and all amounts
payable under this Agreement such federal, state and local taxes
as may be required to be withheld pursuant to any applicable law
or regulation.
(b) SECTION 409A COMPLIANCE.
(i) The parties agree that this Agreement shall be interpreted
to comply with Code Section 409A of the Internal Revenue
Code of 1986, as amended (the “Code”) and the
regulations and guidance promulgated thereunder to the extent
applicable (collectively “Code
Section 409A”) and all provisions of this
Agreement shall be construed in a manner consistent with the
requirements for avoiding taxes or penalties under Code Section
409A. In no event will the Company be liable for any additional
tax, interest or penalties that may be imposed on the Employee
by Code Section 409A or any damages for failing to comply
with Code Section 409A or the provisions of this
Section 24.
(ii) Notwithstanding any provision to the contrary in this
Agreement, a termination of the Employee’s employment shall
not be deemed to have occurred for purposes of any provision of
this Agreement providing for the payment of any amounts or
benefits upon or following a termination of employment unless
such termination is also a “separation from service”
(within the meaning of Code Section 409A) and, for purposes
of any such provision of this Agreement, references to a
“termination” or “termination of employment”
will mean separation from service. If the Employee is deemed on
the date of termination of his employment to be a
“specified employee”, within the meaning of that term
under Section 409A(a)(2)(B) of the Code and using the
identification methodology selected by the Company from time to
time, or if none, the default methodology set forth in Code
Section 409A, then with regard to any payment or the
providing of any benefit that constitutes “non-qualified
deferred compensation” pursuant to Code Section 409A,
such payment or benefit will not be made or provided prior to
the earlier of (i) the expiration of the six-month period
measured from the date of the Employees separation from service
or (ii) the date of the Employee’s death. On the first
day of the seventh month following the date of the
Employee’s separation from service or, if earlier, on the
date of the Employee’s death, all payments delayed pursuant
to this Section (whether they would have otherwise been payable
in a single sum or in installments in the absence of such delay)
will be paid or reimbursed to the Employee in a lump sum, and
any remaining payments and benefits due under this Agreement
will be paid or provided in accordance with the normal payment
dates specified for them herein.
12
(iii) Any reimbursement of costs and expenses provided for under
this Agreement shall be made no later than December 31 of the
calendar year next following the calendar year in which the
expenses to be reimbursed are incurred.
(iv) With regard to any provision herein that provides for
reimbursement of expenses or in-kind benefits, except as
permitted by Code Section 409A, (i) the right to
reimbursement or in-kind benefits is not subject to liquidation
or exchange for another benefit, and (ii) the amount of
expenses eligible for reimbursement, or in-kind benefits,
provided during any taxable year shall not affect the expenses
eligible for reimbursement, or in-kind benefits to be provided,
in any other taxable year, provided, that the foregoing
clause (ii) shall not be violated with regard to expenses
reimbursed under any arrangement covered by Code
Section 105(b) solely because such expenses are subject to
a limit related to the period the arrangement is in effect.
(v) With regard to any installment payments provided for herein,
each installment thereof shall be deemed a separate payment for
purposes of Code Section 409A.
(vi) Whenever a payment under this Agreement specifies a payment
period with reference to a number of days, the actual date of
payment within the specified period shall be within the sole
discretion of the Company.
(vii) To the extent that this Agreement provides for the
Employee’s indemnification by the Company
and/or the
payment or advancement of costs and expenses associated with
indemnification, any such amounts shall be paid or advanced to
the Employee only in a manner and to the extent that such
amounts are exempt from the application of Code
Section 409A in accordance with the provisions of Treasury
Regulation 1.409A-1(b)(10).
25. WAIVER. The Employee hereby acknowledges
that the Escrow Proceeds will be placed in an escrow account
(the “Escrow Account”). The Employee hereby
waives any claim of any kind in or to any monies in the Escrow
Account established by the Company (the
“Claim”) that the Employee may have in the
future as a result of, or arising out of, any negotiations,
contracts or agreements with the Company and will not seek
recourse against the Escrow Account for any reason whatsoever.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
13
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
| By: |
|
Name: Xxxxx X. Xxxx
Title: Executive Chairman
E. Xxxxxxxx Xxxxx
14
