SEPARATION AGREEMENT AND MUTUAL GENERAL RELEASE OF CLAIMS
Exhibit 10.3
SEPARATION AGREEMENT AND MUTUAL GENERAL RELEASE OF CLAIMS
Xxxxxx X. Xxxxxx (hereinafter referred to as “Employee”) and Starwood Hotels & Resorts
Worldwide, Inc. (hereinafter referred to as the “Company”) agree as follows:
ONE: Termination of Employment.
Employee acknowledges that his employment with the Company will end upon his resignation, which he
hereby tenders as a result of a reduction in his role and which will be effective April 1, 2007
(hereinafter referred to as the “Termination Date”). After the Termination Date, Employee will
perform no further duties, functions or services for the Company or any of its affiliates, nor will
he be entitled to any further compensation and/or benefits except as described herein.
From and after the date hereof (the “Effective Date”) through the Termination Date (the “Transition
Period”), Employee will remain employed with the Company and work with Xxxxxx X. Xxxxx and such
other senior executives of the Company designated by Xx. Xxxxx, on an as needed basis to transition
responsibilities and information. During the Transition Period, Employee shall continue to receive
his annual salary of $468,000 semi monthly, less applicable deductions, paid out in regular payroll
periods and the Company shall continue to pay for Employees health insurance coverage, minus
Employee’s normal contributions and options and restricted stock granted under the Company’s Long
Term Incentive Plans shall continue to vest according to their original vesting schedule. Following
the Termination Date, Employee shall be eligible for continued insurance coverage under COBRA.
Notwithstanding the foregoing, during the Transition Period, Employee will not be eligible to
receive any further equity grants (restricted stock or options) from the Company.
Without limiting the effect of any other provision of this Agreement, if at any time prior to the
Termination Date, Employee’s employment is terminated “for cause” or if Employee voluntarily
resigns, all payments and other benefits under this Agreement shall cease immediately and Employee
shall not be entitled to any further payment and/or benefits under this Agreement, including, but
not limited to the severance payments and benefits described in Paragraph TWO below. If Employee
is terminated for cause or voluntarily resigns his employment, the date that Employee’s employment
is terminated for cause or he voluntarily resigns shall be deemed the Termination Date. For
purposes of this Agreement, “cause,” shall mean (i) any material breach by Employee of any of the
duties, responsibilities or obligations of his employment or any of the policies or practices of
the Company; (ii) Employee’s willful failure or refusal to properly perform (as determined by
Company in its reasonable discretion and judgment), or the habitual neglect of, the duties,
responsibilities or obligations of his employment, or to properly perform or follow (as determined
by Company in its reasonable discretion and judgment) any lawful order or direction by the Company;
(iii) any acts or omissions by Employee that constitute (as determined by Company in its reasonable
discretion and judgment) fraud, dishonesty, breach of duty of loyalty, breach of trust, gross
negligence, civil or criminal illegality, or any other misconduct or behavior that could subject to
civil or criminal liability or otherwise adversely and
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materially affect the business, interests or reputation of the Company or any of its affiliates.
For the purposes of the acts described in items (i) through (iii) of this paragraph, such
determinations shall be made by the Company in its reasonable discretion and judgment.
TWO: Benefits.
Provided that (i) Employee executes this Agreement; (ii) his employment is not terminated for cause
prior to April 1, 2007; (iii) he does not voluntarily resign prior to April 1, 2007, and (iv) that
within twenty-one (21) days after the Termination Date, Employee shall have executed and delivered
to the Company a General Release and Waiver (“Release”) in the form annexed hereto as Appendix B;
and (v) Employee does not revoke either this Agreement or the Release, and in consideration for
Employee’s agreements and covenants including the release of claims set forth in this Agreement and
as full and complete and final satisfaction of any and all claims which Employee had, has or may
have against the Company, the Company agrees that within 21 days after the Termination Date and
subject to the conditions to payment set forth herein, it will (i) pay Employee an amount equal to
12 months of his base salary in a lump sum of $468,000, less applicable withholdings; (ii) pay
Employee an additional amount in a lump sum equal to $122,850 (such amount equal to Employee’s
target bonus for the 2006 performance year of $351,000 (representing 75% of Employee’s base salary
of $468,000) less the $228,150 previously paid to Employee on March 1, 2007), less applicable
withholdings; (iii) make COBRA premium payments on Employee’s behalf, minus Employee’s normal
contributions, for a period of 12 months should Employee choose to continue coverage under the
Company’s applicable plans after the Termination Date; and (iv) accelerate the vesting of 50% of
Employee’s then unvested restricted stock and options (on a tranche by tranche basis) as of the
Termination Date, as more fully set forth on Appendix A attached hereto. In addition, Employee
shall be entitled to receive a payout for accrued and unused vacation time as of the Termination
Date in accordance with the Company’s policies.
Subject to the terms herein, Employee will remain an active employee during the Transition Period.
Notwithstanding the foregoing, during the Transition Period, Employee will not be eligible to
participate and expressly and knowingly waives any right to participate in any employee benefit
plans (except health and life insurance plans) within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended, (“ERISA”) or any other plan, policy or
arrangement of the Company, including, but not limited to, any plan, policy or arrangement relating
to bonuses, profit sharing, compensation, pension, severance, deferred compensation, fringe
benefits, insurance, welfare, post-retirement, stock purchases, disability, accidents, sick time,
vacation pay, termination, unemployment, executive compensation, incentives, commissions or sales
arrangements, change in control, and other plan, agreement, policy, or arrangement (whether written
or unwritten), such as the Annual Incentive Plan; the Long Term Incentive Plan; and the Employee
Stock Purchase Plan; nor will he be eligible to receive any incentives, bonuses, further option or
stock grants under such plans.
Employee will not be entitled to any of the severance payments or benefits set forth in Paragraph
TWO or any other consideration under this Agreement until at least seven (7) business days after
the later of all of the following: (i) receipt by the Company of this Agreement signed by Employee;
(ii) receipt by the Company on or about the Termination Date of the Release annexed
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hereto as Appendix B signed by Employee; (iii) expiration of the revocation period set forth in
numbered Paragraph EIGHT, without Employee revoking this Agreement; and (iv) expiration of the
revocation period set forth in the Release annexed hereto as Exhibit B signed by Employee, without
Employee revoking such Release.
THREE: Mutual General Release.
In exchange for the agreement to provide the severance pay and other benefits and arrangements
provided for in this Agreement, Employee understands that he is waiving any and all claims Employee
may have against the Company and its affiliates and subsidiaries and its and their officers,
directors, employees, agents, shareholders, employee benefit programs, administrators, insurers,
attorneys and successors and assigns (collectively “Releasees”), from any and all claims, actions,
suits, damages, complaints and grievances the Employee, his attorneys, heirs, dependents,
beneficiaries, executors, administrators, successors, and assigns, may have related to the
Employee’s employment with the Company or the termination of that employment. This includes a
release of any rights or claims the Employee may have under the Age Discrimination in Employment
Act, which prohibits discrimination in employment based on age; Title VII of
the Civil Rights Act of 1964, as amended, and the Civil Rights Act of 1991, which prohibit
discrimination in employment based on race, color, national origin, ancestry, religion or sex; the
Pregnancy Discrimination Act, which prohibits discrimination based on pregnancy; the Equal Pay Act,
which prohibits paying men and women unequal pay for equal work; the Civil Rights Acts of 1866 and
1871, as amended, which protect against certain discrimination and violations of individuals’ civil
rights; the Americans with Disabilities Act, which prohibits discrimination on the basis of
physical or mental disability; the Employee Retirement Income Security Act (ERISA), which regulates
certain conduct and practices relating to employee benefit and health plans; the Family and Medical
Leave Act, which provides time off to employees for certain family and medical events and prohibits
discrimination relating to such leaves of absence; the Immigration Reform and Control Act, which
prohibits discrimination based upon an individual’s national origin citizenship status and/or work
authorization documents; the New York State Executive Law, the New York City Administrative Code,
and the New York State Constitution; or any other federal, state or local laws or regulations
prohibiting employment discrimination or regulating employment or termination of employment. This
also includes a release by the Employee of any claims for wrongful discharge and any other common
law claims. This release applies to all claims through the date of execution of this Agreement and
covers both claims that the Employee knows about and those he may not know about but excludes (i)
any claim by Employee to enforce the terms of this Agreement; and (ii) any claim to enforce
Employee’s indemnification rights; and (iii) any claims related to actions or omissions occurring
after the execution of this Agreement.
In consideration of Employee’s agreements hereunder, the Company, on its own behalf and on behalf
of its current and former affiliates or related companies, subsidiaries, branches and divisions,
and the successors and assigns of all of the foregoing (collectively, the “Company Releasor”)
hereby releases Employee and Employee’s heirs, executors, administrators, successors and assigns
from or in connection with any and all actions, claims or demands, known or unknown and of any
nature whatsoever and which Company Releasor ever had, now has or hereafter can, shall or may have
as of the date hereof relating to Employee’s employment with
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the Company, except that this Release shall not apply to (i) any obligation of Employee pursuant to
this Agreement and the Non-Solicitation, Confidentiality and Intellectual Property Agreement dated
March 24, 2005 (the “Confidentiality Agreement”); (ii) any act by Employee during his employment
that would constitute fraud or embezzlement; or (iii) any actions, claims or demands related to
actions or omissions occurring after the date hereof.
FOUR: Acknowledgment of Full Payment.
Employee acknowledges that the payments and arrangements specified in Paragraph TWO above represent
sufficient consideration for Employee’s release of claims and the other covenants contained in this
Agreement. Employee expressly acknowledges that the severance pay provided for in this Agreement
exceeds, supersedes and extinguishes any amount, if any, to which Employee may be entitled under
any employment agreement, verbal or written, as well as any employment or personnel policies,
procedures or handbooks including but not limited to severance plans, policies or precedent
utilized by the Company or any other legal obligation which the Company may have to Employee.
Employee further acknowledges that in the absence of this Agreement, Employee would not be entitled
to, among other things, all of the payments and benefits specified in paragraph TWO above. Other
than Employee’s accrued but unused vacation pay for which Employee will be compensated and
Employee’s 401k plan benefits, Employee also acknowledges that the Company has paid all sums owed
to him as a result of his employment with the Company and/or the termination of that employment and
that, other than as provided in this Agreement, Employee is not entitled to, among other things,
any further pay, benefits or severance.
Employee and the Company acknowledge and agree that to the extent that Employee currently holds
stock options and restricted stock, that this information is accurately set forth on Appendix A
hereto, Employee has no other rights that relate to the securities of the Company or any of its
affiliates or subsidiaries and that other than as set forth herein such equity will expire in
accordance with the applicable long-term incentive plan and/or stock option agreements and/or
restricted stock agreements. Other than the fact that Employee’s employment was terminated on the
Termination Date and other than as detailed expressly in Paragraph TWO herein, nothing in this
Agreement shall be construed to alter, amend or modify the terms and conditions governing any
restricted stock, stock options or similar rights, and any rights pertaining thereto, granted to
Employee prior to the Termination Date.
FIVE: Termination of All Existing Agreements.
Except as otherwise expressly provided herein and other than agreements relating to
confidentiality, non-solicitation, non-disclosure and non-competition, including, without
limitation, the Confidentiality Agreement, all rights and obligations of the Company and Employee
under any employment agreement Employee may have had with the Company, and any other agreement,
arrangement, obligation or understanding between the Company and the Employee are hereby cancelled
and terminated as of the Termination Date without liability of any party thereunder.
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SIX: Non-Admission of Liability.
The parties have entered into this Agreement to effect a mutually acceptable termination of
Employee’s employment with the Company. Neither the Company nor the Employee believes nor admits
that either or both of them have done anything wrong.
SEVEN: Period for Review and Consideration of Agreement.
Employee understands that he has been given a period of 21 calendar days to review and consider
this Agreement. Employee further understands that he may take as much or as little of this 21-day
period of time to consider this Agreement as he wishes, before signing this Agreement.
EIGHT: Revocation Period and Payment of Benefits.
This Agreement will not become effective or binding on the parties until seven (7) days after it is
signed, during which time Employee may revoke this Agreement if he desires. Any revocation must be
in writing and directed to Chief Administrative Officer and General Counsel, 0000 Xxxxxxxxxxx
Xxxxxx, Xxxxx Xxxxxx, XX 00000.
NINE: Encouragement to Consult with Attorney.
Employee is encouraged to consult with an attorney before signing this Agreement. Employee
understands that whether to do so is his decision.
TEN: Binding Agreement.
This Agreement shall be binding upon and inure to the benefit of the parties, as well as their
heirs, administrators, representatives, agents, executors, successors and assigns.
ELEVEN: Arbitration.
Any controversy, dispute or claim arising out of or related to this Agreement or its enforceability
shall be finally settled by final and binding arbitration conducted by a single arbitrator selected
by the parties in accordance with the Employment Rules of the American Arbitration Association.
TWELVE: Confidentiality.
Employee represents and agrees that he will keep the terms and dollar amount contained in this
Agreement confidential, and that he will not disclose any information concerning this Agreement to
any third person, including, but not limited to any past or present employee of the Company, except
as may be required by law. Nothing herein shall preclude Employee from disclosing the terms of
this Agreement to his spouse or to his accountant, legal counsel, insurer or tax advisors; provided
that his spouse and such accountant, legal counsel, insurer or tax advisors are advised of and
agree to be bound by the provisions of this Paragraph. Employee acknowledges that he
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will be responsible for any violation of the terms of this Paragraph TWELVE by any of those
persons. The Company represents and agrees that it will keep the terms and dollar amount contained
in this Agreement confidential, and that it will not disclose any information concerning this
Agreement to any third person; provided that the Company may disclose the terms of this Agreement
(i) to its directors, officers and employees who need to know such information in the course of
their duties and (ii) as may be required under the applicable law, United States securities laws,
the rules and regulations of the Securities and Exchange Commission or in a proceeding before a
court, arbitrator or administrative agency, including a national securities exchange.
THIRTEEN: Confidential Information.
As a senior executive officer of the Company, Employee acknowledges that he has had access to
Confidential Information (as hereinafter defined) of the Company through the Termination Date.
Without limiting Employee’s continuing legal obligations pursuant to the Confidentiality Agreement,
in recognition of Employee’s legal obligations and the consideration set forth in this Agreement,
Employee agrees not to disclose, communicate or divulge to, or use for the direct or indirect
benefit of, any person (including Employee), firm, association or other entity (other than the
Company or its affiliates) any Confidential Information.
“Confidential Information” includes, but is not limited to, customer lists, customer financial
information, vendor lists, joint venture lists, actual, contemplated and potential development
projects, opportunities and partners, development strategies, brand marketing and other brand
strategies, information relating to any current, past or prospective management agreement or joint
venture, design plans and strategies, personnel information, labor and personnel strategies,
databases, computer programs and software, frameworks, designs, models, blueprints, marketing
programs and plans, sales, financial, design, training and technical information and plans, sales
data and contacts, business methods, business policies, procedures, techniques, research or
development projects or results, trade secrets (which includes the Company’s customer and
prospective customer lists), pricing policies, financial records, or other financial, commercial,
business or technical information relating to the Company or any of its subsidiaries.
Employee hereby represents and agrees that on or before the Termination Date: (i) Employee has
returned or will return to the Company, and has not retained or will not retain originals or any
copies of all documents, records or materials of any kind, whether written or electronically
created or stored, which contain, relate to or refer to any Confidential Information (“Confidential
Materials”); and (ii) Employee has not disclosed and will not disclose any Confidential Information
or Confidential Materials to any person or entity without the express written authorization of an
authorized officer of the Company.
In the event that Employee receives a subpoena or any other written or oral request for disclosure
or release of any Confidential Information, Confidential Materials or any other information
concerning the Company or its subsidiaries, or its or their current or former employees, officers,
directors, shareholders or agents, Employee shall, within two (2) business days of the service or
receipt of such subpoena or other request notify the Company in writing directed to Chief
Administrative Officer and General Counsel, Starwood Hotels & Resorts Worldwide, Inc., 0000
Xxxxxxxxxxx Xxxxxx, Xxxxx Xxxxxx, Xxx Xxxx 00000 and provide the Company with a copy of
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any subpoena or other written request, or disclose the nature of the request for information, if
oral.
FOURTEEN: Noninterference.
During the period commencing on the Termination Date and ending on the first anniversary of the
Termination Date, Employee solely with respect to matters of which he is aware on or before the
Termination Date, shall not take or omit to take any action or actions which are intended to or
actually cause or encourage any person or prospective entity with which the Company intends to
enter into a business relationship or transaction (or any agent or affiliate thereof) to fail to
enter into the contemplated business relationship or complete the contemplated transaction.
Without limiting the generality of the foregoing, Employee agrees not to pursue on his behalf or on
behalf of any other person or entity or otherwise interfere with the Company’s pursuit of any
pending or contemplated deal, merger or acquisition of which he was aware on or before the
Termination Date.
FIFTEEN: Non-Disparagement.
Employee agrees not to engage in any act or say, publish or disseminate anything (either directly
or by or through another person) that is intended, or may reasonably be expected, to harm the
reputation, business or operations of the Company, its customers, its employees, officers,
directors or shareholders prior to or after the Termination Date. The Company agrees that it will
not make any statements that are intended, or would reasonably be expected, to disparage or defame
Employee.
SIXTEEN: Future Cooperation.
After the Termination Date, Employee will comply with reasonable requests from any Releasee for
assistance and/or information in connection with any matters and/or issues relating to or
encompassed within the duties and responsibilities of Employee’s employment, including without
limitation, consulting with any of the employees and/or attorneys of any Releasee with respect to,
and/or appearing as a witness in, any dispute, controversy, action or proceeding of any kind.
Employee agrees to appear as a witness in any proceeding of any kind and to make himself available
in advance for reasonable preparation upon the request of the Company with reasonable advance
notification without the need for the Company to issue a subpoena. In connection with any of
Employee’s cooperation efforts mandated by this Paragraph SIXTEEN, Employee shall be entitled to
receive an agreed hourly or per diem amount (or reimbursement of lost wages as the case may be) and
reimbursement of reasonable travel and other out of pocket expenses provided that those expenses
are submitted pursuant to and are in conformance with the then applicable Company policy relating
to expense reimbursement.
SEVENTEEN: Non-Solicitation
Without waiving or limiting the obligations under the Confidentiality Agreement, during the
24-month period commencing on the Termination Date, Employee agrees that he will not, without the
prior written consent of the Company, directly or indirectly, solicit or attempt to solicit for
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employment with or on behalf of any corporation, partnership, joint venture or other business
entity, any person who is, or at any time during the six-month period preceding the solicitation of
such person was, a management-level employee of the Company (including, without limitation, for
this purpose any employee at director level or above and any General Manager of any hotel owned (in
whole or in part) or managed by the Company). In the event that the terms of this Paragraph
SEVENTEEN conflict with the non-solicitation obligations under the Confidentiality Agreement, the
terms of this Paragraph shall govern. The non-solicitation provisions in this Paragraph do not
prohibit (i) advertising directed at the general public and not targeted at Company employees; or
(ii) Employee from serving as a reference upon request.
EIGHTEEN: Injunctive Relief
Employee acknowledges and agrees that Paragraphs THIRTEEN, FOURTEEN, FIFTEEN and SEVENTEEN hereof
relate to special, unique and extraordinary matters and that a violation of any of the terms of
such Paragraphs will cause the Company irreparable injury for which adequate remedies are not
available at law. Therefore, Employee agrees that the Company shall be entitled to an injunction,
restraining order or such other equitable relief (without the requirement to post bond) in a court
of law restraining Employee from committing any violation of the covenants and obligations
contained in Paragraphs THIRTEEN, FOURTEEN, FIFTEEN and SEVENTEEN. These remedies are cumulative
and are in addition to any other rights and remedies the Company may have at law or in equity.
NINETEEN: Return of Company Property.
Employee represents that within 1 week after the Termination Date, he will return to the Company
all Company property in his possession or over which he has retained control such as printers,
scanners and accessories, disks, keys, cell phones, credit cards, access cards, Company records,
documents and files and all copies and recordings thereof. To the extent Employee subsequently
discovers Company property in his possession or within his control, he shall immediately return
such property and all copies, recordings or duplicates thereof to the Company.
TWENTY: Severability.
If any portion of this Agreement is declared unlawful or unenforceable, the remaining parts will
remain enforceable.
TWENTY-ONE: Public Announcement
Each of Employee and the Company is required to request and receive approval from the other party
the content of any voluntary statements, whether oral or written, to be made by Employee or the
Company, as the case may be, to any third party or parties regarding Employee’s separation from
employment with the Company, including, without limitation, any press release or other statements
to the press, except that this Paragraph TWENTY-ONE shall not apply to any statements required to
be made by reason of applicable law, the United States securities laws, the rules and regulations
of the Securities and Exchange Commission or in a proceeding before a court,
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arbitrator or administrative agency, including a national securities exchange, applicable to the
relevant party. Each of Employee and the Company hereby covenants and agrees not to make any
public statements (either directly or by or through another person) to any third party, including,
without limitation, to any representative of any news organization, which are inconsistent in any
material respect with the aforementioned agreed upon statements to the public.
TWENTY-TWO: Entire Agreement.
This Agreement, including Appendix A and Appendix B, is the entire agreement between Employee and
the Company regarding the subjects addressed in this document and this Agreement supersedes any
other agreements between the parties, other than agreements relating to confidentiality,
non-disclosure, non-solicitation and non-competition, including without limitation, the
Confidentiality Agreement. The Company has made no promises to Employee other than those in this
Agreement.
EMPLOYEE ACKNOWLEDGES THAT HE HAS READ THIS AGREEMENT, UNDERSTANDS IT, HAS TAKEN SUFFICIENT TIME TO
CONSIDER IT AND IS VOLUNTARILY ENTERING INTO IT.
EMPLOYEE UNDERSTANDS THAT THIS AGREEMENT CONTAINS A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS AND A
RESTRICTION ON RELEASE OF CONFIDENTIAL INFORMATION.
| XXXXXX X. XXXXXX | ||||
| Signed: | /s/ Xxxxxx X. Xxxxxx | |||
| Dated: | March 16, 2007 | |||
| STARWOOD HOTELS & RESORTS WORLDWIDE, INC. |
||||
| By: | /s/ Xxxxxxx X. Xxxxxx | |||
| Name: | Xxxxxxx X. Xxxxxx | |||
| Title: | Chief Administrative Officer and General Counsel | |||
| Dated: March 16, 2007 | ||||
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