REUNION HOSPITALITY TRUST, INC. EMPLOYMENT AGREEMENT
Exhibit 10.4
EMPLOYMENT
AGREEMENT (this “Agreement”), dated as of _________ ___, 2011, between
Reunion Hospitality Trust, Inc., a Maryland corporation, its successors or assigns (the
“Company”), and Xxxxx X. Xxxx (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 Executive Chairman 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 Executive Chairman 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 Executive Chairman 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 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 Executive Chairman
of the Company. The Employee shall report to the Board.
(b) During the Employment Term, the Employee shall devote substantially 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 Hayground Cove Asset Management LLC, Hayground Cove Capital Partners or
their respective affiliates (collectively, “Hayground”), so long as such service does not,
in any material way, limit the operations of the Company, (ii) serving on the boards of directors
of organizations on whose boards of directors he currently sits that have been disclosed to the
Board (including, without limitation, Las Vegas Sands Corp. (collectively with its subsidiaries and
affiliates, “LVSC”), Western Liberty Bancorp (collectively with its
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subsidiaries and affiliates, “WLB”) or India Hospitality Corp. (collectively with its
subsidiaries and affiliates, “IHC”)) or those 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, (iii) participating in charitable, civic, educational, professional,
community or industry affairs or serving on advisory boards and committees, and (iv) 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 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. [RESERVED]
4. ANNUAL
BASE SALARY. From the Effective Date through the earlier of (i)
the date on which the Company satisfies the Capital Deployment
Hurdle (as defined in the Registration Statement) or (ii)
July 31, 2012, the Employee will
not be entitled to receive any salary from the Company pursuant to this Agreement, except that
nothing herein shall prohibit the Employee from receiving any discretionary bonus approved by the
Board or the compensation committee of the Board (the “Compensation Committee”). Commencing
the earlier of (i) the date following the date on which the Company
satisfies the Capital Deployment Hurdle or (ii) August 1, 2012 the Company agrees to pay the Employee an annual base salary of $400,000 (as
increased from time to time in accordance with Section 5 below, the “Annual Base Salary”).
The Annual Base Salary shall be payable in accordance with the regular payroll practices of the
Company.
The Annual Base Salary shall be subject to annual review by the Board (or the Compensation
Committee), and, subject to Section 5 below, may be increased, but not decreased below its then
current level, from time to time by the Board.
5. ANNUAL SALARY INCREASE; ANNUAL BONUS. On each January 1 during the Employment Term, the
Employee shall receive an annual salary increase equal to the greater of (i) 3% of the Employee’s
then current Annual Base Salary (which Annual Base Salary shall, during the period commencing on
the Effective Date through the earlier of (i) the date on which the
Company satisfies the Capital Deployment Hurdle or (ii) July 31,
2012, be deemed to be for this purpose $400,000), 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,
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during the Employment Term, the Employee shall be eligible to receive an annual discretionary
incentive payment under the Company’s annual cash bonus plan as in effect from time to time equal
to either 50%, 75% or 125% of the Employee’s then current Annual Base Salary (the “Annual
Bonus”), upon the attainment of one or more pre-established performance goals established by
the Compensation Committee and approved by the Board, 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 Board 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 Annual
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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
then current Annual Base Salary 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 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 35% 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
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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 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);
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(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 then current Annual Base Salary;
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(ii) a material diminution of the Employee’s authority, duties and
responsibilities; or
(iii) any other action or inaction that constitutes a breach by the Company of
a material provision of this Agreement.
(f) RESIGNATION. 90 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 Annual Base Salary,
as the case may be, through the date of termination, plus (y) the Annual 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”).
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(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 Annual 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. The 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 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 then current
Annual Base Salary, 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
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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 Annual 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 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.
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(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 (i) subject to the
restrictions set forth in Section 1(b)(i), serving Hayground in any capacity, (ii) serving on the
board of directors of any or all of LVSC, WLB, IHC and/or any other organizations that have been
disclosed to and/or approved by the Board pursuant to Section 1(b) hereof, and/or (iii) being,
either directly or indirectly, a passive owner of not more than 9.9% 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
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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,
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
11
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.
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 agrees 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.
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: |
12
1370 Avenue of the Xxxxxxxx, 00xx Xxxxx |
||
Xxx Xxxx, Xxx Xxxx 00000 |
||
Attention:
Xxxxxx X. Xxxxxxx, President |
||
Facsimile: (000) 000-0000 |
||
and |
||
000
Xxxx Xxxxxx, Xxxxx 000 |
||
Xxx
Xxxx, Xxx Xxxx 00000 |
||
Attention:
Xxxxxx X. Xxxx, Executive Vice Chairman |
||
Facsimile:
(000) 000-0000 |
||
with a copy to: |
||
Proskauer Rose LLP |
||
Eleven
Xxxxx Xxxxxx |
||
Xxx Xxxx, Xxx Xxxx 00000 |
||
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.
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
13
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 to be entered into 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 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
14
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 Employee’s
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’s 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 Employee’s 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
15
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.
(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]
16
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first
written above.
| REUNION HOSPITALITY TRUST, INC. |
||||
| By: | ||||
| Name: | Xxxxxx X. Xxxx | |||
| Title: | Executive Vice Chairman | |||
| Xxxxx X. Xxxx |
17
