CHANGE OF CONTROL AGREEMENT
Exhibit
10.1
THIS
AGREEMENT
effective July 1, 2005, by and between HERSHA HOSPITALITY TRUST, a Maryland
real
estate investment trust, (the “Company”), and Xxxxxxx X. Xxxxxxxxx (the
“Executive”).
W
I T N E S S E T H:
WHEREAS,
the
Company desires to employ the Executive to serve as the Chief Accounting
Officer; and
WHEREAS,
the
parties desire to enter into this Change of Control Agreement effective as
of
July 1, 2005 as set forth herein.
NOW,
THEREFORE,
in
consideration of the premises and mutual obligations hereinafter set forth
the
parties agree as follows:
1. Employment.
The
Company shall employ the Executive, and the Executive agrees to be so employed,
as the Chief Accounting Officer of the Company on the terms set forth
herein.
2. Term.
The
term
(the “Term”) of the Executive’s employment hereunder shall commence on July 1,
2005 and shall continue until terminated by either party upon not less than
thirty (30) days’ prior notice to the other party. Notwithstanding the
foregoing, termination of this Agreement and any termination of the Executive’s
employment hereunder shall be subject to the provisions of Sections 5 and 6
of
this Agreement.
3. Services.
The
Executive shall devote such amount of his time and attention to the Company’s
affairs as are necessary to perform his duties to the Company. The Executive
shall have authority and responsibility with respect to the day-to-day
operations and management of the Company and Hersha Hospitality Limited
Partnership (the “Partnership”), for which the Company currently serves as sole
general partner, and the Company’s other subsidiaries, as well as implementation
of the long range growth strategy of the Company and the Partnership and other
subsidiaries of the Company, consistent with direction from the Company’s Board
of Trustees (the “Board”).
4. Compensation.
(a) During
the Term, the Company shall pay the Executive for his services an initial annual
base salary of $140,000, to be paid in accordance with the Company’s regular
payroll procedures, subject to any increases approved by the Compensation
Committee of the Board (the “Compensation Committee”).
5. Definitions.
For
purposes of this Agreement, the following terms shall have the following
definitions:
(a) “Voluntary
Termination”
means,
the Executive’s voluntary termination of his employment hereunder, which may be
effected by the Executive giving the Board not less than thirty (30) days’ prior
written notice of the Executive’s desire to terminate his employment or the
Executive’s failure to provide substantially all the services described in
Section 3 hereof for a period greater than four consecutive weeks by reason
of
the Executive’s voluntary refusal to perform such services. Notwithstanding the
foregoing, if the Executive gives notice of Voluntary Termination and, prior
to
the expiration of the notice period, the Executive voluntarily refuses or fails
to provide substantially all the services described in Section 3 hereof for
a
period greater than two consecutive weeks, the Voluntary Termination shall
be
deemed to be effective as of the date on which the Executive so ceases to carry
out his duties. For purposes of this Section 5, voluntary refusal to perform
services shall not include taking vacation otherwise permitted, the Executive’s
failure to perform services on account of his illness or the illness of a member
of his immediate family (provided such illness is adequately substantiated
at
the reasonable request of the Company), or any other absence from service with
the written consent of the Board. A Voluntary Termination shall not include
the
Executive’s resignation with Good Reason (as defined below).
(b) “Termination
Without Cause”
means
the termination of the Executive’s
employment by the Company for any reason other than Voluntary Termination or
Termination With Cause.
(c) “Termination
With Cause”
means
the termination of the Executive’s
employment by act of the Board for any of the following reasons:
(i) the
Executive’s conviction for a felony;
(ii) the
Executive’s theft, embezzlement, misappropriation of or
intentional and malicious infliction of damage to the Company’s (or its
subsidiaries’) property or business opportunity;
(iii) the
Executive’s continuous neglect of his duties hereunder or his continuous failure
or refusal to follow any reasonable, unambiguous duly adopted written direction
of the Board or any duly constituted committee thereof that is not inconsistent
with the description of the Executive’s duties set forth in Section 3 above
and;
(v) the
Executive’s abuse of alcohol, drugs or other substances, or his engaging in
other deviant personal activities in a manner that, in the reasonable judgment
of the Board, adversely affects the reputation, goodwill or business position
of
the Company.
6. Voluntary
Termination; Termination With Cause. If
(i)
the Executive shall cease being an employee of the Company on account of
a
Voluntary Termination or (ii) there shall be a Termination With Cause, the
Executive shall not be entitled to any compensation after the effective date
of
such Voluntary Termination or Termination With Cause (except base salary
and
vacation accrued but unpaid on the effective date of such event).
7. Change
of Control Compensation.
(a) Compensation.
In
the
event of a Change of Control (as defined below), during the first year of
employment, and a subsequent Termination Without Cause, the Company shall
pay
the Executive his pro-rata annual salary, bonus and health insurance benefits
for a period of three months following the termination. In the event of a
Change
of Control (as defined below), during the second and third year of employment,
and a subsequent Termination Without Cause, the Company shall pay the Executive
his pro-rata annual salary, bonus and health insurance benefits for a period
of
six months following the termination. In the event of a Change of Control
(as
defined below) and subsequent Termination Without Cause, the Company shall
fully
vest the Executive’s share awards and stock options, regardless of any vesting
schedule. At the Executive’s election, the Change of Control compensation may be
made in one lump sum upon termination or in three equal monthly payments
for the
three months following such termination.
(b) A
“Change
of Control”,
for
purposes of this Agreement, shall be deemed
to
have occurred if, at any time during the Term, any of the following events
occurs:
(i) any
“person”, as that term is used in Section 13(d) and Section
14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), becomes, is discovered to be, or files a report on Schedule l3D or 14D-l
(or any successor schedule, form or report) disclosing that such person is,
a
beneficial owner (as defined in Rule 13d-3 under the Exchange Act or any
successor rule or regulation), directly or indirectly, of securities of the
Company representing 50% or more of the combined voting power of the Company’s
then outstanding securities entitled to vote generally in the election of
directors;
(ii) individuals
who, as of the Effective Date, constitute the Board
cease for any reason to constitute at least a majority of the Board, unless
any
such change is approved by the vote of at least 80% of the members of the
Board
in office immediately prior to such cessation;
(iii) the
Company is merged, consolidated or reorganized into or
with
another corporation or other legal person, or securities of the Company are
exchanged for securities of another corporation or other legal person, and
immediately after such merger, consolidation, reorganization or exchange
less
than a majority of the combined voting power of the then-outstanding securities
of such corporation or person immediately after such transaction are held,
directly or indirectly, in the aggregate by the holders of securities entitled
to vote generally in the election of directors of the Company immediately
prior
to such transaction;
(iv) the
Company in any transaction or series of related transactions,
sells all or substantially all of its assets to any other corporation or
other
legal person and less than a majority of the combined voting power of the
then-
outstanding securities of such corporation or person immediately after such
sale
or sales are held, directly or indirectly, in the aggregate by the holders
of
securities entitled to vote generally in the election of directors of the
Company immediately prior to such sale;
(v) the
Company and its affiliates shall sell or transfer of (in a single
transaction or series of related transactions) to a non-affiliate business
operations or assets that generated at least two-thirds of the consolidated
revenues (determined on the basis of the Company’s four most recently completed
fiscal quarters for which reports have been filed under the Exchange Act)
of the
Company and its subsidiaries immediately prior thereto;
(vi) the
Company files a report or proxy statement with the Securities and Exchange
Commission pursuant to the Exchange Act disclosing in response to Form 8-K
(or
any successor, form or report or item therein) that a change in control of
the
Company has occurred; or
(vii) any
other
transaction or series of related transactions occur that have substantially
the
effect of the transactions specified in any of the preceding clauses in this
sentence.
(c) Certain
Transactions.,
Unless
otherwise determined in a specific case by majority vote of the Board of
Trustees of the Company, a Change of Control shall not be deemed to have
occurred for purposes of this Agreement solely because (i) the Company, (ii)
an
entity in which the Company directly or indirectly beneficially owns 50%
or more
of the voting securities or (iii) any Company-sponsored employee stock ownership
plan, or any other employee benefit plan of the Company, either files or
becomes
obligated to file a report or a proxy statement under or in response to Schedule
13D, Schedule 14D-l, Form 8-K or Schedule 14A (or any successor schedule,
form
or report or item thereon) under the Exchange Act, disclosing beneficial
ownership by it of shares of stock of the Company, or because the Company
reports that a Change of Control of the Company has or may have occurred
or will
or may occur in the future by reason of such beneficial ownership.
(d) Good
Reason. “Good
Reason,” for purposes of this Agreement, shall be deemed to mean any of the
following:
(i) a
change
in the Executive’s status, position or responsibilities (including reporting
responsibilities) which, in the Executive’s reasonable judgment, does not
represent a promotion from the Executive’s status, position or responsibilities
as in effect immediately prior to a Change of Control; the assignment to
the
Executive of any duties or responsibilities which, in the Executive’s reasonable
judgment, are inconsistent with such status, position or responsibilities;
or
any removal of the Executive from or failure to reappoint or reelect the
Executive to any of such positions, except in connection with a Termination
With
Cause as defined in Section 5(c), as a result of the Executive’s death or
Permanent Disability, or by Voluntary Termination;
(ii) a
reduction in the Executive’s base salary bonus arrangement as in effect on the
date hereof or as the same may be increased from time to time;
(iii) the
relocation of the Company’s executive offices to a location outside a
thirty-mile radius of New Cumberland, Pennsylvania and Philadelphia,
Pennsylvania and/or the Company’s requiring the Executive to be based at any
place other than a location within a thirty-mile radius of New Cumberland,
Pennsylvania or Philadelphia, Pennsylvania, except for reasonably required
travel on the Company’s business which is not materially greater than such
travel requirements prior to the Change of Control;
(iv) the
failure by the Company to continue to provide the Executive with compensation
and benefits provided for under this agreement or benefits substantially
similar
to those provided to the Executive under any of the employee benefit plans
in
which the Executive is or becomes a participant, or the taking of any action
by
the Company which would directly or indirectly materially reduce any of such
benefits or deprive the Executive of any material fringe benefit enjoyed
by the
Executive at the time of the Change of Control;
(v) any
material breach by the Company of any provision of this
Agreement; or
(vi) the
failure of the Company to obtain a satisfactory agreement from any successor
or
assign of the Company to assume and agree to perform this Agreement.
8. Applicable
Law.
This
Agreement shall be governed and construed in accordance with the laws of
the
Commonwealth of Pennsylvania.
9. Assignment.
The
Executive acknowledges that his services are unique and personal. Accordingly,
the Executive may not assign his rights or delegate his duties or obligations
under this Agreement. The Company’s rights and obligations under this Agreement
shall inure to the benefit of and shall be binding upon the Company’s successors
and assigns.
10.
Headings.
Headings
in this Agreement are for convenience only and shall not be used to interpret
or
construe its provisions.
In
WITNESS WHEREOF, the Parties hereto have executed this Change of Control
Agreement as of the date first set forth above.
BY:______________________________
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EXECUTIVE
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BY:
______________________________
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