EXHIBIT 10.4
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made this 24th day of
October, 2003, by Highland Hospitality, L.P., a Delaware limited partnership
(the "Company"), and Highland Hospitality Corporation, a Maryland corporation
(the "REIT"), each with its principal place of business at 0000 Xxxxxxxxxx
Xxxxx, Xxxxx 000, XxXxxx, XX 00000 (the "Company") and Xxxxx X.X. Xxxxxx,
residing at 0000 Xxx Xxxxx Xxxxxx, XX, Xxxxxxxxxx, Xxxxxxxx xx Xxxxxxxx 00000
(the "Executive").
WHEREAS, the REIT is the general partner of the Company; and
WHEREAS, the parties desire to enter into this agreement to reflect the
Executive's executive capacities in the REIT's business and to provide for the
Company's and the REIT's employment of the Executive; and
WHEREAS, the parties wish to set forth the terms and conditions of that
employment;
NOW THEREFORE, in consideration of the mutual covenants and promises
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, the parties
agree as follows:
1. Term of Employment
The Company and the REIT hereby employ the Executive, and the Executive
hereby accepts employment with the Company and the REIT, upon the terms and
conditions set forth in this Agreement. Unless terminated earlier pursuant to
Section 5, the Executive's employment pursuant to this Agreement shall be for
the two (2) year period commencing on the date of closing of the initial public
offering of the REIT's common stock pursuant to the REIT's registration
statement on Form S-11 filed with the Securities and Exchange Commission (the
"Commencement Date") and ending on the second anniversary of the Commencement
Date (the "Initial Term"). The Initial Term shall be extended for an additional
twelve (12) months on each anniversary of the Commencement Date unless the
Company or the Executive provides written notice to the contrary at least six
(6) months before the applicable anniversary of the Commencement Date. The
Initial Term, together with any such extensions, shall be referred to herein as
the "Employment Period." In the event that the Board of Directors of the REIT
(the "Board of Directors") determines that active efforts to complete the
closing of the initial public offering have been abandoned, this Agreement shall
become null and void.
2. Title; Duties
The Executive shall be employed as Executive Vice President, General
Counsel and Corporate Secretary of the REIT. The Executive shall report to the
Board of Directors, who shall have the authority to direct, control and
supervise the activities of the Executive. The Executive shall perform such
services consistent with her position as may be assigned to her from time to
time by the Board of Directors and are consistent with the bylaws of the REIT
and the Agreement of Limited Partnership of the Company as it may be amended
from time to time, including, but not limited to, managing the affairs of the
REIT and the Company.
3. Extent of Services
(a) General. The Executive agrees not to engage in any business
activities during the Employment Period except those which are for the
sole benefit of the Company or the REIT and their subsidiaries (the
Company and the REIT are hereinafter referred to as the "Company
Group"), and to devote his entire business time, attention, skill and
effort to the performance of her duties under this Agreement.
Notwithstanding the foregoing, the Executive may, without impairing or
otherwise adversely affecting the Executive's performance of her
duties to the Company Group, (i) engage in personal investments and
charitable, professional and civic activities, and (ii) with the prior
approval of the Board of Directors, serve on the boards of directors
of corporations other than the REIT, provided, however, that no such
approval shall be necessary for the Executive's continued service on
any board of directors on which she was serving on the date of this
Agreement, all of which have been previously disclosed to the Board of
Directors in writing and provided further, that in no event shall the
Executive be permitted to serve on the board of directors of any other
entity that owns, operates, acquires, sells, develops and/or manages
any hotel or similar asset in the lodging industry. The Executive
shall perform her duties to the best of her ability, shall adhere to
the Company Group's published policies and procedures, and shall use
her best efforts to promote the Company Group's interests, reputation,
business and welfare.
(b) Corporate Opportunities. The Executive agrees that she will not
take personal advantage of any business opportunities which arise
during her employment with the Company Group and which may be of
benefit to the Company Group. All material facts regarding such
opportunities must be promptly reported by the Executive to the Board
of Directors for consideration by the Company Group.
4. Compensation and Benefits
(a) Salary. The Company shall pay the Executive a gross base annual
salary ("Base Salary") of $235,000. The salary shall be payable in
arrears in approximately equal semi-monthly installments (except that
the first and last such semi-monthly installments may be prorated if
necessary) on the Company's regularly scheduled payroll dates, minus
such deductions as may be required by law or reasonably requested by
the Executive. The REIT's Compensation Policy Committee (the
"Compensation Committee") shall review her Base Salary annually in
conjunction with its regular review of employee salaries and may
increase (but not decrease) her Base Salary as in effect from time to
time as the Compensation Committee shall deem appropriate.
(b) Other Benefits. The Executive shall be entitled to paid time off
and holiday pay in accordance with the Company Group's policies in
effect from time to time and shall be eligible to participate in such
life, health, and disability insurance, pension, deferred compensation
and incentive plans, stock options and awards, performance bonuses and
other benefits as the Company Group extends, as a matter of policy, to
its executive employees. The Company Group shall maintain a disability
insurance policy or plan covering the Executive during the Employment
Period.
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(c) Reimbursement of Business Expenses. The Company shall reimburse the
Executive for all reasonable travel, entertainment and other expenses
incurred or paid by the Executive in connection with, or related to,
the performance of her duties, responsibilities or services under this
Agreement, upon presentation by the Executive of documentation, expense
statements, vouchers, and/or such other supporting information as the
Company may reasonably request.
5. Termination
(a) Termination by the Company for Cause. The Company may terminate the
Executive's employment under this Agreement at any time for Cause, upon
written notice by the Company to the Executive. For purposes of this
Agreement, "Cause" for termination shall mean any of the following: (i)
the conviction of the Executive of, or the entry of a plea of guilty or
nolo contendere by the Executive to, any felony; (ii) fraud,
misappropriation or embezzlement by the Executive; (iii) the
Executive's willful failure or gross negligence in the performance of
her assigned duties for the Company Group, which failure or negligence
continues for more than fifteen (15) calendar days following the
Executive's receipt of written notice of such willful failure or gross
negligence; (iv) the Executive's breach of any of her fiduciary duties
to the Company Group; (v) any act or omission of the Executive that has
a demonstrated and material adverse impact on the Company Group's
reputation for honesty and fair dealing; or (vi) the breach by the
Executive of any material term of this Agreement.
(b) Termination by the Company Without Cause or by the Executive
Without Good Reason. Either party may terminate this Agreement at any
time without Cause (in the case of the Company) or without Good Reason
(in the case of the Executive), upon giving the other party sixty (60)
days' written notice. At the Company's sole discretion, it may
substitute sixty (60) days' salary in lieu of notice. Any salary paid
to the Executive in lieu of notice shall not be offset against any
entitlement the Executive may have to the Severance Payment pursuant to
Section 6(c).
(c) Termination by Executive for Good Reason. The Executive may
terminate her employment under this Agreement at any time for Good
Reason, upon written notice by the Executive to the Company. For
purposes of this Agreement, "Good Reason" for termination shall mean,
without the Executive's consent, (i) the assignment to the Executive of
substantial duties or responsibilities inconsistent with the
Executive's position at the Company Group, or any other action by the
Company Group which results in a substantial diminution of the
Executive's duties or responsibilities other than any such reduction
which is remedied by the Company Group within 30 days of receipt of
written notice thereof from the Executive; (ii) a requirement that the
Executive work principally from a location outside the fifty (50) mile
radius from the Company's address first written above; (iii) the
Company's failure to pay the Executive any Base Salary or other
compensation to which she becomes entitled, other than an inadvertent
failure which is remedied by the Company within thirty (30) days after
receipt of written notice thereof from the Executive (or ten (10) days
for failure to pay Base Salary); or (iv) a substantial reduction in the
Executive's aggregate Base Salary and other compensation taken as a
whole, excluding any reductions caused by the failure to achieve
performance
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targets.
(d) Executive's Death or Disability. The Executive's employment shall
terminate immediately upon her death or, upon written notice as set
forth below, her Disability. As used in this Agreement, "Disability"
shall mean such physical or mental impairment as would render the
Executive eligible to receive benefits under the long-term disability
insurance policy or plan then made available by the Company Group to
the Executive. If the Employment Period is terminated by reason of the
Executive's Disability, either party shall give thirty (30) days'
advance written notice to that effect to the other.
6. Effect of Termination
(a) General. Regardless of the reason for any termination of this
Agreement, the Executive (or the Executive's estate if the Employment
Period ends on account of the Executive's death) shall be entitled to
(i) payment of any unpaid portion of her Base Salary through the
effective date of termination; (ii) reimbursement for any outstanding
reasonable business expense she has incurred in performing her duties
hereunder; (iii) continued insurance benefits to the extent required by
law; (iv) payment of any vested but unpaid rights as required
independent of this Agreement by the terms of any bonus or other
incentive pay or stock plan, or any other employee benefit plan or
program of the Company Group; and (v) except in the case of
"Termination by the Company for Cause," any bonus or incentive
compensation that was approved but not paid.
(b) Termination by the Company for Cause or by Executive Without Good
Reason. If the Company terminates the Executive's employment for Cause
or the Executive terminates her employment without Good Reason, the
Executive shall have no rights or claims against the Company Group
except to receive the payments and benefits described in Section 6(a).
(c) Termination by the Company Without Cause or by Executive for Good
Reason. Except as provided in Section 6(d), if the Company terminates
the Executive's employment without Cause pursuant to Section 5(b), or
the Executive terminates her employment for Good Reason pursuant to
Section 5(c), the Executive shall be entitled to receive, in addition
to the items referenced in Section 6(a), the following:
(i) continued payment of her Base Salary, at the rate in effect on
her last day of employment, for a period of twelve (12) months (the
"Severance Payment"). The Severance Payment shall be paid in
approximately equal installments on the Company's regularly
scheduled payroll dates, subject to all legally required payroll
deductions and withholdings for sums owed by the Executive to the
Company Group;
(ii) continued payment by the Company for the Executive's life,
health and disability insurance coverage during the twelve (12)
month severance period referenced in Section 6(c)(i) to the same
extent that the Company paid for such coverage immediately prior to
the termination of the Executive's employment and subject to the
eligibility requirements and other terms and conditions of such
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insurance coverage, provided that if any such insurance coverage
shall become unavailable during the twelve (12) month severance
period, the Company thereafter shall be obliged only to pay to the
Executive an amount which, after reduction for income and
employment taxes, is equal to the employer premiums for such
insurance for the remainder of such severance period;
(iii) vesting as of the last day of her employment in any unvested
portion of any stock option and any restricted stock previously
issued to the Executive by the Company Group; and
(iv) a bonus equal to the greater of (x) the average of all
bonuses paid to the Executive (taking into account a payment of no
bonus or a payment of a bonus of $0) over the preceding thirty-six
(36) months (or the period of the Executive's employment if
shorter), and (y) the most recent bonus paid to the Executive. Such
bonus shall be paid to the Executive within sixty (60) days
following the end of the fiscal year in which such termination
occurs.
None of the benefits described in this Section 6(c) will be payable
unless the Executive has signed a general release which has become irrevocable,
satisfactory to the Company in the reasonable exercise of its discretion,
releasing the Company, its affiliates, including the REIT, and their officers,
directors and employees, from any and all claims or potential claims arising
from or related to the Executive's employment or termination of employment.
(d) Termination Following Change in Control. If, (x) during the
Employment Period and within twelve (12) months following a Change in
Control, the Company (or its successor) terminates the Executive's
employment without Cause pursuant to Section 5(b) or the Executive
terminates her employment for Good Reason pursuant to Section 5(c), or
(y) the Executive, by notice given under this clause (y) of this
Section 6(d) on or before the tenth (10th) business day following the
Change in Control, terminates her employment for any reason, which
termination shall be effective on the sixtieth (60th) day following a
Change in Control, the Executive shall be entitled to receive, in
addition to the items referenced in Section 6(a), the following:
(i) continued payment of her Base Salary, at the rate in effect
on her last day of employment, for a period of twenty-four (24)
months (the "Control Change Severance Payment"). The Control Change
Severance Payment shall be paid in approximately equal installments
on the Company's regularly scheduled payroll dates, subject to all
legally required payroll deductions and withholdings for sums owed
by the Executive to the Company Group;
(ii) continued payment by the Company for the Executive's life,
health and disability insurance coverage during the twenty-four
(24) month severance period referenced in Section 6(d)(i) to the
same extent that the Company paid for such coverage immediately
prior to the termination of the Executive's employment and subject
to the eligibility requirements and other terms and conditions of
such insurance coverage, provided that if any such insurance
coverage shall become unavailable during the twenty-four (24) month
severance period, the Company
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thereafter shall be obliged only to pay to the Executive an amount
which, after reduction for income and employment taxes, is equal to
the employer premiums for such insurance for the remainder of such
severance period;
(iii) vesting as of the last day of her employment in any unvested
portion of any stock option and any restricted stock previously
issued to the Executive by the Company Group; and
(iv) a bonus equal to two (2) times the greater of (x) the average
of all bonuses paid to the Executive (taking into account a payment
of no bonus or a payment of a bonus of $0) over the preceding
thirty-six (36) months (or the period of the Executive's employment
if shorter), and (y) the most recent bonus paid to the Executive.
Such bonus shall be paid to the Executive within sixty (60) days
following the end of the fiscal year in which such termination
occurs.
(v) (A) In the event that any Control Change Severance Payment,
insurance benefits, accelerated vesting, pro-rated bonus or other
benefit payable to the Executive (under this Agreement or
otherwise), shall (1) constitute "parachute payments" within the
meaning of Section 280G (as it may be amended or replaced) of the
Internal Revenue Code (the "Code") ("Parachute Payments") and (2)
be subject to the excise tax imposed by Section 4999 (as it may be
amended or replaced) of the Code ("the Excise Tax"), then the
Company shall pay to the Executive an additional amount (the
"Gross-Up Amount") such that the net benefits retained by the
Executive after the deduction of the Excise Tax (including interest
and penalties) and any federal, state or local income and
employment taxes (including interest and penalties) upon the
Gross-Up Amount shall be equal to the benefits that would have been
delivered hereunder had the Excise Tax not been applicable and the
Gross-Up Amount not been paid.
(B) For purposes of determining the Gross-Up Amount: (1)
Parachute Payments provided under arrangements with the Executive
other than under any bonus or other incentive pay or stock plan or
program of the Company (collectively, the "Plan") and this
Agreement, if any, shall be taken into account in determining the
total amount of Parachute Payments received by the Executive so
that the amount of excess Parachute Payments that are attributable
to provisions of the Plan and Agreement is maximized; and (2) the
Executive shall be deemed to pay federal, state and local income
taxes at the highest marginal rate of taxation for the Executive's
taxable year in which the Parachute Payments are includable in the
Executive's income for purposes of federal, state and local income
taxation.
(C) The determination of whether the Excise Tax is payable,
the amount thereof, and the amount of any Gross-Up Amount shall be
made in writing in good faith by a nationally recognized
independent certified public accounting firm selected by the
Company and approved by the Executive, such approval not to be
unreasonably withheld (the
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"Accounting Firm"). If such determination is not finally accepted
by the Internal Revenue Service (or state or local revenue
authorities) on audit, then appropriate adjustments shall be
computed based upon the amount of Excise Tax and any interest or
penalties so determined; provided, however, that the Executive in
no event shall owe the Company any interest on any portion of the
Gross-Up Amount that is returned to the Company. For purposes of
making the calculations required by this Section 6(d)(v), to the
extent not otherwise specified herein, reasonable assumptions and
approximations may be made with respect to applicable taxes and
reasonable, good faith interpretations of the Code may be relied
upon. The Company and the Executive shall furnish such information
and documents as may be reasonably requested in connection with the
performance of the calculations under this Section 6(d)(v). The
Company shall bear all costs incurred in connection with the
performance of the calculations contemplated by this Section
6(d)(v). The Company shall pay the Gross-Up Amount to the Executive
no later than sixty (60) days following receipt of the Accounting
Firm's determination of the Gross-Up Amount.
(vi) None of the benefits described in this Section 6(d) will be
payable unless the Executive has signed a general release which has
become irrevocable, satisfactory to the Company in the reasonable
exercise of its discretion, releasing the Company, its affiliates,
including the REIT, and their officers, directors and employees,
from any and all claims or potential claims arising from or related
to the Executive's employment or termination of employment.
(vii) For purposes of this Agreement, a "Change in Control" shall
mean any of the following events:
(A) The ownership or acquisition (whether by a merger
contemplated by Section 6(d)(vii)(B) below, or otherwise) by any
Person (other than a Qualified Affiliate), in a single transaction
or a series of related or unrelated transactions, of Beneficial
Ownership of more than fifty percent (50%) of (1) the REIT's
outstanding common stock (the "Common Stock") or (2) the combined
voting power of the REIT's outstanding securities entitled to vote
generally in the election of directors (the "Outstanding Voting
Securities");
(B) The merger or consolidation of the REIT with or into any
other Person other than a Qualified Affiliate, if, immediately
following the effectiveness of such merger or consolidation,
Persons who did not Beneficially Own Outstanding Voting Securities
immediately before the effectiveness of such merger or
consolidation directly or indirectly Beneficially Own more than
fifty percent (50%) of the outstanding shares of voting stock of
the surviving entity of such merger or consolidation (including for
such purpose in both the numerator and denominator, shares of
voting stock issuable upon the exercise of then outstanding rights
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(including conversion rights), options or warrants) ("Resulting
Voting Securities"), provided that, for purposes of this Section
6(d)(vii)(B), if a Person who Beneficially Owned Outstanding Voting
Securities immediately before the merger or consolidation
Beneficially Owns a greater number of the Resulting Voting
Securities immediately after the merger or consolidation than the
number the Person received solely as a result of the merger or
consolidation, that greater number will be treated as held by a
Person who did not Beneficially Own Outstanding Voting Securities
before the merger or consolidation, and provided further that such
merger or consolidation would also constitute a Change in Control
if it would satisfy the foregoing test if rights, options and
warrants were not included in the calculation;
(C) Any one or a series of related sales or conveyances to
any Person or Persons (including a liquidation) other than any one
or more Qualified Affiliates of all or substantially all of the
assets of the Company;
(D) Incumbent Directors cease to be a majority of the members
of the Board of Directors, where an "Incumbent Director" is (1) an
individual who is a member of the Board of Directors on the
effective date of this Agreement or (2) any new director whose
appointment by the Board of Directors or whose nomination for
election by the stockholders was approved by a majority of the
persons who were already Incumbent Directors at the time of such
appointment, election or approval, other than any individual who
assumes office initially as a result of an actual or threatened
election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board of
Directors or as a result of an agreement to avoid or settle such a
contest or solicitation; or
(E) A Change in Control shall also be deemed to have occurred
immediately before the completion of a tender offer for the REIT's
securities representing more than fifty percent (50%) of the
Outstanding Voting Securities, other than a tender offer by a
Qualified Affiliate.
(F) For purposes of this Agreement, the following definitions
shall apply:
(a) "Beneficial Ownership," "Beneficially Owned" and
"Beneficially Owns" shall have the meanings provided in
Exchange Act Rule 13d-3;
(b) "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended;
(c) "Person" shall mean any individual, entity, or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of
the
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Exchange Act), including any natural person,
corporation, trust, association, company, partnership,
joint venture, limited liability company, legal entity
of any kind, government, or political subdivision,
agency or instrumentality of a government, as well as
two or more Persons acting as a partnership, limited
partnership, syndicate or other group for the purpose
of acquiring, holding or disposing of the REIT's
securities; and
(d) "Qualified Affiliate" shall mean (i) any directly
or indirectly wholly owned subsidiary of the REIT or
the Company, (ii) any employee benefit plan (or related
trust) sponsored or maintained by the REIT or the
Company or by any entity controlled by the REIT or the
Company; or (iii) any Person consisting in whole or in
part of the Executive or one or more individuals who
are then the REIT's Chief Executive Officer or any
other named executive officer (as defined in Item 402
of Regulation S-K under the Securities Act of 1933) of
the REIT as indicated in its most recent securities
filing made before the date of the transaction.
(e) Termination In the Event of Death or Disability.
(i) If the Executive's employment terminates because of her death,
any unvested portion of any stock option and any restricted stock
previously issued to the Executive by the Company Group shall become
fully vested as of the date of her death. In addition, the Executive's
estate shall be entitled to receive a pro-rata share of any
performance bonus to which she otherwise would have been entitled for
the fiscal year in which her death occurs.
(ii) In the event the Executive's employment terminates due to her
Disability, she shall be entitled to receive her Base Salary until
such date as she shall commence receiving disability benefits pursuant
to any long-term disability insurance policy or plan provided to her
by the Company Group. In addition, as of the effective date of the
termination notice specified in Section 5(d), the Executive shall vest
in any unvested portion of any stock option and any restricted shares
previously granted to her by the Company Group. The Executive also
shall be entitled to receive a pro-rata share of any performance bonus
to which she otherwise would have been entitled for the fiscal year in
which her employment terminates due to her Disability.
7. Confidentiality
(a) Definition of Proprietary Information. The Executive acknowledges that
she may be furnished or may otherwise receive or have access to
confidential information which relates to the Company Group's past, present
or future business activities, strategies,
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services or products, research and development; financial analysis and
data; improvements, inventions, processes, techniques, designs or other
technical data; profit margins and other financial information; fee
arrangements; terms and contents of leases, asset management agreements and
other contracts; tenant and vendor lists or other compilations for
marketing or development; confidential personnel and payroll information;
or other information regarding administrative, management, financial,
marketing, leasing or sales activities of the Company Group, or of a third
party which provided proprietary information to the Company Group on a
confidential basis. All such information, including any materials or
documents containing such information, shall be considered by the Company
Group and the Executive as proprietary and confidential (the "Proprietary
Information").
(b) Exclusions. Notwithstanding the foregoing, Proprietary Information
shall not include information in the public domain not as a result of a
breach of any duty by the Executive or any other person.
(c) Obligations. Both during and after the Employment Period, the Executive
agrees to preserve and protect the confidentiality of the Proprietary
Information and all physical forms thereof, whether disclosed to her before
this Agreement is signed or afterward. In addition, the Executive shall not
(i) disclose or disseminate the Proprietary Information to any third party,
including employees of the Company Group (or their affiliates) without a
legitimate business need to know; (ii) remove the Proprietary Information
from the Company Group's premises without a valid business purpose; or
(iii) use the Proprietary Information for her own benefit or for the
benefit of any third party.
(d) Return of Proprietary Information. The Executive acknowledges and
agrees that all the Proprietary Information used or generated during the
course of working for the Company Group is the property of the Company
Group. The Executive agrees to deliver to the Company Group all documents
and other tangibles (including diskettes and other storage media)
containing the Proprietary Information at any time upon request by the
Board of Directors during her employment and immediately upon termination
of her employment.
8. Noncompetition
(a) Restriction on Competition. For the period of the Executive's
employment with the Company Group and for twelve (12) months following the
expiration or termination of the Executive's employment by the Company
Group (the "Restricted Period"), the Executive agrees not to engage,
directly or indirectly, as an owner, director, trustee, manager, member,
employee, consultant, partner, principal, agent, representative,
stockholder, or in any other individual, corporate or representative
capacity, in any of the following: (i) any public or private lodging
company, or (ii) any other business that the Company Group conducts as of
the date of the Executive's termination of employment. Notwithstanding the
foregoing, the Executive shall not be deemed to have violated this Section
8(a) solely by reason of (i) her passive ownership of 1% or less of the
outstanding stock of any publicly traded corporation or other entity or
(ii) the practice of law with an independent law firm or as a sole
practitioner (even if the Executive represents lodging
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company clients or clients engaged in a business in which the Company Group
is engaged).
(b) Non-Solicitation of Clients. During the Restricted Period, the
Executive agrees not to solicit, directly or indirectly, on her own behalf
or on behalf of any other person(s), any client of the Company Group to
whom the Company Group had provided services at any time during the
Executive's employment with the Company Group in any line of business that
the Company Group conducts as of the date of the Executive's termination of
employment or that the Company Group is actively soliciting, for the
purpose of marketing or providing any service competitive with any service
then offered by the Company Group.
(c) Non-Solicitation of Employees. During the Restricted Period, the
Executive agrees that she will not, directly or indirectly, hire or attempt
to hire or cause any business, other than an affiliate of the Company
Group, to hire any person who is then or was at any time during the
preceding six (6) months an employee of the Company Group and who is at the
time of such hire or attempted hire, or was at the date of such employee's
separation from the Company Group a vice president, senior vice president
or executive vice president or other senior executive employee of the
Company Group.
(d) Acknowledgement. The Executive acknowledges that she will acquire much
Proprietary Information concerning the past, present and future business of
the Company Group as the result of her employment, as well as access to the
relationships between the Company and the REIT and their clients and
employees. The Executive further acknowledges that the business of the
Company Group is very competitive and that competition by her in that
business during her employment, or after her employment terminates, would
severely injure the Company Group. The Executive understands and agrees
that the restrictions contained in this Section 8 are reasonable and are
required for the Company Group's legitimate protection, and do not unduly
limit her ability to earn a livelihood.
(e) Rights and Remedies upon Breach. The Executive acknowledges and agrees
that any breach by her of any of the provisions of Sections 7 and 8 (the
"Restrictive Covenants") would result in irreparable injury and damage for
which money damages would not provide an adequate remedy. Therefore, if the
Executive breaches, or threatens to commit a breach of, any of the
provisions of the Restrictive Covenants, the Company and its affiliates,
including the REIT, shall have the following rights and remedies, each of
which rights and remedies shall be independent of the other and severally
enforceable, and all of which rights and remedies shall be in addition to,
and not in lieu of, any other rights and remedies available to the Company
and its affiliates, including the REIT, under law or in equity (including,
without limitation, the recovery of damages):
(i) The right and remedy to have the Restrictive Covenants specifically
enforced (without posting bond and without the need to prove damages)
by any court of competent jurisdiction, including, without limitation,
the right to an entry against the Executive of restraining orders and
injunctions (preliminary,
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mandatory, temporary and permanent) against violations, threatened or
actual, and whether or not then continuing, of such covenants; and
(ii) The right and remedy to require the Executive to account for and
pay over to the Company and its affiliates all compensation, profits,
monies, accruals, increments or other benefits (collectively,
"Benefits") derived or received by her as the result of any
transactions constituting a breach of the Restrictive Covenants, and
the Executive shall account for and pay over such Benefits to the
Company and, if applicable, its affected affiliates.
(f) Without limiting Section 11(i), if any court or other decision-maker of
competent jurisdiction determines that any of the Restrictive Covenants, or
any part thereof, is unenforceable because of the duration or geographical
scope of such provision, then, after such determination has become final
and unappealable, the duration or scope of such provision, as the case may
be, shall be reduced so that such provision becomes enforceable and, in its
reduced form, such provision shall then be enforceable and shall be
enforced.
9. Executive Representation
The Executive represents and warrants to the Company Group that she is not
now under any obligation of a contractual or other nature to any person,
business or other entity which is inconsistent or in conflict with this
Agreement or which would prevent her from performing her obligations under this
Agreement.
10. Arbitration
(a) Except as provided in Section 10(b), any disputes between the Company
Group and the Executive in any way concerning the Executive's employment,
the termination of her employment, this Agreement or its enforcement shall
be submitted at the initiative of either party to mandatory arbitration in
Maryland before a single arbitrator pursuant to the Commercial Arbitration
Rules of the American Arbitration Association, or its successor, then in
effect. The decision of the arbitrator shall be rendered in writing, shall
be final, and may be entered as a judgment in any court in the State of
Maryland. The parties irrevocably consent to the jurisdiction of the
federal and state courts located in Maryland for this purpose. Each party
shall be responsible for its or her own costs incurred in such arbitration
and in enforcing any arbitration award, including attorneys' fees and
expenses.
(b) Notwithstanding the foregoing, the Company or the REIT, in its sole
discretion, may bring an action in any court of competent jurisdiction to
seek injunctive relief and such other relief as the Company or the REIT
shall elect to enforce the Restrictive Covenants. If the courts of any one
or more of such jurisdictions hold the Restrictive Covenants wholly
unenforceable by reason of breadth of scope or otherwise it is the
intention of the Company Group and the Executive that such determination
not bar or in any way affect the Company Group's right, or the right of any
of its affiliates, to the relief provided in Section 8(e) above in the
courts of any other jurisdiction within the
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geographical scope of such Restrictive Covenants, as to breaches of such
Restrictive Covenants in such other respective jurisdictions, such Restrictive
Covenants as they relate to each jurisdiction being, for this purpose,
severable, diverse and independent covenants, subject, where appropriate, to the
doctrine of res judicata. The parties hereby agree to waive any right to a trial
by jury for any and all disputes hereunder (whether or not relating to the
Restrictive Covenants).
11. Miscellaneous
(a) Notices. All notices required or permitted under this Agreement shall
be in writing and shall be deemed effective (i) upon personal delivery,
(ii) upon deposit with the United States Postal Service, by registered or
certified mail, postage prepaid, or (iii) in the case of facsimile
transmission or delivery by nationally recognized overnight delivery
service, when received, addressed as follows:
(i) If to the Company or the REIT, to:
Highland Hospitality Corporation
0000 Xxxxxxxxxx Xxxxx
Xxxxx 000
XxXxxx, XX 00000
Attention: President
Fax No. 571/000-0000
(ii) If to the Executive, to:
Xxxxx X.X. Xxxxxx
0000 Xxx Xxxxx Xxxxxx, XX
Xxxxxxxxxx, XX 00000
or to such other address or addresses as either party shall
designate to the other in writing from time to time by like notice.
(b) Pronouns. Whenever the context may require, any pronouns used in this
Agreement shall include the corresponding masculine, feminine or neuter
forms, and the singular forms of nouns and pronouns shall include the
plural, and vice versa.
(c) Entire Agreement. This Agreement constitutes the entire agreement
between the parties and supersedes all prior agreements and understandings,
whether written or oral, relating to the subject matter of this Agreement.
(d) Amendment. This Agreement may be amended or modified only by a written
instrument executed by both the Company and the Executive, which amendment
or modification is consented to by the REIT.
(e) Governing Law. This Agreement shall be construed, interpreted and
enforced in accordance with the laws of the State of Maryland, without
regard to its conflicts of laws principles.
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(f) Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of both parties and their respective successors
and assigns, including any entity with which or into which the Company
or the REIT may be merged or which may succeed to its assets or
business or any entity to which the Company or the REIT may assign its
rights and obligations under this Agreement; provided, however, that
the obligations of the Executive are personal and shall not be assigned
or delegated by her.
(g) Waiver. No delays or omission by the Company, the REIT or the
Executive in exercising any right under this Agreement shall operate as
a waiver of that or any other right. A waiver or consent by the Company
shall not be effective unless consented to by the REIT. A waiver or
consent given by the Company or the Executive on any one occasion
shall be effective only in that instance and shall not be construed as
a bar or waiver of any right on any other occasion.
(h) Captions. The captions appearing in this Agreement are for
convenience of reference only and in no way define, limit or affect the
scope or substance of any section of this Agreement.
(i) Severability. In case any provision of this Agreement shall be held
by a court or arbitrator with jurisdiction over the parties to this
Agreement to be invalid, illegal or otherwise unenforceable, such
provision shall be restated to reflect as nearly as possible the
original intentions of the parties in accordance with applicable law,
and the validity, legality and enforceability of the remaining
provisions shall in no way be affected or impaired thereby.
(j) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
HIGHLAND HOSPITALITY, L.P.
By: Highland Hospitality Corporation, its
general partner
By: /s/ Xxxxx X. Xxxxxxx
---------------------------------------
Xxxxx X. Xxxxxxx
President and Chief Executive Officer
XXXXX X.X. XXXXXX
/s/ Xxxxx X.X. Xxxxxx
---------------------------------------
HIGHLAND HOSPITALITY CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
---------------------------------------
Xxxxx X. Xxxxxxx
President and Chief Executive Officer
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