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Exhibit 10.5
[Execution Copy]
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
between
STARWOOD HOTELS & RESORTS TRUST
and
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Employment Agreement ("Agreement"), as amended and restated as
of February 17, 1998, between ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ("Executive") and Starwood
Hotels & Resorts Trust, a Maryland real estate investment trust (the "Company"),
with its principal office at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇.
WHEREAS, Executive has served as Chairman and Chief Executive
Officer of the Company since December 1994 and currently serves as such;
WHEREAS, the Company desires to continue the services of
Executive as its Chairman and Chief Executive Officer and to enter into an
agreement embodying the terms of such continuing relationship; and
WHEREAS, Executive is willing to accept such continued
employment upon the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the agreements and
covenants contained herein, the Executive and the Company hereby agree as
follows:
ARTICLE I
Employment and Term
Section 1.01 Position; Responsibilities. (a) The Company
hereby employs and continues the employment of Executive as its Chairman and
Chief Executive Officer ("CEO") upon the terms and conditions hereinafter set
forth.
(b) As CEO, Executive shall at all times be the senior-most
officer of the Company, with the duties, responsibilities and authority
customarily associated with such position and consistent with such duties,
responsibilities and authority as has heretofore been his as CEO. Such duties
include authority and responsibility for acquisitions, divestitures, finance and
investor relations, subject to policies adopted by the Board of Trustees of the
Company (the "Board"). Executive shall perform such other additional duties and
services of a senior executive nature, consistent with his position, as may be
requested of him from time to time by the Board. Executive shall report directly
and solely to the Board.
Section 1.02 Performance of Duties; Other Commitments and
Activities.
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(a) Executive shall at all times endeavor to duly and
faithfully perform all of his duties hereunder to the best of his abilities.
(b) Executive shall devote such time and effort as may be
necessary and appropriate from time to time in the circumstances for the proper
discharge of his duties and obligations under this Agreement. The Company
acknowledges that Executive is involved in other business endeavors, including
with Starwood Capital Group L.L.C. ("SCG"), and as a consequence performs
multiple executive roles. Subject to the Executive's duties and obligations to
the Company as set forth in this Section 1.02(b), and subject to non-competition
agreements between the Company and Executive and between the Company and SCG,
the Company consents to the continuation of Executive's additional business
endeavors and multiple executive roles.
(c) Executive's base of operations under this Agreement shall
continue to be Greenwich, CT, although Executive may, at his election, render
his services from other locations. Executive shall not be required to relocate
or render services, on other than a temporary basis, outside of such town.
Section 1.03 Term. Executive's term of employment under this
Agreement (the "Term") shall commence on the date hereof (the "Commencement
Date") and shall expire on December 31, 1999, unless extended or sooner
terminated as herein provided.
Section 1.04 Representation and Warranty of Executive.
Executive hereby represents and warrants to the Company that he is not aware of
any presently existing fact, circumstance or event (including, but without
limitation, any health condition or legal constraint) which would preclude or
restrict him from providing to the Company the services contemplated by this
Agreement, or which would give rise to any breach of any term or provision
hereof, or which could otherwise result in the termination of his employment
hereunder for Cause or Good Reason (as such terms are hereinafter defined).
Section 1.05 Representation and Warranty of Company. The
Company hereby represents and warrants to Executive that (i) it is not aware of
any fact, circumstance or event which would give rise to any breach of any term
or provision of this Agreement or any agreement covering any Existing Awards (as
hereinafter defined), or which would form the basis for any claim or allegation
that (A) Executive's employment hereunder could be terminated for Cause or Good
Reason hereunder, or (B) the rights of Executive under any Existing Award should
be in whole or any part limited, forfeited or otherwise restricted; and (ii) it
has received all authorizations and has taken all actions, necessary or
appropriate for the due execution, delivery and performance of this Agreement,
all Existing Awards, and all Plan Agreements (as hereinafter defined), including
all amendments thereto effected by this Agreement.
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ARTICLE II
Compensation
Section 2.01 General. The Company shall compensate Executive
for all of his services under this Agreement, as set forth herein.
Section 2.02 Basic Compensation. Executive's minimum annual
salary ("Base Salary") shall be at the rate of $1,000,000 and shall be payable
in bi-weekly or other installments in accordance with the Company's normal
payment schedule for senior management (not less frequently than monthly). The
Base Salary shall be subject to annual review commencing at the end of 1998 and
at the end of each year thereafter during the Term, and may be increased (but
not decreased) for subsequent years.
Section 2.03 Incentive Compensation. In addition to the Base
Salary, the Company shall pay to Executive as incentive compensation ("Incentive
Compensation") in respect of each calendar year (or portion thereof) of the
Company, an amount determined in accordance with any bonus or short term
incentive compensation program (which may be based upon achieving certain
specified performance criteria) which may be established by the Board either for
the Executive or for senior management generally and which in any event shall be
established by the Board for each calendar year not later than the earlier to
occur of (x) March 31 of such year (or, in the case of 1998, 90 days after the
date of this Agreement), and (y) the date on which the Company's audited
financial statements for the prior calendar year are first available; provided,
however, that (i) as Incentive Compensation for the full calendar year ending
December 31, 1997, the Company has paid Executive $2,650,000, and (ii) subject
to Article III hereof, Incentive Compensation for the full calendar year ending
December 31, 1998 shall not be less than $1,325,000 (the "Guaranteed Portion").
All Incentive Compensation earned under this Section 2.03
shall be payable as soon as reasonably practicable, but in no event later than
120 days after end of the relevant calendar year (30 days after December 31,
1998 with respect to the Guaranteed Portion).
Section 2.04 Equity Incentive and Other Benefit Programs. (a)
On and prior to September 25, 1997, Executive was granted certain options,
warrants, restricted stock and performance awards (collectively, the "Existing
Awards"), summarized on the attached Exhibit A, under the Starwood Lodging Trust
1995 Long-Term Incentive Plan (as it has been amended and restated, from time to
time as of and subsequent to August 12, 1996) (the "LTIP") (as well as certain
options which were granted under the Starwood Lodging Trust 1995 Share Option
Plan (the "Share Option Plan"), prior to the amendment and restatement thereof
as of August 12, 1996) (the "Pre-Existing Awards"), all of which grants and
awards are hereby confirmed as having been duly and validly authorized and
issued, and being in full force and effect as of the date of execution of this
Agreement.
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Except as specifically provided in this Agreement, nothing in
this Agreement shall be deemed to modify or otherwise affect any of the terms or
provisions (including, but without limitation, any contingencies) of any
Pre-Existing Awards.
(b) Notwithstanding any provision to the contrary contained in
any agreement(s) (each, a "Plan Agreement") covering the relevant grant of
Existing Awards or Pre-Existing Awards, as the case may be, the following terms
shall apply with respect to such grants (the relevant provisions of this
Agreement constituting an amendment to the relevant Plan Agreement(s) to the
extent necessary to effectuate the same): (i) with respect to the Three Year
Option and the Five Year Option noted on Exhibit A, together with the
Performance Awards relating thereto, and the option granted on September 25,
1997 (collectively, the "Recent Options"), (A) termination for Cause and for
Good Reason shall be as set forth in and subject to this Agreement and (B) in
the event Executive's employment by the Company shall terminate for any reason
other than (1) termination by the Company for Cause, or (2) termination by
Executive without Good Reason (any such termination specified in this clause
(B), a "Non-Cause Termination"), all unvested portions of the Recent Options
shall thereupon immediately vest in full, free of restrictions (except that
Executive may not exercise or sell with respect to such unvested portions for a
period of one-year from the date of termination if the reason for such
termination shall have been the failure of the Company and Executive to agree to
an extension of Executive's employment by the Company by December 1, 1999), and
the Recent Options shall remain exercisable until the third anniversary of the
date of such termination; (ii) with respect to the remainder of the Existing
Awards and all Pre-Existing Awards, in the event of any Non-Cause Termination,
all unvested portions of such Awards shall thereupon immediately vest in full,
free of restrictions (except that Employee may not exercise or sell with respect
to such unvested portions for a period of one-year from the date of termination
if the reason for such termination shall have been the failure of the Company
and Executive to agree to an extension of Executive's employment by the Company
by December 1, 1999), and shall remain exercisable for the period provided by
the terms of such Awards but no less than a period ending three years from the
date of termination of employment hereunder; and (iii) no unvested portion of
any Existing Award shall be subject to forfeiture or restriction under any
circumstance other than in the event of a termination for Cause, or, in the case
of the Recent Options, by Executive without Good Reason. Executive shall be
eligible for grants in the future of additional Paired Options, Paired Shares
and Performance Awards under the LTIP (any such future grants, collectively,
"Subsequent Awards"). All Paired Shares included in or underlying any Existing
Awards or Pre-Existing Awards will be subject to applicable
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resale and other restrictions as set forth in the Plan Agreement(s). The Company
shall use its best efforts to file and keep effective a registration statement
on Form S-8 or other appropriate form with the Securities and Exchange
Commission covering such Paired Shares.
(c) Notwithstanding any provision to the contrary contained in
this Agreement, the LTIP, the Share Option Plan or any other agreement, upon the
Effective Time (as described in Section 1.2 of the Amended and Restated
Agreement and Plan of Merger, dated as of November 12, 1997, among the Starwood
Lodging Corporation (the "Corporation"), Chess Acquisition Corp., the Company
and ITT Corporation (the "ITT Merger Agreement)), all Existing Awards and
Pre-Existing Awards shall be 100% vested, except for such Existing Awards and
Pre-Existing Awards that will not vest at the Effective Time, as set forth on
Exhibit B hereto, which shall vest in accordance with their terms as modified by
this Agreement.
(d) Notwithstanding any provision to the contrary contained in
the agreements (the "Restricted Stock Agreements"), dated August 12, 1996,
covering the grant to Starwood Capital Group, L.L.C. of restricted stock awards
of Paired Shares, the following terms shall apply with respect to such grant to
the extent it was allocated to Executive, Madison ▇▇▇▇▇ or ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (such
portion, the "Award"): (i) the Award became 100% vested upon the Closing (as
defined in Section 1.6 of the Transaction Agreement (the "Westin Agreement"),
dated as of September 8, 1997, among WHWE L.L.C., Woodstar Investor Partnership,
Nomura Asset Capital Corporation, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, W&S Hotel L.L.C., Westin
Hotels & Resorts Worldwide, Inc., W&S Lauderdale Corp., W&S Seattle Corp.,
Westin St. ▇▇▇▇ Hotel Company, Inc., W&S Denver Corp., W&S Atlanta Corp.,
Starwood Lodging Trust, SLT Realty Limited Partnership, Starwood Lodging
Corporation and SLC Operating Limited Partnership, of the Merger (as defined in
the Westin Agreement) (the "Westin Merger"); (ii) upon the execution of this
Agreement, the Company shall pay to Executive an amount equal to 40% of the
aggregate of the Fair Market Value (as defined in the LTIP) (determined at the
time of vesting) of each Paired Share subject to the Award which vested prior to
the Closing; provided, however, that no amount of Fair Market Value of a Paired
Share in excess of $53 shall be taken into account; and (iii) no later than
April 10, 1999, the Company shall pay to Executive an amount equal to 40% of the
aggregate Fair Market Value (as defined in the LTIP) (determined on the date of
the Closing) of each Paired Share subject to the Award which vested upon the
Closing; provided, however, that no amount of Fair Market Value of a Paired
Share in excess of $53 shall be taken into account.
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(e) During the Term, Executive shall be entitled to
participate in the LTIP, any successor plan and all employee benefit plans,
including retirement programs, if any, group health care plans, and all fringe
benefit plans, of the Company. Such plans shall at all times be comparable to
those made available to the senior-most management of the Corporation. In
addition, the Company shall provide Executive with the following benefits during
the Term:
(i) use of an automobile, driver and car service for
business purposes consistent with past practice prior to the execution of this
Agreement;
(ii) priority scheduling on Company aircraft, if any, for
business purposes;
(iii) first-class travel accommodations (air and lodging)
for business-related travel (including the reasonable travel expenses incurred
by Executive's spouse when accompanying Executive on business-related travel);
and
(iv) tax preparation and financial planning assistance up
to a maximum cost of $25,000 per calendar year.
(f) During the Term, the Company shall purchase and maintain a
life insurance policy (the "Executive Insurance Policy") on Executive's life in
the face amount of $10,000,000, the proceeds of which shall be payable to
Executive's estate or such other person or persons as Executive shall designate.
The Company shall not be required to maintain such insurance after termination
of Executive's employment, but upon such termination the Company shall take all
actions reasonably requested by Executive necessary to transfer title to such
policy to Executive at no cost to Executive.
(g) The Company shall reimburse Executive for all legal fees
reasonably incurred by Executive in connection with the negotiation and
execution of this Agreement.
Section 2.05 Expense Reimbursements. The Company shall
reimburse Executive for all proper expenses incurred by him in the performance
of his duties hereunder in accordance with the policies and procedures of the
Company as in effect from time to time.
Section 2.06 Withholding. The Base Salary and all other
payments to Executive for his services to the Company shall be subject to all
withholding and deductions required by federal, state or other law (including
those authorized by Executive but not otherwise required by law), including but
not limited to state, federal and local income taxes, unemployment tax, Medicare
and FICA, together with such
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deductions as Executive may from time to time specifically authorize under any
employee benefit program which may be adopted by the Company for the benefit of
its senior executives or Executive.
ARTICLE III
Termination of Employment
Section 3.01 Termination.
(a) Executive's employment hereunder shall be terminable by
either party with or without Cause and with or without notice except as
otherwise provided herein, but with the effect set forth herein.
(b) Executive shall give the Company at least 30 days' advance
written notice prior to any termination by Executive other than for Good Reason.
The Company shall give Executive at least 30 days' advance written notice prior
to any termination of Executive without Cause.
(c) Executive may resign and terminate his employment
hereunder for Good Reason (which shall also be deemed a termination by the
Company other than for Cause), subject, however, to prior delivery to the
Company of a Preliminary Notice of Good Reason and the failure of the Company to
remedy the same within the cure period provided below. For purposes of this
Agreement, "Good Reason" means (i) the failure to elect and continue Executive
as CEO or Chairman of the Company or to nominate Executive for re-election as a
member of the Board (unless a Cause Termination Notice (as hereinafter defined)
shall theretofore have been given to Executive); (ii) the failure to assign
Executive duties, authorities, responsibilities and reporting requirements
consistent with his position and otherwise as set forth herein, or if the scope
of any of Executive's material duties or responsibilities as CEO of the Company
is reduced or expanded to a significant degree without Executive's prior
consent, except for any reduction in duties and responsibilities due to
Executive's illness or disability or temporary suspensions of duties and
responsibilities pending results of any Board commissioned investigation as to
potential Cause for termination of Executive's employment and except if a Cause
Termination Notice shall theretofore have been given to Executive; (iii) a
reduction in or a substantial delay in the payment of Executive's compensation
or benefits from those required to be provided in accordance with the provisions
of this Agreement, including under or in connection with any Existing Award or
Pre-Existing Award; (iv) a requirement by the Company or the Board, without
Executive's prior consent, that Executive be based outside of Greenwich,
Connecticut, other than on travel reasonably required to carry out Executive's
obligations under this Agreement; (v) the failure of the
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Company to indemnify Executive (including the prompt advancement of expenses),
or to maintain directors' and officers' liability insurance coverage for
Executive, in accordance with the provisions of Section 5.11 hereof; (vi) the
Company's purported termination of Executive's employment for Cause other than
in accordance with the requirements of this Agreement; (vii) a "Change of
Control," as such term is defined and used in the LTIP, shall have occurred
(unless a Cause Termination Notice shall theretofore have been given to
Executive); it being understood that neither the Merger (as described in Article
I of the ITT Merger Agreement) nor the Westin Merger shall constitute a "Change
of Control" under the LTIP for purposes of this Section 3.01(c); (viii) the
failure, by December 1, 1999, of the Company and Executive to agree to an
extension of the Term beyond December 31, 1999, or (ix) any other breach by the
Company of any provision of this Agreement; provided, that in the event Good
Reason is based on clause (ii), (iii), (iv), (v) or (ix) above, (a) "Good
Reason" shall not include acts which are cured by the Company within 30 days
from receipt by the Company of a written notice from Executive (a "Preliminary
Notice of Good Reason") identifying in reasonable detail the act or acts
constituting Good Reason, (b) Good Reason shall not exist unless the Preliminary
Notice of Good Reason shall have been given by Executive within 60 days after
learning of the act, failure or event (or, in the case of a series of related
acts, failures or events, within 120 days of the first such act, failure or
event) which Executive alleges constitutes Good Reason hereunder, (c) if the
Company has failed to cure as provided above, Good Reason shall not exist unless
Executive shall have given notice of termination hereunder for Good Reason
within 60 days from delivery of the Preliminary Notice of Good Reason (which
termination shall be effective 30 days from the giving of such notice), and (d)
if the Company has commenced an expedited arbitration in the manner prescribed
below within 15 days after receipt of Executive's notice of termination called
for under the immediately preceding clause (c), such termination shall not be
effective as a termination of employment and shall not be deemed a termination
by Executive for Good Reason unless and until the Arbitrator shall have
determined otherwise. If the Company has timely commenced such an arbitration
proceeding, in the manner prescribed below, no payments shall be due Executive
under Section 3.02 (i) or (ii) hereof until the conclusion of the arbitration
proceeding or further proceeding contemplated by Section 5.04 hereof and only if
an award is rendered by the Arbitrator in favor of Executive. Notwithstanding
the foregoing, if the Company fails to file a demand for arbitration with the
American Arbitration Association ("AAA") and pay the requisite fees pursuant to
Rule 4 of the AAA's National Rules for the Resolution of Employment Disputes
effective June 1, 1996 (the "National Rules") within 30 days after receipt of
notice of termination from
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Executive, and diligently pursue such proceeding in accordance with the
procedures set forth in Section 5.04 hereof, Executive's termination of
employment from the Company shall be conclusively presumed to have been for Good
Reason.
(d) The Company shall have the right to terminate Executive's
employment hereunder for Cause. For purposes hereof, "Cause" shall be defined as
Executive's having (a) been convicted of a criminal offense constituting a
felony, (b) committed one or more acts or omissions constituting fraud or
willful misconduct, or (c) failed, after written warning from the Board
specifying in reasonable detail the breach(es) complained of, to substantially
perform his duties under this Agreement (excluding, however, any failure to meet
any performance targets), except where such failure results from Executive's
incapacity due to physical or mental illness. For purposes of the foregoing, no
act or failure to act on the part of Executive shall be considered "willful"
unless it is done, or omitted to be done, by Executive without reasonable belief
that Executive's action or omission was in the best interests of the Company.
Any act or failure to act that is expressly authorized by the Board pursuant to
a resolution duly adopted by the Board, or pursuant to the written advice of
counsel for the Company, shall be conclusively presumed to be done, or omitted
to be done, by Executive in the best interests of the Company.
Notwithstanding the foregoing, termination by the Company for
Cause shall not be effective until and unless each of the following provisions
shall have been complied with: (i) notice of intention to terminate for Cause (a
"Preliminary Cause Notice"), the giving of which shall have been authorized by a
vote of not less than 50% of all disinterested Trustees then in office, which
shall include a written statement of the particular acts or circumstances which
are the basis for the termination for Cause and shall set forth a reasonable
period (not less than 30 days) to cure (the "Cure Period"), shall have been
given to Executive by the Board within sixty days after the Company first learns
of the act, failure or event constituting Cause; and (ii) Executive shall not
have cured the acts or circumstances complained of within the Cure Period; and
(iii) the Board shall have called an in personam meeting of the Board, at which
termination of Executive is an agenda item, and shall have provided Executive
with not less than 20 days' notice thereof; and (iv) Executive shall have been
afforded the opportunity, accompanied by counsel, to provide written materials
to the Trustees in advance of such meeting and, if he so desires, to personally
address the Trustees at such meeting; and (v) the Board shall have provided,
within three business days after such meeting, a written notice of termination
for Cause, stating that, based upon the evidence it has received and reviewed,
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and specifying in reasonable detail the acts and circumstances complained of, it
has voted by a vote of at least a majority of all of the disinterested Trustees
then in office to terminate Executive for Cause (such a notice, a "Cause
Termination Notice"), which such notice shall be effective on the sixteenth day
after receipt thereof by Executive, subject to the provisions hereof; provided
that if Executive has commenced an expedited arbitration in the manner
prescribed below within 15 days after his receipt of the Cause Termination
Notice, disputing the Company's right under this Agreement to so terminate for
Cause, Executive shall not be deemed to have been terminated for Cause unless
and until the Arbitrator shall thereafter have determined that Executive was
properly terminated for Cause in accordance with the provisions hereof; and
provided, further that the Company may suspend Executive (a) with pay, at any
time after any indictment of Executive for a criminal offense constituting a
felony or after the giving of the Preliminary Cause Notice, and (b) without pay,
at any time after the giving of the Cause Termination Notice, except that any
payments not so made shall be made within three business days after the
Arbitrator shall have made a determination that Executive was terminated other
than in compliance with the foregoing provisions relating to termination for
Cause. If Executive or his representative fails to file a demand for arbitration
with the AAA and pay the requisite fees pursuant to Rule 4 of the National Rules
within 30 days of his receipt of a Cause Termination Notice from the Board, and
diligently pursue such proceeding in accordance with the procedures set forth in
Section 5.04 hereof, such termination shall be conclusively presumed to have
been for Cause, it being understood and agreed that any decision of the
Arbitrator that Executive has been terminated hereunder for Cause, or any
failure of Executive to contest the Company's allegations of Cause hereunder (by
failing to file and/or prosecute a demand for arbitration or otherwise), is not
intended to, and shall not, have any effect or bearing whatsoever on any
Pre-Existing Award, and the parties specifically agree and undertake that,
notwithstanding anything to the contrary, no finding of any Arbitrator pursuant
hereto that Executive was properly terminated for Cause under this Agreement
shall be binding upon or admissible in any court or other proceeding in which
any Pre-Existing Awards are at issue.
If the Arbitrator declines to rule that Executive was
terminated for Cause, Executive shall be treated as having been terminated
without Cause and Executive shall have the rights provided under Section 3.02
below and provided elsewhere in this Agreement with respect to a termination
without Cause.
For all purposes of this Agreement, "Good Reason" and "Cause"
shall have the applicable defined meaning as set forth above in this Section
3.01.
No termination of Executive's employment shall require that
Executive resign any other position (including as Trustee or Chairman) he may
then be holding with
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the Company; provided, however, that (i) if Executive's employment hereunder is
terminated for Cause under the above provisions, Executive shall resign
forthwith from all positions he may then be holding with the Company, if
requested to do so by the Board, and (ii) if Executive terminates his employment
hereunder other than for Good Reason, Executive shall resign forthwith from all
such positions, if requested to do so by the Board, except for any position to
which he has been elected by the shareholders of the Company (such as Trustee).
Section 3.02 Severance Package. In the event Executive's
employment under this Agreement is terminated by the Company other than for
Cause (and a termination due to the Executive's death or permanent disability
shall be treated for purposes of this Agreement as a termination by the Company
other than for Cause) or is terminated by Executive for Good Reason, then, as
and for a severance package ("Severance Package"),
(i) Executive shall, subject only to the delays permitted by
Section 3.01 for arbitration, receive (A) an amount, which shall be payable in
one lump sum as soon as practicable, but in any event within 30 days of the date
of determination that Executive's termination is (x) other than for Cause, or
(y) for Good Reason as applicable, equal to 2 times the sum of (1) the annual
Base Salary then in effect, plus (2) the average of the Incentive Compensation
paid to Executive with respect to the 2 full calendar years ending immediately
prior to the calendar year in which the termination of employment occurs; and
(B) Company paid medical insurance benefits available to other senior executives
of the Company during the 12-month period subsequent to termination of
employment, all costs of which shall be paid by the Company (and thereafter all
COBRA rights available to Executive shall be paid by Executive); and
(ii) All Pre-Existing Awards and Existing Awards shall,
notwithstanding any provision to the contrary contained in any Plan Agreement(s)
covering the same (the relevant provisions of this Agreement constituting an
amendment to the relevant Plan Agreement(s) to the extent necessary to
effectuate the same), immediately vest in full (with all Performance Periods
terminating on the effective date of Executive's termination of employment and
all relevant Performance Measures being computed through such date), with
preservation of all of Executive's rights relating to all such awards and under
the relevant agreements granting or otherwise governing same for the full terms
thereof, and, following timely exercise of any such awards, Executive shall
receive title to the shares issued upon exercise or otherwise in respect thereof
free and clear of any lien, claim or encumbrance by, through or under the
Company.
If a corporate transaction which would constitute a Change of
Control event
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under the LTIP is agreed to during the pendency of an arbitration hereunder, the
Company will include appropriate provisions which will enable Executive to
participate in such Change of Control event as if the arbitration were resolved
favorably to Executive, but subject to such a favorable resolution.
The parties agree that the foregoing shall be Executive's sole
and exclusive monetary remedy under this Agreement by reason of termination by
Executive for Good Reason or by the Company other than for Cause, it being
agreed that as his actual damages under this Agreement would be difficult to
measure or quantify and would be impracticable to determine, such amount shall
constitute liquidated damages under this Agreement for Executive by reason of
such termination by Executive for Good Reason, or by reason of any termination
by the Company other than for Cause hereunder. Such payments shall not be
reduced or limited by amounts Executive might earn or be able to earn from other
employment or ventures. The parties agree that the Company shall have no
recourse whatsoever to any monetary remedy by reason of Executive's termination
of employment, other than for reimbursement of actual out-of-pocket damages
actually suffered and incurred by the Company as a direct result of Executive's
termination for Cause hereunder (excluding the costs of identifying and/or
hiring any replacement for Executive, or any attorney's fees or costs of
investigation, which shall be borne solely by the Company), all of which are
hereby waived; provided, however, that the foregoing limitation shall not apply
to any claims the Company may have against Executive relating to tortious
conduct by Executive which causes damage to the Company.
Section 3.03 Rights on Termination for Cause or Without Good
Reason. No Severance Package shall be due or owing to Executive in the event
that the Company shall duly terminate Executive's employment for Cause or in the
event that Executive shall terminate his employment with the Company for reasons
other than Good Reason (it being understood and agreed that the provisions
hereof relating to Existing or Pre-Existing Awards, including those set out in
Section 2.04, shall not be affected thereby); provided, however, that Executive
shall in all events be paid all accrued but unpaid Base Salary, earned but
unpaid Incentive Compensation, and other benefits through the date of
termination. In addition, in the event that the Company shall terminate
Executive's employment for Cause or in the event that Executive shall terminate
his employment with the Company for reasons other than Good Reason, then except
as provided in Section 2.04 above or in the following two sentences, all
unvested Recent Options, unvested Performance Awards and unvested restricted
Paired Shares then held by Executive shall automatically be forfeited (subject,
however, to any contrary
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provisions in the relevant Plan Agreements, as amended through the date of
termination, relating to such Recent Options, Awards or Paired Shares, or any
contrary determination of the Board in its sole discretion). No forfeiture of
unvested Recent Options, Performance Awards or unvested restricted Paired Shares
required hereby shall occur or be effective until 15 days after the later of (i)
the conclusion of any arbitration proceeding or further proceeding contemplated
by Section 3.01 hereof, (ii) if no arbitration proceeding is commenced, until
the time for commencing such a proceeding has lapsed, or (iii) with respect to
Pre-Existing Awards, the determination by a court of competent jurisdiction that
"cause," as such term is defined and used in the relevant Plan Agreement(s)
covering the grants of the Pre-Existing Awards, has occurred (the latest of such
three dates being referred to herein as the "Forfeiture Date"), but, except as
otherwise provided in Sections 2.04(a) and (b) above or in the relevant Plan
Agreement(s) governing the terms thereof, no additional service-based or
time-based vesting shall occur with respect to any such Recent Options,
Performance Awards or Paired Shares following the date Executive's employment is
deemed terminated under Section 3.01 hereof. It is expressly agreed that
Executive may exercise vested options and other vested Existing and Pre-Existing
Awards, and receive a settlement of vested Performance Awards, at any time prior
to the Forfeiture Date. In all other respects, the terms of the grant of any
such options or award of any such Paired Shares shall govern.
ARTICLE IV
Confidential Information; Inducing Company Employees
Section 4.01 Confidential Information. Except in the course of
his employment with the Company, or as he may be required pursuant to any law or
court order or similar process, Executive shall not at any time either during or
after his termination of employment hereunder, directly or indirectly disclose
or use any secret, proprietary, confidential information or data of the Company
or the Corporation, or any of their respective subsidiaries or affiliates;
provided, however, that after the expiration of 18 months from such termination
of employment, the Company's sole remedy shall be to seek and procure
appropriate equitable remedies. In the event of any dispute between Executive
and the Company or between Executive or the Company and others, Executive shall
cooperate with the Company as to redaction or other protective measures with
respect to any unnecessary public disclosure of any such confidential
information or proprietary data.
Section 4.02 Inducing of Company Employees. Except in the
course of his employment with the Company, or with the prior written approval of
the Board, Executive shall not at any time through the 12 month period after his
termination of employment hereunder, in any way directly or indirectly hire,
attempt to hire, or cause to
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be hired any person or persons who to Executive's best knowledge was employed at
any time during the period commencing six months prior to such termination by
the Company, the Corporation, or their respective subsidiaries or SLT Realty
Limited Partnership or SLC Operating Limited Partnership.
ARTICLE V
Miscellaneous
Section 5.01 Notices. All notices, requests or other
communications provided for in this Agreement shall be made, if to the Company,
to the Secretary of the Company at the Company's principal executive office, and
if to Executive, to his address on the books of the Company (or to such other
address as the Company or Executive may give to the other for purposes of notice
hereunder).
Copies of all notices given to Executive shall be sent to:
Weil, Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. Block, Esq.
Copies of all notices given to the Company shall be sent to:
Sidley & Austin
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
And
Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
All notices, requests or other communications required or
permitted by this Agreement shall be made in writing either (a) by personal
delivery to the party entitled
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thereto, (b) by mailing via certified mail, postage prepaid, return receipt
requested, in the United States mails to the last known address of the party
entitled thereto, (c) by reputable overnight courier service, or (d) by
facsimile with confirmation of receipt. The notice, request or other
communication shall be deemed to be received upon actual receipt by the party
entitled thereto; provided, however, that if a notice, request or other
communication is not received during regular business hours, it shall be deemed
to be received on the next succeeding business day of the Company.
Section 5.02 Assignment and Succession. The rights and
obligations of the Company under this Agreement may not be assigned in whole or
any part except in the case of a consolidation or merger with, or a transfer of
all or substantially all of the assets of the Company to, another entity
acceptable to Executive, which not later than 15 days prior to the consummation
of such combination transaction expressly assumes in a writing satisfactory in
form and substance to Executive all of the Company's obligations to Executive
hereunder, under all Existing and Pre-Existing Awards and any Subsequent Awards
and otherwise. No such assignment shall limit or restrict Executive's right to
terminate this Agreement for Good Reason, which right shall remain absolute.
Executive's rights and obligations hereunder are personal and may not be
assigned; provided, however, that in the event of the termination of Executive's
employment due to Executive's death or permanent disability, Executive's legal
representative shall have the right to receive the Severance Package as more
particularly set forth in Section 3.02 above. This Agreement shall inure to the
benefit of and be enforceable by Executive's heirs, beneficiaries and/or legal
representatives.
Section 5.03 Headings. The Article, Section, paragraph and
subparagraph headings are for convenience of reference only and shall not define
or limit the provisions hereof.
Section 5.04 Arbitration. In the event of any controversy,
dispute or claim arising out of or related to this Agreement or Executive's
employment by the Company, the parties shall negotiate in good faith in an
attempt to reach a mutually acceptable settlement of such dispute. If
negotiations in good faith do not result in a settlement of any such
controversy, dispute or claim, it shall, except as otherwise provided for herein
be finally settled by expedited arbitration conducted by a single arbitrator
selected as hereinafter provided (the "Arbitrator") in accordance with the
National Rules, subject to the following (the parties hereby agreeing that,
notwithstanding the provisions of Rule 1 of the National Rules, in the event
that there is a conflict between the provisions of the National Rules and the
provisions of this Agreement, the provisions of this Agreement shall control):
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16
(a) The Arbitrator shall be determined from a list of names of
five impartial arbitrators each of whom shall be an attorney experienced in
arbitration matters concerning executive employment disputes, supplied by the
AAA chosen by Executive and the Company each in turn striking a name from the
list until one name remains (with the Company being the first to strike a name).
(b) The expenses of the arbitration shall be borne equally by
each party; and each party shall bear its own legal fees and expenses, except
that the prevailing party shall be awarded his or its reasonable attorney's fees
and expenses with respect to such dispute.
(c) The Arbitrator shall determine whether and to what extent
any party shall be entitled to damages under this Agreement; provided that no
party shall be entitled to punitive or consequential damages (including, in the
case of the Company, any claim for alleged lost profits or other damages that
would have been avoided had Executive remained an employee), and each party
waives all such rights, if any.
(d) The Arbitrator shall not have the power to add to nor
modify any of the terms or conditions of this Agreement. The Arbitrator's
decision shall not go beyond what is necessary for the interpretation and
application of the provision(s) of this Agreement in respect of the issue before
the Arbitrator. The Arbitrator shall not substitute his or her judgment for that
of the parties in the exercise of rights granted or retained by this Agreement.
The Arbitrator's award or other permitted remedy, if any, and the decision shall
be based upon the issue as drafted and submitted by the respective parties and
the relevant and competent evidence adduced at the hearing.
(e) The Arbitrator shall have the authority to award any
remedy or relief (including provisional remedies and relief) that a court of
competent jurisdiction could order or grant. The Arbitrator's written decision
shall be rendered within sixty days of the closing of the hearing. The decision
reached by the Arbitrator shall be final and binding upon the parties as to the
matter in dispute. To the extent that the relief or remedy granted by the
Arbitrator is relief or remedy on which a court could enter judgment, a judgment
upon the award rendered by the Arbitrator shall be entered in any court having
jurisdiction thereof (unless in the case of an award of damages, the full amount
of the award is paid within 10 days of its determination by the Arbitrator).
Otherwise, the award shall be binding on the parties in connection with their
continuing performance of this Agreement and, except as otherwise provided
herein with respect to Existing Grants, in any subsequent arbitral or judicial
proceedings between the parties.
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17
(f) The arbitration shall take place in New York, New York or
Chicago, Illinois, as elected by the party commencing arbitration.
(g) The arbitration proceeding and all filing, testimony,
documents and information relating to or presented during the arbitration
proceeding shall be disclosed exclusively for the purpose of facilitating the
arbitration process and in any court proceeding relating to the arbitration, and
for no other purpose, and shall be deemed to be information subject to the
confidentiality provisions of this Agreement.
(h) The parties shall continue performing their respective
obligations under this Agreement notwithstanding the existence of a dispute
while the dispute is being resolved unless and until such obligations are
terminated or expire in accordance with the provisions hereof.
(i) The parties may obtain a pre-hearing exchange of
information including depositions, interrogatories, production of documents,
exchange of summaries of testimony or exchange of statements of position, and
the Arbitrator shall limit such disclosure to avoid unnecessary burden to the
parties and shall schedule promptly all discovery and other procedural steps and
otherwise assume case management initiative and control to effect an efficient
and expeditious resolution of the dispute. At any oral hearing of evidence in
connection with an arbitration proceeding, each party and its counsel shall have
the right to examine its witness and to cross-examine the witnesses of the other
party. No testimony of any witness, or any evidence, shall be introduced by
affidavit, except as the parties otherwise agree in writing.
(j) Notwithstanding the dispute resolution procedures
contained in this Section 5.04, either party may apply to any court sitting in
the County, City and State of New York (i) to enforce this agreement to
arbitrate, (ii) to seek provisional injunctive relief so as to maintain the
status quo until the arbitration award is rendered or the dispute is otherwise
resolved, (iii) to confirm any arbitration award, or (iv) to challenge or vacate
any final judgment, award or decision of the Arbitrator that does not comport
with the express provisions of this Section 5.04.
(k) No later than 5 business days prior to the due date for
payment of any excise tax imposed on Executive pursuant to Section 4999 of the
Code due and owing as a result of the accelerated vesting at the Effective Time
of any Existing Awards or Pre-Existing Awards (including any such awards which
may vest (or are deemed to have vested) at the Effective Time notwithstanding
the waiver of such vesting pursuant to Section 2.04(c) hereof), the Company
shall pay to Executive an amount equal to such excise tax (the "Excise Tax
Payment"). The Company shall not be required to pay to
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Executive any amount in respect of any income, excise or other taxes
attributable to payment of the Excise Tax Payment.
Section 5.05 Invalidity. If any provision of this Agreement is
or becomes invalid, illegal or unenforceable in any respect under any law, the
validity, legality or enforceability of the remaining provisions hereof shall
not in any way be affected or impaired.
Section 5.06 Waivers. No omission or delay by either party
hereto in exercising any right, power or privilege hereunder shall impair such
right, power or privilege, nor shall any single or partial exercise of any such
right, power or privilege, preclude any further exercise thereof, or the
exercise of any other right, power or privilege.
Section 5.07 Counterparts. This Agreement may be executed in
multiple counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument.
Section 5.08 Entire Agreement. Except as otherwise provided or
referred to herein, this Agreement contains the entire understanding of the
parties and supersedes all prior agreements and understandings relating to the
subject matter hereof. This Agreement may not be amended, except by a written
instrument hereafter signed by each of the parties hereto.
Section 5.09 Interpretation. The parties hereto acknowledge
and agree that each party and its or his counsel reviewed and negotiated the
terms and provisions of this Agreement and have contributed to its drafting.
Accordingly, (i) the rules of construction to the effect that any ambiguities
are resolved against the drafting party shall not be employed in the
interpretation of this Agreement, and (ii) the terms and provisions of this
Agreement shall be construed fairly as to all parties hereto and not in favor of
or against any party regardless of which party was generally responsible for the
preparation of this Agreement. Except where the context requires otherwise, all
references herein to Sections, paragraphs and clauses shall be deemed to be
reference to Sections, paragraphs and clauses of this Agreement. The words
"include", "including" and "includes" shall be deemed in each case to be
followed by the phrase "without limitation". The words "hereof", "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement.
Section 5.10 Governing Law. This Agreement and the performance
hereof shall be construed and governed in accordance with the internal laws of
the State of New
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York without reference to principles of conflict of laws.
Section 5.11 Indemnification. In addition to any additional
benefits provided under applicable state law, as a Trustee and officer of the
Company, Executive shall be entitled to the benefits of: (a) those provisions of
the Declaration of Trust of the Company, as amended, and of the Trustees
Regulations of the Company, as amended, which provide for indemnification of
officers and Trustees of the Company (and no such provision shall be amended in
any way to limit or reduce the extent of indemnification available to Executive
as a Trustee or officer of the Company), (b) the Indemnification Agreement
between the Company and Executive dated as of June 8, 1995, as amended through
the date hereof (the "Indemnification Agreement").
The rights of Executive under such indemnification obligations
shall survive the termination of this Agreement and be applicable for so long as
Executive may be subject to any claim, demand, liability, cost or expense, which
the indemnification obligations referred to in this Section are intended to
protect and indemnify him against.
The Company shall, at no cost to Executive, use its best
efforts to at all times include Executive, during the term of Executive's
employment hereunder and for so long thereafter as Executive may be subject to
any such claim, as an insured under any directors' and officers' liability
insurance policy maintained by the Company, which policy shall provide such
coverage in such amounts as the Board shall deem appropriate for coverage of all
Trustees and officers of the Company.
Section 5.12 Disclaimer. The name "Starwood Hotels & Resorts
Trust" is the designation of a Maryland real estate investment trust and its
Trustees (as Trustees but not personally) under a Declaration of Trust, dated
August 25, 1969, as amended and restated, and all persons dealing with Starwood
Hotels & Resorts Trust must look solely to Starwood Hotels & Resorts Trust's
property for the enforcement of any claims against Starwood Hotels & Resorts
Trust, as the Trustees, officers, agents and security holders of Starwood Hotels
& Resorts Trust assume no personal obligations of Starwood Hotels & Resorts
Trust, and their respective property shall not be subject to claims of any
person relating to such obligation.
Section 5.13 Effectiveness. This Agreement shall be of no
force and effect, and shall be treated as having had no force and effect from
the date hereof, if the Effective Time shall not have occurred by March 31,
1998.
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IN WITNESS WHEREOF, the Company has caused this Agreement to
be signed by its duly authorized officer and the Executive has signed this
Agreement as of the day and year first above written.
STARWOOD HOTELS & RESORTS TRUST
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Its: Senior Vice President and Chief Financial
Officer
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
----------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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EXHIBIT A
to
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
between
STARWOOD HOTELS & RESORTS TRUST
and
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
DATED AS OF FEBRUARY 17, 1998
Existing Awards:
Award as of February 21, 1996 of 45,000 Paired Shares in the form of warrants
vesting over a one year period.
Paired Option to purchase 975,000 Paired Shares vesting over the three year
period August 12, 1996 to August 12, 1999.
Paired Option to purchase 450,000 Paired Shares vesting over the five year
period August 12, 1996 to August 12, 2001.
Performance Awards relating to all Paired Shares underlying the above Paired
Options granted to ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇.
Paired Option, granted on September 25, 1997, to purchase 400,000 Paired Shares.
Pre-Existing Awards:
Paired Option to purchase 616,500 Paired Shares granted June 29, 1995.
Paired Option to purchase 9,000 Paired Shares granted June 29, 1995.
Paired Option to purchase 120,000 Paired Shares granted April 30, 1996.
Paired Option to purchase 9,000 Paired Shares granted June 30, 1996.
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EXHIBIT B
to
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
between
STARWOOD HOTELS & RESORTS TRUST
and
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
DATED AS OF FEBRUARY 17, 1998
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23
EXHIBIT B
1. The unvested portion (one-third (1/3rd)) of the 616,500 options granted
in June, 1995.
2. The 1/3rd of the 120,000 options granted in April, 1996 that is scheduled
to vest in April, 1998.
3. The 1/3rd of the 975,000 three-year options granted in August, 1996 that
is scheduled to vest in August, 1998.
4. The 1/4th of the 450,000 five-year options granted in August, 1996 that
is scheduled to vest in August, 1998.
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
C/O STARWOOD HOTELS AND RESORTS
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
March 11,1998
Starwood Hotels & Resorts
Attention: Secretary
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
RE: 1998 INCENTIVE COMPENSATION
To whom it may concern:
Pursuant to Sections 5.01 and 5.08 of the Amended and Restated
Employment Agreement (the "Agreement"), dated as of February 17, 1998, between
Starwood Hotels & Resorts (the "Company") and me, I hereby agree to amend
Section 2.03 of the Agreement in order to provide that the Board of Directors of
the Company shall have until May 17, 1998 to establish a bonus or short term
incentive compensation program pursuant to which the Incentive Compensation (as
defined in Section 2.03 of the Agreement) for the full calendar year ending
December 31, 1998 shall be determined.
In all other respects the Agreement shall remain in full force
and effect.
Please acknowledge the Company's agreement to the foregoing by
having this letter signed by its duly authorized officer and having a copy
returned to me at the address set forth above.
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
25
IN WITNESS WHEREOF, the Company has caused this letter to be
signed by its duly authorized officer.
STARWOOD HOTELS & RESORTS
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Its: Executive Vice President
cc: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq. (Sidley & Austin)
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq. (Fried, Frank, Harris,
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇)
▇▇▇▇▇▇ ▇. Block, Esq. (Weil, Gotshal & ▇▇▇▇▇▇ LLP)
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