Back to top

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

Employment Agreement

AMENDED AND RESTATED EMPLOYMENT AGREEMENT | Document Parties: STRATEGIC HOTELS & RESORTS, INC | STRATEGIC HOTELS & RESORTS, INC You are currently viewing:
This Employment Agreement involves

STRATEGIC HOTELS & RESORTS, INC | STRATEGIC HOTELS & RESORTS, INC

. RealDealDocs™ contains millions of easily searchable legal documents and clauses from top law firms. Search for free - click here.
Title: AMENDED AND RESTATED EMPLOYMENT AGREEMENT
Governing Law: Delaware     Date: 8/28/2009
Industry: Real Estate Operations     Sector: Services

AMENDED AND RESTATED EMPLOYMENT AGREEMENT, Parties: strategic hotels & resorts  inc , strategic hotels & resorts  inc
50 of the Top 250 law firms use our Products every day

Exhibit 10.1

AMENDED AND RESTATED

EMPLOYMENT AGREEMENT

THIS AGREEMENT, (“Agreement”) made and entered into as of August 27, 2009 (the “Effective Date”), by and between LAURENCE S. GELLER (the “Executive”) and STRATEGIC HOTELS & RESORTS, INC. (the “Company”);

WITNESSETH THAT :

WHEREAS, the Company and the Executive are parties to an Amended and Restated Employment Agreement dated as of September 7, 2006 (the “Prior Agreement”), pursuant to which the terms and conditions of the Executive’s employment were set forth; and

NOW THEREFORE, the Company and the Executive hereby agree that the Prior Agreement shall be amended and restated as set forth herein effective as of the Effective Date:

1. Performance of Services . The Executive’s employment with the Company shall be subject to the following:

 

 

(a)

Subject to the terms of this Agreement, the Company hereby agrees to employ the Executive as its chief executive officer, with the titles of President and Chief Executive Officer during the Agreement Term (as defined below), and the Executive hereby agrees to accept such employment during the Agreement Term. During the Agreement Term, while he is employed by the Company, the Executive shall be nominated for election to the Board of Directors of the Company (the “Board”), so long as he is Chief Executive Officer. If elected to and serving on the Board, the Executive agrees to resign from the Board effective on his Date of Termination (as defined in paragraph 3(h)), unless the Executive and the Board otherwise agree. The “Agreement Term” shall be the period beginning on the Effective Date and ending on December 31, 2012. Thereafter, the Agreement Term will be automatically extended for 12-month periods, unless either the Company or the Executive shall give the other party notice of the intention to not extend the Agreement by October 1, 2012 or by October 1 of any succeeding year, if applicable, except that upon a Change in Control (as defined in paragraph 4(d)) the remaining Agreement Term shall be 24 months from the date the Change in Control occurred.

 

 

(b)

During the Agreement Term, while the Executive is employed by the Company, the Executive shall devote his full time, energies and talents to serving as its President and Chief Executive Officer.

 

 

(c)

The Executive agrees that he shall perform his duties faithfully and to the best of his abilities subject to the directions of the Board. The Executive’s duties may include providing services for both the Company and the Subsidiaries (as defined below), as determined by the Board; provided, however, that the Executive shall not, without his consent, be assigned tasks that would be inconsistent with those of President and Chief Executive Officer of the Company. The Executive will have such authority, power, responsibilities and duties as are inherent to his positions (and the undertakings applicable to his


 

positions) and necessary to carry out his responsibilities and the duties required of him hereunder. For purposes of this Agreement, the term “Subsidiary” shall mean any corporation, partnership, joint venture or other entity during any period, in which at least a majority interest in such entity is owned, directly or indirectly, by the Company (or a successor to the Company).

 

 

(d)

Notwithstanding the foregoing provisions of this paragraph 1, during the Agreement Term, the Executive may devote reasonable time to activities other than those required under this Agreement, including management of his personal investments and activities involving professional, charitable, educational, religious and similar types of organizations, to the extent that such other activities do not, in the reasonable judgment of the Board, inhibit or prohibit the performance of the Executive’s duties under this Agreement, or conflict in any material way with the business of the Company or any Subsidiary; provided, however, that the Executive shall obtain approval of the Board prior to nomination or seeking election to the board of directors of any other company, and such approval shall not be unreasonably withheld.

 

 

(e)

The Company shall, to the maximum extent permitted by applicable law, protect, defend, indemnify and hold harmless the Executive against any costs, losses, expenses, claims, suits, proceedings, investigations, damages or liabilities to which the Executive may become subject which arise out of, are based upon or relate to, or are alleged to so arise, be based upon or to relate to the Executive’s employment by the Company (and any Subsidiary) or the Executive’s service to the Company (and any Subsidiary) as an employee, officer or member of the Board, including, without limitation, reimbursement on a current basis, upon submission of invoices, for any legal or other expenses reasonably incurred by the Executive in connection with investigation and defending against any such costs, losses, expenses, claims, suits, proceedings, investigations, damages or liabilities; provided, however, that the Company shall not be required to pay any amounts under this paragraph except upon receipt of an unsecured undertaking by the Executive to repay any such amounts as to which it shall ultimately be determined by a court of competent jurisdiction that the Executive is not entitled to indemnification by the Company. The Executive will be covered under the Company’s directors and officers insurance policy during the Agreement Term and for such period following the Date of Termination during which any action may be brought against the Executive related to the matters above, so long as the Company maintains such coverage for any director or officer of the Company.

 

2


2. Compensation . Subject to the terms of this Agreement, during the Agreement Term, while the Executive is employed by the Company, the Company shall compensate him for his services as follows:

 

 

(a)

Salary and Bonus .

 

 

(i)

During the Agreement Term, the Executive shall receive an annual base salary (the “Salary”) of not less than $750,000, subject to annual review by the Compensation Committee of the Board (the “Committee”), which, in the discretion of such Committee, may be increased from time to time. Once increased, such Salary may not be decreased. Such Salary shall be payable in arrears, in accordance with the payroll practices of the Company.

 

 

(ii)

For fiscal year 2009 and each subsequent fiscal year of the Company during the Agreement Term, the Executive shall be eligible to receive an annual cash performance-based bonus (the “Bonus”) from the Company, with a target bonus opportunity of 100% of Salary (“Target Bonus”), a threshold bonus opportunity of 66-  2 / 3 % of Salary (“Threshold Bonus”), and a maximum bonus opportunity of 200% of Salary (“Maximum Bonus”). For each fiscal year during the Agreement Term, the Executive shall have the opportunity to earn a bonus determined by the Committee which will make such a determination based on the applicable parameters as set forth in Schedule I. The Bonus shall be paid in cash between January 1 and March 15th of the fiscal year following the fiscal year to which the Bonus relates.

 

 

(iii)

In addition, the Committee may, in its discretion, award additional incentive compensation from time to time to Executive during the Agreement Term.

 

 

(b)

Benefits . The Executive shall be eligible to participate in any employee pension and welfare benefit plans and programs made available to the Company’s senior level executives, on terms which are no less favorable than the terms provided generally for the Company’s senior level executives from time to time, including, without limitation, pension, profit sharing, savings and other retirement plans or programs, medical, dental, hospitalization, short-term and long-term disability and life insurance plans, accidental death and dismemberment protection, travel accident insurance, and any other pension or retirement plans or programs and any other employee welfare benefit plans or programs that may be sponsored by the Company from time to time, including any plans that supplement the above-listed types of plans or programs, whether funded or unfunded.

 

 

(c)

Vacation . The Executive shall be entitled to four weeks of paid vacation each calendar year (or a pro rata portion thereof with respect to any period during the Agreement Term which does not encompass a full calendar year). Any unused vacation may be rolled over to the next calendar year, if permitted under the Company’s regular vacation policy as in effect from time to time.

 

3


 

(d)

Business Expenses . The Company will reimburse the Executive for reasonable expenses incurred by the Executive on company business, pursuant to the Company’s standard expense reimbursement policy as in effect from time to time, so long as the Executive provides proper documentation establishing the amount, date and business purpose of those expenses.

 

 

(e)

Stock-Based Compensation .

 

 

(i)

Value Creation Plan Award

Upon the Effective Date, the Executive shall receive an award of 600,000 Units providing Executive with the opportunity to earn an amount equal to 1.5% of the Company’s market capitalization under the Company’s Value Creation Plan, as attached to this Agreement as Exhibit B (the “Value Creation Plan”). The award will be earned and vested only to the extent of the achievement of certain performance goals, as set forth in the Value Creation Plan. Notwithstanding anything in this Agreement or the Value Creation Plan to the contrary, if a Change in Control as defined in the Value Creation Plan occurs or Executive’s employment is terminated because of death or Disability, the Company terminates Executive’s employment without Cause or Executive’s employment is terminated due to Constructive Termination, all of Executive’s Units under the Value Creation Plan shall become immediately vested and non-forfeitable.

 

 

(ii)

Restricted Stock Unit Awards

Upon the Effective Date, the Executive shall receive an award of seventy-five thousand (75,000) time-vesting restricted stock units. Unless otherwise accelerated pursuant to this Agreement, the restrictions shall lapse on such restricted stock unit grant as follows and the underlying shares of the Company shall be deliverable in accordance with the Company’s standard form of restricted stock unit award agreement (other than vesting provisions) in effect as of the Effective Date under the Company’s Amended and Restated 2004 Incentive Plan as in effect on the Effective Date (“Incentive Plan”):

 1 / 3 of the Restricted Stock Unit grant shall vest on August 27, 2010

 1 / 3 of the Restricted Stock Unit grant shall vest on August 27, 2011

 1 / 3 of the Restricted Stock Unit grant shall vest on August 27, 2012

In addition, during the first quarter of each fiscal year during the Agreement Term, the Company shall grant to Executive restricted stock units with respect to a number of shares of Common Stock of the Company equal to the lower of (i) 120% of Executive’s Salary divided by the closing price of a share of Common Stock on the date of grant of the restricted stock unit or (ii) 125,000 (with such number adjusted in accordance with Section 14.1 of the Incentive Plan). Unless otherwise accelerated pursuant to this Agreement, the restrictions on such restricted stock units shall lapse  1 / 3 on the first January 1st following such grant date and on each January 1st thereafter (for 100%

 

4


vesting on the third January 1st occurring after the grant date) and the underlying shares of the Company shall be deliverable in accordance with the Company’s standard form of restricted stock unit award agreement (other than vesting provisions) in effect as of the Effective Date under the Incentive Plan. If there are not sufficient shares under the Incentive Plan or any other equity plan of the Company to provide any grant required by this paragraph and shareholder approval of additional shares of Common Stock for the Incentive Plan or another equity plan of the Company is not being sought or not obtained for a retroactive grant, equivalent alternative compensation shall be provided Executive.

In addition, the Committee may, in its discretion, award additional stock-based compensation from time to time to Executive during the Agreement Term.

 

 

(iii)

Prior Awards

Any stock-based awards granted to Executive prior to the Effective Date (“Prior Awards”) shall continue to be governed by the terms and conditions of their respective grant agreements and the Incentive Plan, as appropriate, provided, however, that paragraphs 3(c), 3(d), 4(b)(v), 4(c)(v) and 4(d) of this Agreement shall govern the treatment of such Prior Awards upon termination of Executive’s employment.

 

 

(iv)

Dividend Equivalents

Each restricted stock unit award under this paragraph 2(e) (“RSU”) and each Prior Award other than options shall provide for accrual of dividend equivalents until the delivery date, as follows. As of each dividend date with respect to shares of Common Stock, a dollar amount equal to the amount of the dividend that would have been paid on the number of shares of Common Stock equal to the number of RSUs held by the Executive as of the close of business on the record date for such dividend shall be converted into a number of RSUs equal to the number of whole and fractional shares of Common Stock that could have been purchased at the closing price on the dividend payment date with such dollar amount. In the case of any dividend declared on shares of Common Stock which is payable in shares of Common Stock, Executive shall be credited with an additional number of RSUs equal to the product of (x) the number of his RSUs then held on the related dividend record date and the (y) the number of shares of Common Stock (including any fraction thereof) distributable as a dividend on a share of Common Stock. Such dividend equivalents shall be paid to the Executive in shares of Common Stock, at such time as shares are delivered for payment of the RSUs. For avoidance of doubt, dividends equivalents shall be accrued on a retroactive basis to September 1, 2006 based on Performance Shares as they are actually earned, as specified in Schedule II of the Prior Agreement.

 

5


 

(v)

Timing of Delivery of Shares – Generally . Except as otherwise provided in this Agreement, (a) RSUs awarded upon the Effective Date and the annual RSU grants shall vest and be delivered as described in paragraph 2(e)(ii); (b) Prior Awards described in paragraph 2(e)(iii) above shall be delivered in accordance with that paragraph; (c) RSUs delivered pursuant to dividend equivalents described in paragraph 2(e)(iv) above shall be delivered in accordance with that paragraph; (d) Performance Shares under the Prior Agreement shall vest and be delivered in accordance with the terms of the Prior Agreement; and (e) except as otherwise provided in a separate agreement, all other equity awards shall vest and be delivered at the time specified in, and in accordance with the Company’s standard form of award agreement under the Company’s Incentive Plan.

3. Termination . The Executive’s employment with the Company during the Agreement Term may be terminated by the Company or the Executive without any breach of this Agreement under the circumstances described in paragraphs 3(a) through 3(g):

 

 

(a)

Death . The Executive’s employment hereunder will terminate upon his death.

 

 

(b)

Disability . The Company may terminate the Executive’s employment due to the Executive’s Disability. For purposes of this Agreement “Disability” means the absence of the Executive from the Executive’s duties with the Company on a full-time basis for ninety (90) days (which need not be continuous) during any consecutive twelve-month period as a result of incapacity due to a physical or mental illness which, in the opinion of the Board, renders the Executive incapable, after reasonable accommodation, of performing his duties under this Agreement. If the Executive disputes the Company’s determination of Disability, the Executive (or his designated physician) and the Company (or its designated physician) shall jointly appoint a third-party physician to examine the Executive and determine whether the Executive has a Disability.

 

 

(c)

Termination by Company for Cause . The Company may terminate the Executive’s employment hereunder at any time for Cause (“Termination for Cause”). For purposes of this Agreement, the term “Cause” shall mean:

 

 

(i)

any conduct related to the Company involving gross negligence, gross mismanagement, or the unauthorized disclosure of confidential information or trade secrets;

 

 

(ii)

dishonesty or a violation of the Company’s Code of Business Conduct and Ethics that has or reasonably could be expected to result in a detrimental impact on the reputation, goodwill or business position of the Company or any Subsidiary;

 

6


 

(iii)

gross obstruction of business operations or illegal or disreputable conduct by Executive that impairs or reasonably could be expected to impair the reputation, goodwill or business position of the Company or any Subsidiary, and any acts that violate any policy of the Company relating to discrimination or harassment;

 

 

(iv)

commission of a felony or a crime involving moral turpitude or the entrance of a plea of guilty or nolo contendere to a felony or a crime involving moral turpitude; or

 

 

(v)

any action involving a material breach of the terms of this Agreement including material inattention to or material neglect of duties and Executive shall not have remedied such breach within 30 days after receiving written notice from the Board specifying the details thereof.

 

 

(d)

Constructive Termination . The Executive shall be considered to have terminated his employment as a result of a constructive termination (“Constructive Termination”) if, without the written consent of the Executive,

 

 

(i)

the Company materially reduces Executive’s Salary or bonus opportunity or the Company materially breaches this Agreement;

 

 

(ii)

the Company materially reduces the Executive’s duties or authority, fails to nominate the Executive to the Board, or requires the Executive to report other than to the Board or a committee of the Board;

 

 

(iii)

the Company relocates its principal offices, or the Executive’s principal place of employment, outside the Chicago metropolitan area; or

 

 

(iv)

any successor to the Company (or the Company itself, following a Change in Control as defined in paragraph 4(d)) fails to assume this Agreement or affirm its obligations hereunder in any material respect.

Notwithstanding the foregoing, at the direction of the Board, certain of the Executive’s duties may be reassigned to another director or officer for up to 30 days to permit an investigation of whether there is a basis to terminate the Executive for Cause. Such reassignment shall not constitute Constructive Termination as long as the reassigned duties are directly and materially related to the subject of the investigation. Further, suspending the Executive’s duties, with full pay, bonus eligibility, welfare benefits and continued vesting of equity awards and other benefits, after Executive has provided a notice of non-renewal of this Agreement shall not constitute Constructive Termination. A termination by the Executive shall not be deemed to be as a result of a Constructive Termination unless the Executive shall have provided notice of the Constructive Termination event within 90 days of its occurrence and the Company shall have a reasonable opportunity to cure such conduct or event.

 

7


 

(e)

Voluntary Resignation . The Executive may terminate his employment hereunder at any time for any reason by giving the Company prior written notice of his resignation, which shall be effective 30 days after receipt (provided, that, the Company may accelerate the Date of Termination to an earlier date by providing the Executive with notice of such action, or, alternatively, the Company may place the Executive on paid leave during such period) (“Voluntary Resignation”). The Executive shall not be required to specify a reason for any such termination under this paragraph 3(e) unless the Executive intends for such termination to be subject to paragraph 3(d).

 

 

(f)

Mutual Agreement . This Agreement may be terminated at any time by the mutual agreement of the parties (“Mutual Agreement”). Any termination of the Executive’s employment by mutual agreement of the parties will be memorialized by an agreement which is reduced to writing and signed by the Executive and a duly appointed officer of the Company.

 

 

(g)

Termination by Company without Cause . The Company may terminate the Executive’s employment hereunder at any time for any reason, by giving the Executive prior written notice of his termination, which shall be effective immediately or as of such later time as is specified in such notice (“Termination without Cause”). Termination of the Executive’s employment by the Company shall be deemed to have occurred under this paragraph 3(g) unless the notice of termination provided to the Executive by the Company specifies that the Executive’s termination is for reasons described in paragraphs 3(b), 3(c) or 3(f).

 

 

(h)

Date of Termination . “Date of Termination” means the last day the Executive is employed by the Company, whether by reason of the expiration of the Agreement Term, termination of employment in accordance with the foregoing provisions of this paragraph 3, or under any other circumstances. Notwithstanding anything contained in this Agreement to the contrary, the date on which a “separation from service” pursuant to section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”) (“Separation from Service”) occurs shall be the “Date of Termination” or termination of employment for purposes of determining the timing of payments and benefits under this Agreement to the extent necessary to have such payments and benefits under this Agreement be exempt from the requirements of Section 409A or comply with the requirements of Section 409A.

4. Rights Upon Termination . The rights and obligations of the Company and the Executive with respect to compensation and benefits under this Agreement for periods after his Date of Termination shall be determined in accordance with the following provisions of this paragraph 4:

 

 

(a)

Termination for Cause; Voluntary Resignation; Mutual Agreement; Non-Renewal by Either Party . If the Executive’s employment terminates under circumstances described in paragraph 3(c), 3(e) or 3(f) or if the Executive’s employment with the Company terminates at the end of the Agreement Term due to non-renewal of the Agreement Term by either party, then, except as otherwise expressly provided in this Agreement or otherwise agreed in writing between the Executive and the Company, the Company’s only obligation to Executive after the Executive’s Date of Termination is payment of the following:

 

 

(i)

The Executive’s Salary for the period ending on the Date of Termination and, if applicable, any earned but unpaid Bonus for the fiscal year ending on or before the Date of Termination;

 

8


 

(ii)

Payment for unused vacation days, as determined in accordance with the Company policy as in effect from time to time; and

 

 

(iii)

Any other payments or benefits to be provided to the Executive by the Company pursuant to any employee benefit plans or arrangements adopted by the Company, to the extent such amounts are due from the Company (with paragraphs 4(a)(i), (ii) and this subsection (iii) referred to collectively herein as “Accrued Benefits”).

 

 

(b)

During the Agreement Term, Termination due to Death or Disability; Prior to or more than 24 months following a Change in Control, Constructive Termination or Termination by the Company without Cause . If the Executive’s employment terminates under circumstances described in paragraph 3(a) or 3(b) at any time during the Agreement Term, or if the Executive’s employment terminates under circumstances described in 3(d) or 3(g) either prior to a Change in Control (as defined herein) or more than twenty-four (24) months following a Change in Control, the Executive (or, in the event of his death, his estate) shall be entitled to the following from the Company:

 

 

(i)

Accrued Benefits;

 

 

(ii)

A lump sum amount equal to two (2) times the sum of (w) the current Salary then in effect, plus (x) the higher of his Target Bonus or the average of the most three recent annual Bonuses earned;

 

 

(iii)

A pro-rata Target Bonus for the elapsed portion of the calendar year through the Date of Termination, payable in a lump sum;

 

 

(iv)

Continued medical coverage under the Company’s medical plan for the Executive and his family during the twenty-four (24) months following the Date of Termination, with benefits no less favorable in any material respect than the level of coverage applicable to them immediately prior to such Date of Termination, and the Company shall pay all premium amounts thereto. The continued medical coverage during the twenty-four (24) months following the Date of Termination at the Company’s expense shall run concurrently with the time period for which the Executive and his family members are entitled to continued medical coverage under the provisions of section 4980B of the Internal Revenue Code of 1986, as amended (the “Code”), and section 601 of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), if applicable, or any similar state law continuation coverage requirements; and

 

9


 

(v)

The Executive’s RSUs and Prior Awards which are restricted stock units shall become immediately payable, all restrictions on any restricted stock and any other share-based awards shall lapse; all Options shall become immediately vested and continue to be exercisable for the lesser of five years from such Date of Termination or the remaining term of the Option if there had not been a Date of Termination; the earned Performance Shares and related dividend equivalent RSUs shall become immediately vested; and for an employment termination prior to January 1, 2010, the Performance Shares and related dividend equivalent RSUs shall be earned as of the Date of Termination such that the sum of the Performance Shares earned as of the Date of Termination and the previously earned Performance Shares equals 100% of Target Shares (as described in Schedule II of the Prior Agreement) (or if greater, the number of shares calculated pursuant to the following sentence (“Severance Performance Share Number”)) and all such earned Performance Shares shall also become immediately vested. Severance Performance Share Number is such number equal to the sum of (i) if Performance Shares were earned at more than 100% of the applicable Target Shares for any Earning Date (as defined in the Prior Agreement), the total number of Performance Shares earned for such Earning Date and (ii) 100% of the applicable Target Shares for any Earning Date which has not yet occurred or for which no more than 100% of the applicable Target Shares were earned.

 

 

(c)

Termination due to Constructive Termination or Termination by the Company without Cause on or after a Change in Control . If the Executive’s employment terminates on or within twenty-four months following a Change in Control under circumstances described in paragraphs 3(d) or 3(g), the Executive (or, in the event of his death, his estate) shall be entitled to the following from the Company:

 

 

(i)

Accrued Benefits;

 

 

(ii)

A lump sum amount equal to three (3) times the sum of (x) the current Salary then in effect, plus (y) the higher of his Target Bonus or the average of the most three recent annual Bonuses earned;

 

 

(iii)

A pro-rata Target Bonus for the elapsed portion of the calendar year through the Date of Termination, payable in lump sum;

 

 

(iv)

Continued medical coverage under the Company’s medical plan for the Executive and his family during the thirty-six (36) months following the Date of Termination, with benefits no less favorable in any material respect than the level of coverage applicable to them immediately prior to such Date of Termination, and the Company shall pay all premium amounts thereto. The continued medical coverage during such thirty-six months at the Company’s expense shall run concurrently with the time period for which the Executive and his family members are entitled to continued medical coverage under the provisions of section 4980B the Code, and section 601 of ERISA, if applicable, or any similar state law continuation coverage requirements; and

 

10


 

(v)

The Executive’s RSUs and Prior Awards which are restricted stock units shall become immediately payable, all restrictions on any restricted stock and any other share-based awards shall lapse; all Options shall become immediately vested and continue to be exercisable for the lesser of five (5) years following the Date of Termination or the remaining term of the Option if there had not been a Date of Termination; the earned Performance Shares and related dividend equivalent RSUs shall become immediately vested; and for an employment termination prior to January 1, 2010, the Performance Shares and related dividend equivalent RSUs shall be earned as of the Date of Termination such that the sum of the Performance Shares earned as of the Date of Termination and the previously earned Performance Shares equals 100% of Target Shares (as described in Schedule II of the Prior Agreement) (or if greater, the Severance Performance Share Number) and all such earned Performance Shares shall also become immediately vested.

 

 

(d)

Change in Control . For purposes of this Agreement the term “Change in Control” means the happening of any of the following:

 

 

(i)

Any “Person” (having the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a “group” within the meaning of Section 13(d)(3)) has or acquires Beneficial Ownership of twenty-five percent (25%) or more of the combined voting power of the Company’s then outstanding voting securities entitled to vote generally in the election of directors (“Voting Securities”); provided, however, that in determining whether a Change in Control has occurred, Voting Securities which are held or acquired by the following: (i) the Company or any of its Related Companies (as defined in paragraph 4(d)(iv) below) or (ii) an employee benefit plan (or a trust forming a part thereof) maintained by the Company or any of its Related Companies (the persons or entities described in (i) and (ii) shall collectively be referred to as the “Excluded Group”), shall not constitute a Change in Control. For purposes of this Agreement, “Beneficial Ownership” shall mean beneficial ownership within the meaning of Rule 13d-3 promulgated under the Exchange Act.

 

 

(ii)

The individuals who are members of the Incumbent Board cease for any reason to constitute more than fifty percent (50%) of the Board. For purposes of this Agreement, “Incumbent Board” shall mean the individuals who, as of the beginning of the period commencing two years prior to the determination date, constitute the Board; provided, however, that for purposes of this definition, any individual who becomes a member of the Board subsequent to the beginning of such two-year period, whose election, or nomination for election by the Company’s stockholders, was

 

11


 

approved by a vote of at least two-thirds of those individuals who are members of the Board and who were also members of the Incumbent Board (or deemed to be such pursuant to this proviso) shall be considered as though such individual were a member of the Incumbent Board; and provided further, however, that any such individual whose initial assumption of office occurs as a result of or in connection with an actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board shall not be considered a member of the Incumbent Board.

 

 

(iii)

A consummation of a merger, consolidation or reorganization or similar event involving the Company, whether in a single transaction or in a series of transactions (“Business Combination”), unless, following such Business Combination:

 

 

(a)

the Persons with Beneficial Ownership of the Company, immediately before such Business Combination, have Beneficial Ownership of more than fifty percent (50%) of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors of the corporation (or in the election of a comparable governing body of any other type of entity) resulting from such Business Combination (including, without limitation, an entity which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) (the “Surviving Company”) in substantially the same proportions as their Beneficial Ownership of the Voting Securities immediately before such Business Combination;

 

 

(b)

the individuals who were members of the Incumbent Board immediately prior to the execution of the initial agreement providing for such Business Combination constitute more than fifty percent (50%) of the members of the board of directors (or comparable governing body of a noncorporate entity) of the Surviving Company; and

 

 

(c)

no Person (other than a member of the Excluded Group or any Person who immediately prior to such Business Combination had Beneficial Ownership of twenty-five percent (25%) or more of the then Voting Securities) has Beneficial Ownership of twenty-five percent (25%) or more of the then combined voting power of the Surviving Company’s then outstanding voting securities.

 

 

(iv)

The assignment, sale, conveyance, transfer, lease or other disposition of all or substantially all of the assets of the Company to any Person (other than the Company, any Related Company or an employee benefit plan (or related trust) sponsored or maintained by the Company or any Related Company) unless, immediately following such

 

12


 

disposition, the conditions set forth in paragraph (iii)(a), (b) and (c) above will be satisfied with respect to the entity which acquires such assets. For purposes of this Agreement, “Related Company” shall mean any entity that is directly or indirectly controlled by, in control of or under common control with the Company.

 

 

(v)

The occurrence of a liquidation or dissolution of the Company.

Notwithstanding the provisions of this paragraph (d), a Change in Control that results from a transaction consummated by a Person in which the Executive has an equity or debt interest (other than passive ownership of the securities of a publicly traded company acquired in the open market with personal funds) or with which the Executive is associated as a director, officer, employee, consultant or advisor, shall not be considered a Change in Control unless the Executive’s duties and responsibilities following such transaction are substantially and materially different from the duties and responsibilities contemplated by this Agreement for the role of a chief executive officer.

 

 

(e)

In the event of the Executive’s death before payment of any amount that had become due and payable to or on behalf of the Executive pursuant to the terms of this Agreement, payment of that amount shall be made to the Executive’s estate.

 

 

(f)

The Company shall not be required to make the payments and provide the benefits specified in paragraphs 4(a), 4(b) or 4(c) unless the Executive executes and delivers to the Company an agreement releasing the Company, its affiliates and its officers, directors and employees from all liability (other than the payments and benefits under this Agreement) substantially in the form set forth attached hereto as Exhibit A and such agreement has become effective and irrevocable. To the extent that any such payments or benefits under this Agreement are intended to be exempt from Section 409A as a short-term deferral pursuant to Treasury Regulations §1.409A-1(b)(4) or any successor thereto, such release required for such payment or benefit must be provided no later than March 7th of the calendar year following the calendar year of the Executive’s Separation from Service and the Company shall make such payments on the day following the date the release becomes effective and irrevocable. Subject to paragraph 4(h), to the extent that Executive is required to execute and deliver a release to receive a payment or benefit that constitutes a “deferral of compensation” subject to Section 409A (after taking into account to the maximum extent possible any applicable exemptions) (“409A Payment”), such 409A Payment will be provided upon the 30th day following Executive’s Separation from Service provided the release in the form mutually agreed upon between Executive and the Company or in substantially the form set forth as Exhibit A has been executed, delivered, effective and irrevocable prior to such time. If a release is required for a 409A Payment and such release is not executed, delivered, effective and irrevocable by the 30th day following Executive’s Separation from Service, such 409A Payment shall not be provided to the Executive to the extent that providing such 409A Payment would cause such 409A

 

13


 

Payment to fail to comply with Section 409A. Should this paragraph 4(f) result in the delay of benefits under this Agreement, any such benefit shall be made available to the Executive by the Company during such delay period at Executive’s expense. On the first day any such benefits may be made without incurring additional tax pursuant to Section 409A, the Company shall provide such benefits as provided for in this Agreement as well reimbursement of the amount Executive paid for benefits pursuant to the preceding sentence.

 

 

(g)

Except as may otherwise be expressly provided to the contrary in this Agreement, nothing in this Agreement shall be construed as requiring the Executive to be treated as employed by the Company for purposes of any employee benefit plan or arrangement following the date of the Executive’s Date of Termination.

 

 

(h)

To the extent that any payment or benefit pursuant to this Agreement constitutes a 409A Payment treated as payable upon Separation from Service, then, if on the date of the Executive’s Separation from Service, the Executive is a Specified Employee, then to the extent required for Executive not to incur additional taxes pursuant to Section 409A, no such 409A Payment shall be made to the Executive earlier than the earlier of (i) six (6) months after the Executive’s Separation from Service; or (ii) the date of his death. Should this paragraph 4(h) result in the delay of benefits, any such benefit shall be made available to the Executive by the Company during such delay period at Executive’s expense. Should this paragraph 4(h) result in a delay of payments or benefits to Executive, on the first day any such payments or benefits may be made without incurring additional tax pursuant to Section 409A (the “409A Payment Date”), the Company shall make such payments and provide such benefits as provided for in this Agreement, provided that any amounts that would have been payable earlier but for the application of this paragraph 4(h) as well reimbursement of the amount Executive paid for benefits pursuant to the preceding sentence, shall be paid in lump-sum on the 409A Payment Date. For purposes of this paragraph 4(h), the term “Specified Employee” shall have the meaning set forth in Section 409A, as determined in accordance with the methodology established by the Company. For purposes of determining whether a Separation from Service has occurred for purposes of Section 409A, a Separation from Service is deemed to include a reasonably anticipated permanent reduction in the level of services performed by the Executive to less than fifty percent (50%) of the average level of services performed by the Executive during the immediately preceding 36-month period.

5. Duties on Termination . Subject to the terms and conditions of this Agreement, during the period beginning on the date of delivery of a notice of resignation by the Executive or notice of termination of the Executive’s employment by the Company, and ending on the Date of Termination, the Executive shall continue to perform his duties as set forth in this Agreement, and during such period shall also perform such reasonable services for the Company as are necessary and appropriate for a smooth transition to the Executive’s successor, if any. Notwithstanding the foregoing provisions of this paragraph 5, the Company may suspend the Executive from performing his duties under this Agreement following the delivery of any such notice of resignation or termination; provided,

 

14


however, that during the period of suspension (which shall end on the Date of Termination), the Executive shall continue to be treated as employed by the Company for other purposes, and his rights to compensation or benefits shall not be reduced by reason of the suspension.

6. Non-solicitation . While the Executive is employed by the Company, and for a period of 12 months after the Executive’s Date of Termination, the Executive agrees that he will not in any manner, directly or indirectly (without prior written consent of the Company) employ or solicit for employment for himself or any other business entity (other than the Company and its Subsidiaries) any individual (other than a current or former executive assistant (secretary) of the Executive), who is an employee, officer, agent or representative of the Company (or any successor corporation into which the Company may be merged or consolidated) at the time of such solicitation or employment. Nothing in this paragraph 6 or paragraph 7 shall be construed as limiting the Executive’s duty of loyalty to the Company while he is employed by the Company, or any other duty he may otherwise have to the Company while he is employed by the Company.

7. Confidential Information and Non-Disparagement . The Executive agrees that:

 

 

(a)

Except as may be required by the lawful order of a court or agency of competent jurisdiction, or except to the extent that the Executive has express authorization from the Company, the Executive agrees to keep secret and confidential indefinitely all non-public information (including, without limitation, information regarding litigation and pending litigation) concerning the Company and the Subsidiaries which was acquired by or disclosed to the Executive during the course of his employment with or negotiations for employment with the Company, or during the course of any consultation with the Company following his termination of employment pursuant to paragraph 8, and not to disclose the same, either directly or indirectly, to any other person, firm, or business entity, or to use it in any way.

 

 

(b)

To the extent that any court or agency seeks to have the Executive disclose confidential information, he shall promptly inform the Company, and he shall take such reasonable steps to prevent disclosure of confidential information until the Company has been informed of such requested disclosure, and the Company has an opportunity to respond to such court or agency. To the extent that the Executive obtains information on behalf of the Company or any of the Subsidiaries that may be subject to attorney-client privilege as to the Company’s attorneys, the Executive shall take reasonable steps to maintain the confidentiality of such information and to preserve such privilege.

 

 

(c)

Nothing in the foregoing provisions of this paragraph 7 shall be construed so as to prevent the Executive from using, in connection with his employment for himself or an employer other than the Company or any of the Subsidiaries, knowledge which is generally known (other than by reason of a violation of this paragraph 7) to persons of his experience in other companies in the same industry.

 

15


 

(d)

During the Agreement Term and thereafter (including following Executive’s termination of employment for any reason) he will not make statements or representations, or otherwise communicate, directly or indirectly, in writing, orally, or otherwise, or take any action which may, directly or indirectly, disparage the Company or its respective officers, directors, employees, advisors, businesses or reputations. The Company agrees that, during the Agreement Term and thereafter, (including following Executive’s termination of employment for any reason) the Company (including, but not limited to any executives, officers, Directors or employees of the Company) will not make s


 
SITE SEARCH

AGREEMENTS / CONTRACTS

Document Title:

Entire Document: (optional)

Governing Law:(optional)


Try our advanced search >>
 

CLAUSES

Search Contract Clauses >>

Browse Contract Clause Library>>

Get Email Updates
Email:
This is only a partial view of this document. We have millions of legal documents and clauses drafted by top law firms. learn more search for free browse for free learn more