Exhibit 10.1
[Executive]
SEVERANCE AGREEMENT
THIS
SEVERANCE AGREEMENT (the “ Agreement ”) is made
this 9 th day of March 2007, by DiamondRock Hospitality
Company, a Maryland corporation (the “ REIT ”),
with its principal place of business at 6903 Rockledge Drive, Suite
800, Bethesda, Maryland and [_______], residing at [___________]
(the “ Executive ”).
1.
Purpose
The
REIT considers it essential to the best interests of its
stockholders to promote and preserve the continuous employment of
key management personnel. The Board of Directors of the REIT
(the “ Board of Directors ”) recognizes that, as
in the case with many corporations, the possibility of a
termination of employment exists and that such possibility, and the
uncertainty and questions that it may raise among management, may
result in the distraction of key management personnel to the
detriment of the REIT and its stockholders. Therefore, the
Board of Directors has determined that appropriate steps should be
taken to reinforce and encourage the continued attention and
dedication of members of the REIT’s key management.
Nothing in this Agreement shall be construed as creating an express
or implied contract of employment and, except as otherwise agreed
in writing between the Executive and the REIT, the Executive shall
not have any right to be retained in the employ of the
REIT.
2.
Definitions
(a)
Accrued Salary . “Accrued Salary” shall
mean accrued and unpaid base salary through the Date of
Termination. In addition, in the event the Executive’s
annual bonus for the REIT’s most recently completed fiscal
year has not yet been paid to the Executive, then Accrued Salary
also shall include such prior fiscal year’s earned, accrued
and unpaid bonus.
(b)
Cause . “Cause” for termination shall mean
a determination by the Board of Directors in good faith that any of
the following events has occurred: (i) indictment of the
Executive of, or the conviction or entry of a plea of guilty or
nolo contendere by the Executive to any felony, or any misdemeanor
involving moral turpitude; (ii) the Executive engaging in conduct
which constitutes a material breach of a fiduciary duty or duty of
loyalty, including without limitation, misappropriation of funds or
property of the REIT, DiamondRock Hospitality Limited Partnership
(the “ Operating Partnership ”) and their
subsidiaries (the REIT, the Operating Partnership and their
subsidiaries are hereinafter referred to as the “
DiamondRock Group ”) other than an occasional and de
minimis use of Company property for personal purposes; (iii) the
Executive’s willful failure or gross negligence in the
performance of his assigned duties for the DiamondRock Group, which
failure or gross negligence continues for more than 5 days
following the Executive’s receipt of written or electronic
notice of such willful failure or gross negligence from the Board
of Directors; (iv) any act or omission of the Executive that has a
demonstrated and material adverse impact on the DiamondRock
Group’s reputation for honesty and fair dealing or any other
conduct of the Executive that would reasonably be expected to
result in injury to the reputation of the DiamondRock Group; or (v)
willful failure to cooperate with a bona fide internal
investigation or an investigation by regulatory or law enforcement
authorities, after being instructed by the REIT to cooperate, or
the willful destruction or failure to preserve documents or other
materials known to be relevant to such investigation or the willful
inducement of others to fail to cooperate, destroy or fail to
produce documents or other materials.
For
purposes of this Section 2(b), any act, or failure to act, based
upon authority given pursuant to a resolution duly adopted by the
Board of Directors or based upon the written advice of counsel for
the DiamondRock Group shall be conclusively presumed to be done, or
omitted to be done, by the Executive in good faith and in the best
interests of the DiamondRock Group. The cessation of
employment of the Executive shall not be deemed to be for Cause
unless and until there shall have been delivered to the Executive a
copy of a resolution duly adopted by the affirmative vote of the
Board of Directors, finding that, in the good faith opinion of the
Board of Directors, the Executive has engaged in the conduct
described in this Section 2(b); provided, that if the Executive is
a member of the Board of Directors, the Executive shall not vote on
such resolution.
(c)
Change in Control . “Change in Control”
shall mean any of the following events:
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(i)
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The conclusion of the acquisition
(whether by a merger or otherwise) by any Person (other than a
Qualified Affiliate), in a single transaction or a series of
related transactions, of Beneficial Ownership of more than 50% of
(1) the REIT’s outstanding common stock (the “
Common Stock ”) or (2) the combined voting power of
the REIT’s outstanding securities entitled to vote generally
in the election of directors (the “ Outstanding Voting
Securities ”);
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(ii)
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The merger or consolidation of
the REIT with or into any other Person other than a Qualified
Affiliate, if the directors immediately prior to the merger or
consolidation cease to be the majority of the Board of Directors at
anytime within 12 months of the completion of the merger or
consolidation;
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(iii)
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Any one or a series of related
sales or conveyances to any Person or Persons (including a
liquidation or dissolution) other than any one or more Qualified
Affiliates of all or substantially all of the assets of the REIT or
the Operating Partnership; or
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(iv)
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Incumbent Directors cease, for
any reason, to be a majority of the members of the Board of
Directors, where an “ Incumbent Director ” is
(1) an individual who is a member of the Board of Directors on the
effective date of this Agreement or (2) any new director whose
appointment by the Board of Directors or whose nomination for
election by the stockholders was approved by a majority of the
persons who were already Incumbent Directors at the time of such
appointment, election or approval, other than any individual who
assumes office initially as a result of an actual or threatened
election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board of
Directors or as a result of an agreement to avoid or settle such a
contest or solicitation.
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A
Change in Control shall also be deemed to have occurred upon the
completion of a tender offer for the REIT’s securities
representing more than 50% of the Outstanding Voting Securities,
other than a tender offer by a Qualified Affiliate.
For
purposes of this definition of Change in Control, the following
definitions shall apply: (A) “ Beneficial Ownership
,” “ Beneficially Owned ” and “
Beneficially Owns ” shall have the meanings provided
in Exchange Act Rule 13d-3; (B) “ Exchange Act ”
shall mean the Securities Exchange Act of 1934, as amended; (C)
“ Person ” shall mean any individual, entity, or
group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act), including any natural person, corporation, trust,
association, company, partnership, joint venture, limited liability
company, legal entity of any kind, government, or political
subdivision, agency or instrumentality of a government, as well as
two or more Persons acting as a partnership, limited partnership,
syndicate or other group for the purpose of acquiring, holding or
disposing of the REIT’s securities; and (D) “
Qualified Affiliate ” shall mean (I) any directly or
indirectly wholly owned subsidiary of the REIT or the Operating
Partnership; (II) any employee benefit plan (or related trust)
sponsored or maintained by the REIT or the Operating Partnership or
by any entity controlled by the REIT or the Operating Partnership;
or (III) any Person consisting in whole or in part of the Executive
or one or more individuals who are then the REIT’s Chief
Executive Officer or any other named executive officer (as defined
in Item 402 of Regulation S-K under the Securities Act of 1933) of
the REIT as indicated in its most recent securities filing made
before the date of the transaction.
(d)
Date of Termination . “Date of
Termination” shall mean the actual date of the
Executive’s termination of employment with the
REIT.
(e)
Disability . “Disability” shall mean if
the Executive is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be
expected to last for a continuous period of not less than 12
months.
(f)
Good Reason . “Good Reason” for
termination shall mean the occurrence of one of the following
events, without the Executive’s prior written consent,
provided such event is not corrected within 15 days following the
Board of Director’s receipt of written or electronic notice
of such event: (i) a material diminution in the Executive’s
duties or responsibilities or any material demotion from the
Executive’s current position at the REIT, including, without
limitation: (A) if the Executive is the CEO, either discontinuing
his direct reporting to the Board of Directors or a committee
thereof or discontinuing the direct reporting to the CEO by each of
the senior executives responsible for finance, legal, acquisition
and operations or (B) if the Executive is not the CEO,
discontinuing the Executive reporting directly to the CEO or (C) if
the Executive is the Chief Accounting Officer, discontinuing the
Executive’s reporting directly to the Chief Financial Officer
or to the Chief Executive Officer;
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(ii) if the Executive is a member
of the Board of Directors, the failure of the REIT or its
affiliates to nominate the Executive as a Director of the REIT;
(iii) a requirement that the Executive work principally from a
location outside the 50 mile radius from the REIT’s address,
except for required travel on the REIT’s business to the
extent substantially consistent with the Executive’s business
travel obligations on the date hereof; (iv) failure to pay the
Executive any compensation, benefits or to honor any
indemnification agreement to which the Executive is entitled within
30 days of the date due; or (v) the occurrence of any of the
following events or conditions in the year immediately following a
Change in Control: (A) a reduction in the Executive’s annual
base salary or annual bonus opportunity as in effect immediately
prior to the Change in Control; (B) the failure of the REIT to
obtain an agreement, reasonably satisfactory to the Executive, from
any successor or assign of the REIT to assume and agree to adopt
this Agreement for a period of at least two years from the Change
in Control.
(g)
Restricted Period . The “Restricted Period”
shall mean, the Executive’s employment with the REIT, which
period may be extended for an additional period of 12 months if the
Executive is entitled to, and receives, the Cash Severance
specified under Section 3(b)(2) hereof.
(h)
Retirement. As used in this Agreement,
“Retirement” shall mean a retirement by the Executive
if the Executive has been designated as an eligible retiree by the
Board of Directors, in the Board’s sole
discretion.
3.
Effect of Termination
(a)
Any Termination . If the Executive’s employment
with the REIT terminates for any reason, the Executive shall be
entitled to any Accrued Salary. The Executive shall have no
rights or claims against the DiamondRock Group except to receive
the payments and benefits described in this Section 3. The
REIT shall have no further obligations to Executive except as
otherwise expressly provided under this Agreement, provided any
such termination shall not adversely affect or alter
Executive’s rights under any employee benefit plan of the
REIT in which Executive, at the Date of Termination, has a vested
interest, unless otherwise provided in such employee benefit plan
or any agreement or other instrument attendant thereto.
None
of the benefits described in this Section 3 (other than Accrued
Salary) will be payable unless the Executive has signed a general
release which has become irrevocable, satisfactory to the REIT in
the reasonable exercise of its discretion, releasing the
DiamondRock Group, its affiliates including the REIT, and their
officers, directors and employees, from any and all claims or
potential claims arising from or related to the Executive’s
employment or termination of employment. In addition, the
benefits described in this Section 3 (other than Accrued Salary)
are conditioned upon the Executive’s ongoing compliance with
his/her restrictions, covenants and promises under Sections 4, 5, 6
and 7 below (as applicable).
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In
addition, in the event the Executive’s termination of
employment occurs in connection with or following a Change in
Control, then:
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(i)
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In the event that any payment
made pursuant to Section 3 hereof or any insurance benefits,
accelerated vesting, pro-rated bonus or other benefit payable to
the Executive under this Agreement or otherwise (the “
Severance Payments ”), (1) constitute “parachute
payments” within the meaning of Section 280G (as it may be
amended or replaced) of the Internal Revenue Code of 1986, as
amended (the “ Code ”) (“ Parachute
Payments ”); (2) are subject to the excise tax imposed by
Section 4999 (as it may be amended or replaced) of the Code (the
“ Excise Tax ”); and (3) exceed the Threshold
Amount by 10% or more, then the REIT shall pay to the Executive an
additional amount (the “ Gross-Up Amount ”) such
that the net ben
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