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Exhibit 10.4
EXECUTION COPY
EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT ("Agreement"), dated as
of August 31, 2000, and effective as of the Closing Date (as defined below), is
made and entered into by and between Interstate Hotels Corporation, a Maryland
corporation (the "Company"), and J. William Richardson (the "Executive") hereby
amends and restates the employment agreement between the Company and the
Executive dated as of June 18, 1999 (the "Old Agreement").
RECITALS
WHEREAS, the Executive is currently service as a senior executive of
the Company pursuant to the Old Agreement;
WHEREAS, following the transactions (the "Transactions") contemplated
by the Securities Purchase Agreement by and among the Company, CGLH Partners I
LP, a Delaware limited partnership ("CGLH I") and CGLH Partners II LP, a
Delaware limited Partnership ("CGLH II"), dated as of the date hereof (the
"Purchase Agreement"), the Company and the Executive desire to continue their
employment relationship; and
WHEREAS, the Company and the Executive desire to amend and restate the
Old Agreement, effective as of the Closing Date (as defined in the Purchase
Agreement) of the Transactions, as provided herein.
NOW, THEREFORE, the parties agree as follows:
1. DEFINITIONS. In addition to terms defined elsewhere herein, the
following terms have the following meanings when used in this Agreement with
initial capital letters:
(a) "BASE PAY" means the salary provided for in Section 5(a),
as such amount may be adjusted hereunder.
(b) "BOARD" means the Board of Directors of the Company or an
authorized committee thereof.
(c) "CAUSE" means that the Executive shall have committed:
(i) an intentional act of fraud, embezzlement or
theft in connection with his duties or in the course of his employment
with the Company or any Subsidiary;
(ii) intentional wrongful damage to property of the
Company or any Subsidiary;
(iii) intentional Unauthorized Disclosure, Use or
Solicitation, or
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(iv) intentional wrongful engagement in any
Competitive Activity; and any such act shall have been materially
harmful to the Company. For purposes of this Agreement, no act or
failure to act on the part of the Executive will be deemed
"intentional" if it was due primarily to an error in judgment or
negligence, but will be deemed "intentional" only if done or omitted to
be done by the Executive not in good faith and without reasonable
belief that his action or commission was in the best interest of the
Company. Notwithstanding the foregoing, the Executive will not be
deemed to have been terminated for "Cause" hereunder unless and until
there shall have been delivered to the Executive a copy of a resolution
duly adopted by the affirmative vote of not less than three quarters of
the full Board of Directors then in office at a meeting of the Board of
Directors called and held for such purpose, after reasonable notice to
the Executive and an opportunity for the Executive, together with his
counsel (if the Executive chooses to have counsel present at such
meeting), to be heard before the Board, finding that, in the good faith
opinion of the Board, the Executive had committed an act constituting
"Cause" as herein defined and specifying the particulars thereof in
detail, provided, however, that nothing herein will limit the right of
the Executive or his beneficiaries to contest the validity or propriety
of any such determination and such determination, albeit a condition to
any termination for "Cause" as aforesaid, will not create any
presumption that "Cause" in fact exists.
(d) "COMPETITIVE ACTIVITY" means any act by the Executive that
is prohibited under Section 7.
(e) "COMMENCEMENT DATE" means the date upon which shareholder
approval for the Transactions is obtained.
(f) "DISABILITY" means the Executive's inability, as a result
of mental or physical illness, injury or disease, substantially to perform his
material duties and responsibilities under this Agreement for a period of 180
consecutive calendar days within any 12-month period.
(g) "EMPLOYEE BENEFITS" means the perquisites, benefits and
service credit for benefits as provided under any and all employee welfare
benefit policies, plans, programs or arrangements in which Executive is entitled
to participate, including without limitation any group or other life, health,
medical/hospital or other insurance (whether funded by actual insurance or
self-insured by the Company), disability, salary continuation, expense
reimbursement and other employee benefit policies, plans, programs or
arrangements that may now exist or any equivalent successor policies, plans,
programs or arrangements that may be adopted hereafter by the Company.
(h) "GOOD REASON" means that the Executive has complied with
the "Good Reason Process " (hereinafter defined) following the occurrence of a
substantial diminution or other adverse change, not consented to by the
Executive in advance and in writing, in the nature or scope of Executive's
responsibilities, authorities, powers, functions, duties or reporting
relationships, as in effect on the Closing Date after giving effect to the
Transactions. "Good Reason Process" shall mean that (A) the Executive reasonably
determines in good faith that a
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"Good Reason" event has occurred; (B) the Executive notifies the Company in
writing of the occurrence of the Good Reason event; and (C) the Company does not
cure Executive's objections within a reasonable time not to exceed 60 days.
(i) "SUBSIDIARY" means an entity in which the Company directly
or indirectly beneficially owns 50% or more of the outstanding Voting Stock or,
if a partnership, limited liability company or similar entity, at least 50% of
the equity capital interests thereof.
(j) "TERM OF EMPLOYMENT" means the period specified in
Section 2.
(k) "UNAUTHORIZED DISCLOSURE, USE OR SOLICITATION" means any
violation or breach by the Executive of any provision of Section 8.
2. TERM OF EMPLOYMENT. The Company hereby employs the Executive and the
Executive hereby accepts such employment, effective as of the Closing Date and
ending at the close of business on the third anniversary of the Closing Date
(the "Term of Employment"); provided, however, that commencing on the second
anniversary of the Closing Date and each anniversary thereafter, the Term of
Employment will automatically be extended for successive one-year periods unless
either party gives written notice to the other, not less than 90 calendar days
prior to the second anniversary or subsequent anniversary thereafter, that it or
he does not want the Term of Employment so to extend.
3. WAIVER OF RIGHTS. As of the Closing Date, the Old Agreement shall be
of no further force or effect and shall be superseded in its entirety by this
Agreement. For the avoidance of doubt, in the event that the Closing (as defined
in Purchase Agreement) of the Transactions does not occur, the Old Agreement
shall remain in full force and effect in accordance with the its terms and this
Agreement shall be null and void. In consideration for the compensation,
benefits and other terms provided by this Agreement, the Executive expressly
waives any rights to payments and benefits to which he may have been entitled
pursuant the terms of the Old Agreement, including, without limitation, stock
options to purchase shares of Company Common Stock (as hereinafter defined),
cash severance payments, continuation of Employee Benefits, forgiveness of
outstanding loan balances and/or accelerated vesting of outstanding options and
restricted stock of the Company.
4. DUTIES, RESPONSIBILITIES AND OFFICE LOCATION. During the Term of
Employment, the Executive will have and perform the duties and responsibilities
set forth in Exhibit A, provided, however, that the Board may from time to time
change those duties and responsibilities (in which event the parties may, but
will not be required to, substitute a new Exhibit A) and no such change will
give rise to any liability on the part of the Company so long as such change
does not result in a change in the primary reporting relationship set forth on
Exhibit A; provided, however, that such change may constitute Good Reason, as
defined in Section 1(h) hereof. The Executive will devote substantially all of
his business time to the business and affairs of the Company and its
Subsidiaries (excluding reasonable amounts of time devoted to charitable
purposes, passive investments and directorships and periods in which he is
physically or mentally ill, injured or otherwise disabled).
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5. COMPENSATION AND BENEFITS. (a) BASE PAY. During the Term of
Employment, the Executive will receive Base Pay of $325,000 per year subject to
review by the Board for increase (but not decrease) at the end of each fiscal
year during the Term of Employment. Such Base Pay will be payable by the Company
in accordance with its regular compensation practices and policies applicable to
senior executives of the Company.
(b) ANNUAL PERFORMANCE BONUS. For each fiscal year of the
Company during the Term of Employment, the Executive will be eligible for an
annual performance bonus under the Company's Management Bonus Plan ("Bonus
Plan"), that can vary from a minimum of $200,000 to a maximum of 200% of the
Executive's base salary. The Bonus will be subject to the rules issued each year
by the Board. During 1999 the Bonus will be based on Hotel Profits and Corporate
Profits and shall be calculated and paid consistent with other Executives of the
Company. In future years these categories may be revised or deleted and new
categories could be added. The Executive must be employed by the Company at the
time the Bonus is scheduled to be paid to be eligible to receive the Bonus.
(c) EMPLOYEE BENEFITS. During the Term of Employment, the
Executive will be entitled to (i) participate in all employee benefit plans,
programs, policies and arrangements sponsored, maintained or contributed to by
the Company, subject to and in accordance with the terms and conditions of such
plans, programs, policies and arrangements as they relate to similarly situated
senior executives of the Company, (ii) participate in all equity and long-term
incentive plans sponsored or maintained by the Company at a level commensurate
with his position, subject to and in accordance with the terms and conditions of
such plans as they relate to senior executives of the Company, and (iii) receive
all other benefits and perquisites provided or made available by the Company to
its senior executives, subject to and in accordance with the terms and
conditions of such benefits and perquisites as they relate to senior executives
of the Company.
(d) EXPENSES. During the Term of Employment, the Executive
will be entitled to reimbursement of all documented reasonable travel and
entertainment expenses incurred by him on behalf of the Company in the course of
the performance of his duties hereunder, subject to and in accordance with the
terms and conditions of the Company's expense reimbursement policies as they
relate to senior executives of the Company.
(e) VACATION. During the Term of Employment, the Executive
will be entitled to not less than four weeks of vacation, in addition to paid
public holidays as observed by the Company from year to year, subject to and in
accordance with the terms and conditions of the Company's regular compensation
practices and policies as they relate to senior executives of the Company.
(f) LOANS. The Company has loaned the Executive $357,317, the
repayment of which shall be forgiven by the Company so long as the Executive's
employment is not terminated by the Company for Cause or voluntarily by the
Executive prior to September 16, 1999. At the Executive's request, the Company
will amortize such loan forgiveness on terms and conditions mutually agreed upon
between Company and Executive.
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(g) EQUITY. On November 1, 1999, Executive received a grant of
150,000 shares of restricted stock of the Company ("Restricted Stock Grant").
Any unvested portion of the Restricted Stock Grant shall fully vest on the
Closing Date; provided, however, that the Company and the Executive may mutually
agree to defer vesting until a specified date or dates after the Closing Date on
a mutually agreeable schedule.
(h) INTEREST IN COMPANY'S JOINT VENTURE.
(i) As of the Closing Date, and subject to the
execution by the Executive of the "JV Agreement" (as defined below),
the Executive shall be granted a 2.25% "Percentage Interest" (as
defined in the JV Agreement) as a limited partner in CGLH-IHC Fund I,
L.P. (the "JV Interest") pursuant to, and subject to the terms and
conditions of, the JV Agreement. Subject to Section 6 hereof, the
Executive's JV Interest shall be fully vested as of the Closing Date.
For purposes of this Agreement the "JV Agreement" shall mean the
Agreement of Limited Partnership of CGLH-IHC Fund I, L.P. by and
between CGLH Partners III LP, a Delaware limited partnership,
Interstate Investment Corporation, a Delaware corporation, CGLH
Partners IV LP, a Delaware limited partnership, Interstate Property
Partnership, L.P. a Delaware limited partnership, Thomas F. Hewitt and
the Executive, which is attached as Exhibit E to the Purchase
Agreement, to be entered into on the Closing Date.
(ii) To the extent that any additional joint venture
funds or arrangements (similar to the joint venture established
pursuant to the JV Agreement) are established or entered into by the
Company and the other parties to the JV Agreement following the Closing
Date, the parties hereto agree to negotiate in good faith to determine
whether the Executive will participate in such additional joint venture
and the terms and conditions of any such participation.
(i) PREFERRED STOCK. As of the Closing Date, and subject to
the last sentence of this Section 5(i), the Company shall grant to the Executive
75,000 shares of Series B Preferred Stock of the Company (the "Series B
Shares"). Subject to Section 6 hereof, the Series B Shares shall be fully vested
as of the Commencement Date. The grant of Series B Shares pursuant to this
Section 5(i) shall be subject to the stockholders agreement by and among the
Executive, Kevin P. Kilkeary, Thomas F. Hewitt, CGLH I and CGLH II to be entered
into on the date hereof which provides for certain rights and restrictions in
connection with the Executive's ownership of the Series B Shares.
6. TERMINATION OF EMPLOYMENT. (a) TERMINATION BY NOTICE. Subject to the
provisions of Section 2 and this Section 6, the Executive's employment hereunder
will be for the Term of Employment specified in Section 2.
(b) TERMINATION FOR CAUSE OR VOLUNTARY TERMINATION WITHOUT
GOOD REASON. The Company may, with or without notice, terminate the Executive's
employment hereunder for Cause. If the Executive's employment is terminated
during the Term of Employment by the Company for Cause, or by the Executive
other than for Good Reason, the Executive will not be entitled to any
compensation or benefits provided herein, and nothing
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herein will limit the Company's rights against the Executive or the rights and
obligations of the parties under Sections 7 and 8. Notwithstanding anything in
this Agreement to the contrary, (i) if the Executive's employment is terminated
by the Company for Cause (A) prior to the first anniversary of the Commencement
Date, the Series B Shares and the JV Interest shall immediately be forfeited and
the Executive shall have no further rights with respect to the forfeited Series
B Shares or JV Interest as of such date of termination; (B) on or after the
first anniversary of the Commencement Date, but prior to the second anniversary
of the Commencement Date, two-thirds (2/3) of each of the Series B Shares and
the JV Interest shall immediately be forfeited as of such date of termination
and the Executive shall have no further rights with respect to the forfeited
Series B Shares or JV Interest; and (C) on or after the second anniversary of
the Commencement Date, but prior to the third anniversary of the Commencement
Date, one-third (1/3) of each of the Series B Shares and the JV Interest shall
immediately be forfeited as of such date of termination and the Executive shall
have no further rights with respect to the forfeited Series B Shares or JV
Interest and (ii) if the Executive's employment is terminated by the Executive
other than for Good Reason during the nine (9) month period immediately
following the Commencement Date, the Series B Shares and JV Interest shall
immediately be forfeited and the Executive shall have no further rights with
respect to the forfeited Series B Shares or JV Interest.
(c) TERMINATION FOR ANY REASON OTHER THAN CAUSE, DISABILITY OR
DEATH; AND VOLUNTARY TERMINATION FOR GOOD REASON. If the Executive's employment
is terminated during the Term of Employment by the Company for any reason other
than Cause, Disability or Death, or by the Executive for Good Reason:
(i) The Executive will be entitled to receive the
greater of (A) the sum of his Base Pay and annual performance bonus for
one (1) year immediately preceding the effective date of his
termination of employment and (B) his Base Pay (at the rate in effect
on the effective date of his termination of employment) and annual
performance bonus based upon the highest annual performance bonus
received by the Executive during the Term of this Agreement for the
remainder of the Term of Employment, in either case payable in
accordance with the Company's regular compensation practices and
policies applicable to senior executives; and
(ii) For one (1) year following the effective date of
the Executive's termination of employment or, if longer, the remainder
of the Term of Employment (the "Continuation Period"), the Company will
arrange to provide the Executive and his eligible dependents with
Employee Benefits (excluding retirement, deferred compensation and
stock option, stock purchase, stock appreciation or similar
compensatory benefits) that are substantially similar to those that the
Executive and such dependents were receiving or entitled to receive
immediately prior to the effective date of the Executive's termination
of employment, except that the level of any such Employee Benefits to
be provided to the Executive and such dependents may be reduced in the
event of a corresponding reduction generally applicable to all senior
executives. If and to the extent that any benefit described in this
Section 6(c)(ii) is not or cannot be paid or provided under any policy,
plan, program or arrangement of the Company or any
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Subsidiary, as the case may be, then the Company will itself pay or
provide for the payment of such Employee Benefits to the Executive, his
dependents and his beneficiaries. Employee Benefits otherwise
receivable by the Executive pursuant to this Section 6(c)(ii) will be
reduced to the extent comparable welfare benefits are actually received
by the Executive from another employer during the Continuation Period
following the effective date of the Executive's termination of
employment, and any such benefits actually received by the Executive
must be reported by the Executive to the Company.
(iii) The portion of each of the Series B Shares and/or the JV
Interest held by the Executive on the date of such termination which
are unvested or subject to restrictions as of such date, shall vest and
become nonforfeitable and unrestricted as of such termination.
(d) DEATH OR DISABILITY. If the Executive's employment is
terminated effective during the Term of Employment as a result of his death or
by the Company as a result of his Disability, the Executive (or, in the event of
his death, his designated beneficiary) will be entitled to receive his Base Pay
(at the rate in effect on the effective date of his termination of employment)
for a period of 12 months following such effective date, payable in accordance
with the Company's regular compensation practices and policies applicable to
senior executives but less any amounts paid to the Executive under any long-term
disability plan, program, policy or arrangement of the Company or any
Subsidiary. The portion of each of the Series B Shares and/or the JV Interest
held by the Executive on the date of such termination which are unvested or
subject to restrictions as of such date, shall vest and become nonforfeitable
and unrestricted as of such termination.
(e) EXCISE TAX.
(i) If Executive incurs the tax (the "Excise Tax")
imposed by Section 4999 of the Internal Revenue Code of 1986 (the
"Code") on "excess parachute payments" within the meaning of Section
280G(b)(l) of the Code, the Company will pay to Executive an amount
(the "Gross Up Payment") such that the net amount retained by
Executive, after deduction of any Excise Tax on the excess parachute
payment and any federal, state and local taxes (together with penalties
and interest) and Excise Tax upon the payment provided for by this
Section 6(e)(i) and any federal, state and local taxes (together with
penalties and interest thereon), will be equal to the payments made to
the Executive that constitute a parachute payment pursuant to Prop.
Treas. Reg. Section 1.280G-1 (including any such payments made pursuant
to this Section 6(e)(i)) minus the Gross Up Payment.
(ii) For purposes of determining the amount of the
Gross Up Payment, Executive will be deemed to pay federal income taxes
at the highest marginal rate of federal taxation in the calendar year
in which the Gross Up Payment is to be made and state and local income
taxes at the highest marginal rates of taxation in the state and
locality of Executive's residence on the date of Executive's
termination, net of the
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maximum reduction in federal income taxes that could be obtained from
deduction of such state and local taxes. The determination of whether
the Excise Tax is payable and the amount thereof will be determined by
a firm of independent certified public accountants jointly selected by
the Company and the Executive.
(iii) The Company will pay the estimated amount of
the Gross Up Payment to the Federal tax authorities as withholding
taxes. The Executive and the Company agree to reasonably cooperate in
the determination of the actual amount of the Gross Up Payment.
Further, Executive and the Company agree to make such adjustments to
the estimated amount of the Gross Up Payment as may be necessary to
equal the actual amount of the Gross Up Payment, which in the case of
Executive will refer to refunds of prior overpayments and in the case
of the Company will refer to makeup of prior underpayments.
(f) COMPENSATION AND BENEFITS ON TERMINATION. Except as
otherwise provided in Section 6(b), (c) or (d):
(i) All compensation and benefits payable to the
Executive pursuant to Section 4 (other than compensation and benefits
previously earned and, if applicable, vested under the terms of this
Agreement or any other applicable employee benefit plan, program,
policy, arrangement or agreement) will terminate as of the effective
daze of the Executive's termination of employment; and
(ii) The Executive will not be entitled to, and
hereby waives, any claims for compensation or benefits (other than
compensation and benefits previously earned and, if applicable, vested
under the terms of this Agreement or any other applicable employee
benefit plan, program, policy, arrangement or agreement) payable after
such effective date and for damages arising in connection with his
termination of employment pursuant to this Agreement.
(iii) The portion of each of the Series B Shares
and/or the JV Interest held by the Executive on the date of such
termination which are unvested or subject to restrictions as of such
date, shall vest and become nonforfeitable and unrestricted as of such
termination.
(g) NO MITIGATION OBLIGATION. The Company hereby acknowledges
that it will be difficult and may be impossible for the Executive to find
reasonably comparable employment following the Termination Date and that the
non-competition covenant contained in Section 7 will further limit the
employment opportunities for the Executive. Accordingly, the payment of the
compensation by the Company to the Executive in accordance with the terms of
this Agreement is hereby acknowledged by the Company to be reasonable, and the
Executive will not be required to mitigate the amount of any payment provided
for in this Agreement by seeking other employment or otherwise, nor will any
profits, income, earnings or other benefits from any source whatsoever create
any mitigation, offset, reduction or any other obligation on the part of the
Executive hereunder or otherwise, except as expressly provided in the last
sentence of Section 6(c)(ii).
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(h) PURCHASE OF SERIES B SHARES UPON TERMINATION OF
EMPLOYMENT. (i) At any time after the termination of the Executive's
employment with the Company, the Company shall have the right (but not
the obligation) to acquire all of the Executive's Series B Shares (the
"Purchase Interest"), for an amount equal to the fair market value of
such Purchase Interest as of the Purchase Interest Closing Date (as
defined below). The following procedure shall apply to such proposed
acquisition:
(ii) The Company shall give notice (the "Purchase
Notice") to the Executive specifying the fair market value for the
Executive's Purchase Interest as of the date of such Purchase Notice,
determined by the Company in good faith. For a period of 10 days after
the Purchase Notice has been given, the Company and the Executive shall
negotiate in good faith to mutually agree on such fair market value
(the "Purchase Price").
(iii) On a date mutually agreed by the Company and
the Executive, but in no event later than 20 days after the Purchase
Notice has been given (such date, the "Purchase Closing Date"), the
Company shall pay to the Executive the Purchase Price against the
delivery of certificates or other instruments evidencing such Series B
Shares duly endorsed for transfer.
(iv) Any dispute as to the fair market value of the
Purchase Interest shall be submitted for final determination to a
mutually acceptable investment banking firm of national reputation
familiar with the valuation of companies in the hospitality and lodging
industry (an "Investment Banking Firm"). In the event that the Company
and the Executive cannot agree on a mutually acceptable Investment
Banking Firm within 10 business days, the Company, on the one hand, and
the Executive, on the other hand, shall each select one Investment
Banking Firm, which two Investment Banking Firms shall jointly make
such determination within 20 business days after the date of the
Purchase Notice, or, if such two Investment Banking Firms are unable to
agree on such determination, the two Investment Banking Firms shall, by
the end of the 20th business day after the date of the Purchase Notice,
select a third Investment Banking Firm and notify such third Investment
Banking Firm in writing (with a copy to the Company and the Executive)
of their respective determinations of the fair market value of the
Purchase Interest following which such third Investment Banking Firm
shall, within 15 business days after the date of its selection, notify
the Company and the Executive in writing of its selection of one or the
other of the two original determinations of the fair market value of
the Purchase Interest, which determination shall be final and binding
on the Company and the Executive.
(v) The costs of the Investment Banking Firms shall
be borne by the Company.
7. COMPETITIVE ACTIVITY. During the Term of Employment and the period
ending one year following the effective date of the Executive's termination of
employment, the Executive will not:
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(a) enter into or engage in any business which competes with
the Company's business or promote or assist, financially or otherwise, any firm,
person, association, partnership, corporation or other entity engaged in any
business which competes with the Company's business; provided that this clause
(a) shall cease to apply after the Executive's termination of employment; and
provided further that the Executive shall be permitted to (a) enter into
agreements with Milton Fine and/or his immediate family members or trusts for
their benefit and affiliates (the "Fine Group") and (b) pursuant to such
agreements with the Fine Group invest in entities that engage in activities in
the lodging industry, so long as, at the time the Executive enters into such
agreement or investment, hotels owned by such entities are managed by the
Company; provided, further, that if hotels owned by such entities are not
managed by the Company, the Executive shall obtain the approval of the Board
prior to entering into any such agreement or making any such investment, or
(b) solicit or endeavor, directly or indirectly (including
through third parties), to cause any employee of the Company or any Subsidiary
to leave his employment or induce or attempt to induce any such employee to
breach any employment agreement with the Company or any Subsidiary or otherwise
interfere with the employment of any such employee; or
(c) solicit, endeavor to cause, induce or attempt to induce
any agent who engages in the business of marketing the services of the Company
or any Subsidiary to terminate, reduce or modify its agency relationship with
the Company or any Subsidiary.
8. UNAUTHORIZED DISCLOSURE, USE OR SOLICITATION. (a) Executive will
keep in strict confidence, and will not, directly or indirectly, at any time
during or after his employment with the Company, disclose, furnish, disseminate,
make available or, except in the course of performing his duties of employment
hereunder, use any trade secrets or confidential business and technical
information of the Company or its customers, vendors or property owners or
managers, without limitation as to when or how Executive may have acquired such
information. Such confidential information will include, without limitation, the
Company's unique selling methods and trade techniques, management, training,
marketing and selling manuals, promotional materials, training courses and other
training and instructional materials, vendor, owner, manager and product
information, customer lists, other customer information and other trade
information. Executive specifically acknowledges that all such confidential
information including, without limitation, customer lists, other customer
information and other trade information, whether reduced to writing, maintained
on any form of electronic media, or maintained in the mind or memory of
Executive and whether compiled by the Company, and/or Executive, derives
independent economic value from not being readily known to or ascertainable by
proper means by others who can obtain economic value from its disclosure or use,
that reasonable efforts have been made by the Company to maintain the secrecy of
such information, that such information is the sole property of the Company and
that any retention and use of such information by Executive during his
employment with the Company (except in the course of performing his duties and
obligations hereunder) or after the termination of his employment will
constitute a misappropriation of the Company's trade secrets.
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(b) Executive agrees that upon termination of Executive's
employment with the Company, for any reason, Executive will return to the
Company, in good condition, all property of the Company, including without
limitation, the originals and all copies of all management, training, marketing
and selling manuals, promotional materials, other training and instructional
materials, vendor, owner, manager and product information, customer lists, other
customer information and all other selling, service and trade information-and
equipment In the event that such items are not so returned, the Company will
have the to charge Executive for all reasonable damages, costs, attorneys' fees
and other expenses incurred in searching for, taking, removing and/or recovering
such property.
(c) Executive acknowledges that to the extent permitted by
law, all work papers, reports, documentation, drawing, photographs, negatives,
tapes and masters therefor, prototypes and other materials (hereinafter,
"items"), including, without limitation, any and all such items generated and
maintained on any form of electronic media, generated by Executive during his
employment with the Company will be considered a "work made for hire" and that
ownership of any and all copyrights in any and all such items will belong to the
Company. The item will recognize the Company as the copyright owner, will
contain all proper copyright notices, e.g., "(year of creation" Interstate
Hotels Corporation. All rights reserved," and will be in condition to be
registered or otherwise placed in compliance with registration or other
statutory requirements throughout the world.
(d) Executive hereby assigns and agrees to assign to the
Company, its successors, assigns or nominees, all of his rights to any
discoveries, inventions and improvements, whether patentable or note, made,
conceived or suggested, either solely or jointly with others, by Executive while
in the Company's employ, whether in the course of his employment with the use of
the Company's time, materials or facilities or in any way within or related to
the existing or contemplated scope of the Company's business. Any discovery,
invention or improvement relating to any subject matter with which the Company
was concerned during Executive's employment and made, conceived or suggested by
Executive, either solely or jointly with others, within one year following
termination of Executive's employment under this Agreement or any successor
agreements will be irrebuttably presumed to have been so made, conceived or
suggested in the course of such employment with the use of the Company's time,
materials or facilities. Upon request by the Company with respect to any such
discoveries, inventions or improvements, Executive will execute and deliver to
the Company, at any time during or after his employment, all appropriate
documents for use in applying for, obtaining and maintaining such domestic and
foreign patents as the Company may desire, and all proper assignments therefor,
when so requested, at the expense of the Company, but without further or
additional consideration.
(e) Executive may use the Company's trade names, trademarks
and/or service marks in connection with the sale of the Company's products and
services, but only in such manner and for such purposes as may be authorized by
the Company. Upon any termination of this Agreement, Executive immediately will
cease the use of such trade names, trademarks and/or service marks and eliminate
them wherever they have been used or incorporated by Executive.
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(f) The Executive will not directly or indirectly (i) solicit
or endeavor to cause any employee of the Company or any Subsidiary to leave his
employment or induce or attempt to induce any such employee to breach any
employment agreement with the Company or any Subsidiary or otherwise interfere
with the employment of any such employee or (ii) solicit, endeavor to cause,
induce or attempt to induce any agent who engages in the business of marketing
the services of the Company or any Subsidiary to terminate, reduce or modify its
agency relationship with the Company or any Subsidiary.
9. SUCCESSORS AND BINDING AGREEMENT. (a) The Company will require any
successor (whether direct or indirect, by purchase, merger, consolidation,
reorganization or otherwise) to all or substantially all of the business or
assets of the Company, by agreement in form and substance reasonably
satisfactory to the Executive, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent the Company would be
required to perform if no such succession had taken place. This Agreement will
be binding upon and inure to the benefit of the Company and any successor to the
Company, including without limitation any persons acquiring directly or
indirectly all or substantially all of the business or assets of the Company
whether by purchase, merger, consolidation, reorganization or otherwise (and
such successor will thereafter be deemed the "Company" for the purposes of this
Agreement), but will not otherwise be assignable, transferable or delegable by
the Company.
(b) This Agreement will inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees and legatees.
(c) This Agreement is personal in nature and neither of the
parties hereto will, without the consent of the other, assign, transfer or
delegate this Agreement or any rights or obligations hereunder except as
expressly provided in Sections 9(a) and (b). Without limiting the generality or
effect of the foregoing, the Executive's right to receive payments hereunder
will not be assignable, transferable or delegable, whether by pledge, creation
of a security interest, or otherwise, other than by a transfer by Executive's
will or by the laws of descent and distribution and, in the event of any
attempted assignment or transfer contrary to this Section 8(c), the Company will
have no liability to pay any amount so attempted to be assigned, transferred or
delegated.
10. LEGAL FEES AND EXPENSES. It is the intent of the Company that the
Executive not be required to incur legal fees and the related expenses
associated with the interpretation, enforcement or defense of Executive's rights
under this Agreement by litigation or otherwise because the cost and expense
thereof would substantially detract from the benefits intended to be extended to
the Executive hereunder. Accordingly, if it should appear to the Executive that
the Company has failed to comply with any of its obligations under this
Agreement or in the event that the Company or any other person takes or
threatens to take any action to declare this Agreement void or unenforceable, or
institutes any litigation, arbitration or other action or proceeding designed to
deny, or to recover from, the Executive the benefits provided or intended to be
provided to the Executive hereunder, the Company irrevocably authorizes the
Executive from time to time to retain counsel of Executive's choice, at the
expense of the Company as
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hereafter provided, to advise and represent the Executive in connection with any
such interpretation, enforcement or defense, including without limitation the
initiation or defense of any litigation, arbitration or other legal action,
whether by or against the Company or any Director, officer, stockholder or other
person affiliated with the Company, in any jurisdiction. Notwithstanding any
existing or prior attorney-client relationship between the Company and such
counsel, the Company irrevocably consents to the Executive's entering into an
attorney-client relationship with such counsel, and in that connection the
Company and the Executive agree that a confidential relationship shall exist
between the Executive and such counsel. Without respect to whether the Executive
prevails, in whole or in part, in connection with any of the foregoing, the
Company will pay and be solely financially responsible for any and all
attorneys' and related fees and expenses incurred by the Executive in connection
with any of the foregoing.
11. ADDITIONAL REMEDIES. (a) Notwithstanding any other remedy herein
provided for or available, if the Executive should be in breach of any of the
provisions of Section 7 or 8, the Executive expressly acknowledges and agrees
that the Company will be entitled to injunctive relief or specific performance,
without the necessity of proving damages, in addition to any other remedies it
may have.
(b) Notwithstanding any of the foregoing, in the event of any
disputes regarding the interpretation or application of any provision of this
Agreement, either the Executive or the Company, or both parties, may request in
writing that such dispute be resolved through final and binding arbitration. The
parties will jointly select the arbitrator who will hear such dispute. If the
parties cannot agree on the selection of an arbitrator, the parties will request
that one be appointed by the American Arbitration Association. The arbitration
will be conducted in Pittsburgh, Pennsylvania (or in any other location mutually
agreed upon by the parties) in accordance with the rules of the American
Arbitration Association. The parties acknowledge and agree that time will be of
the essence throughout such procedure. The decision of the arbitrator may be
entered in any court having subject matter and personal jurisdiction over the
dispute and the Executive. The Company will pay any costs and expenses in
connection with any such dispute or procedure.
12. REPRESENTATION. Each party represents and warrants that it is fully
authorized and empowered to enter into this Agreement and that the performance
of its obligations under this Agreement will not violate any agreement between
it and any other person or entity.
13. SEVERABILITY. In the event that any provision or portion of this
Agreement is determined to be invalid or unenforceable for any reason, in whole
or in part, the remaining provisions of this Agreement will be unaffected
thereby and will remain in full force and effect to the fullest extent permitted
by law.
14. LITIGATION AND REGULATORY COOPERATION. During and after Executive's
employment, Executive shall reasonably cooperate with the Company in the defense
or prosecution of any claims or actions now in existence or which may be brought
in the future against or on behalf of the Company which relate to events or
occurrences that transpired while
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Executive was employed by the Company; provided, however, that such cooperation
shall not materially and adversely affect Executive or expose Executive to an
increased probability of civil or criminal litigation. Executive's cooperation
in connection with such claims or actions shall include, but not be limited to,
being available to meet with counsel to prepare for discovery or trial and to
act as a witness on behalf of the Company at mutually convenient times. During
and after Executive's employment, Executive also shall cooperate fully with the
Company in connection with any investigation or review of any federal, state or
local regulatory authority as any such investigation or review relates to events
or occurrences that transpired while Executive was employed by the Company. The
Company shall also provide Executive with compensation on an hourly basis
calculated as his final Base Pay for requested litigation and regulatory
cooperation that occurs after his termination of employment, and reimburse
Executive for all costs and expenses incurred in connection with his performance
under this Section 14; including, but not limited to, reasonable attorney" fees
and costs.
15. INDEMNIFICATION. The Executive shall receive maximum
indemnification from the Company as permitted by the Company's by-laws in effect
at any time during the Term of this Agreement and applicable law. This Section
shall survive the termination of this Agreement.
16. NOTICES. For all purposes of this Agreement, all communications,
including without limitation notices, consents, requests or approvals, required
or permitted to be given hereunder will be in writing and will be deemed to have
been duly given when hand delivered or dispatched by electronic facsimile
transmission (with receipt thereof orally confirmed), or five business days
after having been mailed by United States registered or certified mail, return
receipt requested, postage prepaid, or three business days after having been
sent by a nationally recognized overnight courier service such as Federal
Express or UPS, addressed to the Company (to the attention of the Secretary of
the Company) at its principal executive office and to the Executive at his
principal residence (with a copy to any counsel designated by the Executive), or
to such other address as any party may have furnished to the other in writing
and in accordance herewith, except that notices of changes of address will be
effective only upon receipt.
17. DISCLOSURE. During the Term of Employment and for one year
thereafter, Executive will communicate the contents of this Agreement to any
person, firm, association, partnership, corporation or other entity which he or
she intends to be employed by, associated I with, or represent and which is
engaged in a business that is competitive to the business of the Company.
18. MODIFICATIONS AND WAIVERS. No provision of this Agreement may be
modified or discharged unless such modification or discharge is authorized by
the Board and is agreed to in writing, signed by the Executive and by an officer
of the Company duly authorized by the Board. No waiver by either party hereto of
any breach by the other party hereto of any condition or provision of this
Agreement to be performed by such other party will be deemed a waiver of similar
or dissimilar provisions or conditions at the time or at any prior or subsequent
time.
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19. ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding of the parties hereto with respect to its subject matter, except
as such parties may otherwise agree in a writing which specifies that it is an
exception to the foregoing. Without limiting the generality of the foregoing
sentence, as of the Commencement Date, the Old Agreement shall cease to be of
any force or effect. This Agreement supersedes all prior agreements between the
parties hereto with respect to its subject matter and, notwithstanding any other
provision hereof, will become effective upon the execution of this Agreement by
the parties.
20. GOVERNING LAW. The validity, interpretation, construction and
performance of this Agreement will be governed by and construed in accordance
with the substantive laws of the Commonwealth of Pennsylvania, without giving
effect to the principles of conflict of laws of such Commonwealth.
21. COUNTERPARTS. This Agreement may be executed simultaneously in one
or more counterparts, each of which will be deemed to be an original but all of
which together will constitute one and the same instrument
22. HEADINGS, ETC. The section headings contained in this Agreement are
for convenience of reference only and will not be deemed to control or affect
the meaning or construction of any provision of this Agreement References to
Sections are to Sections in this Agreement
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
INTERSTATE HOTELS CORPORATION
By: /s/ Timothy Q. Hudak
--------------------------
Title: Attorney-in-fact for Thomas F. Hewitt
/s/ J. William Richardson
-----------------------------
J. William Richardson