**Exhibit 10.3****EXECUTIVE EMPLOYMENT AGREEMENT**EXECUTIVE EMPLOYMENT AGREEMENT, effective as of February 17, 2005, by and between INTERSTATE HOTELS& RESORTS, INC., a Delaware corporation (the “Company”), INTERSTATE MANAGEMENT COMPANY, L.L.C., aDelaware limited liability company (the “LLC”) and any successor employer, and THOMAS F. HEWITT(the “Executive”), an individual residing at ***********************************.     The Company and the LLC desire to employ the Executive in the capacity of Chief ExecutiveOfficer, and the Executive desires to be so employed, on the terms and subject to the conditionsset forth in this agreement (the “Agreement”);     Now, Therefore, in consideration of the mutual covenants set forth herein and other good andvaluable consideration the parties hereto hereby agree as follows:     1. Employment; Term. The Company and the LLC each hereby employ the Executive, andthe Executive agrees to be employed by the Company and the LLC, upon the terms and subject to theconditions set forth herein, for a term of three (3) years, commencing on February 17, 2005 (the“Commencement Date”), and ending on February 17, 2008, unless terminated earlier in accordance withSection 5 of this Agreement; provided that such term shall automatically be extended fromtime to time for additional periods of one calendar year from the date on which it would otherwiseexpire unless the Executive, on the one hand, or the Company and the LLC, on the other, give noticeto the other party at least 120 calendar days prior to such date that it elects to permit the termof this Agreement to expire without extension on such date. (The initial term of this Agreement asthe same may be extended in accordance with the terms of this Agreement is hereinafter referred toas the “Term”).     2. Positions; Conduct.          (a) During the Term, the Executive will hold the title and office of, and serve in theposition of Chief Executive Officer of the Company and the LLC. The Executive shall undertake theresponsibilities and exercise the authority customarily performed, undertaken and exercised bypersons situated in a similar executive capacity, and shall perform such other specific duties andservices (including service as an officer, director or equivalent position of any direct orindirect subsidiary without additional compensation) as they shall reasonably request consistentwith the Executive’s positions.          (b) During the Term, the Executive agrees to devote his full business time and attention tothe business and affairs of the Company and the LLC and to faithfully and diligently perform, tothe best of his ability, all of his duties and responsibilities hereunder. Nothing in thisAgreement shall preclude the Executive from devoting reasonable time and attention to (i) serving,with the approval of the Board, as a director, trustee or member of any committee of anyorganization, (ii) engaging in charitable and community activities and (iii) managing his personalinvestments and affairs; providedthat such activities do not involve any materialconflict of interest withthe interests of the Company or, individually or collectively, interfere materially with theperformance by the Executive of his duties and responsibilities under this Agreement.

 

2Notwithstanding the foregoing and except as expressly provided herein, during the Term, theExecutive may not accept employment with any other individual or entity, or engage in any otherventure which is directly or indirectly in conflict or competition with the business of the Companyor the LLC.          (c) The Executive’s office and place of rendering his services under this Agreement shall bein the principal executive offices of the Company which shall be in the Washington, D.C.metropolitan area. During the Term, the Company shall provide the Executive with executive officespace, and administrative and secretarial assistance and other support services consistent with hisposition as Chief Executive Officer and with his duties and responsibilities hereunder.     3. Board of Directors. While it is understood that the right to elect directors ofthe Company is by law vested in the stockholders and directors of the Company, it is neverthelessmutually contemplated that, subject to such rights, during the Term the Executive will serve as amember of the Company’s Board of Directors. Executive will not receive any additional compensationor receive any stock options in the Company as a result of his position as a director of theCompany.     4. Salary; Additional Compensation; Perquisites and Benefits.          (a) During the Term, the Company and the LLC will pay the Executive a base salary at anaggregate annual rate of not less than $400,000 per annum, subject to annual review by theCompensation Committee of the Board (the “Compensation Committee”), and in the discretion of suchCommittee, increased from time to time. Once increased, such base salary may not be decreased.Such salary shall be paid in periodic installments in accordance with the Company’s standardpractice, but not less frequently than semi-monthly.          (b) For each fiscal year during the Term, the Executive will be eligible to receive a bonusfrom the Company. The award and amount of such bonus shall be based upon the achievement ofpredefined operating or performance goals and other criteria established by the CompensationCommittee, which goals shall give the Executive the opportunity to earn a cash bonus equal to anamount between 0% and 150% of base salary.          (c) During the Term, the Executive will participate in all plans now existing or hereafteradopted by the Company or the LLC for their management employees or the general benefit of theiremployees, such as any pension, profit-sharing, deferred compensation plans, bonuses, stock optionor other incentive compensation plans, life and health insurance plans, or other insurance plansand benefits on the same basis and subject to the same qualifications as other senior executiveofficers. Notwithstanding the foregoing, the Company and the LLC may, in their sole discretion,discontinue or eliminate any such plans.          (d) The Executive shall be eligible for stock option and restricted stock award grants fromtime to time pursuant to the Company’s Incentive Planin accordance with the terms thereof. Except as noted below, all such grants shall be at the solediscretion of the Board. Executive shall receive a separate option agreement

 

3governing any suchgrants. Notwithstanding the foregoing, the Executive shall be granted annually no later than March31 of each year (beginning in 2005) at least 50,000 restricted shares in the Company, as determinedby the Board, depending on the performance of the Company. The shares will vest equally on thefirst, second and third anniversary of the date of grant.          (e) The Company and the LLC will reimburse the Executive, in accordance with its standardpolicies from time to time in effect, for all out-of-pocket business expenses as may be incurred bythe Executive in the performance of his duties under this Agreement. Until April 21, 2005, theCompany shall provide at the Company’s cost an apartment for the Executive in Arlington, Virginiaand shall reimburse the Executive for all travel to and from Arlington, Virginia relating to hisrelocation to the Washington, D.C. metropolitan area.          (f) The Executive shall be entitled to vacation time to be credited and taken in accordancewith the Company’s policy from time to time in effect for senior executives, which in any eventshall not be less than a total of four weeks per calendar year. Such vacation time shall not becarried over year to year, and shall not be paid out upon termination of employment, or uponexpiration of this Agreement*.*          (g) The Company, at its sole cost, shall pay (i) up to $10,000 annually toward the premium ofa life insurance policy with a death benefit payable to a beneficiary designated by the Executiveand (ii) up to $15,000 annually toward the premium of a disability insurance policy with adisability benefit payable to the executive in accordance with the terms and conditions of suchdisability insurance policy. The Company makes no representations or warranties that the insurancebenefits contained in the insurance policies supplied pursuant to this section will be paid underany particular conditions, and the Company shall not be deemed a guarantor of such benefits. Suchbenefits shall be payable in accordance with the terms of the respective insurance policy.          (h) The Executive shall be granted a car allowance of up to $1,000 per month.          (i) The Company shall reimburse Executive for all relocation expenses incurred by Executive inmoving he and his family to the Washington, D.C. metropolitan area (including but not limited tobrokerage commissions on selling his current home) up to a maximum of $125,000 .          (j) In addition to any bonus payable for calendar year 2005 pursuant to paragraph 4(b) above,the Executive shall be eligible for a one-time bonus for calendar year 2005 which shall have amaximum potential of $500,000 and shall be based on criteria, including the Company’s financialperformance for the year, established by the Board. The bonus will be paid within 30 days of theCompany’s filing of its Form 10-K for 2005 with the Securities and Exchange Commission.          (k) To the fullest extent permitted by applicable law, the Executive shall be indemnified andheld harmless by the Company and the LLC againstany and all judgments, penalties, fines, amounts paid in settlement, and other reasonableexpenses (including, without limitation, reasonable attorneys’ fees and disbursements)

 

4actuallyincurred by the Executive in connection with any threatened, pending or completed action, suit orproceeding (whether civil, criminal, administrative, investigative or other) for any action oromission in his capacity as a director, officer or employee of the Company or the LLC.          Indemnification under this Section 4(i) shall be in addition to, and not in substitution of,any other indemnification by the Company or the LLC of its officers and directors. Expensesincurred by the Executive in defending an action, suit or proceeding for which he claims the rightto be indemnified pursuant to this Section 4(k) shall be paid by the Company or the LLC, as thecase may be, in advance of the final disposition of such action, suit or proceeding upon theCompany’s or the LLC’s receipt of (x) a written affirmation by the Executive of his good faithbelief that the standard of conduct necessary for his indemnification hereunder and under theprovisions of applicable law has been met and (y) a written undertaking by or on behalf of theExecutive to repay the amount advanced if it shall ultimately be determined by a court that theExecutive engaged in conduct, including fraud, theft, misfeasance, or malfeasance against theCompany or the LLC, which precludes indemnification under the provisions of such applicable law.Such written undertaking in clause (y) shall be accepted by the Company or the LLC, as the case maybe, without security therefor and without reference to the financial ability of the Executive tomake repayment thereunder. The Company and the LLC shall use commercially reasonable efforts tomaintain in effect for the Term of this Agreement a directors’ and officers’ liability insurancepolicy, with a policy limit of at least $25,000,000, subject to customary exclusions, with respectto claims made against officers and directors of the Company or the LLC; provided,however, the Company or the LLC, as the case may be, shall be relieved of this obligationto maintain directors’ and officers’ liability insurance if, in the good faith judgment of theCompany or the LLC, it cannot be obtained at a reasonable cost.     5. Termination.          (a) The Term will terminate immediately upon the Executive’s death, Disability, or, uponthirty (30) days’ prior written notice by the Company, in the case of a Determination ofDisability. As used herein the term “Disability” means the Executive’s inability to perform hisduties and responsibilities under this Agreement for a period of more than 120 consecutive days, orfor more than 180 days, whether or not continuous, during any 365-day period, due to physical ormental incapacity or impairment. A “Determination of Disability” shall occur when a physician,reasonably satisfactory to both the Executive and the Company and paid for by the Company or theLLC, finds that the Executive will likely be unable to perform his duties and responsibilitiesunder this Agreement for the above-specified period due to a physical or mental incapacity orimpairment. Such decision shall be final and binding on the Executive and the Company;provided that if they cannot agree as to a physician, then each shall select and pay for aphysician and these two together shall select a third physician whose fee shall be borne equally bythe Executive and either the Company or the LLC and whose Determination of Disability shall bebinding on the Executive and the Company. Should the Executive become incapacitated, hisemployment shall continue and all base and other compensation due the Executive hereunder shallcontinue to bepaid through the date upon which the Executive’s employment is terminated for Disability orDetermination of Disability in accordance with this section.

 

5          (b) The Term may be terminated by the Company upon notice to the Executive and with or without“Cause” as defined herein.          (c) The Term may be terminated by the Executive upon notice to the Company and with or without“Good Reason” as defined herein.     6. Severance.          (a) If the Term is terminated by the Companyfor Cause, (i) the Company and the LLCwill pay to the Executive an aggregate amount equal to theExecutive’s accrued and unpaid base salary through the dateof such termination;  (ii) all unvested options andrestricted shares will terminate immediately; and  (iii) any vested options issuedpursuant to the Company’s Incentive Plan and held by theExecutive at termination, will expire ninety (90) days afterthe termination date.          (b) If the Term is terminated by the Executive other than because of death, Disability or forGood Reason, (i) the Company and the LLCwill pay to the Executive an aggregate amount equal to theExecutive’s accrued and unpaid base salary through the dateof such termination;  (ii) all unvested options andrestricted shares terminate immediately; and  (iii) any vested options issuedpursuant to the Company’s Incentive Plan and held by theExecutive at termination, will expire ninety (90) days afterthe termination date.          (c) If the Term is terminated upon the Executive’s death or Disability, (i) the Company and the LLCwill pay to the Executive’s estate or the Executive, as thecase may be, a lump sum payment equal to the Executive’s basesalary through the termination date, plus a prorata portion of the Executive’s bonus for the fiscal yearin which the termination occurred;

 

6 (ii) the Company will makepayments for one (1) year of all compensation otherwisepayable to the Executive pursuant to this Agreement,including, but not limited to, base salary, bonus and welfarebenefits;  (iii) all of the Executive’sunvested stock options will immediately vest and suchoptions, along with those previously vested and unexercised,will become exercisable for a period of one (1) yearthereafter; and  (iv) all of the Executive’sunvested restricted stock will immediately vest and all ofthe restricted stock of the Company held by the Executiveshall become free from all contractual restrictions.          (d) Subject to Section 6(e) hereof, if the Term is terminated by the Company without Cause orother than by reason of Executive’s death or Disability, in addition to any other remediesavailable, or if the Executive terminates the Term for Good Reason, (i) the Company and the LLCshall pay the Executive a lump sum equal to two (2) times theproduct of (x) the sum of (A) the Executive’s then annualbase salary and (B) the amount of the Executive’s bonus forthe preceding calendar year; **provided****that**,if Executive separates from employment pursuant to thisSection 6(d) prior to his first anniversary with the Company,then Executive’s bonus amount for purposes of this Section6(d)(i) will be 112.5% of Executive’s base salary;  (ii) all of the Executive’sunvested stock options will immediately vest and suchoptions, along with those previously vested and unexercised,will become exercisable for a period of one (1) yearthereafter;  (iii) all of the Executive’sunvested restricted stock will immediately vest and all ofthe restricted stock of the Company held by the Executiveshall become free from all contractual restrictions; and  (iv) the Company shall alsocontinue in effect the Executive’s health and dental benefits(or similar health and dental benefits paid to seniorexecutives) noted in Section 3(c) as follows: UponExecutive’stermination of employment, Executive shall be eligible forcontinued health insurance benefits under the federal lawknown as COBRA. Executive

 

7   is required to timely electCOBRA in order to receive continued health insurancecoverage under this Agreement. Upon Executive’s electionof COBRA coverage and timely payment of applicable monthlyCOBRA premiums, Executive will receive health insurancecoverage under COBRA up to the maximum period provided bylaw. The Company will reimburse Executive of the cost ofsuch COBRA coverage until the earlier of (x) eighteen (18)months from the termination date or (y) the date on whichthe Executive obtains health insurance coverage from asubsequent employer. Executive acknowledges that if hedoes not timely elect COBRA coverage he will not receivecontinued health insurance benefits from the Company.Executive also acknowledges that he is responsible for anytaxes due on payments from the Company in reimbursementfor COBRA premium amounts.          (e) Intentionally left blank.          (f) If at any time the Term is not extended pursuant to the proviso to Section 1 hereof as aresult of the Company giving notice thereunder that it elects to permit the term of this Agreementto expire without extension, the Company shall be deemed to have terminated the Executive’semployment without Cause.          (g) As used herein, the term “Cause” means:          (i) the Executive’s willful and intentional failure or refusal to perform or observeany of his material duties, responsibilities or obligations set forth in this Agreement;provided, however, that the Company shall not be deemed to have Causepursuant to this clause (i) unless the Company gives the Executive written notice that thespecified conduct has occurred and making specific reference to this Section 6(g)(i) andthe Executive fails to cure the conduct within thirty (30) days after receipt of suchnotice;          (ii) any willful and intentional act of the Executive involving malfeasance, fraud,theft, misappropriation of funds, or embezzlement affecting the Company or the LLC;          (iv) the Executive’s conviction of, or a plea of guilty or nolo contendere to, anoffense which is a felony;          (v) Executive’s material breach of this Agreement; or          (vi) Gross misconduct by Executive that is of such a serious or substantial naturethat a substantial likelihood exists that such misconduct would injure the reputation ofthe Company if the Executive were to remain employed by the Company or LLC.

 

8Termination of the Executive for Cause shall be communicated by a Notice of Termination. Forpurposes of this Agreement, a “Notice of Termination” shall mean delivery to the Executive of acopy of a resolution duly adopted by the affirmative vote of not less than a majority of the entiremembership of the Company’s Board at a meeting of the Board called and held for the purpose (afterreasonable notice to the Executive and reasonable opportunity for the Executive, together with theExecutive’s counsel, to be heard before the Board prior to such vote) of finding that in the goodfaith opinion of the Board, the Executive was guilty of conduct constituting Cause and specifyingthe particulars thereof in detail, including, with respect to any termination based upon conductdescribed in clause (i) above that the Executive failed to cure such conduct during the thirty-dayperiod following the date on which the Company gave written notice of the conduct referred to insuch clause (i). For purposes of this Agreement, no such purported termination of the Executive’semployment shall be effective without such Notice of Termination;          (h) As used herein, the term “Good Reason” means the occurrence of any of the following,without the prior written consent of the Executive:          (i) assignment to the Executive of duties materially inconsistent with the Executive’spositions as described in Section 2(a) hereof, or any significant diminution in theExecutive’s duties or responsibilities, other than in connection with the termination ofthe Executive’s employment for Cause, Disability or as a result of the Executive’s death orby the Executive other than for Good Reason;          (ii) the change in the location of the Company’s principal executive offices or of theExecutive’s principal place of employment to a location outside the Washington, D.C.metropolitan area;          (iii) the failure of the Company to nominate the Executive to the Board, removal fromthe Board or the failure of the Executive to be elected to the Board;          (iv) any material breach of this Agreement by the Company or the LLC which iscontinuing;          (v) a Change in Control; provided that a Change of Control shall only constitute GoodReason if (i) the Executive terminates this Agreement within the twelve month periodfollowing a Change of Control, or (ii) the Company terminates the Executive within twoyears following a Change of Controlprovided, however,     (x) that the Executive shall not be deemed to have Good Reason pursuant toclauses (h)(i), (ii), (iii) or (iv) above unless the Executive gives the Company orthe LLC, as the case may be, written notice that the specified conduct or event hasoccurred and the Company or the LLC fails to cure such conduct or event withinthirty (30) days of the receipt of such notice; and

 

9     (y) that if that Executive terminates for Good Reason under paragraph6(h)(v)(i) above, notwithstanding paragraph 6(d) above, Executive will not receiveany severance payment pursuant to paragraph 6(d)(i) above.              (i) As used herein, the term “Change in Control” shall have the following meaning:                        (i) the acquisition (other than from the Company) by any “Person” (as the term is usedfor purposes of Sections 13(d) or 14(d) of the Exchange Act) of beneficial ownership(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of thirty (30%)percent or more of the combined voting power of the Company’s then outstanding votingsecurities;                        (ii) the individuals who were members of the Board (the “Incumbent Board”) during theprevious twelve (12) month period, cease for any reason to constitute at least a majorityof the Board; provided, however, that if the election, or nomination forelection by the Company’s stockholders, of any new director was approved by a vote of atleast two-thirds of the Incumbent Board, such new director shall, for purposes of thisAgreement, be considered as a member of the Incumbent Board;                        (iii) approval by the stockholders of the Company of (a) merger or consolidationinvolving the Company if the stockholders of the Company, immediately before such merger orconsolidation do not, as a result of such merger or consolidation, own, directly orindirectly, more than fifty (50%) percent of the combined voting power of the thenoutstanding voting securities of the corporation resulting from such merger orconsolidation in substantially the same proportion as their ownership of the combinedvoting power of the voting securities of the Company outstanding immediately before suchmerger or consolidation or (b) a complete liquidation or dissolution of the Company or anagreement for the sale or other disposition of all or substantially all of the assets ofthe Company; or                        (iv) approval by the stockholders of the Company of any transaction (including withoutlimitation a “going private transaction”) involving the Company if the stockholders of theCompany, immediately before such transaction, do not as a result of such transaction, owndirectly or indirectly, more than fifty (50%) percent of the combined voting power of thethen outstanding voting securities of the corporation resulting from such transaction insubstantially the same proportion as their ownership of the combined voting power of thevoting securities of the Company outstanding immediately before such transaction.            Notwithstanding the foregoing, a Change in Control shall not be deemed to occur pursuant toclause (i) above solely because thirty (30%) percent or more of the combined voting power of theCompany’s then outstanding securities is acquired by (a) a trustee or other fiduciary holdingsecurities under one or more employee benefit plans maintained by the Company or any of itssubsidiaries or (b) any corporation which,

 

10immediately prior to such acquisition, is owned directlyor indirectly by the stockholders of the Company in the same proportion as their ownership of stockin the Company immediately prior to such acquisition.          (j) The amounts required to be paid and the benefits required to be made available to theExecutive under this Section 6 are absolute. Under no circumstances shall the Executive, upon thetermination of his employment hereunder, be required to seek alternative employment and, in theevent that the Executive does secure other employment, no compensation or other benefits receivedin respect of such employment shall be set-off or in any other way limit or reduce the obligationsof the Company under this Section 6.          (k) Excise Tax Payments.          (i) Gross-Up Payment. If it shall be determined that any payment ordistribution of any type to or in respect of the Executive, by the Company, the LLC, or anyother person, whether paid or payable or distributed or distributable pursuant to the termsof the Agreement or otherwise (the “Total Payments”), is or will be subject to the excisetax imposed by Section 4999 of the Internal Code of 1986, as amended (the “Code”) or anyinterest or penalties with respect to such excise tax (such excise tax, together with anysuch interest and penalties, are collectively referred to as the “Excise Tax”), then theExecutive shall be entitled to receive an additional payment (a “Gross-Up Payment”) in anamount such that after payment by the Executive of all taxes (including any interest orpenalties imposed with respect to such taxes) imposed upon the Gross-Up Payment, theExecutive retains an amount of the Gross-Up Payment equal to the Excise Tax imposed uponthe Total Payments.          (ii) Determination by Accountant.               (A) All computations and determinations relevant to this Section 6(k) shall be made bya national accounting firm selected by the Company from among the five (5) largestaccounting firms in the United States (the “Accounting Firm”) which firm may be theCompany’s accountants. Such determinations shall include whether any of the Total Paymentsare “parachute payments” (within the meaning of Section 280G of the Code). In making theinitial determination hereunder as to whether a Gross-Up Payment is required the AccountingFirm shall determine that no Gross-Up Payment is required, if the Accounting Firm is ableto conclude that no “Change of Control” has occurred (within the meaning of Section 280G ofthe Code) on the basis of “substantial authority” (within the meaning of Section 6230 ofthe Code) and shallprovide opinions to that effect to both the Company and the Executive. If theAccounting Firm determines that a Gross-Up Payment is required, the Accounting Firm shallprovide its determination (the “Determination”), together with detailed supportingcalculations regarding the amount of any Gross-Up Payment and any other relevant matterboth to the Company and the Executive by no later than ten (10) days following theTermination Date, if applicable, or such earlier time as is requested by the Company or theExecutive (if the Executive reasonably believes that any of the Total Payments may besubject to the Excise

 

11Tax). If the Accounting Firm determines that no Excise Tax ispayable by the Executive, it shall furnish the Executive and the Company with a writtenstatement that such Accounting Firm has concluded that no Excise Tax is payable (includingthe reasons therefor) and that the Executive has substantial authority not to report anyExcise Tax on his federal income tax return.               (B) If a Gross-Up Payment is determined to be payable, it shall be paid to theExecutive within twenty (20) days after the later of (i) the Determination (and allaccompanying calculations and other material supporting the Determination) is delivered tothe Company by the Accounting Firm or (ii) the date of the event which leads to theGross-up Payment. Any determination by the Accounting Firm shall be binding upon theCompany and the Executive, absent manifest error.               (C) As a result of uncertainty in the application of Section 4999 of the Code at thetime of the initial determination by the Accounting Firm hereunder, it is possible thatGross-Up Payments not made by the Company should have been made (“Underpayment”), or thatGross-Up Payments will have been made by the Company which should not have been made(“Overpayments”). In either such event, the Accounting Firm shall determine the amount ofthe Underpayment or Overpayment that has occurred. In the case of an Underpayment, theamount of such Underpayment (together with any interest and penalties payable by theExecutive as a result of such Underpayment) shall be promptly paid by the Company to or forthe benefit of the Executive.               (D) In the case of an Overpayment, the Executive shall, at the direction and expenseof the Company, take such steps as are reasonably necessary (including the filing ofreturns and claims for refund), follow reasonable instructions from, and proceduresestablished by, the Company, and otherwise reasonably cooperate with the Company to correctsuch Overpayment, provided, however, that (i) the Executive shall not in any event beobligated to return to the Company an amount greater than the net after-tax portion of theOverpayment that he has retained or has recovered as a refund from the applicable taxingauthorities and (ii) this provision shall be interpreted in a manner consistent with theintent of Section 6(k)(i), which is to make the Executive whole, on an after-tax basis,from the application of the Excise Taxes, it being acknowledged and understood that thecorrection of an Overpayment may result in the Executive repaying to the Company an amountwhich is less than the Overpayment.               (E) The Executive shall notify the Company in writing of any claim by the InternalRevenue Service relating to the possible application of the Excise Tax under Section 4999of the Code to any of the payments and amounts referred to herein and shall afford theCompany, at its expense, the opportunity to control the defense of such claim.

 

12     7. Cooperation with Company. Following the termination of the Executive’s employmentfor any reason, Executive shall fully cooperate with the Company in all matters relating to thewinding up of his pending work on behalf of the Company including, but not limited to, anylitigation in which the Company is involved and the orderly transfer of any such pending work toother employees of the Company as may be designated by the Company. The Company agrees toreimburse the Executive for any out-of-pocket expense he incurs in performing any work on behalf ofthe Company following the termination of his employment. In addition, after the six month periodfollowing Executive’s termination of employment, Executive will be paid a per diem at a daily rateequivalent to his base salary at the time of termination for the time Executive spends on behalf ofthe Company pursuant to this paragraph.     8. Confidential Information.          (a) The Executive acknowledges that the Company and its subsidiaries or affiliated ventures(“Company Affiliates”) own and have developed and compiled, and will in the future own, develop andcompile, certain Confidential Information and that during the course of his rendering serviceshereunder Confidential Information will be disclosed to the Executive by the Company Affiliates.The Executive hereby agrees that, during the Term and for a period of three years thereafter, hewill not use or disclose, furnish or make accessible to anyone, directly or indirectly, anyConfidential Information of the Company Affiliates. In particular, Executive covenants and agreesthat Executive shall not, directly or indirectly, communicate or divulge, or use for the benefit ofExecutive or for any other person, or to the disadvantage of the Company, the ConfidentialInformation or any information in any way relating to the Confidential Information, without priorwritten consent from the Company.          (b) As used herein, the term “Confidential Information” means any trade secrets, confidentialor proprietary information, or other knowledge, know-how, information, documents, materials, owned,developed or possessed by a Company Affiliate pertaining to its businesses, including, but notlimited to, records, memoranda, computer files and disks, audio and video tapes, CD’s, and propertyin any form containing information generally not known in the hospitality industry, including butnot limited to trade secrets, techniques, know-how (including designs, plans, procedures, processesand research records), operations, market structure, formulas, data, programs, licenses, prices,costs, software, computer programs, innovations, discoveries, improvements, research, developments,test results, reports, specifications, data, formats, marketing data and business plans andstrategies, customer lists, client lists and client contact lists, agreements and other forms ofdocuments, expansion plans, budgets, projections, and salary, staffing and employment information.Notwithstanding the foregoing, Confidential Information shall not in any event include informationwhich (i)was generally known or generally available to the public prior to its disclosure to theExecutive, (ii) becomes generally known or generally available to the public subsequent to itsdisclosure to the Executive through no wrongful act of the Executive, (iii) is or becomes availableto the Executive from sources other than the Company Affiliates which sources are not known to theExecutive to be under any duty of confidentiality with respect thereto or (iv) the Executive isrequired to disclose by applicable law or regulation or by order of any court or federal, state orlocal regulatory or administrative

 

13body (provided that the Executive provides the Company withprior notice of the contemplated disclosure and reasonably cooperates with the Company, at theCompany’s sole expense, in seeking a protective order or other appropriate protection of suchinformation).          (c) Upon demand by the Company and/or upon termination of employment with the Company for anyreason, Executive shall promptly deliver to the Company all property and materials, whetherwritten, descriptive, or maintained in some other form belonging to or relating to the Company, itsbusiness affairs and those of its Affiliates, including all Confidential Information. If Executivedesires to retain copies of any forms or other materials developed by Executive during hisemployment with the Company, he may request permission to do so from the Chairman of the Board ofDirectors, which permission shall not be unreasonably withheld.          (d) The Executive agrees that during hisemploymenthereunder and for a period of twelve (12) months thereafter he will not solicit or accept thebusiness of, or assist any other person to solicit or accept the business of, any persons orentities who were customers of the Company, as of, or within one (1) year prior to, the Executive’stermination of employment, for the purposes of providing products or services competitive with theproducts or services of the Company or to cause such customers to reduce or end their business withthe Company.          (e) The Executive agrees that during his employment hereunder and for a period of twelve (12) months thereafter he will not solicit, raid, entice orinduce any person that then is or at any time during the twelve (12) month period prior to theExecutive’s termination was an employee of the Company (other than a person whose employment withthe Company has been terminated by the Company), to become employed by any person, firm orcorporation.          (f) Executive shall make no statements disparaging the Company, any of its affiliates, any ofits officers, directors, or employees, or any of its business practices. The Company’s directorsand officers shall make no statements disparaging the Executive.     9. Specific Performance.          (a) The Executive acknowledges that the services to be rendered by him hereunder are of aspecial, unique, extraordinary and personal character and that the Company Affiliates would sustainirreparable harm in the event of a violation by the Executive of Section 8 hereof. Therefore, inaddition to any other remedies available, the Company shall be entitled to specific enforcementand/or an injunctionfrom any court of competent jurisdiction restraining the Executive from committing orcontinuing any such violation of this Agreement without proving actual damages or posting a bond orother security. Nothing herein shall be construed as prohibiting the Company from pursuing anyother remedies available to it for such breach or threatened breach, including the recovery ofdamages.          (b) If any of the restrictions on activities of the Executive contained in Section 8 hereofshall for any reason be held by a court of competent

 

14jurisdiction to be excessively broad, suchrestrictions shall be construed so as thereafter to be limited or reduced to be enforceable to themaximum extent compatible with the applicable law as it shall then appear; it being understood thatby the execution of this Agreement the parties hereto regard such restrictions as reasonable andcompatible with their respective rights.          (c) Notwithstanding anything in this Agreement to the contrary, in the event that the Companyfails to make any payment of any amounts or provide any of the benefits to the Executive when dueas called for under Section 6 of this Agreement and such failure shall continue for twenty (20)days after written notice thereof from the Executive, all restrictions on the activities of theExecutive under Section 8 hereof shall be immediately and permanently terminated.     10. Withholding. The parties agree that all payments to be made to the Executive bythe Company pursuant to the Agreement shall be subject to all applicable withholding obligations ofsuch company.     11. Notices. All notices required or permitted hereunder shall be in writing andshall be deemed given and received when delivered personally, four (4) days after being mailed ifsent by registered or certified mail, postage pre-paid, or by one (1) day after delivery if sent byair courier (for next-day delivery) with evidence of receipt thereof or by facsimile with receiptconfirmed by the addressee. Such notices shall be addressed respectively:If to the Executive, to:Thomas F. Hewitt