Document:

EXTR 8-K 05042015 EX 10.2

CONFIDENTIAL SEPARATION AGREEMENT
AND GENERAL RELEASE OF CLAIMS

THIS CONFIDENTIAL SEPARATION AGREEMENT AND GENERAL RELEASE OF CLAIMS (the “Agreement”) is entered into by and between Edward Carney (“Executive”) and Extreme Networks, Inc. (the “Company”). This Agreement will become effective on the eighth day after it is signed by Executive (the “Effective Date”), provided that Executive has not revoked this Agreement (by email notice to aamadia@extremenetworks.com) prior to that date.  This Agreement was originally presented to Executive on April 24, 2015.  Executive has 21 days from that date to consider this Agreement.
FACTUAL RECITALS
This Agreement is entered into with respect to the following facts: 
A.    Executive was employed by the Company as its Executive Vice President, Product Success from on or about July 29, 2013 through April 23, 2015;
B.    Executive’s last day of employment with the Company was April 23, 2015 (the “Separation Date”); 
C.    The Company has offered to Executive certain separation benefits provided that Executive agrees to the terms of this Agreement and the release herein; and
D.   Executive has elected to accept such separation benefits, and to terminate employment with the Company under the terms and conditions set forth below.
Accordingly, Executive and the Company now agree as set forth below. 
AGREEMENT
1.    Separation from Employment, Positions, and Offices. Executive hereby confirms the cessation of his employment with the Company effective as of the Separation Date. 
Prior to and after the Separation Date, Executive agrees that he will reasonably cooperate with the Company, its subsidiaries and affiliates, at any level, and any of their officers, directors, shareholders, or employees: (A) concerning requests for information about the business of the Company or its subsidiaries or affiliates or his involvement and participation therein, (B) in connection with any investigation or review by the Company or any federal, state or local regulatory, quasi-regulatory or self-governing authority (including, without limitation, the Securities and Exchange Commission) as any such investigation or review relates to events or occurrences that transpired while Executive was employed by the Company and (C) with respect to transition and succession matters. Executive’s cooperation shall include, but not be limited to (taking into account Executive’s personal and professional obligations, including those to any new employer or entity to which he provides services), 

being available to meet and speak with officers or employees of the Company and/or the Company's counsel at reasonable times and locations, executing accurate and truthful documents and taking such other actions as may reasonably be requested by the Company and/or the Company's counsel to effectuate the foregoing. Executive shall be entitled to reimbursement, upon receipt by the Company of suitable documentation, for reasonable and necessary travel and other expenses which Executive may incur at the specific request of the Company and as approved by the Company in advance and in accordance with its policies and procedures established from time to time
2.    Acknowledgment of Payment/Receipt of All Wages and Benefits. Except for payment of expense reimbursements owed to Executive through the Separation Date, Executive acknowledges and agrees that he has been paid in full all wages (including, but not limited to, base salary, any applicable bonuses, and Executive’s last paycheck which includes his regular final pay through and including April 23, 2015 and which will be sent to Executive via overnight delivery on or about April 24, 2015), and he has received all benefits that Executive earned during his employment with the Company.  Executive understands and agrees that he is not entitled to, and shall not receive, any further compensation or benefits from the Company except as set forth in this Section and in Section 3 herein.
3.    Severance Consideration. Subject to Executive's execution of this Agreement (without revocation during the seven-day revocation period described below) and compliance with the terms of this Agreement: (a) the Company shall provide Executive with a lump sum payment, which amount represents twelve (12) months’ current base salary, equal to $400,000, less applicable withholding, by no later than ten (10) days after the Effective Date of this Agreement; and (b) the Company shall make six (6) months of COBRA payments on behalf of Executive should Executive timely elect to extend and continue COBRA for this period for Executive’s enrolled participants as of the date of Separation.
4.    Executive’s General Release of Claims. As consideration of and in exchange for the severance amount described in Section 3 herein, Executive and his successors release the Company, its parents and subsidiaries, and each of those entities' respective current and former shareholders, investors, directors, officers, employees, agents, accountants, attorneys, tax advisors, insurers, legal successors and assigns, of and from any and all claims, actions and causes of action, whether now known or unknown, which Executive now has, or at any other time had, or shall or may have against those released parties based upon or arising out of any matter, cause, fact, thing, act or omission whatsoever occurring or existing at any time up to and including the date on which Executive signs this Agreement, including, but not limited to any claim arising out of his employment with and/or separation from the Company, including, but not limited to, any claims for breach of express or implied contract; wrongful termination; constructive discharge; discrimination; harassment; retaliation; fraud; defamation; infliction of emotional distress; any and all claims arising under the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Fair Labor Standards Act, the Americans with Disabilities Act, the Age Discrimination in Employment Act, the Older Workers Benefit Protection Act, The Family Medical Leave Act, the Rehabilitation Act of 1973, The Worker Adjustment and Retraining Notification Act, the Immigration and Nationality Act, the Employee Retirement Income Security Act of 1974, the National Labor Relations Act, the California Fair Employment and Housing Act, the California Family Rights Act, the California Family and Medical Leave law, the California Labor Code, the North Carolina Equal Employment Practices Act, or the 

North Carolina Persons with Disabilities Protection Act, all as amended; and any claim or damage arising out of Executive’s employment with and/or separation from the Company under any common law theory, or any federal, state or local law, statute or ordinance not expressly referenced above; provided, however, that nothing in this Agreement prevents Executive from filing, cooperating with, or participating in any proceeding before the EEOC or a State Fair Employment Practices Agency except that Executive acknowledges that he may not be able to recover any monetary benefits in connection with any such claim. Notwithstanding the above release of claims, it is expressly understood that this release does not apply to, and shall not be construed as, a waiver or release of any claims or rights that cannot lawfully be released by private agreement. This release of claims shall not affect Executive's existing indemnity rights from the Company (whether pursuant to contract or statute, including, but not limited to, his indemnity rights pursuant to California Labor Code section 2802), which rights shall remain in full force and effect. In addition, the above release of claims, is not intended to apply to or impact any continuing obligations the Company may have related to Executive's 401(k).
Executive on behalf of himself and his successors, agrees not to sue or file any claims seeking monetary recovery from any of the released parties based upon any claim released by this Agreement.
5.    Company’s General Release of Claims.  Executive represents and warrants that he is not aware of any facts or circumstances which would give rise to any claim that the Company would have against him, or that any third-party would have against the Company based upon any action (or failure to act) or statement (or failure to disclose) made by him during the course of his employment with the Company.  In reliance upon such representation and warranty, and in consideration for the releases and promises given by Executive herein, the  Company, its parents and subsidiaries, and each of those entities' successors and assigns, hereby fully and forever releases and discharges Executive and his successors from any and all claims, actions and causes of action, whether now known or unknown, which the Company now has, or at any other time had, or shall or may have against those released parties based upon or arising out of any matter, cause, fact, thing, act or omission whatsoever occurring or existing at any time up to and including the date on which the Company signs this Agreement, including, but not limited to, any claims related in any way to the employment relationship between the Company and Executive and the termination of that employment relationship.  The Company understands and agrees that this release is a full and complete waiver of all claims.
6.    Civil Code Section 1542 Waiver. The parties acknowledge that they have read section 1542 of the Civil Code of the State of California, which states in full:
A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor.
The parties waive any rights that they have or may have under section 1542 (or any similar provision of the laws of any other jurisdiction) to the full extent that they may lawfully waive such rights pertaining to this general release of claims, and affirms that they are releasing all known and unknown claims that have or may have against the respective released parties listed in Sections 4 and 5 above.

7.    Waiver of Rights under the Age Discrimination in Employment Act.  Executive is over the age of forty (40) years, and in accordance with the Age Discrimination in Employment Act and Older Workers' Benefit Protection Act (collectively, the "Act"), Executive acknowledges that:
(i) He has been advised in writing to consult with an attorney prior to executing this Release, and has had the opportunity to do so;
(ii) He is aware of certain rights to which he may be entitled under the Act;
(iii) In exchange for executing this Release, Executive will receive severance pay to which he would otherwise not be entitled, and in addition to the compensation and benefits that he earned as an employee of the Company;
(iv) By signing this Agreement, he will not waive rights or claims under the Act which may arise after the execution of this Agreement; 
(v) He has been given a period of at least 21 days to consider this Release, and understands that if he does not sign this Agreement he will not receive the severance pay described in Section 3 of this Agreement; and
(vi) Executive further acknowledges that he has a period of seven days from the date of execution in which to revoke this Release by email notice to Allison Amadia at aamadia@extremenetworks.com. In the event Executive does not exercise his right to revoke this Agreement, the Agreement shall become effective on the date immediately following the seven-day revocation period described above.
8.    Agreement Not To Assist With Other Claims. Executive agrees that he shall not, at any time in the future, encourage any current or former Company employee, or any other person or entity, to file any legal or administrative claim of any type or nature against the Company or any of its officers or employees. Executive further agrees that he shall not, at any time in the future, assist in any manner any current or former Company employee, or any other person or entity, in the pursuit or prosecution of any legal or administrative claim of any type or nature against the Company or any of its officers or employees. This Section shall not apply to the Executive's participation in any legal or administrative proceeding pursuant to a duly-issued subpoena or other compulsory legal process. 
9.    Prior Agreement and Return of Company Property. Executive acknowledges and agrees that he shall continue to be bound by and comply with the terms of any proprietary rights, assignment of inventions, and/or confidentiality agreements between the Company and Executive, a copy of each having been provided to Executive at his request. To the extent that he has not already done so, by the Separation Date, Executive will promptly return to the Company, in good working condition, all Company property and equipment that is in Executive's possession or control, including, but not limited to, any PDAs, files, records, computers, computer equipment, cell phones, credit cards, keys, programs, manuals, business plans, financial records, and all documents (whether in paper, electronic, or other format, and all copies thereof) that Executive prepared or received in the course of his employment with the Company.

10.    References.  Executive understands and agrees that, provided that Executive directs all requests for employment references to the Company’s Executive Vice President and Chief HR Officer, Kelley Steven-Waiss, or her successor, the Company agrees that it will respond to reference requests for Executive by providing his date of hire of July 29, 2013, his last date of employment of April 23, 2015, his last position with the Company of Executive Vice President, Product Success and his last rate of pay with the Company of $400,000 per year plus bonus.  The Company will provide no further information.  
11.    Confidentiality.  The parties shall keep confidential and not disclose the terms of this Agreement, the contents of any negotiations that led to this Agreement, and/or the fact or amount of any payments made hereunder.  However, nothing in this Agreement shall prohibit the Company from making such disclosures as are necessary to individuals, including but not limited to board members, officers, agents, employees, attorneys, auditors, accountants, and/or tax preparers, who have a reasonable need to know and/or to effectuate the terms of this Agreement, provided that the Company also informs the recipient(s) of the disclosure that the information is confidential.  In addition, nothing in this Agreement shall prohibit the Company from making such disclosures as are required by law and/or by any regulatory agency, including but not limited to, any and all disclosures required pursuant to SEC reporting and other regulations.  Nothing in this Agreement shall prevent Executive from making such disclosures as are necessary to his spouse, attorneys, auditors, accountants, and tax preparers, provided that Executive also informs the recipient of the disclosure that the information is confidential. The covenants of confidentiality set forth in this Agreement are material terms hereof, and for the breach thereof, any aggrieved party will be entitled to pursue damages and seek injunctive relief.
Executive acknowledges that during his employment with the Company he received and/or obtained Confidential Information and Third Party Information as those terms are defined below.  Executive represents that at all times during the term of his employment he held in strictest confidence, and did not use, except for the benefit of the Company any Confidential Information of the Company.  Executive agrees that he will continue to keep confidential and not to use for the benefit of any person or entity all non-public information about the Company or third parties that he acquired during the course of his employment with the Company, including without limitation any Confidential Information or Third Party Information.  Executive acknowledges that “Confidential Information“ means any Company personnel information, employee information, proprietary information, technical data, trade secrets or know-how, including, but not limited to, research, product plans, products, services, pricing, markets, software, processes, marketing, finances or other business information obtained by Executive and/or disclosed to Executive by the Company either directly or indirectly in writing or orally.  Executive further acknowledges that Confidential Information does not include any of the foregoing items, which have become publicly known and made generally available through no wrongful act of Executive or of others who were under confidentiality obligations as to the item or items involved or improvements or new versions thereof.  
Executive acknowledges that the Company has received from third parties their confidential or proprietary information subject to a duty on the part of the Company to maintain the confidentiality of such information (“Third Party Information”).  Executive represents that he has held all such confidential or proprietary information in the strictest confidence and agrees not to disclose any Third Party Information to any person, firm or corporation or to use it.

Nothing in this Agreement is intended to waive or release Executive from any and all obligations to the Company under any confidentiality, proprietary information or non-disclosure agreement, or any obligation created by statutory or common law to protect any intellectual property or proprietary information of the Company and/or its employees.
12.    Non-Disparagement. Executive agrees that he will not make any disparaging statements about the Company, or any of its services, products, officers, directors, employees, customers, or channel partners except to the extent that such statements are made truthfully in response to a duly-issued subpoena or other compulsory legal process.  The Company Agrees that it will direct its officers, directors, and managers not to make any disparaging statements about the Executive, or any of his work product, except to the extent that such statements are made truthfully in response to a duly issued subpoena or other compulsory legal process.  The covenants of non-disparagement set forth in this Agreement are material terms hereof, and for the breach thereof, any aggrieved party will be entitled to pursue damages and seek injunctive relief.
13.    Non-Solicitation. Executive agrees that for a period of two years following the Separation Date, he will not, on behalf of himself or any other person or entity, directly or indirectly solicit any employee of the Company to terminate his/her employment with the Company.
14.    Section 409A Compliance. The Company intends that income provided to the Executive pursuant to this Agreement will not be subject to taxation under Section 409A of the Internal Revenue Code (“Section 409A”). The provisions of this Agreement shall be interpreted and construed in favor of satisfying any applicable requirements of Section 409A of the Code. However, the Company does not guarantee any particular tax effect for income provided to the Executive pursuant to this Agreement. In any event, except for the Company's responsibility to withhold applicable income and employment taxes from compensation paid or provided to the Executive, the Company shall not be responsible for the payment of any applicable taxes incurred by the Executive on compensation paid or provided to the Executive pursuant to this Agreement. In the event that any compensation to be paid or provided to Executive pursuant to this Agreement may be subject to the excise tax described in Section 409A, the Company may delay such payment for the minimum period required in order to avoid the imposition of such excise tax.
15.    Equity.  Vesting of Executive’s option shares and/or restricted stock shall cease effective the Separation Date.  Executive's rights with respect to the exercise the vested options and shares shall continue to be governed by and subject to the terms and conditions of the related stock option and/or restricted stock unit agreement or any other applicable equity plans/agreements under which they were granted.
16.    No Admission.  This Agreement shall never be considered at any time or for any purpose as an admission of liability by any party hereto, or that any party or person referred to herein in this Agreement acted wrongfully with respect to any other party or person.
17.    Governing Law. This Agreement shall be interpreted in accordance with and governed by the laws of the State of California. 
18.    Severability. If any provision of this Agreement is deemed invalid, illegal, or unenforceable, that provision will be modified so as to make it valid, legal, and enforceable, or if it cannot be so modified, it will 

be stricken from this Agreement, and the validity, legality, and enforceability of the remainder of the Agreement shall not in any way be affected.   This Agreement shall be binding upon, and shall inure to the benefit of, the parties and their respective successors, assigns, heirs and personal representatives.
19.    Dispute Resolution. In the event of any disputes or claims between the parties, including, but not limited to, any claims that are based upon or arise out of this Agreement or any alleged breach of this Agreement, the parties agree that all such disputes or claims shall be resolved by binding arbitration in the manner described in Executive’s Offer Letter dated July 19, 2014 (the “Employment Agreement”), a copy of which will be provided to Executive at his request. 
20.    Entire Agreement and Modification. This Agreement, along with any agreements described herein, constitute the entire agreement between the parties with respect to the subject matter hereof and supersede all prior negotiations and agreements between the parties, whether written or oral, including the Employment Agreement, which agreements are hereby terminated and of no further legal force or effect. However, nothing in this agreement shall waiver or release any proprietary rights, assignment of inventions, and/or confidentiality agreements between the Company and Executive, including, but not limited to Executive’s Employee Innovations and Proprietary Rights Assignment Agreement dated August 15, 2013, which agreements shall remain in full force and effect.  This Agreement may not be modified or amended except by a document signed by an authorized officer of the Company and Executive.
21.     Execution in Counterparts.  This Agreement may be executed in one or more counterparts, any one of which shall be deemed to be the original even if the others are not produced.  Furthermore, facsimile or electronic format signatures shall be enforceable as originals.
EXECUTIVE ACKNOWLEDGES THAT HE SHOULD CONSULT WITH AN ATTORNEY PRIOR TO SIGNING THIS AGREEMENT AND THAT HE IS GIVING UP ANY LEGAL CLAIMS (AS DESCRIBED ABOVE IN SECTIONS 4 AND 6) HE HAS AGAINST THE PARTIES RELEASED ABOVE BY SIGNING THIS AGREEMENT. EXECUTIVE UNDERSTANDS THAT HE MAY HAVE UP TO 21 DAYS TO CONSIDER THIS AGREEMENT, THAT HE MAY REVOKE IT AT ANY TIME DURING THE 7 DAYS AFTER HE SIGNS IT, AND THAT IT SHALL NOT BECOME EFFECTIVE UNTIL THAT 7-DAY PERIOD HAS PASSED. EXECUTIVE ACKNOWLEDGES THAT HE IS SIGNING THIS AGREEMENT KNOWINGLY, WILLINGLY AND VOLUNTARILY IN EXCHANGE FOR THE SEVERANCE AMOUNT DESCRIBED IN SECTION 3, WHICH HE WOULD NOT OTHERWISE BE ENTITLED TO RECEIVE.

	
				
	AGREED:

Date:
	May 1, 2015
	 
	/s/ Edward Carney

	 
	 
	 
	Edward Carney

	 
	 
	EXTREME NETWORKS, INC.

	Date:
	May 1, 2015
	By:
	/s/ Allison Amadia

	 
	 
	Name:
	Allison Amadia

	 
	

Date: ______________________________

	Title:
	Executive Vice President, General Counsel, and Corporate SecretaryBEE-2015.3.31-EX10.1

Exhibit 10.1

STRATEGIC HOTELS & RESORTS, INC. 
SECOND AMENDED AND RESTATED 2004 INCENTIVE PLAN 
PERFORMANCE SHARE AWARD AGREEMENT
We are pleased to inform you that you have been awarded by Strategic Hotels & Resorts, Inc. (the “Company”) the opportunity to earn a performance share award (the “Performance Share Award”).
The terms of the Performance Share Award are as set forth in this Performance Share Award Agreement (“Agreement”).  This Agreement is granted under the Strategic Hotels & Resorts Second Amended and Restated 2004 Incentive Plan (“Plan”) and, except as expressly provided otherwise herein, is limited by and subject to the express terms and conditions of the Plan, a copy of which has been made available to you.  Certain capitalized terms are defined in the Appendix to this Agreement.  Capitalized terms that are not defined in this Agreement (including the Appendix) have the meanings given to them in the Plan.  The basic terms of the Performance Share Award are summarized as follows:
	
		
	Employee Name:
	RAYMOND GELLEIN, JR.

	Target Number of Shares Subject 
to the Award (“Target Shares”): 

	 

	Performance Period:
	January 2, 2015 (“Start Date”) through December 29, 2017 (“End Date”)

1.Earning Performance Shares Award
Subject to the conditions and limitations set forth herein, the Company will determine and distribute shares of Common Stock to the extent earned as set forth below on a date (“Distribution Date”) in the first calendar quarter of 2018 (no later than March 15, 2018) in which the Committee determines and certifies the Relative SNL Lodging Index TSR Performance Percentage achieved, as described in Section 2 hereof.  The Committee will in good faith make such determination and certification and except as set forth in Sections 3, 4 and 6, distribute such shares of Common Stock within the time period set forth in the preceding sentence.
(a)    Base Performance Shares
Shares of Common Stock are earned under this Performance Share Award based on the following performance metric (the “Performance Metric”): the Relative SNL Lodging Index TSR Performance.

Shares of Common Stock are earned according to Relative SNL Lodging Index TSR Performance as set forth below:

	
		
	Percentile Rank
	Multiple of Target Shares Earned

	85% or Higher
	2.0

	50%
	1.00

	25%
	0.25

	Below 25%
	0

The number of Shares that are earned with respect to the Performance Metric shall be interpolated on a straight line basis between the Multiple of Target Shares Earned levels set forth in the schedule above.
(b)    Dividend Equivalents:
You shall be credited from the Start Date with dividend equivalents payable in shares of Common Stock with respect to shares of Common Stock you earn under this Performance Share Award until the delivery date, without regard to any deferral election pursuant to Section 6, of such shares of Common Stock (or cash in a Go Private Transaction) under this Agreement.  The number of shares of Common Stock you will acquire pursuant to dividend equivalents is determined by assuming that as of each dividend ex-date from the Start Date to such delivery date under this Agreement with respect to the shares of Common Stock you earn under this Agreement without regard to this Section 1(c) plus previously credited shares of Common Stock attributable to prior dividend equivalents under this Section 1(c), a dollar amount equal to the amount of the dividend that would have been paid on such number of shares of Common Stock under this Performance Share Award for such dividend shall be converted into a number of shares of Common Stock equal to the number of whole and fractional shares of Common Stock that could have been purchased at the closing price on the dividend payment date with such dollar amount. In the case of any dividend declared on shares of Common Stock which is payable in shares of Common Stock, you shall be credited with an additional number of shares of Common Stock equal to the product of (x) the number of shares of Common Stock earned under this Agreement without regard to this Section 1(c) plus previously credited shares of Common Stock attributable to prior dividend equivalents under this Section 1(c) and the (y) the number of shares of Common Stock (including any fraction thereof) distributable as a dividend on a share of Common Stock. Such dividend equivalents shall be paid to you in shares of Common Stock, (or cash in a Go Private Transaction (as defined hereafter)) at such time as  the Performance Share Award is otherwise paid. 
(c)    Limitation on Shares of Common Stock To Be Earned:
Notwithstanding anything to the contrary herein:
(1)    No more than the Target Shares will be earned under this Performance Share Award if the Company TSR is less than or equal to 100%.

(2)    No shares of Common Stock will be earned under this Performance Share Award if the Performance Date Average Price is less than or equal to $6.34 (50% of the Start Date Average Price), with such dollar amount subject to adjustment consistent with Section 14.1 of the Plan.

(d)    Example:
An example of a calculation of the earning of a Performance Share Award is set forth in Exhibit A.

2.    Determining Performance Metric
As set forth above, the earning of shares of Common Stock under this Performance Share Award depends upon one Performance Metric: the Relative SNL Lodging Index TSR.  Shares of Common Stock are earned solely under that relative TSR measure.  Relative TSR will be based on the Company’s TSR performance relative to the equally-weighted TSRs of the common stock of each Index Company included in the SNL Lodging Index (the “Index”) as applicable as of the Performance Date, excluding the Company if it is part of the Index.  TSR is calculated as share price appreciation plus the reinvestment of dividends during the applicable period.
To determine relative performance, the baseline metrics are the 60-trading day average closing price of a share of Common Stock of the Company and of a share of common stock of each Index Company, with the last of the 60-trading days falling on December 29, 2014.  This 60-trading day average establishes both the Company’s Start Date Average Price and the Index Company Baseline Stock Price against which future Company stock performance and the stock performance of Index Companies within the applicable Index will be compared.  If a company was added to the applicable Index after the Start Date, such company’s average closing stock price for the 60-trading days prior to joining the Index will be used for purposes of determining the Index Company Baseline Stock Price.  In the event such Index Company does not have a trading history prior to joining the Index, the average closing stock price for the 60-trading days starting on the day the Index Company joined the Index will be used for purposes of determining the Index Company Baseline Stock Price.  Any companies included in the applicable Index as of the Start Date but which are no longer included in the applicable Index as of the Performance Date will not be included in the TSR analysis with respect to such Index. 
The 60-trading day average closing price of a share of Common Stock and of a share of each Index Company with the last trading day of such 60-trading day period ending on the Performance Date (establishing both the “Performance Date Average Price” and the “Index Company Performance Date Average Price”, respectively) is separately determined.  (The Performance Date Average Price and the Index Company Performance Date Average Prices shall be automatically adjusted to account for any stock split or similar change in capitalization in a manner as set forth in Section 14.1 of the Plan.) 
Company performance will be measured by dividing the Performance Date Average Price plus Company dividends reinvested as of each dividend ex-date between Start Date and the 

Performance Date by the Start Date Average Price, with the quotient expressed as a percentage of the Start Date Average Price (the “Company TSR”).  The performance for each Index Company will be measured separately by dividing the Index Company Performance Date Average Price plus Index Company dividends reinvested as of each dividend ex-date between Start Date and the Performance Date by the Index Company Baseline Stock Price, with the quotient expressed as a percentage of the Index Company Baseline Stock Price (the “Index Company TSR”).  Therefore, the TSR for the Company and each Index Company equals the change in value between Start Date Average Price and the Performance Date Average Price, plus dividends reinvested as of each dividend ex-date between Start Date and Performance Date, as a percentage of the Start Date Stock Price.
The Company’s TSR will be ranked against the Index Company TSRs of the Index Companies within the SNL Lodging Index to determine the Company’s Percentile Rank for purposes of Relative SNL Lodging Index TSR Performance Metric.  
An example including the calculation of Start Date Average Price and a calculation of Company TSR for a prior three year period is set forth in Exhibit B.
3.    Change of Control
Notwithstanding any other provision of this Agreement, if a Change of Control occurs prior to December 29, 2017 the end date for the Performance Period shall be treated as the date immediately prior to the Change of Control rather than December 29, 2017 and the relative TSR ranking for the Performance Metrics will be determined based on a shortened Performance Period (“Change of Control Performance Period”) and TSRs for Index Companies that shall be determined based on the 60-trading day average closing price of each Index Company’s common stock with the last trading day of such 60-trading day period ending immediately prior to the date of public announcement of the Change of Control.  For purposes of the calculation of the Company’s TSR for the Change of Control Performance Period, the Company’s Performance Date Average Price shall be the fair market value of a share of Common Stock in the Change of Control.  The Company’s TSR for the Change of Control Performance Period shall equal the Performance Date Average Price as determined pursuant to the preceding sentence plus dividends reinvested as of each dividend ex-date between the Start Date and the Performance Date, as a percentage of the Start Date Stock Price.
Although the date of public announcement of the Change of Control determines the end date of the 60-trading day period for determining the TSRs for Index Companies, payments under this Section 3 shall not be made unless the Change of Control closes.  In the absence of such a closing, this Section 3 shall be ineffective and inapplicable to determinations applicable to this Performance Share Award.
All payments under this Performance Share Award with respect to a Change of Control constituting a Go Private Change of Control Transaction may be paid in, at the Company’s discretion, either (1) shares of Common Stock prior to the Go Private Change of Control Transaction at such time and in such manner that you may participate fully as a holder of shares of Common Stock in the Go Private Change of Control Transaction or (2) cash.  For purposes of 

this Performance Share Award, a “Go Private Change of Control Transaction” shall be deemed to have occurred if on or immediately following the Change of Control no shares of Common Stock or other common stock of the Company (or any successor) are traded on a national securities exchange.
4.    Termination of Employment or Services
If  the Company terminates your employment or service relationship for Cause or you terminate your employment or services relationship other than as a result of a Constructive Termination or at the end of the Agreement Term under your Employment Agreement with the Employer dated as of November 19, 2012 (“Employment Agreement”), you shall have no right to any shares of Common Stock under this Performance Share Award and this Performance Share Award will immediately terminate without the payment of any further consideration to you. 
If your employment or service relationship with the Employer terminates prior to a Change of Control because of death, Disability, Constructive Termination, Termination by the Employer other than for Cause or by either you or the Employer other than for Cause at the end of the Agreement Term under the Employment Agreement, you will become fully vested in the shares of Common Stock that you would have earned under this Performance Share Award if you had remained employed through December 29, 2017 and such shares of Common Stock shall be payable in accordance with the Plan as though you had remained employed with the Employer.  
You will become fully vested in the shares of Common Stock earned under this Performance Share Award on a Change of Control and such shares of Common Stock (or cash if the Change of Control is a Go Private Transaction) shall be payable to you upon such  Change of Control. 
5.    Distributions of Shares of Common Stock
Except as otherwise provided by a deferral election pursuant to Section 6 of this Agreement or by virtue of a Change of Control as described in Section 3 and 4, shares of Common Stock earned pursuant to Sections 1, 2, 3 or 4 shall be distributed in the first calendar quarter of 2018 (no later than March 15, 2018).
If, however, you elect to defer payment of the shares of Common Stock as provided in Section 6 of this Agreement, the shares of Common Stock shall be issued as set forth in the Deferral Election Agreement entered into between you and the Committee.
6.    Deferral Election
Subject to Section 13, you may elect to defer delivery of the shares of Common Stock that would otherwise be due by virtue of the satisfaction of the requirements for distribution of shares of Common Stock under this Performance Share Award Agreement.  The Committee shall, in its sole discretion, establish the rules and procedures for such deferral elections and payment deferrals.

7.    No Rights as Shareholder
You shall not have voting or any other rights as a shareholder of the shares of Common Stock with respect to the Performance Share Award until shares of Common Stock are actually delivered to you pursuant to Section 4 or 5.  Upon delivery of shares of Common Stock pursuant to this Performance Share Award, you will obtain full voting and other rights as a shareholder of the Company.
8.    Securities Law Compliance
Notwithstanding any other provision of this Agreement, you may not sell the shares of Common Stock acquired pursuant to this Performance Share Award unless such shares of Common Stock are registered under the Securities Act or, if such shares of Common Stock are not then so registered, the Company has determined that such sale would be exempt from the registration requirements of the Securities Act.  The sale of such shares of Common Stock must also comply with other applicable laws and regulations governing the shares of Common Stock, and you may not sell the shares of Common Stock if the Company determines that such sale would not be in material compliance with such laws and regulations.
9.    Transfer Restrictions
Any sale, transfer, assignment, encumbrance, pledge, hypothecation, conveyance in trust, gift, transfer by bequest, or other transfer or disposition of any kind, whether voluntarily or by operation of law, directly or indirectly, of this Performance Share Award shall be strictly prohibited and void except a transfer after death by will or by the applicable laws of descent and distribution.
10.    Independent Tax Advice
You acknowledge that determining the actual tax consequences to you of receiving this Performance Share Award or shares of Common Stock or cash thereunder or deferring or disposing of shares of Common Stock or cash may be complicated.  These tax consequences will depend, in part, on your specific situation and may also depend on the resolution of currently uncertain tax law and other variables not within the control of the Company.  You are aware that you should consult a competent and independent tax advisor for a full understanding of the specific tax consequences to you of receiving, deferring or disposing of the Performance Share Award or shares of Common Stock or cash hereunder.  Prior to executing this Agreement, you either have consulted with a competent tax advisor independent of the Company to obtain tax advice concerning the Performance Share Award with respect to your specific situation or have had the opportunity to consult with such a tax advisor but chose not to do so.
11.    Withholding and Disposition of Shares of Common Stock 
You agree to make arrangements satisfactory to the Employer for the payment of any federal, state, local or foreign withholding tax obligations that arise with respect to this Performance Share Award, including, without limitation, the receipt of shares of Common Stock 

or cash.  Notwithstanding the previous sentence, you acknowledge and agree that the Employer has the right to deduct from payments of any kind otherwise due to you any federal, state or local taxes of any kind required by law to be withheld with respect this Performance Share Award, including, without limitation, the receipt of shares of Common Stock or cash.
12.    General Provisions
12.1    No Waiver.  No waiver of any provision of this Agreement will be valid unless in writing and signed by the person against whom such waiver is sought to be enforced, nor will failure to enforce any right hereunder constitute a continuing waiver of the same or a waiver of any other right hereunder.
12.2    Undertaking.  You hereby agree to take whatever additional action and execute whatever additional documents the Committee may deem necessary or advisable in order to carry out or effect one or more of the obligations or restrictions imposed on either you, the Performance Share Award or the shares of Common Stock or cash acquired pursuant to the express provisions of this Agreement.
12.3    Recoupment.  Notwithstanding any other provisions in this Agreement to the contrary, you acknowledge that you will be subject to recoupment policies adopted by the Company pursuant to the requirements of Dodd-Frank Wall Street Reform and Consumer Protection Act or other law or the listing requirements of any national securities exchange on which shares of Common Stock of the Company are listed.  
12.4    Agreement Is Entire Contract.  This Agreement constitutes the entire contract between the parties hereto with regard to the subject matter hereof.  
12.5    Successors and Assigns.  The provisions of this Agreement will inure to the benefit of, and be binding on, the Company and its successors and assigns and you and your legal representatives, heirs, legatees, distributees, assigns and transferees by operation of law, whether or not any such person will have become a party to this Agreement and agreed in writing to join herein and be bound by the terms and conditions hereof.
12.6    No Employment or Service Contract.  This Agreement does not confer upon you any right with respect to continuance of employment by the Employer, nor does it interfere in any way with the right of your employer to terminate your employment or services at any time, subject to the terms of the Employment Agreement.
12.7    Counterparts.  This Agreement may be executed in two or more counterparts, each of which will be deemed an original, but which, upon execution, will constitute one and the same instrument.
12.8    Governing Law.  This Agreement will be construed and administered in accordance with and governed by the laws of the State of Illinois.

13.    Section 409A Compliance
The Company intends that any distribution of shares of Common Stock or cash, deferral and other provisions applicable to your Performance Share Award fully comply with the payout and other limitations and restrictions imposed under Section 409A of the Internal Revenue Code of 1986, as amended (“Code”), as clarified or modified by IRS guidance, including without limitation, treating the date you have a separation from service under Code Section 409A as the date you terminate employment or your service relationship for purposes of this Agreement – in each case if and to the extent such Code Section 409A is otherwise applicable to your Performance Share Award and such compliance is necessary to avoid the penalties otherwise imposed under Code Section 409A.  In this connection, the Company and you agree that the payout timing provisions applicable to the Performance Share Award, and the terms of any deferral and other rights regarding such Performance Share Award, shall be deemed modified, if and to the extent necessary to comply with the payout and other limitations and restrictions imposed under Code Section 409A, as clarified or modified by IRS guidance – in each case if and to the extent such Code Section 409A is otherwise applicable to your Performance Share Award and such compliance is necessary to avoid the penalties otherwise imposed under Code Section 409A, including, without limitation, any necessary delay in payment (but not vesting) of the Performance Share Award to avoid Code Section 409A adverse consequences with respect to a payment that is subject to Code Section 409A if a Change of Control occurs that does not constitute a permissible distribution trigger for a payment that is subject to Code Section 409A.  This Performance Share Award is subject to Section 17.5 of the Plan.

REMAINDER OF PAGE INTENTIONALLY BLANK. 
SIGNATURE PAGE FOLLOWS.

IN WITNESS WHEREOF, the parties have executed this Agreement on this 23rd day of February 2015.
STRATEGIC HOTELS & RESORTS, INC.
	
	
	/s/ Paula C. Maggio

By:    Paula C. Maggio
		
	Its: 
	Executive Vice President, General Counsel & Secretary

	
	
	RAYMOND GELLEIN, JR.

(Employee Name)
	
	
	/s/ Raymond Gellein, Jr.

(Employee Signature)

EXHIBIT A
EXAMPLE OF PERFORMANCE SHARE AWARD CALCULATION
	
									
	 
	Company % TSR Rank
	Multiple
	 
	 
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 
	 
	 
	 

	SNL Lodging Index
	72
	1.61
	 
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 
	 
	 

	
						
	 
	Multiple
	 
	Target Grant
	 
	 

	 
	 
	 
	 
	 
	 

	 
	1.61
	X
	10,000
	=
	Base Grant   16,100

	

	Dividend Equivalents as calculated in the table below.
	 
 
Dividend 
  Equivalents      1,949 

	 
	 
	 

	 
	 
	Total Grant

	 
	 
	 
	 
	 
	with Dividend _______

	 
	 
	 
	 
	 
	Equivalents     14,799

A-1

Calculation of Dividend Equivalents assuming 2015-2017 was identical to 2005-2007:

	
								
	Date
	Stock Price
	Dividends Per Share
	Shares Including Dividends Reinvested

	 
	 
	 
	 

	Initial Shares
	 
	 
	12,850

	4/20/05 Dividend Payment Date
	

	$14.25
	

	

	$0.22
	

	13,048

	7/20/05 Dividend Payment Date
	

	$18.06
	

	

	$0.22
	

	13,207

	10/20/05 Dividend Payment Date
	

	$17.03
	

	

	$0.22
	

	13,378

	1/20/06 Dividend Payment Date
	

	$21.04
	

	

	$0.22
	

	13,518

	4/20/06 Dividend Payment Date
	

	$22.94
	

	

	$0.23
	

	13,653

	7/10/06 Dividend Payment Date
	

	$20.52
	

	

	$0.23
	

	13,806

	10/10/06 Dividend Payment Date
	

	$20.83
	

	

	$0.23
	

	13,959

	1/10/07 Dividend Payment Date
	

	$20.80
	

	

	$0.23
	

	14,113

	4/10/07 Dividend Payment Date
	

	$22.84
	

	

	$0.24
	

	14,262

	7/10/07 Dividend Payment Date
	

	$23.21
	

	

	$0.24
	

	14,409

	10/10/07 Dividend Payment Date
	

	$22.24
	

	

	$0.24
	

	14,564

	1/10/08 Dividend Payment Date
	

	$14.89
	

	

	$0.24
	

	14,799

A-2

EXHIBIT B
EXAMPLE OF PRICE CALCULATION

Start Date Average Price was calculated as set forth below: 
	
							
	Date
	 
	Close
	 
	Date
	 
	Close

	31-Dec-14
	 
	13.23
	 
	17-Nov-14
	 
	12.85

	30-Dec-14
	 
	13.48
	 
	14-Nov-14
	 
	12.85

	29-Dec-14
	 
	13.58
	 
	13-Nov-14
	 
	12.92

	26-Dec-14
	 
	13.57
	 
	12-Nov-14
	 
	12.75

	24-Dec-14
	 
	13.55
	 
	11-Nov-14
	 
	12.74

	23-Dec-14
	 
	13.56
	 
	10-Nov-14
	 
	12.67

	22-Dec-14
	 
	13.50
	 
	7-Nov-14
	 
	12.52

	19-Dec-14
	 
	13.31
	 
	6-Nov-14
	 
	12.69

	18-Dec-14
	 
	13.34
	 
	5-Nov-14
	 
	12.69

	17-Dec-14
	 
	13.25
	 
	4-Nov-14
	 
	12.77

	16-Dec-14
	 
	12.87
	 
	3-Nov-14
	 
	12.95

	15-Dec-14
	 
	12.87
	 
	31-Oct-14
	 
	12.85

	12-Dec-14
	 
	13.12
	 
	30-Oct-14
	 
	12.67

	11-Dec-14
	 
	13.09
	 
	29-Oct-14
	 
	12.67

	10-Dec-14
	 
	13.06
	 
	28-Oct-14
	 
	12.69

	9-Dec-14
	 
	13.06
	 
	27-Oct-14
	 
	12.48

	8-Dec-14
	 
	12.81
	 
	24-Oct-14
	 
	12.36

	5-Dec-14
	 
	12.83
	 
	23-Oct-14
	 
	12.31

	4-Dec-14
	 
	12.76
	 
	22-Oct-14
	 
	12.03

	3-Dec-14
	 
	12.81
	 
	21-Oct-14
	 
	11.94

	2-Dec-14
	 
	12.83
	 
	20-Oct-14
	 
	11.74

	1-Dec-14
	 
	13.03
	 
	17-Oct-14
	 
	11.60

	28-Nov-14
	 
	13.28
	 
	16-Oct-14
	 
	11.58

	26-Nov-14
	 
	13.09
	 
	15-Oct-14
	 
	11.24

	25-Nov-14
	 
	13.02
	 
	14-Oct-14
	 
	11.35

	24-Nov-14
	 
	13.01
	 
	13-Oct-14
	 
	11.23

	21-Nov-14
	 
	12.91
	 
	10-Oct-14
	 
	11.30

	20-Nov-14
	 
	13.02
	 
	9-Oct-14
	 
	11.55

	19-Nov-14
	 
	12.94
	 
	8-Oct-14
	 
	11.69

	18-Nov-14
	 
	13.03
	 
	7-Oct-14
	 
	11.25

	
			
	Average
	 
	$12.68

Performance Date Average Price, Index Company Baseline Stock Price and Index Company Performance Date Average Price shall be calculated in the same manner as the Start Date Average Price was calculated.

B-1

EXAMPLE OF TSR CALCULATION
 
Below is a calculation of TSR for the Company from 2005 to 2007:

	
												
	Date
	Stock Price
	Dividends Per Share
	Value of $100 Initial Investment
	TSR

	 
	 
	 
	 
	 

	12/31/04 60 Day Avg.
	

	$14.82
	

	 
	

	$100.00
	

	 

	3/29/05 Dividend Ex-Date
	

	$14.30
	

	

	$0.22
	

	

	$97.98
	

	 

	6/28/05 Dividend Ex-Date
	

	$17.96
	

	

	$0.22
	

	

	$124.56
	

	 

	9/28/05 Dividend Ex-Date
	

	$17.70
	

	

	$0.22
	

	

	$124.28
	

	 

	12/16/05 Dividend Ex-Date
	

	$20.35
	

	

	$0.22
	

	

	$144.43
	

	 

	3/29/06 Dividend Ex-Date
	

	$22.90
	

	

	$0.23
	

	

	$164.16
	

	 

	6/28/06 Dividend Ex-Date
	

	$20.06
	

	

	$0.23
	

	

	$145.45
	

	 

	9/27/06 Dividend Ex-Date
	

	$20.04
	

	

	$0.23
	

	

	$146.98
	

	 

	12/22/06 Dividend Ex-Date
	

	$21.14
	

	

	$0.23
	

	

	$156.73
	

	 

	3/23/07 Dividend Ex-Date
	

	$23.54
	

	

	$0.24
	

	

	$176.30
	

	 

	6/22/07 Dividend Ex-Date
	

	$22.20
	

	

	$0.24
	

	

	$168.07
	

	 

	9/24/07 Dividend Ex-Date
	

	$20.95
	

	

	$0.24
	

	

	$160.42
	

	 

	12/24/07 Dividend Ex-Date
	

	$18.37
	

	

	$0.24
	

	

	$142.50
	

	 

	12/31/07 60 Day Avg.
	

	$21.61
	

	 
	

	$167.64
	

	167.64
	%

A comparable methodology for determining TSR for the Company and Index Companies during the Performance Period or Change of Control Performance Period shall be used.

B-2

APPENDIX

“Cause” has the meaning assigned to it in the Employment Agreement whether or not the Agreement Term under the Employment Agreement has ended.

“Constructive Termination” has the meaning assigned to it in the Employment Agreement whether or not the Agreement Term under the Employment Agreement has ended.

 “Employment Agreement” means your Employment Agreement with the Company dated November 19, 2012.
 
“Index Company” means each of the companies including in the SNL Lodging Index.

“Index Company Baseline Stock Price” means the baseline common stock price for each Index Company.

“Performance Date” means the earlier of the End Date or the date of a Change of Control.

“Performance Date Average Price” means the average closing price of a share of Common Stock during the 60-trading day period ending on the End Date if the Performance Date is the End Date or the fair market value of a share of Common Stock on the date of a Change of Control if the Performance Date is the date of a Change of Control.

“Start Date Average Price” means the average closing price of a Share during the 60-day trading period immediately prior to the Start Date.

“TSR” means the total shareholder return.

B-3

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