EX-10.3 6 a18-14563_2ex10d3.htm EX-10.3 EMPLOYEE MATTERS AGREEMENT by and between WYNDHAM HOTELS & RESORTS, INC. and WYNDHAM DESTINATIONS, INC. Dated as of May 31, 2018 EMPLOYEE MATTERS AGREEMENT
by and between
WYNDHAM HOTELS & RESORTS, INC.
and
WYNDHAM DESTINATIONS, INC.
Dated as of May 31, 2018
TABLE OF CONTENTS
ARTICLE I DEFINITIONS |
1 | |
Section 1.01 |
Definitions |
1 |
Section 1.02 |
Certain Constructions |
5 |
Section 1.03 |
Schedules, Sections |
6 |
Section 1.04 |
Effective Time |
6 |
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6 | ||
Section 2.01 |
Allocation of Employees |
6 |
Section 2.02 |
Employee Liabilities Generally |
7 |
Section 2.03 |
No Termination of Employment Intended as a Result of the Allocation of Employees |
7 |
Section 2.04 |
At-Will Employment |
7 |
Section 2.05 |
Service Crediting |
8 |
Section 2.06 |
Continuity of Benefits and Coverage |
8 |
Section 2.07 |
Establishment and Spinoff of 401(k) Plans |
8 |
Section 2.08 |
Group Health Plans |
9 |
Section 2.09 |
10 | |
Section 2.10 |
Group Term Life, Accidental Death & Dismemberment and Business Travel Accident Insurance Plans |
11 |
Section 2.11 |
Insurance Contracts and Third-Party Vendor Agreements |
11 |
Section 2.12 |
Deferred Compensation Plans |
12 |
Section 2.13 |
Severance Pay Plans |
12 |
Section 2.14 |
Paid Time Off |
13 |
Section 2.15 |
Multiemployer Plans |
13 |
Section 2.16 |
Other Plans |
13 |
Section 2.17 |
Reimbursements |
14 |
Section 2.18 |
Non-U.S. Plans |
14 |
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|
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ARTICLE III INCENTIVE COMPENSATION PLANS AND ARRANGEMENTS |
14 | |
Section 3.01 |
Treatment of Equity Awards |
14 |
Section 3.02 |
Nonequity Incentive Compensation Arrangements |
18 |
|
|
|
ARTICLE IV LABOR AND EMPLOYMENT MATTERS |
19 | |
Section 4.01 |
Payroll Reporting and Tax Withholding |
19 |
Section 4.02 |
Employment Policies and Practices |
20 |
Section 4.03 |
Leave of Absence Policies |
20 |
Section 4.04 |
Employee Records |
20 |
Section 4.05 |
Notice and Consultation Obligations; Collective Bargaining Agreements |
20 |
Section 4.06 |
WARN Act |
21 |
Section 4.07 |
Access to Employee Records |
21 |
Section 4.08 |
Sharing of Personal Information |
21 |
|
|
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ARTICLE V MISCELLANEOUS |
22 | |
Section 5.01 |
Relationship of Parties |
22 |
Section 5.02 |
Access to Information; Cooperation |
22 |
Section 5.03 |
Complete Agreement |
22 |
Section 5.04 |
Counterparts |
22 |
Section 5.05 |
Survival |
22 |
Section 5.06 |
Notices |
22 |
Section 5.07 |
Waivers |
23 |
Section 5.08 |
Amendment |
23 |
Section 5.09 |
Assignment |
23 |
Section 5.10 |
Successors and Assigns |
23 |
Section 5.11 |
No Circumvention |
23 |
Section 5.12 |
Third Party Beneficiaries |
23 |
Section 5.13 |
Title and Headings |
24 |
Section 5.14 |
Governing Law |
24 |
Section 5.15 |
Dispute Resolution; Consent to Jurisdiction; Specific Performance; Waiver of Jury Trial; Force Majeure |
24 |
Section 5.16 |
Severability |
24 |
Section 5.17 |
Interpretation |
24 |
Section 5.18 |
No Duplication; No Double Recovery |
24 |
This EMPLOYEE MATTERS AGREEMENT (this “Agreement”) is made and entered into as of May 31, 2018, by and between Wyndham Hotels & Resorts, Inc., a Delaware corporation (“SpinCo”), and Wyndham Destinations, Inc., a Delaware corporation (“RemainCo” and with SpinCo each, individually, a “Party”, and, collectively, the “Parties”). Capitalized terms used in this Agreement, but not defined, shall have the meanings ascribed to them in the Separation and Distribution Agreement, dated as of May 31, 2018, by and between SpinCo and RemainCo (as amended from time to time, the “Distribution Agreement”).
(a) “Cause” shall mean: (i) if there is an employment or similar agreement in effect between the relevant RemainCo Employee or SpinCo Employee and RemainCo or SpinCo, as applicable, or there is a Plan applicable to the relevant RemainCo Employee or SpinCo Employee, in each case, that defines “Cause”, and such agreement or Plan is in effect at the time of the termination of the relevant RemainCo Employee or SpinCo Employee, “Cause” as defined therein; and (ii) if there is no such agreement or Plan or “Cause” is not defined therein, “Cause” means any of the relevant RemainCo Employee’s or SpinCo Employee’s: (A) misconduct or gross negligence in the performance of his or her duties to the respective employing entity; (B) failure to substantially perform his or her duties to the respective employing entity, which continues after such entity has provided written notice to the relevant RemainCo Employee or SpinCo Employee, and the relevant RemainCo Employee or SpinCo Employee has not cured such failure within five (5) business days thereafter, or failure to follow the lawful directives of the person to whom the relevant RemainCo Employee or SpinCo Employee directly reports (or, in the event he or she reports directly to the Board of Directors of RemainCo or SpinCo (as applicable, the “Board”),
failure to follow the lawful directives of the Board) (in each case, other than as a result of the relevant RemainCo Employee’s or SpinCo Employee’s death or disability); (C) indictment for, conviction of, or pleading of guilty or nolo contendere to, a felony or any crime involving dishonesty or moral turpitude, or otherwise engaging in material misconduct that has caused or is reasonably expected to cause injury to the respective employing entity or its interests, including, but not limited to, harm to the standing and reputation of, or which otherwise brings public disgrace or disrepute to, such entity; (D) failure to cooperate in any audit or investigation of the business or financial practices of the respective employing entity; (E) performance of any act of theft, embezzlement, fraud, malfeasance, dishonesty or misappropriation with respect to RemainCo or SpinCo, as applicable, or any of its respective security holders, customers, suppliers; or (F) material breach or violation of the relevant RemainCo Employee’s or SpinCo Employee’s agreement, if any, with the respective employing entity’s code of conduct or other written policy.
(b) “COBRA” shall mean Code Section 4980B and ERISA Sections 601 through 608 or similar state law.
(c) “Code Section 409A” shall mean Section 409A of the Code and the regulations and guidance promulgated thereunder.
(d) “Collective Bargaining Agreement” shall mean any collective bargaining agreement, works council agreement or other labor agreement with any Employee Representative to which RemainCo or any of its Subsidiaries is a party to or bound by before the Effective Time.
(e) “Employee” shall mean any individual who is treated, according to the payroll and other records of RemainCo or any of its Subsidiaries, as an employee of RemainCo or any of its Subsidiaries immediately before the Effective Time, including active employees and employees on vacation and approved leave of absence (including maternity, paternity, family, sick, short-term or long-term disability leave, qualified military service under the Uniformed Services Employment and Reemployment Rights Act of 1994, leave under the Family Medical Leave Act and other approved leaves).
(f) “Employee Representative” shall mean any works council, employee representative, trade union, labor organization, labor union, group of employees or similar representative body.
(g) “Employment Claim” shall mean any actual or threatened lawsuit, charge, complaint, audit, investigation, grievance, arbitration, ERISA claim, or federal, state, or local judicial or administrative proceeding of whatever kind involving a demand by, on behalf of or relating to a current or former Employee or independent contractor, or by or relating to an Employee Representative, or by or relating to any federal, state, or local Government Entity alleging Liability against a Party or against a Party’s pension, welfare or other benefit plan, or such plan’s administrator, trustee or fiduciary.
(h) “Equity Vesting Date” shall mean the six (6)-month anniversary of the Distribution Date.
(i) “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended, or any successor legislation.
(j) “Former Employee” shall mean any individual who was employed by RemainCo or any of its Subsidiaries at any time before the Effective Time but who is not considered to be an Employee hereunder.
(k) “IRS” shall mean the Internal Revenue Service.
(l) “Plan” shall mean any plan, policy, arrangement, contract or agreement providing compensation or benefits for any group of Employees or individual Employee, or the dependents or beneficiaries of any such Employee(s), whether formal or informal or written or unwritten, and including, without limitation, any means, whether or not legally required, pursuant to which any benefit is provided by an employer to any Employee or the beneficiaries of any such Employee. The term “Plan” as used in this Agreement does not include any contract, agreement or understanding relating to settlement of actual or potential employment claims.
(m) “Post-Spin RemainCo RSU” shall have the meaning set forth in Section 3.01(b)(i) hereof.
(n) “Post-Spin RemainCo SSAR” shall have the meaning set forth in Section 3.01(a)(i) hereof.
(o) “Post-Spin RemainCo Stock Price” shall mean the opening share price of RemainCo Common Stock on the New York Stock Exchange on the first trading day immediately after the Effective Time.
(p) “Pre-Spin RemainCo SSAR Price” shall have the meaning set forth in Section 3.01(a)(i)(A) hereof.
(q) “Pre-Spin RemainCo Stock Price” shall mean the closing share price of RemainCo Common Stock on the New York Stock Exchange on the last trading day immediately preceding the Effective Time.
(r) “RemainCo 401(k) Plans” shall have the meaning set forth in Section 2.07 hereof.
(s) “RemainCo Bonus Plans” shall have the meaning set forth in Section 3.02(a) hereof.
(t) “RemainCo Deferred Compensation Plans” shall mean, collectively, the Wyndham Worldwide Corporation Officer Deferred Compensation Plan, the Wyndham Worldwide Corporation Non-Employee Directors Deferred Compensation Plan and the Wyndham Worldwide Corporation Savings Restoration Plan.
(u) “RemainCo Deferred Units” shall mean deferred RemainCo RSUs subject to Code Section 409A.
(v) “RemainCo Employee” shall have the meaning set forth in Section 2.01(a) hereof.
(w) “RemainCo Equity and Incentive Plan” shall mean the Wyndham Worldwide Corporation Amended and Restated 2006 Equity and Incentive Plan, as amended from time to time.
(x) “RemainCo Group Health Plans” shall mean the medical, dental, vision and health care spending account components constituting “Covered Welfare Programs” under the Wyndham Worldwide Corporation Health and Welfare Plan.
(y) “RemainCo Participant” shall mean a RemainCo Employee, any former RemainCo Employee, and any eligible dependent or beneficiary thereof who participates or is eligible to participate in a RemainCo Plan.
(z) “RemainCo Plan” shall mean each Plan that is sponsored, maintained, contributed to or required to be contributed to by any member of the RemainCo Group, but not including any SpinCo Plan.
(aa) “RemainCo PVRSU” shall mean a restricted stock unit subject to time- and performance-vesting conditions pursuant to the applicable award agreement issued under the RemainCo Equity and Incentive Plan, which is outstanding immediately prior to the Effective Time.
(bb) “RemainCo Ratio” shall mean the quotient obtained by dividing (i) the Pre-Spin RemainCo Stock Price by (ii) the Post-Spin RemainCo Stock Price, carried out to six decimal places.
(cc) “RemainCo RSU” shall mean a vested or unvested stock-settled restricted stock unit subject only to time-vesting conditions pursuant to the applicable award agreement issued under the RemainCo Equity and Incentive Plan, which is outstanding immediately prior to the Effective Time.
(dd) “RemainCo Severance Plans” shall mean, collectively, the Wyndham Worldwide Corporation Severance Pay Plan for Officers and the Worldwide Corporation Severance Pay Plan for Non-Officers.
(ee) “RemainCo SSAR” shall mean an unexercised, vested or unvested, stock-settled stock appreciation right issued under the RemainCo Equity and Incentive Plan, which is outstanding immediately prior to the Effective Time.
(ff) “SpinCo 401(k) Plans” shall have the meaning set forth in Section 2.07 hereof.
(gg) “SpinCo Bonus Plans” shall have the meaning set forth in Section 3.02(a) hereof.
(hh) “SpinCo Deferred Compensation Liabilities” shall have the meaning set forth in Section 2.12(a) hereof.
(ii) “SpinCo Deferred Compensation Plans” shall mean, collectively, the SpinCo Officer Deferred Compensation Plan, the SpinCo Non-Employee Director Deferred Compensation Plan and the SpinCo Savings Restoration Plan.
(jj) “SpinCo Deferred Units” shall mean deferred SpinCo RSUs subject to Code Section 409A.
(kk) “SpinCo Directors” shall have the meaning set forth in Section 2.12(a) hereof.
(ll) “SpinCo Employee” shall have the meaning set forth in Section 2.01(a) hereof.
(mm) “SpinCo Equity and Incentive Plan” shall mean the Wyndham Hotels & Resorts, Inc. 2018 Equity and Incentive Plan, as amended from time to time.
(nn) “SpinCo Group Health Plans” shall have the meaning set forth in Section 2.08(b) hereof.
(oo) “SpinCo MEPPs” shall have the meaning set forth in Section 2.15 hereof.
(pp) “SpinCo Participant” shall mean a SpinCo Employee, any former SpinCo Employee, and any eligible dependent or beneficiary thereof who participates or is eligible to participate in a SpinCo Plan.
(qq) “SpinCo Plan” shall mean each Plan that is sponsored, maintained or contributed to or required to be contributed to by any member of the SpinCo Group that does not also cover any RemainCo Employee.
(rr) “SpinCo Ratio” shall mean the quotient obtained by dividing (a) the Pre-Spin RemainCo Stock Price by (b) the SpinCo Stock Price, carried out to six decimal places.
(ss) “SpinCo RSU” shall mean a vested or unvested stock-settled restricted stock unit issued under the SpinCo Equity and Incentive Plan.
(tt) “SpinCo Severance Plans” shall mean, collectively, the SpinCo Severance Pay Plan for Officers and the SpinCo Severance Pay Plan for Non-Officers.
(uu) “SpinCo SSAR” shall mean an unexercised, vested or unvested, stock-settled stock appreciation right issued under the SpinCo Equity and Incentive Plan.
(vv) “SpinCo Stock Price” shall mean the opening share price of SpinCo Common Stock on the New York Stock Exchange on the first trading day immediately after the Effective Time.
Section 1.04 Effective Time. This Agreement shall be effective as of the Effective Time.
ARTICLE II ALLOCATION OF EMPLOYEES; EMPLOYEE BENEFITS
Section 2.01 Allocation of Employees.
(a) Effective no later than immediately prior to the Effective Time and except as otherwise agreed by the Parties, (i) each Party shall have taken, or shall have caused the applicable member of its Group to have taken, such actions as are necessary to ensure to the extent possible that each individual who is intended to be an employee of the SpinCo Group as of immediately after the Effective Time, including (A) any such individual who is not actively working as of the Effective Time as a result of an illness, injury or leave of absence (including due to a short-term or long-term disability) approved by the SpinCo Human Resources Department, as provided for in the applicable schedule to the Transition Services Agreement, or otherwise taken in accordance with applicable Law and (B) those individuals set forth on Schedule 2.01(a)(i) attached hereto (collectively, the “SpinCo Employees”), is employed by a member of the SpinCo Group as of immediately after the Effective Time; and (ii) each Party shall have taken, or shall have caused the applicable member of its Group to have taken, such actions as are necessary to ensure to the extent possible that each individual who is intended to be an employee of the RemainCo Group as of immediately after the Effective Time, including (A) any such individual who is not actively working as of the Effective Time as a result of an illness, injury or leave of absence (including due to a short-term or long-term disability) approved by the SpinCo Human Resources Department, as provided for in the applicable schedule to the Transaction Services Agreement between the Parties, or otherwise taken in accordance with applicable Law), (B) those individuals set forth on Schedule 2.01(a)(ii) attached hereto, and (C) any other Employee who is not a SpinCo Employee (collectively, the “RemainCo Employees”), is employed by a member of the RemainCo Group as of immediately after the Effective Time. Each of the Parties agrees to execute, and to seek to have the applicable Employees execute, such documentation, if any, as may be necessary to reflect such assignment and/or to comply with applicable Law in relation to the transfer of the employment of applicable Employees. Each of the Parties also shall have taken, or shall have caused the applicable member of its Group to have taken, such actions as are necessary to allocate individual independent contractors between the SpinCo Group and the RemainCo Group, effective no later than immediately after the Effective Time.
(b) Notwithstanding anything in Section 2.01(a) to the contrary, if the Parties mutually agree after the Distribution Date that an Employee or individual independent contractor was incorrectly allocated to the RemainCo Group or the SpinCo Group (or was incorrectly employed or engaged by a member of the RemainCo Group or the SpinCo Group as of the Effective Time), the Parties shall use their reasonable best efforts to correct such matter as appropriate (including by transferring the employment or engagement opportunity of such Employee or individual independent contractor to the applicable member of the applicable Group or by offering employment or an engagement opportunity to such Employee or individual
independent contractor), and, to the extent possible, such correction shall be effective as of the Effective Time.
Section 2.02 Employee Liabilities Generally.
(a) From and after the Effective Time, RemainCo or a member of the RemainCo Group hereby assumes or retains, and shall be responsible for paying, performing, fulfilling and discharging in accordance with their respective terms, (i) all Liabilities or obligations expressly assigned to or assumed by a member of the RemainCo Group under this Agreement; and (ii) except as otherwise expressly provided for herein or in the Distribution Agreement, all Liabilities with respect to the employment, service, termination of employment or termination of service of all RemainCo Employees, independent contractors allocated to RemainCo pursuant to Section 2.01(a), Former Employees and their respective dependents and beneficiaries (and any alternate payees in respect thereof), whenever incurred. All Liabilities assumed or retained by a member of the RemainCo Group under this Section 2.02(a) shall be “RemainCo Liabilities” for purposes of the Distribution Agreement.
(b) From and after the Effective Time, SpinCo or a member of the SpinCo Group hereby assumes or retains, and shall be responsible for paying, performing, fulfilling and discharging in accordance with their respective terms, (i) all Liabilities or obligations expressly assigned to or assumed by a member of the SpinCo Group under this Agreement; and (ii) except as otherwise expressly provided for herein or in the Distribution Agreement, all Liabilities with respect to the employment, service, termination of employment or termination of service of all SpinCo Employees and independent contractors allocated to SpinCo pursuant to Section 2.01(a) and their respective dependents and beneficiaries (and any alternate payees in respect thereof), whenever incurred. All Liabilities assumed or retained by a member of the SpinCo Group under this Section 2.02(b) shall be “SpinCo Liabilities” for purposes of the Distribution Agreement.
Section 2.05 Service Crediting.
(a) From and after the Effective Time, SpinCo shall, and shall cause other members of the SpinCo Group (as applicable) to, recognize each SpinCo Employee’s service prior to the Effective Time (including service with any member of the RemainCo Group prior to the Effective Time) for all purposes, including purposes of eligibility, vesting and level of paid time off or severance benefits under any SpinCo Plan, to the same extent and for the same purpose such service was recognized as of the Effective Time under the corresponding RemainCo Plan. Notwithstanding the foregoing, nothing herein shall require the SpinCo Group or any equity compensation plan or arrangement maintained by the SpinCo Group after the Effective Time to credit service prior to the Effective Time for purposes of any equity award or other equity-based benefit or equity-based compensation that may be established by the SpinCo Group at any time at or after the Effective Time, except as set forth in Section 3.01 herein.
(b) Notwithstanding anything to the contrary in this Agreement, the Distribution Agreement or any other Ancillary Agreement, no Employee shall receive service credit or benefits to the extent that receipt of such service credit or benefits would result in duplication of benefits provided by another RemainCo Plan or SpinCo Plan.
Section 2.08 Group Health Plans.
(a) RemainCo Group Health Plans.
(i) From the Effective Time through December 31, 2018, RemainCo shall continue the RemainCo Group Health Plans. Liabilities relating to, or arising in connection with, any claims incurred under the RemainCo Group Health Plans by RemainCo Participants and SpinCo Participants during the 2018 plan year, including claims that are self-insured and claims that are fully insured through third party insurance and including the coverage of SpinCo Participants after the Effective Time as described in subsection (ii) below, shall be shared by RemainCo and SpinCo based on the pooling methodology in place prior to the Effective Time. At the end of the 2018 plan year, all remaining Liabilities for such year with respect to self-insured group health benefits under the RemainCo Group Health Plans shall be apportioned to RemainCo and SpinCo based on the premium contributions of RemainCo and SpinCo for the 2018 plan year.
(ii) SpinCo Participants who were participating in the RemainCo Group Health Plans immediately prior to the Effective Time shall be entitled to continue participating in such RemainCo Group Health Plans, as applicable, until December 31, 2018, pursuant to the terms of the Transition Services Agreement. SpinCo Employees who were employed at or before the Effective Time, but who have not completed their benefits waiting or eligibility period for the RemainCo Group Health Plans as of the Effective Time, shall be eligible to participate in the applicable RemainCo Group Health Plans, as of the date prior to January 1, 2019, in which they would have been eligible to participate had they been RemainCo Employees under such RemainCo Group Health Plans, and shall be entitled to continue participating in such RemainCo Group Health Plans until December 31, 2018 pursuant to the terms of the Transition Services Agreement. Any SpinCo Employee covered under the RemainCo Group Health Plans who has a qualifying status change (e.g., birth/adoption of a child, marriage) shall be able to make changes to his or her enrollment based on the event in accordance with the terms of the applicable RemainCo Group Health Plan. SpinCo shall be responsible for the costs of SpinCo Participants’ participation in the RemainCo Group Health Plans after the Effective Time, including pursuant to COBRA as described in Section 2.08(c)(ii) hereof, pursuant to the terms of the Transition Services Agreement.
(b) SpinCo Group Health Plans. Effective no later than January 1, 2019, SpinCo or another member of the SpinCo Group shall take, or cause to be taken, all actions necessary and appropriate to establish or designate and administer group medical, dental, vision, and health care spending account plans (collectively, the “SpinCo Group Health Plans”) to provide benefits thereunder for all eligible SpinCo Participants who choose to enroll in such SpinCo plans. With respect to any Liabilities relating to or arising in connection with claims incurred under a SpinCo Group Health Plan by SpinCo Participants from and after the effective date of such SpinCo Group Health Plan, including claims that are self-insured and claims that are fully insured through third party insurance, SpinCo and the applicable SpinCo Group Health Plan shall be solely responsible for such Liabilities.
(c) COBRA Continuation Coverage.
(i) From and after the Effective Time, (A) the RemainCo Group shall assume or retain and shall be solely responsible for, or cause the RemainCo Group Health Plans (and applicable insurance carriers) to be responsible for, the continuation coverage requirements imposed by COBRA as they relate to any RemainCo Participant or Former Employee, and no member of the SpinCo Group shall have any liability or obligation with respect thereto; and (B) subject to Section 2.08(c)(ii) below, the SpinCo Group shall assume or retain and shall be solely responsible for, or cause the SpinCo Group Health Plans (and applicable insurance carriers) to be responsible for, COBRA continuation coverage requirements as they relate to any SpinCo Participant, and no member of the RemainCo Group shall have any liability or obligation with respect thereto.
(ii) A SpinCo Participant who becomes entitled to COBRA continuation coverage by reason of an event that occurs after the Effective Time, but prior to January 1, 2019, shall be entitled to coverage under the applicable RemainCo Group Health Plans through December 31, 2018, and thereafter, such SpinCo Participant shall be entitled to coverage under the applicable SpinCo Group Health Plans for the remainder of his or her COBRA period after December 31, 2018.
Employee becomes eligible to transition directly from receiving short-term disability benefits to receiving long-term disability benefits either before, at or after the Effective Time under the applicable RemainCo Plan, RemainCo and the applicable RemainCo Plan shall provide the long-term disability benefits to which such disabled SpinCo Employee is entitled (taking into account, if applicable, the extent to which such employee has elected such coverage and has made the required contributions therefor). After the Effective Time, the SpinCo Group shall be solely responsible for providing short- and long-term disability benefits under SpinCo Plans to eligible SpinCo Employees who become disabled after the Effective Time, and, effective at the Effective Time, SpinCo or a member of the SpinCo Group shall take, or cause to be taken, all action necessary and appropriate to establish or designate and administer short- and long-term disability plans to provide benefits thereunder for all eligible SpinCo Employees (and their eligible dependents and beneficiaries).
Section 2.10 Group Term Life, Accidental Death & Dismemberment and Business Travel Accident Insurance Plans. With respect to any Liabilities relating to or arising in connection with claims incurred by RemainCo Participants or SpinCo Participants under the applicable RemainCo Plan prior to the Effective Time, including claims that are self-insured and claims that are fully insured through third party insurance, RemainCo and the applicable RemainCo Plan shall retain and be responsible for such Liabilities. After the Effective Time, the SpinCo Group shall be solely responsible for providing life, accidental death and dismemberment and business travel accident insurance benefits to eligible SpinCo Employees under SpinCo Plans, and, effective at the Effective Time, SpinCo or a member of the SpinCo Group shall take, or cause to be taken, all action necessary and appropriate to establish or designate and administer life, accidental death and dismemberment and business travel accident insurance plans to provide benefits thereunder for all eligible SpinCo Employees (and their eligible dependents and beneficiaries). For purposes of this Section 2.10, a claim in respect of life insurance, accidental death and dismemberment and business travel accident insurance shall be deemed to be incurred upon the occurrence of the event giving rise to such claim or expense.
Section 2.12 Deferred Compensation Plans.
(b) All elections made by SpinCo Employees and SpinCo Directors that were in effect under the terms of the applicable RemainCo Deferred Compensation Plan immediately prior to the Effective Time shall continue in effect from and after the Effective Time until a new election that, by its terms, supersedes the prior election is made by such SpinCo Employees or SpinCo Directors in accordance with the terms of the applicable SpinCo Deferred Compensation Plan and consistent and compliant with the provisions of Code Section 409A.
(c) Prior to the Effective Time, RemainCo shall take all actions necessary such that participants who have RemainCo Deferred Units credited to their accounts under any of the RemainCo Director Deferred Compensation Plans immediately prior to the Effective Time shall receive, effective as of the Effective Time, a number of SpinCo Deferred Units determined in the manner described in Section 3.01(b)(i) for RemainCo RSUs.
(d) The terms and conditions relating to the SpinCo Deferred Units shall be substantially similar to the terms and conditions relating to the corresponding RemainCo Deferred Units immediately prior to the Effective Time, except that (i) RemainCo shall cause the RemainCo Deferred Compensation Plans to be amended, effective as of the Effective Time, to provide participants with the ability to re-direct the notional investment of all or a portion of the SpinCo Deferred Units credited by reason of the Distribution into additional RemainCo Deferred Units or into one or more alternative investment vehicles offered under the applicable RemainCo Director Deferred Compensation Plan; and (ii) SpinCo shall cause the SpinCo Deferred Compensation Plans to provide participants with the ability to re-direct notional investment of all or a portion of the RemainCo Deferred Units into additional SpinCo Deferred Units or one or more alternative investment vehicles offered under the SpinCo Director Deferred Compensation Plan.
be taken, all actions necessary and appropriate to establish, designate or administer the SpinCo Severance Plans. Employees who become entitled to benefits under a RemainCo Severance Plan for terminations of employment occurring before the Effective Time shall be entitled to continue to receive such benefits in accordance with the terms of the RemainCo Severance Plan, and the RemainCo Group shall be solely responsible for paying the entire amount of the cost of any such benefits.
(a) Unless continued coverage is provided under the Transition Services Agreement, SpinCo or another member of the SpinCo Group shall take, or cause to be taken, all
actions necessary and appropriate to establish a dependent care spending account plan for eligible SpinCo Employees as of the Effective Time, and from and after the Effective Time, SpinCo Employees shall cease to contribute to the RemainCo dependent care spending account plan; provided, however, that SpinCo Employees may continue to make claims under the RemainCo dependent care spending account plan for eligible expenses incurred through the Effective Time (or such later date as provided in the Transition Services Agreement), in accordance with the terms of such plan.
(b) Except as otherwise expressly provided in this Agreement or the Transition Services Agreement, the RemainCo Group shall retain or assume all Liabilities under all Plans to the extent relating to RemainCo Participants, and the SpinCo Group shall assume or retain all Liabilities under all Plans to the extent relating to SpinCo Participants.
ARTICLE III INCENTIVE COMPENSATION PLANS AND ARRANGEMENTS
applicable award agreement, employment agreement, or other RemainCo Plan, and (y) with respect to equity awards outstanding as of the Effective Time that are denominated in shares of SpinCo Common Stock, such reference shall be deemed to refer to a “change in control,” “change of control” or similar definition as set forth in the SpinCo Equity and Incentive Plan or the applicable award agreement, employment agreement, or other SpinCo Plan.
(a) Stock-Settled Stock Appreciation Rights.
(i) Prior to the Effective Time, RemainCo shall take all actions necessary such that, as of the Effective Time, by virtue of the Distribution, each holder of a vested and unvested RemainCo SSAR shall (x) continue to hold such RemainCo SSAR (with the number of shares of RemainCo Common Stock subject to such RemainCo SSAR unchanged as a result of the Distribution, but with the per share exercise price of such RemainCo SSAR adjusted as set forth in Section 3.01(a)(i)(A) below) (a “Post-Spin RemainCo SSAR”), and (y) receive a SpinCo SSAR with respect to the number of shares of SpinCo Common Stock and with an exercise price per share of SpinCo Common Stock determined as set forth in Section 3.01(a)(i)(B) and Section 3.01(a)(i)(C) below, respectively. Both the Post-Spin RemainCo SSAR and the SpinCo SSAR shall be subject to the same terms and conditions after the Effective Time as the terms and conditions applicable to the corresponding RemainCo SSAR immediately prior to the Effective Time, except as set forth in Section 3.01(a)(ii) and Section 3.01(a)(iii) below.
(A) The per share exercise price of each Post-Spin RemainCo SSAR shall be equal to the quotient, rounded up to the nearest whole cent, obtained by dividing (x) the per share exercise price of the RemainCo SSAR immediately prior to the Effective Time (the “Pre-Spin RemainCo SSAR Price”) by (y) the RemainCo Ratio.
(B) The number of shares of SpinCo Common Stock subject to each SpinCo SSAR, rounded down to the nearest whole number of shares, shall be equal to the number of shares of SpinCo Common Stock the holder of the RemainCo SSAR would have been entitled to receive in the Distribution had the shares subject to the RemainCo SSAR represented outstanding shares of RemainCo Common Stock.
(C) The per share exercise price of each SpinCo SSAR shall be equal to the quotient, rounded up to the nearest whole cent, obtained by dividing (x) the Pre-Spin RemainCo SSAR Price by (y) the SpinCo Ratio.
(ii) Each Post-Spin RemainCo SSAR (whether vested or unvested) held by a SpinCo Employee shall fully vest and become immediately exercisable effective as of the Effective Time; and each unvested SpinCo SSAR held by a SpinCo Employee shall become fully vested and exercisable on the earliest to occur of (A) the date on which such SpinCo SSAR would have otherwise vested in accordance with the vesting schedule applicable to the corresponding RemainCo SSAR, subject to the SpinCo Employee’s continued employment with a member of the SpinCo Group through the applicable vesting date, (B) the Equity Vesting Date, subject to the SpinCo Employee’s continued employment with a member of the SpinCo Group through the Equity Vesting Date, and (C) the date of the SpinCo Employee’s termination of employment with the SpinCo Group without Cause (not due to the SpinCo Employee’s death, disability or resignation for any or no reason).
(iii) Each SpinCo SSAR (whether vested or unvested) held by a RemainCo Employee shall fully vest and become immediately exercisable effective as of the Effective Time; and each unvested Post-Spin RemainCo SSAR held by a RemainCo Employee shall become fully vested and exercisable on the earliest to occur of (A) the date on which such Post-Spin RemainCo SSAR would have otherwise vested in accordance with the vesting schedule applicable to the corresponding RemainCo SSAR, subject to the RemainCo Employee’s continued employment with a member of the RemainCo Group through the applicable vesting date, (B) the Equity Vesting Date, subject to the RemainCo Employee’s continued employment with a member of the RemainCo Group through the Equity Vesting Date, and (C) the date of the RemainCo Employee’s termination of employment with the RemainCo Group without Cause (not due to the RemainCo Employee’s death, disability or resignation for any or no reason).
(i) Prior to the Effective Time, RemainCo shall take all actions necessary such that, as of the Effective Time, by virtue of the Distribution, each holder of a RemainCo RSU shall (A) continue to hold such RemainCo RSU (with the number of shares of RemainCo Common Stock to which such RemainCo RSU relates unchanged as a result of the Distribution) (a “Post-Spin RemainCo RSU”), and (B) receive a SpinCo RSU (with the number of shares of SpinCo Common Stock to which such SpinCo RSU relates, rounded down to the nearest whole number of shares, equal to the number of shares of SpinCo Common Stock the holder of such RemainCo RSU would have been entitled to receive in the Distribution had the shares subject to such RemainCo RSU represented outstanding shares of RemainCo Common Stock). Both the Post-Spin RemainCo RSU and the SpinCo RSU shall be subject to the same terms and conditions after the Effective Time as the terms and conditions applicable to the corresponding RemainCo RSU immediately prior to the Effective Time, except as set forth in Section 3.01(b)(ii) and Section 3.01(b)(iii) below.
(ii) Each Post-Spin RemainCo RSU (whether vested or unvested) held by a SpinCo Employee shall fully vest and be settled in RemainCo Common Stock effective as of the Effective Time; and each unvested SpinCo RSU held by a SpinCo Employee shall become fully vested and be settled in SpinCo Common Stock on the earliest to occur of (A) the date on which such SpinCo RSU would have otherwise vested in accordance with the vesting schedule applicable to the corresponding RemainCo RSU, subject to the SpinCo Employee’s continued employment with a member of the SpinCo Group through the applicable vesting date, (B) the Equity Vesting Date, subject to the SpinCo Employee’s continued employment with a member of the SpinCo Group through the Equity Vesting Date, and (C) the date of the SpinCo Employee’s termination of employment with the SpinCo Group without Cause (not due to the SpinCo Employee’s death, disability or resignation for any or no reason).
(iii) Each SpinCo RSU (whether vested or unvested) held by a RemainCo Employee shall fully vest and be settled in SpinCo Common Stock effective as of the Effective Time; and each Post-Spin RemainCo RSU held by a RemainCo Employee shall become fully vested and be settled in RemainCo Common Stock on the earliest to occur of (A) the date on which such Post-Spin RemainCo RSU would have otherwise vested in accordance with the vesting schedule applicable to the corresponding RemainCo RSU, subject to the RemainCo Employee’s continued employment with a member of the RemainCo Group through the applicable vesting
date, (B) the Equity Vesting Date, subject to the RemainCo Employee’s continued employment with a member of the RemainCo Group through the Equity Vesting Date, and (C) the date of the RemainCo Employee’s termination of employment with the RemainCo Group without Cause (not due to the RemainCo Employee’s death, disability or resignation for any or no reason).
(d) Equity and Incentive Plans.
(i) Prior to the Effective Time, RemainCo shall amend the RemainCo Equity and Incentive Plan to provide that, effective as of the Effective Time, for purposes of the Post-Spin RemainCo SSARs (including in determining exercisability and the post-employment exercise period), a SpinCo Employee’s continued service with a member of the SpinCo Group shall be deemed continued service with a member of the RemainCo Group. Prior to the Effective Time, RemainCo shall cause SpinCo to adopt the SpinCo Equity and Incentive Plan, effective as of the Effective Time, and shall approve, as the sole stockholder, the adoption of the SpinCo Equity and Incentive Plan. The SpinCo Equity and Incentive Plan shall provide that, for purposes of the SpinCo SSARs (including in determining the exercisability and post-employment exercise period), a RemainCo Employee’s continued service with a member of the RemainCo Group shall be deemed service with a member of the SpinCo Group. SpinCo shall grant each SpinCo RSU and SpinCo SSAR under the SpinCo Equity and Incentive Plan, which shall provide that, except as otherwise provided herein, the terms and conditions applicable to the SpinCo RSUs and SpinCo SSARs shall be on the same terms and conditions applicable to the corresponding RemainCo RSUs and RemainCo SSARs, including the terms and conditions relating to vesting and the post-termination exercise period (if applicable) (as set forth in the applicable plan, the award holder’s award agreement or the award holder’s then applicable employment agreement with the applicable member of the RemainCo Group or SpinCo Group, as applicable).
(ii) Upon the exercise of a Post-Spin RemainCo SSAR or the vesting and settlement of a RemainCo RSU or a RemainCo PVRSU settled in RemainCo common stock, regardless of the holder thereof, RemainCo shall be solely responsible for the issuance of RemainCo Common Stock, and for ensuring the withholding of all applicable Taxes on behalf of the employing entity of such holder and the remittance of such withholding Taxes to the employing entity of such holder; and the employing entity shall be solely responsible for promptly remitting such withheld amounts, along with the employer’s portion of any applicable payroll Taxes due with respect to the exercise or vesting and settlement of such equity award, to the appropriate
(iii) Notwithstanding anything to the contrary contained herein, the provisions of this Section 3.01(d) shall be applied in a manner consistent with Code Section 409A and shall be modified, without the requirement of any further action by SpinCo or RemainCo, to the extent necessary to comply with Code Section 409A.
Section 3.02 Nonequity Incentive Compensation Arrangements.
and any other nonequity incentive plans that may be in place in respect of the calendar year in which the Effective Time occurs (including sponsorship thereof).
ARTICLE IV LABOR AND EMPLOYMENT MATTERS
Section 4.01 Payroll Reporting and Tax Withholding.
(a) Form W-2 Reporting. To the extent an Employee’s employing entity changes as a result of the transactions contemplated by the Distribution Agreement, RemainCo and SpinCo shall use the “standard procedure” for preparing and filing IRS Forms W-2 (Wage and Tax Statements), as described in Revenue Procedure 2004-53, for the calendar year in which such change occurs. Under this procedure, each employing entity shall provide (subject to any applicable provisions of the Transition Services Agreement) all required Forms W-2 to report the wages paid and taxes withheld by it during the year in which the Effective Time occurs. With respect to any issuances of RemainCo Common Stock or SpinCo Common Stock described in Section 3.01(d)(ii), the Employee’s employing entity shall reflect such issuance and taxes withheld in connection with such issuance on the Form W-2 provided to such Employee by such employing entity during the year in which such issuance occurs. With respect to RemainCo Employees and SpinCo Employees outside of the United States, the Parties shall cooperate in good faith to obtain the same or similar results, to the extent possible, under applicable tax laws.
(b) Garnishments, Tax Levies, Child Support Orders, and Wage Assignments. With respect to any Employees with garnishments, tax levies, child support orders, or wage assignments in effect immediately prior to the Effective Time, a member of the SpinCo Group (with respect to SpinCo Employees) or a member of the RemainCo Group (with respect to RemainCo Employees) shall honor such payroll deduction authorizations and shall continue to make payroll deductions and payments to the authorized payee, as specified by the court or governmental order which was filed prior to the Effective Time.
(a) Subject Matter and Duration of the Processing of Personal Information. The subject matter of the Processing of Personal Information is set out in this Agreement. Subject to sections 4.11 and 4.12 of the Data Sharing Addendum, each Data Recipient shall Process Personal Information for the duration of the period set forth in in accordance with RemainCo’s records management policy in effect as of the Effective Date, unless otherwise agreed between the Parties in writing to comply with applicable Law.
(b) The Nature and Purpose of the Processing of Personal Information. The Data Recipient shall Process Personal Information as necessary to perform its obligations under this Agreement.
(d) The Categories of Data Subjects to whom the Personal Information Relates. The Personal Information to be Processed by the Data Recipient in relation to this Agreement may include, but is not limited to, Personal Information relating to the following categories of Data Subjects: employees, directors, freelancers and contractors of Data Provider; agents of Data Provider; advisors of Data Provider; and candidates.
To RemainCo:
Wyndham Destinations, Inc.
0000 Xxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Attn: Office of the General Counsel
To SpinCo:
Wyndham Hotels & Resorts, Inc. 00 Xxxxxx Xxx
Xxxxxxxxxx, XX 00000
Attn: Office of the General Counsel
(ii) create any rights or obligations in any Person not Party to this Agreement (including any RemainCo Employee or SpinCo Employee), including with respect to (x) any right to employment or continued employment or to a particular term or condition of employment and (y) the ability of the RemainCo Group and the SpinCo Group to amend, modify, or terminate any Plan or other benefit or compensation plan, program, agreement or arrangement at any time established, sponsored or maintained by any of them.
Section 5.14 Governing Law. This Agreement shall be interpreted and construed in accordance with the laws of the State of Delaware. Any and all claims, controversies, and causes of action arising out of or relating to this Agreement, whether sounding in contract, tort, statute or otherwise, shall be governed by the laws of the State of Delaware, including its statutes of limitations, without giving effect to any conflict-of-laws or other rule that would result in the application of the laws of a different jurisdiction.
Section 5.15 Dispute Resolution; Consent to Jurisdiction; Specific Performance; Waiver of Jury Trial; Force Majeure. The provisions of Article IX (Dispute Resolution) and Sections 12.19 (Consent to Jurisdiction), 12.20 (Specific Performance), 12.21 (Waiver of Jury Trial), and 12.23 (Force Majeure) of the Distribution Agreement are incorporated herein by reference, mutatis mutandis.
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WYNDHAM HOTELS & RESORTS, INC. | |
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By: |
/s/ Xxxxx X. Xxxxxxx |
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Name: |
Xxxxx X. Xxxxxxx |
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Title: |
Chief Financial Officer |
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WYNDHAM DESTINATIONS, INC. | |
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By: |
/s/ Xxxxxxx Xxx |
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Name: |
Xxxxxxx Xxx |
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Title: |
Executive Vice President |