EXHIBIT 10.5
EXECUTIVE EMPLOYMENT AGREEMENT
This EXECUTIVE EMPLOYMENT AGREEMENT ("Agreement") is made as of the 26th
day of May 1999, between Wyndham International, Inc., a Delaware corporation
(the "Company"), and Xxxxxxx Xxxxxxx ("Executive").
WHEREAS, Executive is desirous of committing to serve the Company on the
terms herein provided.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. Employment. The term of this Agreement shall extend from the date hereof
(the "Commencement Date") until the third anniversary of the Commencement Date;
provided, however, that the term of this Agreement shall automatically be
extended for one additional year on the third anniversary of the Commencement
Date and each anniversary thereafter unless, not less than 90 days prior to each
such date, either party shall have given notice to the other that it does not
wish to extend this Agreement; provided, further, that if a Change in Control
occurs during the original or extended term of this Agreement, the term of this
Agreement shall continue in effect for a period of not less than eighteen (18)
months beyond the month in which the Change in Control occurred. The term of
this Agreement shall be subject to termination as provided in Paragraph 6 and
may be referred to herein as the "Period of Employment."
2. Position and Duties. During the Period of Employment, Executive shall
serve as an Executive Vice President and Chief Financial Officer of the Company,
shall have supervision and control over and responsibility for the day-to-day
business and affairs of those functions and operations of the Company and shall
have such other powers and duties as may from time to time by prescribed by the
Chairman of the Board of the Company (the "Chairman") or the Chief Executive
Officer of the Company (the "CEO") or other executive authorized by the Chairman
or CEO, provided that such duties are consistent with Executive's position or
other positions that he may hold from time to time. Executive shall devote his
full working time and efforts to the business and affairs of the Company.
Notwithstanding the foregoing, Executive may serve on other boards of directors,
with the approval of the Chairman of CEO, or engage in religious, charitable or
other community activities as long as such services and activities and disclosed
to the Chairman or CEO and do not materially interfere with Executive's
performance of his duties to the Company as provided in this Agreement.
3. Compensation and Related Matters.
(a) Base Salary and Incentive Compensation. Executive's initial annual
base salary ("Base Salary") shall be $450,000.00. Executive's Base Salary shall
be redetermined at least thirty (30) days before each annual compensation
determination date established by the Company during the Period of Employment in
an amount to be fixed by the Board of Directors of the
Company or a Committee thereof or a duly authorized officer (the "Board"). The
Base Salary, as redetermined, may be referred to herein as "Adjusted Base
Salary". The Base Salary or Adjusted Base Salary shall be payable in
substantially equal bi-weekly installments and shall in no way limit or reduce
the obligations of the Company hereunder. In addition to Base Salary or Adjusted
Base Salary, Executive shall be eligible to receive cash incentive compensation
as determined by the Board from time to time, and shall also be eligible to
participate in such incentive compensation plans as the Board shall determine
from time to time for employees of the same status within the hierarchy of the
Company. Executive's incentive compensation potential shall be between zero and
150% of Executive's Base Salary, or, if applicable, Adjusted Base Salary and
Executive's target incentive compensation shall be 100% of Executive's Base
Salary or, if applicable, Adjusted Base Salary if the budget is achieved. For
the fiscal year ending December 31, 1999, Executive shall be entitled to
incentive compensation in an amount not less than $450,000.00.
(b) Expenses. Executive shall be entitled to receive prompt
reimbursement for all reasonable expenses incurred by him (in accordance with
the policies and procedures then in effect and established by the Company for
its senior executive employees) in performing services hereunder during the
Period of Employment, provided that Executive properly accounts therefor in
accordance with Company policy.
(c) Signing Bonus. Executive shall be entitled to receive a signing
bonus of $1,250,000.00 in cash on the Commencement Date. In the event that
within twelve (12) months of the Commencement Date, Executive shall voluntarily
terminate his employment without Good Reason (as defined in Paragraph 6(e)) or
the Company shall terminate Executive's employment for Cause (as defined in
Paragraph 6(c)), Executive shall return to the Company an amount determined by
dividing the signing bonus, net of income and employment taxes, by twelve (12),
and multiplying and quotient by the amount of months or partial months less than
twelve (12) that Executive is employed by the Company.
(d) Restricted Paired Unit Award. On the Commencement Date, the Company
shall issue to Executive a Restricted Paired Unit Award covering the right to
vest in 121,053 shares of common stock of the Company and common stock of
Patriot American Hospitality, Inc. which trade as a pair ("Paired Shares"). Said
award shall vest and become nonforfeitable on the Commencement Date. In the
event that within twelve (12) months of the Commencement Date, Executive shall
voluntarily terminate his employment without Good Reason (as defined in
Paragraph 6(e)) or the Company shall terminate Executive's employment for Cause
(as defined in Paragraph 6(c)), Executive shall return to the Company an amount
determined by dividing the initial value of the Restricted Paired Unit Award,
net of income and employment taxes, by twelve (12) and multiplying the quotient
by the amount of months or partial months less than twelve (12) that Executive
is employed by the Company.
(e) Option Grant. On May 7, 1999 (the "Grant Date"), the Company has
issued to Executive a non-qualified stock option (the "Option") to acquire
850,000 Paired Shares at an exercise price of $4.75 per Paired Share. Said
Option shall vest and become exercisable ratably over five (5) years, at the
rate of 20% on each anniversary date of the Grant Date.
(f) Relocation Benefits. Executive shall relocate to the Dallas area as
soon as reasonably practicable. The Company shall reimburse Executive for all
reasonable relocation expenses, grossed up for tax purposes.
(g) Travel benefits. Executive shall be entitled to reimbursement for
round trip air transportation (Dallas-Seattle-Dallas) up to twenty-four (24)
times annually.
(h) Other Benefits. During the Period of Employment, Executive shall be
entitled to continue to participate in or receive benefits under all the
Company's Employee Benefit Plans in effect on the date hereof, or under plans or
arrangements that provide Executive with at least substantially equivalent
benefits to those provided under such Employee Benefit Plans. As used herein,
"Employee Benefit Plans" include, without limitation, each pension and
retirement plan; supplemental pension, retirement and deferred compensation
plan; savings and profit-sharing plan; stock ownership plan; stock purchase
plan; stock option plan; life insurance plan; medical insurance plan; disability
plan; and health and accident plan or arrangement established and maintained by
the Company on the date hereof for employees of the same status within the
hierarchy of the Company. During the Period of Employment, Executive shall be
entitled to participate in or receive benefits under any employee benefit plan
or arrangement which may, in future, be made available by the Company to its
executives and key management employees, subject to and on a basis consistent
with the terms, conditions and overall administration of such plan or
arrangement. Any payments or benefits payable to Executive under a plan or
arrangement referred to in this Subparagraph 3(h) in respect of any calendar
year during which Executive is employed by the Company for less than the whole
of such year shall, unless otherwise provided in the applicable plan or
arrangement, be prorated in accordance with the number of days in such calendar
year during which he is employed. Should any such payments or benefits accrue on
a fiscal (rather than calendar) year, then the proration in the preceding
sentence shall be on the basis of a fiscal year rather than a calendar year.
(i) Life Insurance. The Company shall pay the premiums on, and maintain
in effect throughout the Period of Employment a life insurance policy on the
life of Executive in an amount not less than the amount of Executive's then
current Base Salary or Adjusted Base Salary. Executive shall have the right to
designate the beneficiary under such policy.
(j) Vacations. Executive shall be entitled to the number of paid
vacation days in each calendar year determined by the Company from time to time
for executives at the same level of Executive but in no event less than four (4)
weeks per calendar year. Executive shall also be entitled to all paid holidays
given by the Company to its executives.
(k) Disability Insurance. The Company shall pay the premiums on, and
maintain in effect through the Period of Employment, long-term disability
insurance providing for payment of benefits at rates not less than sixty percent
(60%) of Executive's current Base Salary or Adjusted Base Salary.
4. Unauthorized Disclosure.
(a) Confidential Information. Executive acknowledges that in the course
of his employment with the Company (and, if applicable, its predecessors), he
has been allowed to become, and will continue to be allowed to become,
acquainted with the Company's business affairs, information, trade secrets, and
other matters which are of a proprietary or confidential nature, including but
not limited to the Company's and its predecessors' operations, business
opportunities, price and cost information, finance, customer information,
business plans, various sales techniques, manuals, letters, notebooks,
procedures, reports, products, processes, services, and other confidential
information and knowledge (collective the "Confidential Information") concerning
the Company's and its predecessors' business. The Company agrees to provide on
an ongoing basis such Confidential Information as the Company deems necessary or
desirable to aid Executive in the performance of his duties. Executive
understands and acknowledges that such Confidential Information is confidential,
and he agrees not to disclose such Confidential Information to anyone outside
the Company except to the extent that (i) Executive deems such disclosure or use
reasonably necessary or appropriate in connection with performing his duties on
behalf of the Company, (ii) Executive is required by order of a court of
competent jurisdiction (by subpoena or similar process) to disclose or discuss
any Confidential Information, provided that in such case, Executive shall
promptly inform the Company of such event, shall cooperate with the Company in
attempting to obtain a protective order or to otherwise restrict such
disclosure, and shall only disclose Confidential Information to the minimum
extent necessary to comply with any such court order, (iii) such Confidential
Information becomes generally known to and available for use by the hotel and
hospitality industry (the "Hotel Industry"), other than as a result of any
action or inaction by Executive; or (iv) such information has been rightfully
received by a member of the Hotel Industry or has been published in a form
generally available to the Hotel Industry prior to the date Executive proposes
to disclose or use such information. Executive further agrees that he will not
during employment and/or at any time thereafter use such Confidential
Information in competing, directly or indirectly, with the Company. At such time
as Executive shall cease to be employed by the Company, he will immediately turn
over to the Company all Confidential Information, including papers, documents,
writings, electronically stored information, other property, and all copies of
them provided to or created by him during the course of his employment with the
Company.
(b) Heirs, successors, and legal representatives. The foregoing
provisions of this Paragraph 4 shall be binding upon Executive's heirs,
successors, and legal representatives. The provisions of this Paragraph 4 shall
survive the termination of this Agreement for any reason.
5. Covenant Not to Compete. In consideration for the equity grants under
Paragraph 3 and for Executive's employment by the Company under the terms
provided in this Agreement and as a means to aid in the performance and
enforcement of the terms of the Unauthorized Disclosure provisions of Paragraph
4, Executive agrees that
(a) during the term of Executive's employment with the Company and for
a period of twenty-four (24) months thereafter, regardless of the reason for
termination of employment, Executive will not, directly or indirectly, as an
owner, director, principal, agent, officer,
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employee, partner, consultant, servant, or otherwise, carry on, operate, manage,
control, or become involved in any manner with any business, operation,
corporation, partnership, association, agency, or other person or entity which
is in the business of owning, operating, managing or granting franchise rights
with respect to hotels, motels or other lodging facilities in any area or
territory in which the Company conducts operations; provided, however, that the
foregoing shall not prohibit Executive from owning up to one percent (1%) of the
outstanding stock of a publicly held company engaged in the hospitality
business. Notwithstanding the foregoing, Executive shall be permitted to engage
in such activities with respect to any other hotel, motel or lodging facility
that would be immaterial to the operations of the Company in the area or
territory in question. Immediately, for purposes of the foregoing sentence,
shall be determined in the sole discretion of the Board of good faith.
(b) during the term of Executive's employment with the Company and for
a period of twenty-four (24) months thereafter, regardless of the reason for
termination of employment, Executive will not, directly or indirectly, either
for himself or for any other business, operation, corporation, partnership,
association, agency, or other person or entity, call upon, compete for, solicit,
divert, or take away, or attempt to divert or take away any of the customers
(including, without limitation, any hotel owner, lessor or lessee, asset
manager, trustee, consumer with whom the Company from time to time (i) has an
existing agreement or business relationship; or (ii) has included as a prospect
in its applicable pipeline) or vendors of the Company in any of the areas or
territories in which the Company conducts operations if such action has the
intent or effect of interfering with the Company's relationship with the vendor
or customer.
(c) during the term of Executive's employment with the Company and for
a period of twenty-four (24) months thereafter, regardless of the reason for
termination of employment, Executive will not directly or indirectly solicit or
induce any present or future employee of the Company to accept employment with
Executive or with any business, operation, corporation, partnership,
association, agency, or other person or entity with which Executive may be
associated, and Executive will not employ or cause any business, operation,
corporation, partnership, association, agency, or other person or entity with
which Executive may be associated to employ any present or future employee of
the Company without providing the Company with ten (10) days' prior written
notice of such proposed employment.
Should Executive violate the provisions of this Paragraph, then in
addition to all other rights and remedies available to the Company at law or in
equity, the duration of this covenant shall automatically be extended for the
period of from which Executive began such violation until he permanently ceases
such violation.
6. Termination. Executive's employment hereunder may be terminated without
any breach of this Agreement under the following circumstances:
(a) Death. Executive's employment hereunder shall terminate upon his
death.
(b) Disability. If, as a result of Executive's incapacity due to
physical or mental illness, Executive shall have been absent from his duties
hereunder on a full-time basis for one
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hundred eighty (180) calendar days in the aggregate in any twelve (12) month
period, the Company may terminate Executive's employment hereunder.
(c) Termination by Company For Cause. At any time during the Period of
Employment, the Company may terminate Executive's employment hereunder for Cause
if such meeting of such Board of Directors called and held for such purpose. For
purposes of this Agreement "Cause" shall mean: (A) conduct by Executive
constituting a material act of willful misconduct in connection with the
performance of his duties, including, without limitation, misappropriation of
funds or property of the Company or any of its affiliates other than the
occasional, customary and de minimis use of Company property for personal
purposes; (B) criminal or civil conviction by Executive, a plea of nolo
contendere by Executive or conduct of Executive that has resulted in material
injury to the repuration of the Company including, without limitation,
conviction of a felony involving moral turpitude; (C) continued, willful and
deliberate non-performance by Executive of his duties hereunder (other than by
reason of Executive's physical or mental illness, incapacity or disability) and
such non-performance has continued for more than thirty (30) days following
written notice of such non-performance from the Board; (D) a breach by Executive
of any of the provisions contained in Paragraphs 4 and 5 of this Agreement; or
(E) a violation by Executive of the Company's employment policies and such
violation has continued following written notice of such violation from the
Board.
(d) Termination Without Cause. At any time during the Period of
Employment, the Company may terminate Executive's employment thereunder without
Cause if such termination is approved by a majority of the Board at a meeting of
the Board called and held for such purpose. Any termination by the Company of
Executive's employment under this Agreement which does not constitute a
termination for Cause under Subparagraph 6(c), or result from the death or
disability of the Executive under Subparagraph 6(a) or (b) shall be deemed a
termination without Cause. If the Company provides notice to the Executive under
Paragraph 1 that it does not wish to extend the Period of Employment, such
action shall be deemed a termination without a Cause.
(e) Termination by Executive. At any time during the Period of
Employment, Executive may terminate his employment hereunder for any reason,
including but not limited to Good Reason. If Executive provides notice to the
Company under Paragraph 1 that he does not wish to extend the Period of
Employment, such action shall be deemed a voluntary termination by Executive and
one without Good Reason. For purposes of this Agreement, "Good Reason" shall
mean that Executive has complied with the "Good" Reason Process" (hereinafter
defined) following the occurrence of any of the following events: (A) a
substantial diminution or other substantive adverse change, not consented to by
Executive, in the nature or scope of Executive's responsibilities, authorities,
powers, functions or duties, other than a change in Executive's position or
reporting relationship; (B) any removal, during the Period of Employment, from
Executive of his title of Executive Vice President; (C) an involuntary reduction
compensation plan (but not reduction in incentive compensation appropriate for
level of performance) except for across-the-board salary reductions similarly
affecting all or substantially all management
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employees; (D) a breach by the Company of any of its other material obligations
under this Agreement and the failure of the Company to cure such breach within
thirty (30) days after written notice thereof by Executive; (E) the involuntary
relocation of the Company's offices at which Executive is principally employed
or the involuntary relocation of the offices of Executive's primary workgroup to
a location more than fifty (50) miles from such offices (other than a relocation
in either event to Dallas, Texas), or the requirement by the Company for
Executive to be based anywhere other than the Company's offices at such location
or in Dallas, Texas on an extended basis, except for required travel on the
Company's business to an extent substantially consistent with Executive's
business travel obligations; or (F) the requirement that Executive report to a
person who is not the CEO or the Chief Operating Officer. "Good Reason Process"
shall mean that (i) the Executive reasonably determines in good faith that a
"Good Reason" event has occurred; (ii) Executive notifies the Company in writing
of the occurrence of the Good Reason event; (iii) Executive cooperates in good
faith with the Company's efforts, for a period not less than sixty (60) days
following such notice, to modify Executive's employment situation in a manner
acceptable to Executive and Company; and (iv) notwithstanding such efforts, one
or more of the Good Reason events continues to exist and has not been modified
in a manner acceptable to Executive. If the Company cures the Good Reason event
during the sixty (60) day period, Good Reason shall be deemed not to have
occurred.
(f) Notice of Termination. Except for termination as specified in
Subparagraph 6(a), any termination of Executive's employment by the Company or
any such termination by Executive shall be communicated by written Notice of
Termination to the other party hereto. For purposes of this Agreement, a "Notice
of Termination" shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon.
(g) Date of Termination. "Date of Termination" shall mean: (A) if
Executive's employment is terminated by his death, the date of his death; (B) if
Executive's employment is terminated on account of disability under Subparagraph
6(b) or by the Company for Cause under Subparagraph 6(c), the date on which
Notice of Termination is given; (C) if Executive's employment is terminated by
the Company under Subparagraph 6(d), sixty (60) days after the date on which a
Notice of Termination is given; and (D) if Executive's employment is terminated
by Executive under Subparagraph 6(e), thirty (30) days after the date on which
Notice of Termination is given.
7. Compensation Upon Termination or During Disability.
(a) If Executive's employment terminates by reason of his death, the
Company shall, within ninety (90) days of death, pay in a lump sum amount to
such person as Executive shall designate in a notice filed with the Company or,
if no such person is designated, to Executive's estate, Executive's accrued and
unpaid Base Salary or, if applicable, his Adjusted Base Salary, to the date of
his death, plus his accrued and unpaid incentive compensation, if any, under
Subparagraph 3(a). For a period of one (1) year following the Date of
Termination, the Company shall pay such health insurance premiums as may be
necessary to allow Executive's spouse and dependents to receive health insurance
coverage substantially similar to coverage they received prior to the Date of
Termination. In addition to the foregoing, any payments to
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which Executive's spouse, beneficiaries, or estate may be entitled under any
employee benefit plan shall also be paid in accordance with the terms of such
plan or arrangement. Such payments, in the aggregate, shall fully discharge the
Company's obligations hereunder.
(b) During any period that Executive fails to perform his duties
hereunder as a result of incapacity due to physical or mental illness,
Executive shall continue to receive his accrued and unpaid Base Salary or, if
applicable, his Adjusted Base Salary and accrued and unpaid incentive
compensation payments, if any, under Subparagraph 3(a), until Executive's
employment is terminated due to disability in accordance with Subparagraph 6(b)
or until Executive terminates his employment in accordance with Subparagraph
6(e), whichever first occurs. For a period of one (1) year following the Date of
Termination, the Company shall pay such health insurance premiums as may be
necessary to allow Executive, Executive's spouse and dependents to receive
health insurance coverage substantially similar to coverage they received prior
to the Date of Termination. Upon termination due to death prior to the
termination first to occur as specified in the preceding sentence, Subparagraph
7(a) shall apply.
(c) If Executive's employment is terminated by Executive other than for
Good Reason as provided in Subparagraph 6(e), then the Company shall, through
the Date of Termination, pay Executive his accrued and unpaid Base Salary or, if
applicable, his Adjusted Base Salary at the rate in effect at the time Notice of
Termination is given. Thereafter, the Company shall have no further obligations
to Executive except as otherwise expressly provided under this Agreement,
provided any such termination shall not adversely affect or alter Executive's
rights under any employee benefit plan of the Company in which Executive, at the
Date of Termination, has a vested interest, unless otherwise provided in such
employee benefit plan or any agreement or other instrument attendant thereto.
(d) If Executive terminates his employment for Good Reason as provided
in Subparagraph 6(e) or if Executive's employment is terminated by the Company
without Cause as provided in Subparagraph 6(d), then the Company shall, through
the Date of Termination, pay Executive his accrued and unpaid Base Salary or, if
applicable, his Adjusted Base Salary at the rate in effect at the time Notice of
Termination is given and his accrued and unpaid incentive compensation, if any,
under Subparagraph 3(a). In addition, subject to signing by Executive of a
general release of claims in a form and manner satisfactory to the Company,
(i) the Company shall provide payments to Executive in an amount
equal to the sum of Executive's Average Base Salary and his Adjusted
Incentive Compensation payable for the remaining length of the Period of
Employment after the Date of Termination (the "Severance Amount"), but
in no event for fewer than twenty-four (24) months. The Severance Amount
shall be paid out in substantially equal bi-weekly installments, in
arrears; provided, however, that in the event Executive commences any
employment during such period, the Company shall be entitled to set-off
against the remaining Severance Amount seventy-five percent (75%) of the
amount of any cash compensation received by Executive from the new
employer. From time to time, Executive may be asked to certify to the
Company that he has not accepted employment with a new employer
(including, without limitation, contract and consulting agreements).
For purposes of this Agreement, "Average Base Salary" shall mean the
average of the annual Base Salary or, if applicable, Adjusted Base
Salary received by Executive for each of the three (3) immediately
preceding fiscal years or such fewer number of complete fiscal years as
Executive may have been employed by the Company. For purposes of this
Agreement, "Average Incentive Compensation" shall mean the average of
the annual incentive compensation under Subparagraph 3(a) received by
executive for three (3) immediately preceding fiscal years or such fewer
number of complete fiscal years as Executive may have been employed by
the Company. In the event Executive's employment terminates within the
first twelve (12) months of the Commencement Date, his Average Incentive
Compensation for purposes of this Subparagraph is deemed to be
$450,000.00. In no event shall "Average Incentive Compensation" include
any sign-on bonus, retention bonus or any other special bonus.
Notwithstanding the foregoing, if the Executive breaches any of the
provisions contained in Paragraphs 4 and 5 of this Agreement, all
payments of the Severance Amount shall immediately cease.
Notwithstanding the foregoing, in the event Executive terminates his
employment for Good Reason as provided in Subparagraph 6(e), he shall be
entitled to the Severance Amount only if he provides the Notice of
Termination provided for in Subparagraph 6(f) within sixty (60) days
after the occurrence of the event or events which constitute such Good
Reason as specified in clauses (A), (B), (C), (D), (E) and (F) of
Subparagraph 6(e).
(ii) in addition to any other benefits to which Executive may be
entitled in accordance with the Company's then existing severance
policies, the Company shall, for a period of one (1) year commencing on
the Date of Termination, pay such health insurance premiums as may be
necessary to allow Executive, Executive's spouse and dependents to
continue to receive health insurance substantially similar to the
coverage they received prior to his termination of employment.
(e) If Executive's employment is terminated by the Company for Cause as
provided in Subparagraph 6(c), then the Company shall, through the Date of
Termination, pay Executive his accrued and unpaid Base Salary or, if applicable,
his Adjusted Base Salary at the rate in effect at the time Notice of Termination
is given. Thereafter, the Company shall have no further obligations to Executive
except as otherwise expressly provided under this Agreement, provided any such
termination shall not adversely affect or alter Executive's rights under any
employee benefit plan of the Company in which Executive, at the Date of
Termination, has a vested interest, unless otherwise provided in such employee
benefit plan or any agreement or other instrument attendant thereto.
(f) Regardless of the reason for termination, for a period of five (5)
years beginning on the Date of Termination, the Company will provide such
reasonable assistance and support to Executive as he shall reasonably require in
connection with the preparation and filing of tax returns, statements and forms
insofar as such returns, statements or forms relate to Executive's association
with the Company or its predecessors or affiliates. At the Company's election,
such assistance and support shall be provided by either tax personnel from the
Company or certified public accountants selected and compensated by the Company.
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(g) Nothing contained in the foregoing Subparagraphs 7(a) through 7(f)
shall be construed so as to affect Executive's rights or the Company's
obligations relating to agreements or benefits which are unrelated to
termination of employment.
8. Change in Control Payment. The provisions of this Paragraph 8 set forth
certain terms of an agreement reached between Executive and the Company
regarding Executive's rights and obligations upon the occurrence of a Change in
Control of the Company. These provisions are intended to assure and encourage in
advance Executive's continued attention and dedication to his assigned duties
and his objectivity during the pendency and after the occurrence of any such
event. These provisions shall apply in lieu of, and expressly supersede, the
provisions of Subparagraph 7(d)(i) regarding severance pay upon a termination of
employment, if such termination of employment occurs within eighteen (18) months
after the occurrence of the first event constituting a Change of Control;
provided that such first event occurs during the Period of Employment. These
provisions shall terminate and be of no further force or effect beginning
eighteen (18) months after the occurrence of Change of Control.
(a) Change in Control.
(i) If within eighteen (18) months after the occurrence of the
first event constituting a Change of Control, Executive's employment is
terminated by the Company without Cause as provided in Subparagraph 6(d) or
Executive terminates his employment for Good Reason as provided in
Subparagraph 6(e), then the Company shall pay Executive the Severance
Amount as provided in Subparagraph 7(d)(i) in substantially bi-weekly
installments, in arrears, over twenty-four (24) months. Notwithstanding the
foregoing, if the Executive breaches any of the provisions contained in
Paragraphs 4 and 5 of this Agreement, all payments of the Severance Amount
shall immediately cease; and
(ii) Within fifteen (15) days after Executive becomes entitled to
receive the Severance Amount under (i) above, the Company shall place funds
in an amount equal to the estimated Severance Amount in escrow, pursuant to
arrangements that are mutually acceptable to the Company and Executive (the
"Escrow Arrangement"). The Escrow Arrangement shall be maintained under the
final installment payment of the Severance Amount has been made;
(iii) Notwithstanding anything to the contrary in any applicable
option agreement or stock-based award agreement; if Executive terminates
his employment for Good Reason as provided in Subparagraph 6(e) or if
Executive's employment is terminated by the Company without Cause as
provided in Subparagraph 6(d) within eighteen (18) months of a Change in
Control, all stock options and other stock-based awards granted to
Executive by the Company shall immediately accelerate and become
exercisable or non-forfeitable as of the Date of Termination, and Executive
shall have 360 days to exercise all his stock options. Executive shall also
be entitled to any other rights and benefits with respect to stock-related
awards, to the extent and upon the terms provided in the employee stock
option or incentive plan or any agreement or other instrument attendant
thereto pursuant to which such options or awards were granted; and
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(iv) The Company shall, for a period of one (1) year commencing on
the Date of Termination, pay such health insurance premiums as may be
necessary to allow Executive, Executive's spouse and dependents to
continue to receive health insurance coverage substantially similar to the
coverage they received prior to his termination of employment.
(b) Gross Up Payment.
(i) Excess Parachute Payment. If Executive incurs the tax (the
"Excise Tax") imposed by Section 4999 of the Internal Revenue Code of 1986
(the "Code") on "excess parachute payments" within the meaning of Section
280G(b)(1) of the Code, the Company will pay to Executive an amount (the
"Gross Up Payment") such that the net amount retained by Executive, after
deduction of any Excise Tax on the excess parachute payment and any
federal, state and local income taxes and employment taxes (together with
penalties and interest) and Excise Tax upon the payment provided for by
this Subparagraph 8(c)(i), will be equal to the Severance Amount.
(ii) Applicable Rates. For purposes of determining the amount of
the Gross Up Payment, Executive will be deemed to pay federal income taxes
at the highest marginal rate of federal income taxation in the calendar
year in which the Gross Up Payment is to be made and state and local income
taxes at the highest marginal rates of taxation in the state and locality
of Executive's residence on the date of Executive's Termination, net of
the maximum reduction in federal income taxes that could be obtained from
deduction of such state and local taxes.
(iii) Determination of Gross Up Payment Amount. The determination of
whether the Excise Tax is payable and the amount thereof will be based upon
the opinion of tax counsel selected by Executive and approved by the
Company, which approval will not be unreasonably withheld. If such opinion
is not finally accepted by the Internal Revenue Service (or state and local
taxing authorities), then appropriate adjustments to the Excise Tax will be
computed and additional Gross Up Payments will be made in the manner
provided by this Subparagraph (c).
(iv) Time for Payment. The Company will pay the estimated amount of
the Gross Up Payment in cash to Executive at such time or times when the
Excise Tax is due. Executive and the Company agree to reasonably cooperate
in the determination of the actual amount of the Gross Up Payment. Further,
Executive and the Company agree to make such adjustments to the estimated
amount of the Gross Up Payment as may be necessary to equal the actual
amount of the Gross Up Payment, which in the case of Executive will refer
to refunds of prior overpayments and in the case of the Company will refer
to makeup of prior underpayments.
(c) Definitions. For purposes of this Paragraph 8, the following terms
shall have the following meanings:
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"Change in Control" shall mean any of the following:
(a) the acquisition by an individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (the "Acquiring
Person"), other than the Company, or any of its Subsidiaries or any Investor or
Excluded Group, of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 35% or more of the combined voting power
or economic interests of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors; provided, however, that
any transfer from any Investor or Excluded Group will not result in a Change in
Control if such transfer was part of a series of related transactions the effect
of which, absent the transfer to such Acquiring Person by the Investor or
Excluded Group, would not have resulted in the acquisition by such Acquiring
Person of 35% or more of the combined voting power or economic interests of the
then outstanding voting securities; or
(b) during any period of 12 consecutive months after the Issuance Date,
the individuals who at the beginning of any such 12-month period constituted a
majority of Class A Directors and Class C Directors (the "Incumbent Non-Investor
Majority") cease for any reason to constitute at least a majority of such Class
A Directors and Class C Directors; provided that (i) any individual becoming a
director whose election, or nomination for election by the Company's
stockholders, was approved by a vote of the stockholders having the right to
designate such director and (ii) any director whose election to the Board or
whose nomination for election by the stockholders of the Company was approved
by the requisite vote of directors entitled to vote on such election or
nomination in accordance with the Restated Certificate of Incorporation of the
Company, shall, in each such case, be considered as though such individual were
a member of the Incumbent Non-Investor Majority, but excluding, as a member of
the Incumbent Non-Investor Majority, any such individual whose initial
assumption of office is in connection with an actual or threatened election
contest relating to the election of the directors of the Company (such as terms
as used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) and
further excluding any person who is an affiliate or associate of an Acquiring
Person having or proposing to acquire beneficial ownership of 25% or more of the
combined voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors; or
(c) the approval by the stockholders of the Company of a reorganization
merger or consolidation, in each case, with respect to which all or
substantially all of the individuals and entities who were the respective
beneficial owners of the voting securities of the Company immediately prior to
such reorganization, merger or consolidation do not, following such
reorganization, merger or consolidation, beneficially own, directly or
indirectly, more than 57.5% of the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of directors of the
Company resulting from such reorganization, merger or consolidation; or
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(d) the sale or other disposition of assets representing 50% or
more of the assets of the Company in one transaction or series of related
transactions.
All defined terms used in the definition of "Change in Control" shall have
the same meaning as set forth in the Form of Certificate of Designation of
Series B Convertible Preferred Stock of Wyndham International, Inc.
"Company" shall mean not only Wyndham International, Inc., but also
its successors by merger or otherwise.
9. Notice. For purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
certified mail, return receipt requested, postage prepaid, addressed as follows:
if to the Executive:
At his home address as shown
in the Company's personnel records;
if to the Company:
Wyndham International, Inc.
0000 Xxxxxxxx Xxxxxxx
Xxxxx 0000
Xxxxxx, XX 00000
Attention: Senior Vice President of Human Resources and
General Counsel
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
10. Miscellaneous. No provisions of this Agreement may be modified, waived, or
discharged unless such waiver, modification, or discharge is agreed to in
writing and signed by Executive and such officer of the Company as may be
specifically designated by the Board. No waiver by either party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, unless specifically
referred to herein, with respect to the subject matter hereof have been made by
either party which are not set forth expressly in this Agreement. The validity,
interpretation, construction, and performance of this Agreement shall be
governed by the laws of the State of Texas (without regard to principles of
conflicts of laws).
11. Validity. The invalidity or unenforceability of any provision or provisions
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect. The
invalid portion of this Agreement, if
13
any, shall be modified by any court having jurisdiction to the extent necessary
to render such portion enforceable.
12. Counterparts. This Agreement may be executed in several counterparts, each
of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
13. Arbitration; Other Disputes. In the event of any dispute or controversy
arising under or in connection with this Agreement, the parties shall first
promptly try in good faith to settle such dispute or controversy by mediation
under the rules of the American Arbitration Association before resorting to
arbitration. In the event such dispute or controversy remains unresolved in
whole or in part for a period of thirty (30) days after it arises, the parties
will settle any remaining dispute or controversy exclusively by arbitration in
Dallas, Texas, in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator's award
in any court having jurisdiction. Notwithstanding the above, the Company
shall be entitled to seek a restraining order or injunction in any court of
competent jurisdiction to prevent any continuation of any violation of Paragraph
4 or 5 hereof. Furthermore, should a dispute occur concerning Executive's
mental or physical capacity as described in Subparagraph 6(b), 6(c) or 7(b), a
doctor selected by Executive and a doctor selected by the Company shall be
entitled to examine Executive. If the opinion of the Company's doctor and
Executive's doctor conflict, the Company's doctor and Executive's doctor shall
together agree upon a third doctor, whose opinion shall be binding. Any amount
to which Executive is entitled under this Agreement (including any disputed
amount), which is not paid when due, shall bear interest at a rate equal to the
lesser of eighteen percent (18%) per annum or the maximum lawful rate.
14. Third-Party Agreements and Rights. Executive represents to the Company
that Executive's execution of this Agreement, Executive's employment with the
Company and the performance of Executive's proposed duties for the Company will
not violate any obligations Executive may have to any employer or other party,
and Executive will not bring to the premises of the Company any copies or other
tangible embodiments of non-public information belonging to or obtained from any
such previous employment or other party.
15. Litigation and Regulatory Cooperation. During and after Executive's
employment, Executive shall reasonably cooperate with the Company in the defense
or prosecution of any claims or actions now in existence or which may be brought
in the future against or on behalf of the Company which relate to events or
occurrences that transpired while Executive was employed by the Company;
provided, however, that such cooperation shall not materially and adversely
affect Executive or expose Executive to an increased probability of civil or
criminal litigation. Executive's cooperation in connection with such claims or
actions shall include, but not be limited to, being available to meet with
counsel to prepare for discovery or trial and to act as a witness on behalf of
the Company at mutually convenient times. During and after Executive's
employment, Executive also shall cooperate fully with the Company in connection
with any investigation or review of any federal, state or local regulatory
authority as any such investigation or review relates to events or occurrences
that transpired while Executive was employed by the Company. The Company shall
also provide Executive with compensation on
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an hourly basis calculated at his final base compensation rate for requested
litigation and regulatory cooperation that occurs after his termination of
employment, and reimburse Executive for all costs and expenses incurred in
connection with his performance under this Paragraph 15, including, but not
limited to, reasonable attorneys' fees and costs.
16. Gender Neutral. Wherever used herein, a pronoun in the masculine gender
shall be considered as including the feminine gender unless the context clearly
indicates otherwise.
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IN WITNESS WHEREOF, the parties have executed this Agreement effective
on the date and year first above written.
WYNDHAM INTERNATIONAL, INC.
By: /s/ Xxxxx X. Xxxxxxxx
--------------------------------------
Its: Chairman and Chief Executive Officer
/s/ Xxxxxxx Xxxxxxx
--------------------------------------
Xxxxxxx Xxxxxxx
