EXHIBIT 10.3
EMPLOYMENT AGREEMENT
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This Employment Agreement (this "Agreement") is entered into as of the ____
day of September, 1996, between Homegate Hospitality, Inc., a Delaware
corporation (the "Company"), and Xxxx X. Xxxxxxx ("JCK").
RECITALS:
WHEREAS, JCK is the Chief Operating Officer of the Company and is an
integral part of its management who participates in the Company's planning and
policy decision-making;
WHEREAS, the Board of Directors of the Company (the "Board") desires to
assure itself of the continued management services of JCK by directly engaging
JCK as an officer of the Company; and
WHEREAS, JCK desires to commit himself to serve the Company on the terms
herein provided.
NOW, THEREFORE, in consideration of the foregoing and of the respective
covenants and agreements set forth below, the parties hereto agree as follows:
1. Employment. The Company hereby agrees to employ JCK as its Chief
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Operating Officer, and JCK hereby agrees to accept such employment, on the terms
and conditions set forth herein, for the period commencing on the Effective
Date, as defined below, and expiring as of 11:59 p.m. on December 31, 1998
(unless sooner terminated as hereinafter set forth) (the "Term"). For the
purposes of this Agreement, the "Effective Date" shall mean the date on which
the Company has successfully completed an initial public offering (the
"Offering") of shares of common stock of the Company pursuant to that certain
Registration Statement on Form S-1, filed by the Company on August 30, 1996.
2. Duties and Restrictions.
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(a) Duties as Employee of the Company. JCK shall, subject to the
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supervision of the President of the Company and the Board, have general
management and control of the investment affairs of the Company in the ordinary
course of its business with all such powers with respect to such general
management and control as may be reasonably incident to such responsibilities.
(b) Non-Compete. JCK agrees that he will not, for a period of two
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years following the termination of his employment with the Company, knowingly
(i) employ, associate in any business relationship with, endeavor to entice away
from the Company or its subsidiary or otherwise interfere with any person who
was an employee of or consultant to the Company or any of its affiliates during
the one year-period preceding such termination or (ii) be employed by,
associated with or have any interest in, directly or indirectly (whether as
principal, director, officer, employee, consultant, partner, stockholder,
trustee, manager or otherwise), any extended-stay lodging company which is
directly competitive with the Company or its affiliates within a 25-mile radius
of any extended-stay lodging facility at which the Company or its affiliates
engage in business at the time of such termination; provided, however, that the
provisions of this
Section 2(b) shall not apply in the event (x) the Company terminates JCK's
employment with the Company without "Cause" (as herein defined) or otherwise in
violation of this Agreement, or (y) JCK remains employed by the Company until
the Term of this Agreement expires.
(c) Confidentiality. During the period of his employment hereunder,
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and following the term of such employment, JCK shall not, directly or
indirectly, at any time reveal, divulge or make known to any person or entity,
or use for JCK's personal benefit (including without limitation for the purpose
of soliciting business, whether or not competitive with any business of the
Company or any of its affiliates), any information acquired during the course of
employment hereunder with regard to the financial, business or other affairs of
the Company or any of its affiliates (including without limitation any list or
record of persons or entities with which the Company or any of its affiliates
has any dealings); provided however, that JCK shall not be required to keep
confidential any such information and may disclose such information under the
following circumstances:
(i) during the term of his employment hereunder, JCK may
disclose such confidential information to another employee of the
Company or to representatives or agents of the Company (such as
independent accountants and legal counsel) when such disclosure is
reasonably necessary or appropriate in connection with the performance
by JCK of his duties as an executive officer of the Company;
(ii) at the express direction of any authorized governmental
entity;
(iii) pursuant to a subpoena or other court process; or
(iv) as otherwise required by law or the rules, regulations,
or orders of any applicable regulatory body.
JCK shall, at any time requested by the Company (either during or after his
employment with the Company), promptly deliver to the Company all memoranda,
notes, reports, lists and other documents (and all copies thereof) relating to
the business of the Company or any of its affiliates which he may then possess
or have under his control.
(d) Restrictions on Transfer of Stock. The parties hereby
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acknowledge and agree that JCK will own 237,138 shares of Company common stock
as of the Effective Date (such number of shares may be adjusted pursuant to the
Offering). JCK hereby agrees that two-thirds of the shares (the "Restricted
Shares") of common stock issued to him shall not be transferable by him without
the Company's prior written consent, which consent may be withheld by the
Company in its sole discretion, prior to December 31, 2003; provided, however,
that (i) 50% of the Restricted Shares shall be released from this Section 2(d)
and freely transferable by JCK (subject to compliance with applicable securities
laws) if JCK is still an employee of the Company upon the earlier of (A) the
first date on which the Company owns 30 completed (acquired or constructed)
extended-stay lodging facilities, and (B) December 31, 1997, and (ii) the
remainder of such Restricted Shares shall be released from this Section 2(d) and
freely transferable by JCK (subject to compliance with applicable securities
laws) if JCK is still an employee of the Company upon the earlier of (A) the
first date on which the Company owns 60 completed extended-stay lodging
facilities, and (B) December 31, 1998.
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3. Compensation and Related Matters.
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(a) Base Salary. JCK shall receive an initial base salary paid
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by the Company ("Base Salary") at the annual rate of $145,000, payable in
substantially equal monthly installments (or such other more frequent times as
executives of the Company normally are paid). The Base Salary may be adjusted
upward from time to time, as determined by the Company's Compensation Committee
in its sole discretion. Any payments payable to JCK hereunder in respect of any
calendar year during which JCK is employed by the Company for less than the
entire year, unless otherwise provided in the applicable plan or arrangement,
shall be prorated in accordance with the number of days in such calendar year
during which he is so employed. All amounts payable hereunder shall be net of
applicable withholding for federal income taxes and other taxes, as required by
law.
(b) Expenses. During the term of his employment hereunder, JCK
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shall be entitled to receive prompt reimbursement for all reasonable expenses
incurred by him (in accordance with the policies and procedures established by
the Board for its senior executive officers) in performing services hereunder,
provided that JCK properly accounts therefor in accordance with Company policy.
4. Termination. JCK's employment hereunder may be terminated by the
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Company without any breach of this Agreement only under the following
circumstances.
(a) Death. JCK's employment hereunder shall terminate upon his
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death.
(b) Disability. If, as a result of JCK's incapacity due to
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physical or mental illness, JCK shall have been unable to perform his material
managerial duties and responsibilities hereunder on a full-time basis for 180
consecutive calendar days, and within 30 days after written notice of
termination is given (which may occur before or after the end of such 180 day
period) JCK shall not have returned to the performance of his material
managerial duties and responsibilities hereunder on a full-time basis, the
Company may terminate JCK's employment hereunder.
(c) Cause. The Company may terminate JCK's employment hereunder
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for Cause. For purposes of this Agreement, the Company shall have
"Cause" to terminate JCK's employment hereunder upon:
(i) JCK's failure to obey the reasonable and lawful
orders of a material nature of the Board;
(ii) JCK's habitually neglecting or willfully disregarding
his duties of a material nature;
(iii) JCK's material violation of any material covenant of
JCK contained herein;
(iv) the engagement by JCK in dishonesty of a material
nature that relates to the performance of JCK's duties hereunder;
or
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(v) the engagement by JCK in criminal conduct (other than
minor infractions and traffic violations) that relates to the performance of the
JCK's duties hereunder.
5. Compensation Upon Termination. JCK shall be entitled to the following
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compensation from the Company upon the termination of his employment.
(a) Cause. If JCK's employment shall be terminated for Cause, the
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Company shall pay JCK his Base Salary through the Date of Termination. Such
payments shall fully discharge the Company's obligations hereunder.
(b) Death or Breach of Agreement. If (A) JCK's employment is
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terminated by reason of his death, or (B) the Company shall terminate JCK's
employment in breach of this Agreement (it being understood that a purported
termination of JCK's employment by the Company pursuant to any provision of this
Agreement that is disputed and finally determined not to have been proper shall
be a termination by the Company in breach of this Agreement), then the Company
shall pay JCK his Base Salary through December 31, 1998 in addition to all
benefits payable under the terms of any employee benefit plan or other
arrangement as of the Date of Termination. In the event of a termination by
reason of death, the stock transfer restrictions contained in Section 2(d) above
shall immediately lapse and all shares shall become immediately and fully vested
in JCK's spouse and/or children. In the event of a termination in breach of
this Agreement, JCK shall be considered to remain in the Company's employment
solely for the purpose of meeting the lapse provisions set forth in Section 2(d)
above. In addition, the Company shall make payments of premiums as necessary to
cause JCK and JCK's spouse and children under age 25 to continue to be covered
by the medical and dental insurance as in effect at and as of the Date of
Termination (or to provide as similar coverage as possible for the same premiums
if the continuation of existing coverage is not permitted) for one year after
the Date of Termination, in each case to the extent such coverage is available.
(c) Disability. During any period that JCK fails to perform his
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material managerial duties and responsibilities hereunder as a result of
incapacity due to physical or mental illness, JCK shall continue to receive his
Base Salary and any bonus payments until JCK's employment is terminated pursuant
to Section 4(b) hereof. After such termination, the Company shall pay to JCK,
on or before the fifth day following the Date of Termination (as hereinafter
defined), his Base Salary to the Date of Termination. In addition, the Company
shall make payments of premiums as necessary to cause JCK and JCK's spouse and
children under age 25 to continue to be covered by the medical and dental
insurance as in effect at and as of the Date of Termination (or to provide as
similar coverage as possible for the same premiums if the continuation of
existing coverage is not permitted) for one year after the Date of Termination,
in each case to the extent such coverage is available.
(d) Mitigation. JCK shall not be required to mitigate the amount of
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any payment provided for in this Section 5 by seeking other employment or
otherwise, nor shall the amount of any payment provided for in this Section 5 be
reduced by any compensation earned by JCK as the result of employment by another
employer after the Date of Termination, or otherwise.
All amounts payable hereunder shall be net of applicable withholding for federal
income taxes and other taxes, as required by law.
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6. Other Provisions Relating to Termination.
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(a) Notice of Termination. Any termination of JCK's employment by the
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Company (other than termination because of the death of JCK) shall be
communicated by written Notice of Termination to JCK. 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 and shall set
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of JCK's employment under the provision so indicated.
(b) Date of Termination. For purposes of this Agreement, "Date of
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Termination" shall mean (i) if JCK's employment is terminated by his death, the
date of his death; (ii) if JCK's employment is terminated because of a
disability pursuant to Section 4(b), then 30 days after Notice of Termination is
given (provided that JCK shall not have returned to the performance of his
duties on a full-time basis during such 30 day period); (iii) if JCK's
employment is terminated by the Company for Cause, then, subject to Section
6(c), the date specified in the Notice of Termination; and (iv) if JCK's
employment is terminated for any other reason, the date on which a Notice of
Termination is given.
(c) Cause. In the case of any termination of JCK for Cause, the
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Company will give JCK a Notice of Termination describing in reasonable detail
the facts or circumstances giving rise to JCK's termination (and, if applicable,
the action required to cure same) and will permit JCK 30 days to cure such
failure to comply or perform. Cause for JCK's termination will not be deemed to
exist until the expiration of the foregoing cure period, so long as JCK
continues to use his best efforts during the cure period to cure such failure.
If within 30 days following JCK's receipt of a Notice of Termination for Cause
(i) JCK delivers written notice to the Company denying that Cause exists, the
question of the existence or nonexistence of Cause will be submitted for
arbitration in accordance with Section 9; or (b) if JCK has not cured the facts
or circumstances giving rise to JCK's termination for Cause and shall not have
delivered a notice pursuant to clause (i) of this Section 6(c), then JCK's
termination for Cause shall be effective as of the date specified in the Notice
of Termination.
(d) Interest. Until paid, all past due amounts required to be paid by
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the Company under any provision of this Agreement shall bear interest at the
highest non-usurious rate permitted by applicable federal, state, or local law.
7. Successors; Binding Agreement.
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(a) Successors. This Agreement shall be binding upon, and inure to
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the benefit of, the Company, JCK, and their respective successors, assigns,
personal and legal representatives, executors, administrators, heirs,
distributees, devisees, and legatees, as applicable.
(b) Certain Payments. If JCK should die while any amounts would still
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be payable to him hereunder if he had continued to live, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to JCK's devisee, legatee, or other designee or, if there be no
such designee, to JCK's estate.
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8. Notice. For purposes of this Agreement, notices and all other
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communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when (i) delivered personally; (ii) sent by
facsimile or similar electronic device and confirmed; (iii) delivered by
overnight express; or (iv) if sent by any other means, upon receipt. Notices
and all other communications provided for in this Agreement shall be sent to the
parties at the addresses indicated on the signature page attached hereto, or
such other addresses of which the parties have received 10 days prior written
notice.
9. Disputes. In the event any dispute or controversy arises under this
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Agreement and is not resolved by mutual written agreement between JCK and the
Company within 30 days after notice of the dispute is first given, then, upon
the written request of JCK or the Company, such dispute or controversy shall be
submitted to arbitration, which arbitration shall be conducted in accordance
with the rules of the American Arbitration Association. Judgment may be entered
thereon and the results of arbitration will be binding and conclusive on the
parties hereto. Any arbitrator's award or finding or any judgment or verdict
thereon will be final and unappealable. All parties agree that venue for
arbitration will be in Dallas, Texas, and that any arbitration commenced in any
other venue will be transferred to Dallas, Texas, upon the written request of
any party to this Agreement. The prevailing party will be entitled to
reimbursement for reasonable attorneys fees, costs or other expenses pertaining
to the arbitration and the enforcement thereof and such attorneys fees, costs or
other expenses shall become a part of any award, judgment or verdict. All
arbitrations will have three individuals acting as arbitrators: one arbitrator
will be selected by JCK, one arbitrator will be selected by the Company, and the
two arbitrators so selected will select a third arbitrator. Any arbitrator
selected by a party will not be affiliated, associated or related to the party
selecting that arbitrator in any matter whatsoever. The decision of the
majority of the arbitrators will be binding on all parties.
10. Miscellaneous. No provision of this Agreement may be modified,
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waived, or discharged unless such waiver, modification, or discharge is agreed
to in writing signed by JCK and the Company. 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, 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, excluding any choice-of-law provisions thereof.
11. Validity. The invalidity or unenforceability of any provision or
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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.
12. Counterparts. This Agreement may be executed in several counterparts,
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each of which shall be deemed to be an original, but all of which together will
constitute one and the same agreement.
THE SIGNATURE PAGE IS ATTACHED HERETO.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date and
year first above written.
ADDRESS:
HOMEGATE HOSPITALITY, INC.
a Delaware corporation
0000 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Fax No.: (000) 000-0000
By:
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Xxxxxx X. Faith
President
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Xxxx X. Xxxxxxx
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