Exhibit 10.1
EXECUTIVE EMPLOYMENT AGREEMENT
This EXECUTIVE EMPLOYMENT AGREEMENT ("Agreement") between Wyndham
International, Inc., a Delaware corporation (the "Company") and Xxxx X. Xxxxx
("Executive") is made, and is effective, as of the 17th day of September, 2002.
WHEREAS, the Company desires to employ Executive and Executive desires to
be employed by the Company;
WHEREAS, as an additional inducement to Executive to enter into this
Agreement, the Company shall, on the Start Date, as defined below, grant
Executive a certain number of shares of class A common stock of the Company as
set forth in the agreement attached hereto as Exhibit A (the "Stock Grant"); and
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 Executive's employment shall extend from September
30, 2002 (the "Start Date") until the third anniversary of the Start Date;
provided, however, that the term of Executive's employment shall automatically
be extended for one additional year on the third anniversary of the Start Date
and each anniversary thereafter unless, not less than ninety (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 Executive's employment,
the term of Executive's employment shall continue in effect until the later of
the end of the initial term described above or the end of the eighteenth (18th)
month following the month in which the Change in Control occurred. The term of
Executive's employment 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 Executive Vice President, General Counsel, and Chief Legal 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 be
prescribed by the Chairman of the Board of the Company (the "Chairman") or the
Chief Executive Officer of the Company (the "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. Executive shall serve as the senior
most legal counsel of the Company. Notwithstanding the foregoing, Executive may
serve on other boards of directors, with the approval of the Chairman or CEO, or
engage in religious, charitable or other community activities as long as such
services and activities are 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.
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3. Compensation and Related Matters.
(a) Base Salary. During the Period of Employment, Executive's initial
annual base salary ("Base Salary") shall be $350,000. Executive's salary for the
year 2002 shall be prorated for the portion of the year Executive is employed
with the Company. Thereafter, Executive's Base Salary shall be redetermined at
least thirty (30) days before each annual compensation determination date (the
"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, if applicable, shall be
payable in substantially equal bi-weekly installments and shall in no way limit
or reduce the obligations of the Company hereunder.
(b) Incentive Compensation. In addition to Base Salary or, if applicable,
Adjusted Base Salary, Executive shall be eligible to receive in each fiscal year
during the Period of Employment, on or about the Annual Compensation
Determination Date (or earlier as provided in Paragraph 7 or 8 of this
Agreement), cash incentive compensation (the "Incentive Compensation") in an
amount determined annually by the Board based on individual performance,
"Employer EBITDA Achievement" (as hereinafter defined), and total return to
shareholders. Incentive Compensation shall equal from zero to 1 1/2 times the
then current Base Salary or, if applicable, Adjusted Base Salary. "Employer
EBITDA Achievement" is the degree to which the annual budget established by the
Company for earnings before interest, taxes, depreciation, and amortization is
achieved. Incentive Compensation shall be fixed and guaranteed at 100% of Base
Salary paid for the period commencing on the Start Date and ending December 31,
2002. Thereafter, Incentive Compensation shall be targeted at a minimum of 100%
of the Base Salary or, if applicable, Adjusted Base Salary for any year in which
Employer EBITDA Achievement is one hundred percent (100%) or more ("Target
Incentive Compensation"). The maximum Incentive Compensation payable to
Executive for any fiscal year shall be equal to one hundred fifty percent (150%)
of the Base Salary, or if applicable, Adjusted Base Salary. Incentive
Compensation shall be paid to Executive no later than the date incentive
compensation is paid by the Company to similarly situated executives.
"Pro Rata Incentive Compensation" shall be paid to Executive if Executive's
employment is terminated by reason of Executive's death or disability, as
provided in Subparagraphs 6(a) and 6(b), if Executive's employment is terminated
by the Executive 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). Pro Rata Incentive Compensation equals the Incentive
Compensation for the fiscal year of termination multiplied by a fraction, the
numerator of which is the number of days in the current fiscal year through Date
of Termination and the denominator of which is 365.
If, for the purpose of calculating Incentive Compensation or Pro Rata
Incentive Compensation, the Incentive Compensation cannot be determined by the
time required to be paid, the Company shall make a good faith estimate of the
pro rata amount based on an amount Executive would have earned had he continued
employment for the entire fiscal year; provided, however, that where the Date of
Termination occurs during the first six months of any fiscal year, the Pro Rata
Incentive Compensation paid to Executive if Executive's employment is
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terminated by reason of Executive's death or disability, by the Executive for
Good Reason, or by the Company without Cause shall not exceed fifty percent
(50%) of the maximum Incentive Compensation which could have been paid to
Executive in the fiscal year immediately preceding the fiscal year of
termination.
Subject to Paragraph 18, on the Start Date, the Company shall grant
Executive a certain number of shares of class A common stock of the Company as
set forth in the Stock Grant.
Executive will also participate in such other incentive compensation plans,
policies or practices as the Board shall determine.
(c) 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 officers) in performing services hereunder during the Period of
Employment, provided that Executive properly accounts therefor in accordance
with Company policy.
(d) Other Benefits. During the Period of Employment, Executive shall be
entitled to continue to participate in or receive benefits under all of 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. To the extent that the scope or nature of benefits
described in this section are determined under the policies of the Company based
in whole or in part on the seniority or tenure of an employee's service,
Executive shall be deemed to have a tenure with the Company equal to the actual
time of Executive's service with Company; provided, however, that Executive
shall be entitled to the number of paid vacation days set forth in Paragraph
3(f). 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 the 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(c) 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 so 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 calendar year.
During the Period of Employment, but prior to the date that Executive and
Executive's family are eligible to participate in the Company's medical
insurance plan, the Company will reimburse Executive for the cost of continuing
medical coverage under his previous employer's medical plan pursuant to 29
U.S.C. ss.1161 et seq. (commonly known as "COBRA"), if Executive elects COBRA,
less the amount Executive would pay for the Company's Point of Service medical
insurance plan for coverage for Executive and Executive's
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family. Executive must submit a receipt or cancelled check for the COBRA medical
insurance coverage to Human Resources at the Company's Dallas, Texas corporate
offices to be reimbursed.
(e) 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.
(f) Vacations. During the Period of Employment, 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 as Executive;
provided, however, that Executive shall be entitled to twelve paid vacation days
during 2002 and will be entitled to no less than fifteen days of paid vacation
during each additional year during the Period of Employment, notwithstanding the
twelve days of paid vacation received by Executive during 2002. Executive shall
also be entitled to all paid holidays given by the Company to its executives.
(g) 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. The Company (and, if applicable, its
predecessors) shall provide Executive with, and Executive shall become
acquainted with, information related to the business affairs, trade secrets, and
other matters of the Company and its subsidiaries which is of a proprietary or
confidential nature, including but not limited to the 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 (collectively the "Confidential Information")
concerning the business of the Company, its predecessors and their respective
subsidiaries. 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), governmental agency, or similar tribunal, 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
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such Confidential Information in competing, directly or indirectly, with the
Company or any of its subsidiaries. At such time as Executive shall cease to be
employed by the Company, or if the Company terminates the Agreement pursuant to
Paragraph 18, Executive 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.
(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.
(c) Definition of Subsidiary. For purposes of this Paragraph 4 and for
purposes of Paragraph 5 (Covenant Not to Compete) below, "subsidiary" of the
Company means any corporation, partnership, joint venture, limited liability
company or other entity of which (i) at least a majority of the securities or
other interests having by their terms voting power to elect a majority of the
board of directors or others performing similar functions for such entity is
directly or indirectly beneficially owned by the Company (either alone or
through or together with one or more of its subsidiaries), or (ii) the Company
or any subsidiary of the Company is a general partner or manager.
5. Covenant Not to Compete. In consideration for the Stock Grant, the
Company's promise to provide Confidential Information as set forth in Paragraph
4 above, the payment specified in Paragraph 18, if necessary, and for
Executive's employment by the Company under the terms provided in this
Agreement, as a means to aid in the performance and enforcement of the terms of
and preserve the rights of the Company pursuant to the Unauthorized Disclosure
provisions of Paragraph 4, Executive agrees as follows:
(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 (except that the restrictions of this Paragraph 5(a)
relating to the twenty-four (24) months after the term of employment shall not
apply if (x) Executive terminates his employment for Good Reason as provided in
Subparagraph 6(e) or (y) Executive's employment is terminated by the Company
without Cause as provided in Subparagraph 6(d) within eighteen (18) months after
the occurrence of a Change in Control), Executive will not, directly or
indirectly, as an owner, director, principal, agent, officer, 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
or any of its subsidiaries 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, after Executive's employment with the
Company has terminated, upon receiving written permission by the Board,
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 and its subsidiaries in the area or territory in
question. Immateriality, for purposes of the foregoing sentence, shall be
determined in the sole discretion of the Board in good faith.
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(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 (except that the restrictions of this Paragraph 5(b)
relating to the twenty-four (24) months after the term of employment shall not
apply if (x) Executive terminates his employment for Good Reason as provided in
Subparagraph 6(e) or (y) Executive's employment is terminated by the Company
without Cause as provided in Subparagraph 6(d) within eighteen (18) months after
the occurrence of a Change in Control), 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 or consumer with whom the Company or
any of its subsidiaries from time to time (i) has an existing agreement or
business relationship; (ii) has had an agreement or business relationship within
the two-year period preceding the Executive's last day of employment with the
Company; or (iii) has included as a prospect in its applicable pipeline) or
vendors of the Company or any of its subsidiaries in any of the areas or
territories in which the Company or any of its subsidiaries conducts operations
if such action has the intent or effect of interfering with the Company's or any
of its subsidiaries' 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 (except that the restrictions of this Paragraph 5(c)
relating to the twenty-four (24) months after the term of employment shall not
apply if (x) Executive terminates his employment for Good Reason as provided in
Subparagraph 6(e) or (y) Executive's employment is terminated by the Company
without Cause as provided in Subparagraph 6(d) within eighteen (18) months after
the occurrence of a Change in Control), Executive will not directly or
indirectly solicit or induce any current employee of the Company or any of its
subsidiaries (including, without limitation, any current employee of the Company
or any of its subsidiaries within the six-month period preceding Executive's
last day of employment with the Company or within the 24-month period of this
covenant) 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 current
employee of the Company or any of its subsidiaries without providing the Company
with ten (10) days' prior written notice of such proposed employment.
(d) Executive agrees and acknowledges that the restrictions contained in
this noncompetition covenant are reasonable in scope of activity, duration and
geographical area and are necessary to protect the Company's business interests
and Confidential Information after the Start Date of this Agreement. If any
provision of this noncompetition covenant as applied to any party or to any
circumstance is adjudged by a court to be invalid or unenforceable, the same
will in no way affect any other circumstance or the validity or enforceability
of this Agreement. If any such provision, or any part thereof, is held to be
unenforceable because of the duration of such provision or the scope of activity
or area covered thereby, the parties agree that the court making such
determination shall have the power to reduce the duration and/or area and/or
scope of activity of such provision, and/or to delete specific words or phrases,
and in its reduced form, such provision shall then be enforceable and shall be
enforced. The parties agree and acknowledge that the breach of this
noncompetition covenant will cause irreparable damage to
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the Company, and upon breach of any provision of this noncompetition covenant,
the Company shall be entitled to injunctive relief, specific performance, or
other equitable relief; provided, however, that this shall in no way limit any
other remedies which the Company may have (including, without limitation, the
right to seek monetary damages).
(e) 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 time 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 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 termination is approved by not less than a majority of the Board of
Directors at a meeting of such Board of Directors called and held for such
purpose. Any determination by the Board of Directors that "Cause" exists shall
be made by the Board of Directors in good faith. 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 of
Executive, a plea of nolo contendere by Executive or conduct by Executive that
would reasonably be expected to result in material injury to the reputation of
the Company if he were retained in his position with 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 for more than
thirty (30) days 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 hereunder without
Cause if such termination is approved by a majority of the Board of Directors at
a meeting of the Board of Directors 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
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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 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;
(B) any removal, during the Period of Employment, from Executive of his title of
Executive Vice President, General Counsel and Chief Legal Officer; (C) an
involuntary reduction in Executive's Base Salary or Adjusted Base Salary or
involuntary reduction in cash incentive 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 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 thirty (30) 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 below the level of CEO. "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 ninety (90)
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 ninety (90) 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, any
termination by the Company pursuant to Paragraph 18, 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), by the Company for Cause under
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Subparagraph 6(c), or if the Agreement is terminated by the Company pursuant to
Paragraph 18, 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 a 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 accrued and unpaid Incentive Compensation, if any, for the
fiscal year preceding termination and Pro Rata 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. Such payments, in the aggregate, shall fully discharge the
Company's obligations under this Paragraph 7(a). In addition to the foregoing,
any payments or other rights to which Executive's spouse, beneficiaries, or
estate may be entitled under any employee benefit plan or arrangement shall be
governed by the terms of such plan or arrangement.
(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 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, at
which point Executive shall then receive accrued and unpaid base salary and
accrued and unpaid Incentive Compensation, if any, for the fiscal year preceding
termination and Pro Rata Incentive Compensation, if any, under Subparagraph
3(b). 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, and accrued and unpaid Incentive Compensation, if any, for
the fiscal year preceding termination. 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.
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(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 accrued and unpaid Incentive Compensation, if any, for
the fiscal year preceding termination and Pro Rata 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 continue Executive's compensation at a rate
equal to the sum of Executive's Average Base Salary and his Average
Incentive Compensation, payable for the remaining length of the Period of
Employment after the Date of Termination, but in no event for fewer than
twenty-four (24) months (the "Severance Amount"). 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 with an employer other than the Company during the twelve (12)
month period ending on the first anniversary of the Date of Termination,
the Company shall be entitled to set-off against the remaining Severance
Amount fifty percent (50%) of the amount of any cash compensation received
by Executive from the new employer during such period; provided, further,
that in the event Executive commences any employment with, or is employed
by, any employer other than the Company during the twelve (12) month period
following the first anniversary of the Date of Termination, the Company
shall be entitled to set-off against the remaining Severance Amount
twenty-five percent (25%) of the amount of any cash compensation received
by Executive from such employer during such period. 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; provided,
however, that if Executive has not been employed by the Company for a full
fiscal year, then "Average Base Salary" shall mean the actual amount of
Base Salary paid to Executive for the immediately preceding fiscal year,
which amount shall be annualized as if Executive had been employed by the
Company for the entire immediately preceding fiscal year, and if Executive
was not employed by the Company during the immediately preceding fiscal
year, then "Average Base Salary" shall mean the actual amount of Base
Salary paid to Executive for the fiscal year in which termination occurs,
which amount shall be annualized as if Executive had been employed for such
entire fiscal year. 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 the three (3) immediately
preceding fiscal years or such fewer number of complete fiscal years as
Executive may have been employed by the Company; provided, however, that if
Executive has not been employed by the Company for a complete fiscal year,
then "Average Incentive Compensation" shall mean $350,000. 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
10
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 thirty (30) 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 coverage 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, and accrued and unpaid Incentive Compensation, if any, for the fiscal
year preceding termination. 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 any of 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.
(g) Nothing contained in the foregoing Subparagraphs 7(a) through 7(e)
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 during the Period of Employment. 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. If such termination does not
11
occur within eighteen (18) months after the occurrence of the first event
constituting a Change of Control, the provisions of Subparagraph 8(a) shall
terminate and be of no further force or effect.
(a) Change in Control.
(i) If within eighteen (18) months after the occurrence of the first
event constituting a Change in 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 equal bi-weekly
installments, in arrears, over twenty-four (24) months; provided, however,
that in the event Executive commences any employment with an employer other
than the Company during such twenty-four (24) month period, the Company
shall not be entitled to any right of set-off against the Severance Amount
for any cash compensation received by the Executive from the new employer
during such period.
(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 until the
final installment payment of the Severance Amount has been made;
(iii) Executive shall also be entitled to any such 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
(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 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 sentence, will be equal to the Severance Amount. In addition, if
pursuant to the immediately preceding sentence a full gross up payment is not
made to Executive for the entire amount of Excise Tax (and any federal, state
and local income taxes and employment taxes (together with penalties and
interest) and Excise Tax on the payment provided for in the immediately
preceding sentence) incurred by Executive in connection with the first event
12
constituting a Change in Control, then the Company will pay to Executive an
additional amount that, after taking into account the amount payable pursuant to
the immediately preceding sentence, will completely gross up the Executive for
the entire amount of Excise Tax (and for any federal, state and local income
taxes and employment taxes (together with penalties and interest) and Excise Tax
on the payments provided for by this Subparagraph 8(b)(i)); provided, however,
that any payment made pursuant to this sentence will not exceed an amount equal
to twice the Executive's Base Salary or Adjusted Base Salary, as applicable, in
effect immediately prior to the date of the Change in Control. The payments made
pursuant to this Subparagraph 8(b)(i) are collectively referred to herein as the
"Gross Up Payments". It is the intent that the Gross Up Payments provided for by
this Subparagraph 8(b)(i) place Executive in the same position Executive would
have been in had no Excise Tax been imposed, subject to the limitation on the
Gross Up Payment provided for in the second sentence of this Subparagraph
8(b)(i) by the proviso of such sentence.
(ii) Applicable Rates. For purposes of determining the amount of the Gross
Up Payments, 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 Payments are to be made and state and local income taxes at the highest
marginal rates of taxation in the state and locality of Executive's primary
residence for the calendar year in which the Gross Up Payments are to be made,
net of the maximum reduction in federal income taxes that could be obtained from
deduction of such state and local taxes.
(iii) Time for Payment. The Company will pay the estimated amount of the
Gross Up Payments in cash to Executive at such time or times when the Excise Tax
is due. Executive and the Company and their respective tax advisors agree to
confer and reasonably cooperate in the determination of the actual amount of the
Gross Up Payments. Without limiting the foregoing, Executive shall, if requested
by the Company, cooperate in a valuation of Executive's obligations under
paragraph 5 of this Agreement by a valuation firm selected and paid for by the
Company. Further, Executive and the Company agree to make such adjustments to
the estimated amount of the Gross Up Payments as may be necessary to equal the
actual amount of the Gross Up Payments, 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:
"Change in Control" shall mean any of the following:
(a) the acquisition by any 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 thirty-five percent
(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
13
Investor or Excluded Group, would not have resulted in the acquisition by
such Acquiring Person of thirty-five percent (35%) or more of the combined
voting power or economic interests of the then outstanding voting
securities; or
(b) during any period of twelve (12) consecutive months after the
Issuance Date, the individuals who at the beginning of any such 12-month
period constituted a majority of the 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 (as such terms are 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 twenty-five percent (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 fifty-seven and one-half percent (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
(d) the sale or other disposition of assets representing fifty
percent (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 Certificate of Designation of Series B
Convertible Preferred Stock of Wyndham International, Inc. as in effect on
the date of this Agreement.
"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 for in the Agreement shall be in writing and shall be deemed
to have been duly given when
14
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
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. This Agreement, with
its Exhibit A, constitutes the entire agreement between the parties with respect
to the subject matter hereof. 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 and Exhibit A to this Agreement. This
Agreement supersedes all prior agreements between the parties with respect to
any related subject matter. 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 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. Mediation and/or Arbitration; Other Disputes.
(a) General Procedures. In the event of any dispute or controversy arising
under or in connection with the terms of this Agreement, the parties shall first
promptly try in good faith
15
to settle such dispute or controversy by mediation under the Commercial
Mediation Rules of the American Arbitration Association ("AAA") before resorting
to arbitration, provided, however, that if the dispute or controversy concerns
whether Executive is entitled to a payment under subparagraph 8(a) or 8(b) or
the amount of any payment to which the Executive is entitled under subparagraph
8(a) or 8(b), the expedited procedures in subparagraph 13(b) will apply. In the
event such dispute or controversy remains unresolved in whole or in part for a
period of thirty (30) days after it is submitted to mediation, the parties will
settle any remaining dispute or controversy exclusively by arbitration in
Dallas, Texas in accordance with the Commercial Arbitration Rules of the AAA
then in effect. The parties hereto agree that any dispute relating to the terms
of this Agreement or the performance by the parties of their respective
obligations under the terms of this Agreement shall not in any event be subject
to the AAA's National Rules for the Resolution of Employment Disputes. Judgment
may be entered on the arbitrator's award in any court having jurisdiction. With
respect to a dispute or other controversy arising under or in connection with
the terms of this Agreement after a Change in Control, all administration fees
and arbitration fees shall be paid solely by the Company. Each party agrees to
pay its own legal fees and expenses incurred in connection with mediation and/or
arbitration.
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. Should a
dispute occur concerning Executive's mental or physical capacity as described in
subparagraphs 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 from the
date due until paid at a rate equal to the lesser of eighteen percent (18%) per
annum or the maximum lawful rate.
(b) Expedited Procedures. The following expedited procedures apply in the
event of any dispute or controversy concerning whether Executive is entitled to
a payment under subparagraph 8(a) or 8(b) or the amount of any payment to which
Executive is entitled under subparagraph 8(a) or 8(b), and are intended to
supplement the general procedures detailed above. The parties shall first
promptly try in good faith to settle such dispute or controversy by expedited
mediation under the Commercial Mediation Rules of the AAA, as modified by this
Agreement, before resorting to arbitration. In the event that such dispute or
controversy remains unresolved in whole or in part for a period of fifteen (15)
days after either party files a request for expedited mediation with the AAA,
the parties will settle any remaining dispute or controversy exclusively by
expedited arbitration in Dallas, Texas in accordance with the Expedited
Procedures of the Commercial Arbitration Rules of the AAA then in effect, as
modified by this Agreement. The parties agree that the arbitration hearing will
be held sixty (60) days after the filing of a demand for expedited arbitration.
The parties further agree that the following deadlines shall apply: (1) a party
has fifteen (15) days following the conclusion of the mediation period to file
an arbitration demand; (2) the opposing party then has seven (7) days to file an
answering statement; (3) thereafter, the parties have thirty-five (35) days to
conduct discovery, and (4) the parties have seven (7) days following the close
of discovery to exchange copies of all exhibits that they intend to submit at
the hearing. During the first five (5) days of
16
the discovery period, and prior to either party starting discovery, the parties
must agree upon the type of discovery that will be conducted and upon a
discovery schedule. Any dispute regarding the type of discovery or the discovery
schedule must be resolved by the arbitrator during a discovery conference
conducted in person or on the telephone within the first five (5) days of the
discovery period. The parties agree that the arbitrator shall have fifteen (15)
days after the arbitration hearing to issue an award. The award shall be written
and reasoned, if requested by one of the parties.
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 an hourly basis (to be derived from
the sum of his Base Salary or, if applicable, Adjusted Base Salary and Average
Incentive Compensation) 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.
17. Assumption in Bankruptcy. The Company agrees that in the event that a
chapter 11 bankruptcy petition is filed by or against the Company, the Company
will, at its sole expense, promptly file a motion seeking Bankruptcy Court
approval of the Company's assumption of this Agreement as an executory contract
pursuant to Bankruptcy Code section 365. The Company further agrees to use
commercially reasonable efforts to seek approval of such motion. Executive
agrees to cooperate with the Company's efforts in prosecuting such motion, and
agrees to provide such information and assistance as may be necessary for the
Company to obtain the approval thereof; provided, however, that Executive's
obligation to provide such assistance and cooperation shall not require
Executive to pay any of the costs, including legal fees or expenses, incurred by
the Company in seeking approval of such motion.
17
18. Termination by the Company Prior to the Start Date. The Company may
terminate this Agreement prior to the Start Date without any breach of this
Agreement. If the Company terminates this Agreement prior to the Start Date,
under circumstances which would have constituted a termination by the Company
without Cause (as defined in Paragraph 6(d) of the Agreement), Executive shall
be entitled to the severance payment specified in Subparagraph 7(d)(i) of the
Agreement, pursuant to the terms set forth therein; provided, however that (a)
the Company shall not be obligated to make any payment under Subparagraph
7(d)(i) unless Executive first executes and delivers to the Company a general
release in a form and manner satisfactory to the Company and (b) the Severance
Amount shall be $1,400,000. Other than as specified in this Paragraph 18, the
Company shall have no further liability or obligation to Executive under the
Agreement or Exhibit A to the Agreement, if the Company terminates this
Agreement prior to the Start Date, including, but not limited to, the Company's
obligation to grant the Stock Grant. The Company and Executive agree that this
Paragraph 18 sets forth all the consideration to which Executive is entitled
from the Company if the Company terminates the Agreement prior to the Start
Date, and Executive agrees that he shall not be entitled to or eligible to
receive any other payments or benefits under the Agreement, Exhibit A to this
Agreement, or under any Company severance, bonus, retention or incentive policy,
arrangement or plan. In exchange for the receipt of the payments made pursuant
to this Paragraph 18, Executive agrees to be bound by and comply with Paragraphs
4 and 5 of the Agreement. For purposes of this Paragraph 18, the twenty-four
month periods specified in Subparagraphs 5(a)-(c) shall start on the date of the
first payment made to Executive pursuant to this Paragraph 18. Notwithstanding
the foregoing, if an arbitrator determines that the Company breached its
obligations under this Paragraph 18, pursuant to the arbitration procedures set
forth in Paragraph 13, the Company shall reimburse the Executive for all costs
and expenses (including legal fees) arising out of the enforcement by the
Executive of his rights under this Paragraph 18.
IN WITNESS WHEREOF, the parties have executed this Agreement effective on
the date and year first above written.
WYNDHAM INTERNATIONAL, INC.
By: /s/ XXXX X. XXXXXXXX
-------------------------------------
Its: Chairman and Chief Executive Officer
/s/ XXXX X. XXXXX
-------------------------------------
Xxxx X. Xxxxx
18
EXHIBIT A
WYNDHAM INTERNATIONAL, INC.
RESTRICTED UNIT AWARD AGREEMENT
Dated as of September 30, 2002
Wyndham International, Inc., a corporation organized under the laws of
Delaware (the "Company"), hereby awards to Xxxx X. Xxxxx (the "Participant"), as
of the date hereof (the "Award Date"), an Award (the "Award") of 700,000
Restricted Units ("Restricted Units"), each such Restricted Unit covering the
right to receive one share of Class A Common Stock of the Company, subject to
the terms and conditions set forth below. Such grant is pursuant to the Second
Amendment and Restatement of the Wyndham International, Inc. 1997 Incentive Plan
(the "Plan") and is made as an inducement to the Participant to enter into the
Employment Agreement between the Participant and the Company of even date
herewith (the "Employment Agreement").
1. Award Subject to Acceptance of Agreement and Employment Agreement. The
Award shall not be valid and binding unless the Participant accepts this
Agreement and the Employment Agreement by executing this Agreement and the
Employment Agreement and returning such original execution copies to the
Company.
2. Vesting of Award. Except as set forth below in this Agreement, and subject
to the discretion of the Committee or the Board of Directors to accelerate
the vesting schedule ("Vesting Schedule") hereunder, this Award shall be
vested and nonforfeitable with respect to the indicated number of
Restricted Units on the dates indicated in the following Vesting Schedule
provided the Participant has remained employed by the Company or an
Affiliate to such date:
======================================================================
Number of Restricted Units
Subject to Vesting Date Restrictions Lapse
----------------------------------------------------------------------
233,333 3rd anniversary of Award Date
----------------------------------------------------------------------
233,333 4th anniversary of Award Date
----------------------------------------------------------------------
233,334 5th anniversary of Award Date
======================================================================
In the event of a Change in Control (as defined in the Employment
Agreement) after the date hereof during the Participant's employment with
the Company, the vesting date for any Restricted Units which have not yet
vested shall be accelerated to the date of such Change in Control provided
the Participant is employed by the Company or an Affiliate on such date.
If in connection with any such Change in Control, the outstanding
shares of Class A Common Stock are changed into or exchanged for stock or
other securities of any other corporation or entity or cash or any other
property, whether by merger, consolidation,
1
amalgamation, liquidation or otherwise (each a "Transaction"), then proper
provision shall be made so that upon consummation of such Transaction:
(a) each Restricted Unit covered by this Award shall thereafter
represent, in lieu of the right to receive a share of Class A Common
Stock, the right to receive the stock, other securities, cash and/or
other property to which a Participant would have been entitled upon
consummation of such Transaction and a certificate for such share of
Class A Common Stock had been delivered to the Participant pursuant to
Section 5(c) hereof immediately prior to such consummation (or, if
applicable, any record date with respect to such Transaction); and
(b) the issuer of any such stock or other securities shall
promptly file a registration statement under the Securities Act of
1933, as amended (the "Act"), with respect to the stock or other
securities receivable upon vesting of a Restricted Unit and shall use
its best efforts to cause such registration statement to become and
remain effective such that upon vesting of the Restricted Units, such
stock or other securities received by the Participant shall not be
"restricted securities" within the meaning of Rule 144(a) under such
Act.
The Company shall not be a party to any Transaction unless prior to
consummation thereof, each corporation (other than the Company) or other
entity which may be required to deliver (or, as applicable, register) any
stock, securities, cash or other property in connection with the vesting of
Restricted Units shall assume, by written instrument, a copy of which shall
be delivered to the Participant, the obligation to so deliver to the
Participant (or to so register) such shares of stock, securities, cash or
property in connection with such vesting and to comply with the other
provisions of this Award.
3. Termination of Employment. If the Participant's employment by the Company
or an Affiliate is terminated prior to the dates the restrictions lapse as
set forth above, the Participant shall forfeit all Restricted Units which
have not yet vested, except as provided below. Any transfer of employment
from the Company to an Affiliate shall not be deemed to be a termination of
employment for purposes of this Agreement.
(a) Termination Due to Death. If the Participant's employment terminates
by reason of death prior to the dates the restrictions lapse as set
forth above, the Participant's estate shall become fully vested in all
the Restricted Units.
(b) Termination Due to Disability. If the Participant's employment
terminates by reason of disability as described in Subparagraph 6(b)
of the Employment Agreement prior to the dates the restrictions lapse
as set forth above, the Participant shall become fully vested in all
the Restricted Units.
(c) Termination for Cause or Without Good Reason. If the Participant's
employment is terminated by the Company or an Affiliate for Cause (as
defined in the Employment Agreement) or if the Participant terminates
his employment for any
2
reason other than Good Reason (as defined in the Employment
Agreement), the unvested portion of the Award shall terminate
immediately and the Participant shall have no further rights or
interest therein.
(d) Termination without Cause or for Good Reason. If the Participant's
employment is terminated by the Company or an Affiliate without Cause
(as defined in the Employment Agreement) or the Participant terminates
his employment for Good Reason (as defined in the Employment
Agreement), the Participant shall become fully vested in all
Restricted Units.
Notwithstanding the foregoing, if the Participant breaches any of the
provisions contained in Paragraphs 4 or 5 of the Employment Agreement,
(i) any portion of the Award that will vest by virtue of this Section
3(d) shall immediately terminate upon any such breach and the
Participant shall have no further rights or interest therein, and (ii)
to the extent any portion of the Award has vested by virtue of this
Section 3(d), the Participant shall be required upon any such breach
to pay to the Company the fair market value per share of Class A
Common Stock on the date of vesting, multiplied by the number of
shares of Class A Common Stock received by the Participant.
4. Incorporation of Plan. Notwithstanding anything herein to the contrary,
this Award shall be subject to and governed by all the terms and conditions
of the Plan. Capitalized terms in this Agreement shall have the meaning
specified in the Plan, unless a different meaning is specified herein. In
the event of any conflict between any provisions in the Plan and the
provisions in this Agreement, the provisions of the Plan shall govern.
5. Additional Terms and Conditions of Award.
(a) Non-Transferability of Award. The Restricted Units shall not be
assignable or transferable by Participant other than by will and the
laws of descent and distribution until the restrictions on the
Restricted Units lapse. The Restricted Units shall not otherwise be
transferred, assigned, pledged or hypothecated for any purpose
whatsoever and are not subject, in whole or in part, to execution,
attachment, or similar process. Any attempted assignment, transfer,
pledge or hypothecation or other disposition of the Restricted Units,
other than in accordance with the terms set forth herein, shall be
void and of no effect.
(b) Delivery of Certificates. Upon the vesting of any part of the Award by
virtue of the lapse of the restriction period pursuant to Section 2 or
3 above, the Company shall deliver or cause to be delivered to the
Participant a stock certificate covering the requisite number of
shares of Class A Common Stock (or following a Transaction,
certificates covering the requisite amount of stock or other
securities into which the Class A Common Stock shall have been changed
or exchanged) so vested, registered in the name of the Participant on
the books of the Company (or after a Transaction, on the books of the
issuer of such stock or other securities). Upon receipt of such
certificate(s), Participant is free to hold or dispose of such
certificate(s) at will, subject to any applicable securities laws.
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(c) Award Confers No Rights as Stockholder. The Participant shall not be
entitled to any privileges of ownership with respect to shares of
Class A Common Stock (or stock or other securities into which the
Class A Common Stock shall have been changed or exchanged in a
Transaction) subject to the Award unless and until certificates for
such shares (or such stock or other securities) are delivered to the
Participant upon the vesting of the Award and the Participant becomes
a holder of record with respect to such delivered shares (or such
stock or other securities); and the Participant shall not be
considered a stockholder of the Company (or of the issuer of such
stock or other securities) with respect to any such shares (or such
stock or other securities) not so delivered. Any rights the
Participant may at any time have against the Company (or such issuer
of such other stock or securities) with respect to the Award shall be
solely those of an unsecured creditor of the Company (or such issuer).
(d) Decisions of Committee. The Committee shall have the right to resolve
all questions which may arise in connection with the Award, the lapse
of the restrictions, the Plan or this Agreement. Any interpretation,
determination or other action made or taken by the Committee regarding
this Agreement shall be final, binding and conclusive.
(e) Reservation of Shares. The Company (and following a Transaction, any
issuer of stock or other securities into which the Class A Common
Stock shall have been changed or exchanged) shall at all times prior
to the expiration or termination of the Award (excluding periods
during which the Escrow is in effect) reserve or cause to be reserved
and keep or cause to be kept available, either in its treasury or out
of its authorized but unissued shares of Class A Common Stock (or
after a Transaction, such stock or other securities), the full number
of shares of Class A Common Stock of the Company (or after a
Transaction, such stock or other securities) subject to the Award from
time to time.
(f) Change in Capital Structure. The terms of this Award shall be adjusted
as the Committee determines is equitably required in the event the
Company (or following a Transaction, any issuer of stock or other
securities into which the Class A Common Stock shall have been changed
or exchanged) effects one or more stock dividends, stock split-ups,
subdivisions or consolidations of shares or other similar changes in
capitalization.
(g) Fractional Shares. Fractional shares shall not be issuable hereunder,
and when any provision hereof may entitle Participant to a fractional
share such fraction shall be paid out in cash.
(h) Meaning. Upon consummation of a Transaction, references herein to the
Company shall mean the Company or other corporation or entity
surviving such transaction.
6. Tax Withholding. The Participant shall, not later than the date as of which
the vesting of this Award becomes a taxable event for Federal income tax
purposes, pay to the
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Company or make arrangements satisfactory to the Committee for payment of
any Federal, state, and local taxes required by law to be withheld on
account of such taxable event. Subject to the approval of the Committee,
the Participant may elect to have such required minimum tax withholding
obligation satisfied, in whole or in part, by (i) authorizing the Company
to withhold from the shares of Class A Common Stock to be issued, or (ii)
transferring to the Company a number of previously owned whole shares of
Class A Common Stock (which the Participant has held for at least six
months prior to the delivery of such shares or which the Participant
purchased on the open market and for which the Participant has good title,
free and clear of all liens and encumbrances) having an aggregate Fair
Market Value, determined as of the date of vesting, that would satisfy the
withholding amount due.
7. Miscellaneous Provisions.
(a) Successors. This Agreement shall be binding upon and inure to the
benefit of any successor or successors of the Company and any person
or persons who shall, upon the death of the Participant, acquire any
rights hereunder in accordance with this Agreement or the Plan.
(b) Notices. All notices, requests or other communications provided for in
this Agreement shall be made, if to the Company, to the Secretary of
the Company at the Company's principal executive office, and if to the
Participant, to his or her address on the books of the Company (or to
such other address as the Company or the Participant may give to the
other for purposes of notice hereunder).
All notices, requests or other communications provided for in this
Agreement shall be made in writing either (a) by personal delivery to
the party entitled thereto, (b) by facsimile with confirmation of
receipt, (c) by mailing in the United States mail to the last known
address of the party entitled thereto or (d) by express courier
service. The notice, request or other communication shall be deemed to
be received upon personal delivery, upon confirmation of receipt of
facsimile transmission or upon receipt by the party entitled thereto
if by United States mail or express courier service; provided,
however, that if a notice, request or other communication in not
received during regular business hours, it shall be deemed to be
received on the next succeeding business day of the Company.
(c) Governing Law. This Agreement and all determinations made and actions
taken pursuant hereto and thereto, to the extent not governed by the
laws of the United States, shall be governed by the laws of the State
of Delaware and construed in accordance therewith without giving
effect to principles of conflicts of laws.
(d) Counterparts. This Agreement may be executed in two counterparts, each
of which shall be deemed an original and both of which together shall
constitute one and the same instrument.
(e) Force and Effect. The various provisions of this Agreement are
severable in their entirety. Any determination of invalidity or
unenforceability of any one provision
5
shall have no effect on the continuing force and effect of the
remaining provisions.
(f) Further Assurances. The Company and the Participant shall execute and
deliver such further instruments and take such additional action as
each party may reasonably request to effect, consummate, confirm or
evidence the grant of the Award to the Participant, and they shall
each execute such documents as may be reasonably necessary to assist
each other in preserving or perfecting their respective rights in the
Award.
(g) Conflict with Employment Agreement. If there shall be any conflict
between provisions in this Agreement and the provisions in the
Employment Agreement, the provisions of this Agreement shall govern.
(h) No Right to Continued Employment. This Award does not confer upon
Participant any right to continue in the employ of the Company or an
Affiliate, nor shall it interfere in any way with the right of the
Company or an Affiliate to terminate such employment at any time.
WYNDHAM INTERNATIONAL, INC.
By:
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Title:
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Accepted as of the 30th day of September, 2002.
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"Participant"
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