Exhibit 10.21
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ADDENDUM TO EMPLOYMENT AGREEMENT
WHEREAS, Wyndham International, Inc. (the "Company") and Xxxxxxxx Xxxx
(the "Executive") are parties to that certain Executive Employment Agreement
effective as of May 1, 2000 (the "Employment Agreement"); and
WHEREAS, the Company and the Executive wish to amend certain provisions of
the Employment Agreement as specified in this Addendum to Employment Agreement
(this "Addendum");
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Company and the Executive hereby agree that effective August
30, 2001, the Employment Agreement is amended as hereinafter set forth.
1. Certain Defined Terms. Capitalized terms not otherwise defined
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herein shall have the meanings ascribed to such terms in the Employment
Agreement.
2. Amendment to Paragraph 5. Unauthorized Disclosure. Paragraph 5 of
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the Employment Agreement is hereby deleted in its entirety and replaced with the
following:
5. Unauthorized Disclosure.
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(a) Confidential Information. Executive acknowledges that in
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the course of his employment with the Company (and, if applicable,
its predecessors), he has been allowed to become, and will continue
to be allowed to become, acquainted with the business affairs,
information, trade secrets, and other matters of the Company and its
subsidiaries which are 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. The Company
agrees to provide on an ongoing basis such Confidential Information
as the Company deems necessary or desirable to aid Executive in the
performance of his duties. Executive understands and acknowledges
that such Confidential Information is confidential, and he agrees
not to disclose such Confidential Information to anyone outside the
Company except to the extent that (i) Executive deems such
disclosure or use reasonably necessary or appropriate in connection
with performing his duties on behalf of the Company, (ii) Executive
is required by order of a court of competent jurisdiction (by
subpoena or similar process) to
disclose or discuss any Confidential Information, provided that in
such case, Executive shall promptly inform the Company of such
event, shall cooperate with the Company in attempting to obtain a
protective order or to otherwise restrict such disclosure, and shall
only disclose Confidential Information to the minimum extent
necessary to comply with any such court order; (iii) such
Confidential Information becomes generally known to and available
for use by the hotel and hospitality industry (the "Hotel
Industry"), other than as a result of any action or inaction by
Executive; or (iv) such information has been rightfully received by
a member of the Hotel Industry or has been published in a form
generally available to the Hotel Industry prior to the date
Executive proposes to disclose or use such information. Executive
further agrees that he will not during employment and/or at any time
thereafter use such Confidential Information in competing, directly
or indirectly, with the Company or any of its subsidiaries. At such
time as Executive shall cease to be employed by the Company, he will
immediately turn over to the Company all Confidential Information,
including papers, documents, writings, electronically stored
information, other property, and all copies of them provided to or
created by him during the course of his employment with the Company.
(b) Heirs, successors, and legal representatives. The
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foregoing provisions of this Paragraph 5 shall be binding upon
Executive's heirs, successors, and legal representatives. The
provisions of this Paragraph 5 shall survive the termination of this
Agreement for any reason.
(c) Definition of Subsidiary. For purposes of this Paragraph 5
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and for purposes of Paragraph 6 (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.
3. Amendment to Paragraph 6. Covenant Not to Compete. Paragraph 6 of the
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Employment Agreement is hereby deleted in its entirety and replaced with the
following:
6. Covenant Not to Compete. In consideration for the Option,
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Stock Grant, loan evidenced by the Note, the Restricted Unit Award
granted to Executive on April 12, 2001, the other consideration set
forth in the Addendum, the Company's promise to provide Confidential
Information as set forth in Paragraph 5 above (including the
Confidential Information provided by the Company to Executive
concurrently with the execution of the Addendum, which Executive
acknowledges has not been previously provided to Executive), and for
Executive's employment by the
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Company under the terms provided in this Agreement, and 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 5, 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 (other than termination by the Company without
Cause), 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 location
in which the Company, or any subsidiary or affiliate of the
Company, operates or has plans or has projected to operate any
facility during Executive's term of Employment including any
area within a 50 mile radius of such facility (any "Business
Area"); 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 shall be
determined in the sole discretion of the Board in good faith
to be immaterial to the operations of the Company, or any
subsidiary or affiliate of the Company, in the area or
territory in question.
(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 (other than termination by the Company without
Cause) 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 current or
prospective customers (including, without limitation, any
hotel owner, lessor or lessee, asset manager, trustee or
consumer with whom the Company, or any subsidiary or affiliate
of the Company, (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
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pipeline) or vendors of the Company, or any subsidiary or
affiliate of the Company, in any Business Area.
(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 (other than termination by the Company without
Cause), Executive will not directly or indirectly solicit or
induce any current or prospective employee of the Company, or
any subsidiary or affiliate of the Company (including, without
limitation, any current or prospective employee of the Company
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 or prospective employee of
the Company, or any subsidiary or affiliate of the Company,
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 Effective
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 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
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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.
4. Amendment to Subparagraph (7)(e). Termination by Executive. The last
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two sentences of Subparagraph 7(e) of the Employment Agreement are hereby
deleted in their entirety and replaced with the following:
"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 (the "Good
Reason Notice") of the occurrence of the Good Reason event; (iii)
for a period (the "Good Reason Process Period") consisting of (x)
not less than thirty (30) days if the Good Reason Notice is
delivered to the Company within 18 months after the occurrence of
the first event constituting a Change in Control (as defined in
Subparagraph 9(c)) or if the Good Reason event is an event specified
in clause (C) of this Subparagraph 7(e) and (y) not less than ninety
(90) days in all other instances, Executive cooperates in good faith
with the Company's efforts to modify Executive's employment
situation in a manner acceptable to Executive and the 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 applicable Good Reason Process Period, Good Reason shall
be deemed not to have occurred.
5. Amendments to Subparagraph 8(d)(i). The second sentence of Subparagraph
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8(d) is hereby deleted in its entirety and replaced with the following:
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 of 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 seventh complete sentence of Subparagraph 8(d)(i) of the
Employment Agreement is hereby deleted in its entirety and replaced with the
following:
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Notwithstanding the foregoing, in the event Executive terminates his
employment for Good Reason as provided in Subparagraph 7(e), he
shall be entitled to the Severance Amount only if he provides the
Notice of Termination provided for in Subparagraph 7(f) within five
(5) days after the expiration of the applicable Good Reason Process
Period.
Subparagraph 8(d)(ii) remains unchanged as provided in the
Employment Agreement.
6. Amendment to Paragraph 9. Change in Control Payment. In the last
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sentence of the first paragraph of Paragraph 9, the words "These provisions" are
hereby deleted and replaced with "The provisions of Subparagraph 9(a)".
7. Amendments to Subparagraph 9(a). Change in Control. The first sentence
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of Subparagraph 9(a)(i) of the Employment Agreement is hereby deleted in its
entirety and replaced with the following:
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
7(d) or Executive terminates his employment for Good Reason as
provided in Subparagraph 7(e), then the Company shall pay Executive
the Severance Amount as provided in Subparagraph 8(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.
The following subparagraph is hereby inserted immediately following
Subparagraph 9(a)(iv):
(v) Notwithstanding Subparagraph 9(a)(iii), the Restricted Unit
Award granted to Executive on April 12, 2001 shall not vest as
provided in such Subparagraph 9(a)(iii) and shall instead vest
in accordance with the terms of such Restricted Unit Award.
8. Amendments to Subparagraph 9(b). Gross Up Payment. Subparagraph 9(b)(i)
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of the Employment Agreement is hereby deleted in its entirety and replaced with
the following:
(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
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interest) and Excise Tax on the payment provided for in the
immediately preceding sentence) incurred by Executive in connection
with the first event 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 9(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 9(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 9(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 9(b)(i) by the proviso of such
sentence.
Subparagraph 9(b)(ii) is hereby deleted in its entirety and replaced
with the following:
(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.
Subparagraphs 9(b)(iii) and 9(b)(iv) are hereby deleted in their
entirety and are replaced with the following:
(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 6 of
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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.
9. Amendment to Subparagraph 9(c). Definitions. The penultimate sentence
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of Subparagraph 9(c) is hereby deleted in its entirety and replaced with the
following:
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 Effective Date of this
Agreement.
10. Amendment to Paragraph 14. Arbitration; Other Disputes. Paragraph 14
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of the Employment Agreement is hereby deleted in its entirety and replaced with
the following:
14. Mediation and/or Arbitration; Other Disputes.
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(a) General Procedures. In the event of any dispute or
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controversy arising under or in connection with the terms of this
Agreement, the parties shall first promptly try in good faith 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 9(a) or 9(b) or the amount of any payment
to which the Executive is entitled under subparagraph 9(a) or 9(b),
the expedited procedures in subparagraph 14(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
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jurisdiction to prevent any continuation of any violation of
paragraph 5 or 6 hereof. Should a dispute occur concerning
Executive's mental or physical capacity as described in
subparagraphs 7(b), 7(c) or 8(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
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apply in the event of any dispute or controversy concerning whether
Executive is entitled to a payment under subparagraph 9(a) or 9(b)
or the amount of any payment to which Executive is entitled under
subparagraph 9(a) or 9(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 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.
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11. Governing Law. The validity, interpretation, construction, and
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performance of this Addendum shall be governed by the laws of the State of Texas
(without regard to principles of conflicts of laws).
12. Counterparts. This Addendum may be executed in several counterparts,
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each of which shall be deemed an original but all of which together will
constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Addendum
effective as of August 30, 2001.
WYNDHAM INTERNATIONAL, INC.
By:/s/ Xxxx X. Xxxxxx
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Name: Xxxx X. Xxxxxx
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Title: Senior Vice President - Human Resources
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/s/ Xxxxxxxx Xxxx
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Xxxxxxxx Xxxx, Executive
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