EXHIBIT 10.2
EXECUTIVE EMPLOYMENT AGREEMENT
This EXECUTIVE EMPLOYMENT AGREEMENT ("Agreement") is made as of the 12th
day of August, 1999, between Wyndham International, Inc., a Delaware corporation
(the "Company"), and Xxxx X. Xxxxxxxx ("Executive"), but it shall become
effective only on the date set forth in Paragraph 19 below (the "Effective
Date").
WHEREAS, the Company desires to employ Executive as its President and
Chief Operating Officer; and
WHEREAS, as an additional inducement to Executive to enter into this
Agreement, the Company shall, on the Effective Date, (a) pay to Executive a
signing bonus of $550,000.00, (b) aid Executive in the purchase of a Dallas
residence, up to and including a bridge loan, (c) grant Executive an option to
purchase 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 "Option"), (d)
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 B (the "Stock
Grant"); and (e) enter into a promissory note in the form attached hereto as
Exhibit C (the "Note"); and
WHEREAS, Executive desires to be employed by the Company on the terms
herein provided.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. Employment. The term of this Agreement shall extend from the Effective Date
until the third anniversary of the Effective Date; provided, however, that the
term of this Agreement shall automatically be extended for one additional year
on the third anniversary of the Effective Date and each anniversary thereafter
unless, not less than 90 days prior to each such date, either party shall have
given notice to the other that it does not wish to extend this Agreement;
provided, further, that if a Change in Control occurs during the original or
extended term of this Agreement, the term of this Agreement shall continue in
effect for a period of not less than eighteen (18) months beyond the month in
which the Change in Control occurred. The term of this Agreement shall be
subject to termination as provided in Paragraph 7 and may be referred to herein
as the "Period of Employment."
2. Position and Duties. During the Period of Employment, Executive shall serve
as President and Chief Operating 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 the normal and
customary duties of the 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
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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.
3. Compensation and Related Matters.
(a) Base Salary. Executive's initial annual base salary ("Base Salary")
shall be $550,000.00. Thereafter, Executive's Base Salary shall be redetermined
at least thirty (30) days before each annual compensation determination date
established by the Company during the Period of Employment but in any event not
later than the first quarter of the applicable fiscal year (the "Annual
Compensation Determination Date") in an amount to be fixed by the Board of
Directors (the "Board") based upon merit, but in no event shall such re-
determined Base Salary be less than $550,000.00. The Base Salary, as
redetermined, is referred to herein as the "Adjusted Base Salary." The Base
Salary or, if applicable, the Adjusted Base Salary, shall be payable in
substantially equal bi-weekly installments.
(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 8 and 9 of this
Agreement), cash incentive compensation (the "Incentive Compensation") in an
amount determined annually by the Compensation Committee of the Board based on
individual performance, "Employer EBITDA Achievement" (as hereinafter defined),
and total return to shareholders. Incentive Compensation shall equal from zero
to two 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 Employer for earnings before interest, taxes, depreciation, and
amortization is achieved. Incentive Compensation shall equal at least
$750,000.00 for the remainder of 1999, which shall be payable to Executive not
later than March 31, 2000. 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 Company will advance $12,500.00
of Incentive Compensation on a monthly basis, as a draw against annual Incentive
Compensation.
"Pro Rata Incentive Compensation" shall be paid to Executive for any
termination. 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 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, Employer 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.
Executive will also participate in such other incentive compensation plans,
policies or practices as the Board shall determine.
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(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 the 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. 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 executive 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(d) 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 each
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.
(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 $2.0 million. Executive shall have the
right to designate the beneficiary under such policy.
(f) Vacations. Executive shall be entitled to the number of paid vacation
days in each calendar year determined by the Company from time to time for
executives at the same level as Executive. Executive shall also be entitled to
all paid holidays given by the Company to its executives. 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.
(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
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of benefits at rates not less than sixty percent (60%) of Executive's current
Base Salary or Adjusted Base Salary.
4. Board Service. Executive agrees to serve as a Director of the Company if so
elected or appointed.
5. Unauthorized Disclosure.
(a) Confidential Information. Executive acknowledges that in the course of
his employment with the Company (and, if applicable, its predecessors), he has
been allowed to become, and will continue to be allowed to become, acquainted
with the Company's business affairs, information, trade secrets, and other
matters which are of a proprietary or confidential nature, including but not
limited to the Company's and its predecessors' operations, business
opportunities, price and cost information, finance, customer information,
business plans, various sales techniques, manuals, letters, notebooks,
procedures, reports, products, processes, services, and other confidential
information and knowledge (collectively the "Confidential Information")
concerning the Company's and its predecessors' business. The Company agrees to
provide on an ongoing basis such Confidential Information as the Company deems
necessary or desirable to aid Executive in the performance of his duties.
Executive understands and acknowledges that such Confidential Information is
confidential, and he agrees not to disclose such Confidential Information to
anyone outside the company except to the extent that (i) Executive deems such
disclosure or use reasonably necessary or appropriate in connection with
performing his duties on behalf of the Company; (ii) Executive is required by
order of a court of competent jurisdiction (by subpoena or similar process) to
disclose or discuss any Confidential Information, provided that in such case,
Executive shall promptly inform the Company of such event, shall cooperate with
the Company in attempting to obtain a protective order or to otherwise restrict
such disclosure, and shall only disclose Confidential Information to the minimum
extent necessary to comply with any such court order; (iii) such Confidential
Information becomes generally known to and available for use by the hotel and
hospitality industry (the "Hotel Industry"), other than as a result of any
action or inaction by Executive; or (iv) such information has been rightfully
received by a member of the Hotel Industry or has been published in a form
generally available to the Hotel Industry prior to the date Executive proposes
to disclose or use such information. Executive further agrees that he will not
during employment and/or at any time thereafter use such Confidential
Information in competing, directly or indirectly, with the Company. At such time
as Executive shall cease to be employed by the Company, he will immediately turn
over to the Company all Confidential Information, including papers, documents,
writings, electronically stored information, other property, and all copies of
them, provided to or created by him during the course of his employment with the
Company.
(b) Heirs, successors, and legal representatives. The foregoing provisions
of this Paragraph 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.
6. Covenant Not to Compete. In consideration for the Option, Stock Grant, loan
evidenced by the Note, the Company's promise to provide Confidential Information
as set forth in Paragraph 5 above, and for Executive's employment by the Company
under the terms provided
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in this Agreement and as a means to aid in the performance and enforcement of
and preserve the rights of the Company pursuant to the terms of 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, 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, 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 current or prospective
customers (including, without limitation, any hotel owner, lessor or lessee,
asset manager, trustee, 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 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, 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 the
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
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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 and duration 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 no in 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 area covered
thereby, the parties agree that the court making such determination shall have
the power to reduce the duration and/or area 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
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.
7. 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 of the Company at a meeting of such Board of Directors called and held
for such purpose. For purposes of this Agreement "Cause" shall mean: (A) conduct
by Executive constituting a material act of willful misconduct in connection
with the performance of his duties, including, without limitation,
misappropriation of funds or property of the Company or any of its affiliates
other than the occasional, customary and de minimis use of Company property for
personal purposes; (B) criminal or civil conviction of Executive, a plea of nolo
contendere by Executive or conduct by Executive that, as determined in the sole
discretion of the Board of Directors of the Company, has resulted in, or would
result in if he were retained in his position with the Company, material
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injury to the reputation of the Company, including, without limitation,
conviction of a felony involving moral turpitude; (C) continued, willful and
deliberate non-performance by Executive of his duties hereunder (other than by
reason of Executive's physical or mental illness, incapacity or disability) and
such non-performance has continued for more than thirty (30) days following
written notice of such non-performance from the Board; (D) a breach by Executive
of any of the provisions contained in Paragraphs 5 and 6 of this Agreement; or
(E) a violation by the Executive of the Company's employment policies and such
violation has continued following written notice of such violation from the
Board.
(d) Termination Without Cause. At any time during the Period of Employment,
the Company may terminate Executive's employment hereunder without Cause if such
termination is approved by a majority of the Board at a meeting of the Board
called and held for such purpose. Any termination by the Company or Executive's
employment under this Agreement which does not constitute a termination for
Cause under Subparagraph 7(c) or result from the death or disability of the
Executive under Subparagraph 7(a) or (b) shall be deemed a termination without
Cause. If the Company provides notice to the Executive under Paragraph 1 that it
does not wish to extend the Period of Employment, such action shall be deemed a
termination without 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 titles
of President and Chief Operating Officer; (C) an involuntary reduction in
Executive's Base Salary, Adjusted Base Salary or Incentive Compensation (but not
reduction in Incentive Compensation appropriate for level of performance); (D) a
breach by the Company of any of its other material obligations under this
Agreement and the failure of Company to cure such breach within thirty (30) days
after written notice thereof by Executive; (B) 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 obligations; and (F)
Executive shall not have been nominated by the Nominating Committee of the Board
to fill a seat as a Class A Director when the next such vacancy occurs but in
any event prior to the first anniversary of the Effective Date. "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
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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 Term/nation. Except for termination as specified in
Subparagraph 7(a), any termination of Executive's employment by the Company or
any such termination by Executive shall be communicated by written Notice of
Termination to the other party hereto. For purposes of this Agreement, a "Notice
of Termination" shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon.
(g) Date of Termination. "Date of Termination" shall mean: (A) if
Executive's employment is terminated by his death, the date of his death; (B) if
Executive's employment is terminated on account of disability under Subparagraph
7(b) or by the Company for Cause under Subparagraph 7(c), the date on which
Notice of Termination is given; (C) if Executive's employment is terminated by
the Company under Subparagraph 7(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 7(e), thirty (30) days after the date on which a
Notice of Termination is given.
8. Compensation Upon Termination or During Disability.
(a) If Executive's employment terminates by reason of his death, the
Company shall, within ninety (90) days of death, pay in a lump sum amount to
such person as Executive shall designate in a notice filed with the Company or,
if no such person is designated, to Executive's estate, Executive's accrued and
unpaid Base Salary, or, if applicable, his Adjusted Base Salary, to the date of
his death, plus his 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's spouse and dependents to receive health insurance coverage
substantially similar to coverage they received prior to the Date of
Termination. In addition to the foregoing, any payments to which Executive's
spouse, beneficiaries, or estate may be entitled under any employee benefit plan
shall also be paid in accordance with the terms of such plan or arrangement.
Such payments, in the aggregate, shall fully discharge the Company's obligations
hereunder.
(b) During any period that Executive fails to perform his duties hereunder
as a result of incapacity due to physical or mental illness, Executive shall
continue to receive his accrued arid unpaid Base Salary or, if applicable, his
Adjusted Base Salary and accrued and unpaid Incentive Compensation payments, if
any, under Subparagraph 3(b), until Executive's employment is terminated due to
disability in accordance with Subparagraph 7(b) or until Executive terminates
his employment in accordance with Subparagraph 7(e), whichever first occurs. For
a period of one (1) year following the Date of Termination, the Company shall
pay such health insurance premiums as may be necessary to allow Executive,
Executive's spouse and dependents to receive health insurance coverage
substantially similar to coverage they received prior to the Date of
Termination. Upon termination due to death prior to the termination first to
occur as specified in the preceding sentence, Subparagraph 8(a) shall apply.
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(c) If Executive's employment is terminated by Executive other than for
Good Reason as provided in Subparagraph 7(e), then the Company shall, through
the Date of Termination, pay Executive his accrued and unpaid Base Salary or, if
applicable, his Adjusted Base Salary at the rate in effect at the time Notice of
Termination is given. Thereafter, the Company shall have no further obligations
to Executive except as otherwise expressly provided under this Agreement,
provided any such termination shall not adversely affect or alter Executive's
rights under any employee benefit plan of the Company in which Executive, at the
Date of Termination, has a vested interest, unless otherwise provided in such
employee benefit plan or any agreement or other instrument attendant thereto.
(d) If Executive terminates his employment for Good Reason as provided in
Subparagraph 7(e) or if Executive's employment is terminated by the Company
without Cause as provided in Subparagraph 7(d), then the Company shall, through
the Date of Termination, pay Executive his accrued and unpaid Base Salary or, if
applicable, his Adjusted Base Salary at the rate in effect at the time Notice of
Termination is given and his accrued and unpaid Incentive Compensation, if any,
under Subparagraph 3(b). 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 (the "Severance Amount"), but in
no event for fewer than twenty-four (24) months. The Severance Amount shall
be paid out in substantially equal bi-weekly installments, in arrears;
provided, however, that in the event Executive commences any employment
with an employer other than the Company during the twelve 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 month period ending on
the second 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 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. For purposes of this
Agreement, "Average Incentive Compensation" shall mean the average of the
annual Incentive Compensation under Subparagraph 3(b) received by Executive
for the three (3) immediately preceding fiscal years or such fewer numbers
of complete fiscal years as Executive may have been employed by the
Company. 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 5 and 6 of this
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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 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 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 7(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 7(c), then the Company shall, through the Date of
Termination, pay Executive his accrued and unpaid Base Salary or, if applicable,
his Adjusted Base Salary at the rate in effect at the time Notice of Termination
is given. Thereafter, the Company shall have no further obligations to Executive
except as otherwise expressly provided under this Agreement, provided any such
termination shall not adversely affect or alter Executive's rights under any
employee benefit plan of the Company in which Executive, at the Date of
Termination, has a vested interest, unless, otherwise provided in such employee
benefit plan or any agreement or other instrument attendant thereto.
(f) Regardless of the reason for termination, for a period of five (5)
years beginning on the Date of Termination, the Company will provide such
reasonable assistance and support to Executive as he shall reasonably require in
connection with the preparation and filing of tax returns, statements and forms
insofar as such returns, statements or forms relate to Executive's association
with the Company or 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 8(a) through 8(f)
shall be construed so as to effect Executive's rights or the Company's
obligations relating to agreements or benefits which are unrelated to
termination of employment.
9. Change in Control Payment. The provisions of this Paragraph 9 set forth
certain terms of an agreement reached between Executive and the Company
regarding Executive's rights and obligations upon the occurrence of a Change in
Control of the Company. These provisions are intended to assure and encourage in
advance Executive's continued attention and dedication to his assigned duties
and his objectivity during the pendency and after the occurrence of any such
event. These provisions shall apply in lieu of, and expressly supersede, the
provisions of Subparagraph 8(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 in Control;
provided that such first event occurs during the Period of
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Employment. These provisions shall terminate and be of no further force or
effect beginning eighteen (18) months after the occurrence of a Change in
Control.
(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 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 biweekly
installments, in arrears, over twenty-four (24) months. Notwithstanding the
foregoing, if the Executive breaches any of the provisions contained in
Paragraphs 5 and 6 of this Agreement, all payments of the Severance Amount
shall immediately cease;
(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 Agreement 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) Notwithstanding anything to the contrary in any applicable
option agreement or stock-based award agreement, if Executive terminates
his employment for Good Reason as provided in Subparagraph 7(e) or if
Executive's employment is terminated by the Company without Cause as
provided in Subparagraph 7(d) within eighteen (18) months of a Change in
Control, all stock options and other stock-based awards granted to
Executive by the Company shall immediately accelerate and become
exercisable or non-forfeitable as of the Date of Termination, and Executive
shall have 360 days to exercise his stock options. Executive shall also be
entitled to any other rights and benefits with respect to stock-related
awards, to the extent and upon the terms provided in the employee stock
option or incentive plan or any agreement or other instrument attendant
thereto pursuant to which such options or awards were granted; and
(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 dependent to continue
to receive health insurance coverage substantially similar to the coverage
they received prior to his termination employment.
(b) Gross Up Payment.
(i) Excess Parachute Payment. If Executive incurs the tax (the
"Excise Tax") imposed by Section 4999 of the Internal Revenue Code of 1986
(the "Code") on "excess parachute payments" within the meaning of Section
280G(b)(1) of the Code, the Company will pay to Executive an amount (the
"Gross Up Payment") such that the net amount retained by Executive, after
deduction of any Excise Tax on the excess parachute
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payment and any federal, state and local income taxes and employment taxes
(together with penalties and interest) and Excise Tax upon the payment
provided for by this Subparagraph 8(c)(i), will be equal to the Severance
Amount.
(ii) Applicable Rates. For purposes of determining the amount of the
Gross Up Payment, Executive will be deemed to pay federal income taxes at
the highest marginal rate of federal income taxation in the calendar year
in which the Gross Up Payment is to be made and state and local income
taxes at the highest marginal rates of taxation in the state and locality
of Executive's residence on the date of Executive's Termination, net of the
maximum reduction in federal income taxes that could be obtained from
deduction of such state and local taxes.
(iii) Determination of Gross Up Payment Amount. The determination of
whether the Excise Tax is payable and the amount thereof will be based upon
the opinion of tax counsel selected by Executive and approved by the
Company, which approval will not be unreasonably withheld. If such opinion
is not finally accepted by the Internal Revenue Service (or state and local
taxing authorities), then appropriate adjustments to the Excise Tax will be
computed and additional Gross Up Payments will be made in the manner
provided by this Subparagraph (c).
(iv) Time For Payment. The Company will pay the estimated amount of
the Gross Up Payment in cash to Executive at such time of times when the
Excise Tax is due. Executive and the Company agree to reasonably cooperate
in the determination of the actual amount of the Gross Up Payment. Further,
Executive and the Company agree to make such adjustments to the estimated
amount of the Gross Up Payment, 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 purpose of this Paragraph 9, 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 35% or more of the
combined voting power or economic interests of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors; provided, however, that any transfer from any Investor or
Excluded Group will not result in a Change in Control if such transfer was
part of a series of related transactions the effect of which, absent the
transfer to such Acquiring Person by the Investor or Excluded Group, would
not have resulted in the acquisition by such Acquiring Person of 35% or
more of the combined voting power or economic interests of the then
outstanding voting securities; or
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(b) during any period of 12 consecutive months after the Issuance
Date, the individuals who are 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 25% or more of the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally in
the election of directors; or
(c) the approval by the stockholders of the Company of a
reorganization, merger or consolidation, in each case, with respect to
which all or substantially all of the individuals and entities who were the
respective beneficial owners of the voting securities of the Company
immediately prior to such reorganization, merger or consolidation do not,
following such reorganization, merger or consolidation, beneficially own,
directly or indirectly, more than 57.5% of the combined voting power of the
then outstanding voting securities entitled to vote generally in the
election of director of the Company resulting from such reorganization,
merger or consolidation; or
(d) the sale or other disposition of assets representing 50% or more
of the assets of the Company in one transaction or series of related
transactions.
All defined terms used in the definition of "Change in Control" shall have
the same meaning as set forth in the Form of Certificate of Designation of
Series B Convertible Preferred Stock of Wyndham International, Inc.
"Company" shall mean not only Wyndham International, Inc., but also
its successors by merger or otherwise.
10. Notice. For purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
certified mail, return receipt requested, postage prepaid, addressed as follows:
if to the Executive:
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At his home address as shown in the Company's personnel records;
if to the Company:
Wyndham International, Inc.
0000 Xxxxxxxx Xxxxxxx
Xxxxx 0000
Xxxxxx, XX 00000
Attention: Senior Vice President of Human Resources and General Counsel
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
11. Miscellaneous. No provisions of this Agreement may be modified, waived, or
discharged unless such waiver, modification, or discharge is agreed to in
writing and signed by Executive and such officer of the Company as may be
specifically designated by the Board. No waiver by either party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No agreements or
representations, oral or otherwise, express or implied, unless specifically
referred to herein, with respect to the subject matter hereof have been made by
either party which are not set forth expressly in this Agreement. The validity,
interpretation, construction, and performance of this Agreement shall be
governed by the laws of the State of Texas (without regard to principles of
conflicts of laws.)
12. 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.
13. 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.
14. Arbitration; Other Disputes. In the event of any dispute or controversy
arising under or in connection with this Agreement, the parties shall first
promptly try in good faith to settle such dispute or controversy by mediation
under the applicable rules of the American Arbitration Association before
resorting to arbitration. In the event such dispute or controversy remains
unresolved in whole or in part for a period of thirty (30) days after it arises,
the parties will settle any remaining dispute or controversy exclusively by
arbitration in Dallas, Texas in accordance with the rules of the American
Arbitration Association then in effect. Judgment may be entered on the
arbitrator's award in any court having jurisdiction. Notwithstanding the above,
the Company shall be entitled to seek a restraining order or injunction in any
court of competent jurisdiction to prevent any continuation of any violation of
Paragraph 5 or 6 hereof. Furthermore, should a dispute occur concerning
Executive's mental or physical capacity as
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described in Subparagraph 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 at a rate equal to the lesser of eighteen percent (18%) per annum
or the maximum lawful rate.
15. 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.
16. 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 Compensation 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 14, including, but not limited to, reasonable attorneys'
fees and costs.
17. 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.
18. Governing Law and Consent. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Texas without
giving effect to any choice of law or conflict provisions or rule (whether of
the State of Texas or any other jurisdiction) that would cause the application
of the laws of any jurisdiction other than the State of Texas, and Executive
hereby expressly consents to the personal jurisdiction of the state and federal
courts located in Dallas County, Texas for any lawsuit filed by the Company to
seek a restraining order or injunction to prevent any continuation of any
violation of Paragraph 5 or 6 of this Agreement.
19. Effective Date. This Agreement is effective ____________________, 1999.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the date
and year first above written.
WYNDHAM INTERNATIONAL, INC.
By: /s/ XXXXX X. CARREKAR
-------------------------------------
Its: Chairman and Chief Executive Officer
/s/ XXXX X. XXXXXXXX
----------------------------------------
Xxxx X. Xxxxxxxx
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