Exhibit 99.1
February 26, 1999
Xx. Xxxx X. Xxxxxxxx
0000 Xxxxxxxxx
Xxxxxx, XX 00000
Dear Xxxx:
This letter agreement (the "Agreement") confirms the agreement that we
have reached regarding your resignation from your regular, full-time employment
and all offices you hold with Patriot American Hospitality, Inc. ("PAHI"), and
its related and affiliated entities (collectively with PAHI, "Patriot") and your
agreement to remain available on a consulting basis to assist Patriot and
Wyndham International, Inc. ("WII") and its related and affiliated entities
(collectively, "Wyndham" and, together with Patriot, the "Companies") in
connection with certain pending matters.
The purpose of this Agreement is to establish mutually agreeable
arrangements for ending your relationship with the Companies. This Agreement
does not constitute and should not be construed as an admission by the Companies
that they have in any way violated any legal obligation that they owe to you or
to any other person or as an admission by you that you have in any way violated
any legal obligation that you owe to the Companies or to any other person. To
the contrary, the parties' willingness to enter into this Agreement demonstrates
that they are continuing to deal with each other fairly and in good faith.
With those understandings and in exchange for the promises set forth
below, you and the Companies agree as follows:
1. RESIGNATION
You hereby resign as an employee of PAHI effective as of the
Resignation Date. You also hereby resign from your offices of Chairman of the
Board and Chief Executive Officer of PAHI and any and all employment, offices
and board of directors seats (other than your directorships on PAHI's and WII's
Boards) that you may hold with any of the other Companies as of the Resignation
Date. Said resignations are hereby accepted by the Companies. For purposes of
this Agreement, the Resignation Date shall be February 26, 1999.
Xx. Xxxx X. Xxxxxxxx
February 26, 1999
Page 2
2. BOARD
For so long as you shall remain on the Board of Directors of PAHI or
WII, you shall serve in the honorary, non-executive capacity of "Chairman
Emeritus" thereof.
3. COMPENSATION AND BENEFITS
(a) LOAN. PAHI will undertake the following with respect to
your present outstanding indebtedness to NationsBank (initial face amount of
$8,459,450, of which $7,044,268.71 remains outstanding) (the "NationsBank
Loan"):
(i) PAHI will guarantee the repayment of the
remaining outstanding principal on the NationsBank Loan;
(ii) PAHI will make all interest payments that become
due and payable on the NationsBank Loan on or after the date hereof;
and
(iii) On the Refinancing Date (as defined below) PAHI
shall pay off the then outstanding balance of the NationsBank Loan upon
your delivery to PAHI of (A) an executed promissory note and security
agreement in the form of Exhibit A hereto in an amount equal to the sum
of the then outstanding balance of the NationsBank Loan and the
aggregate interest payments, if any, made by PAHI pursuant to Section
3(a)(ii) above from and after July 1, 1999 through the Refinancing Date
(the "Promissory Note") and pursuant to which you pledge 449,818 paired
shares of common stock of PAHI and WII (the "Paired Shares") or such
other number of shares for which those 449,818 Paired Shares may be
exchanged in connection with a restructuring of the Companies (the
"Pledged Shares"), as security for indebtedness to PAHI represented by
the Promissory Note, and (B) certificates representing the Pledged
Shares and an executed irrevocable stock power in the form of Exhibit B
hereto. You shall have the right, at any time, to substitute additional
Paired Shares you may then own for the Paired Shares you originally
pledged, so long as the aggregate number of Pledged Shares shall at all
times be at least 449,818. For purposes of this Agreement, the
"Refinancing Date" shall be the earlier of (1) the date (the
"Transaction Date") that PAHI consummates a private equity investment
transaction (the "Transaction") by the investment group consisting of
Apollo Real Estate Advisors, L.P., Apollo Management, L.P., Xxxxxx X.
Xxx Company, Beacon Capital Partners, Inc. and Xxxxx Consulting Group,
and (2) December 31, 1999.
Xx. Xxxx X. Xxxxxxxx
February 26, 1999
Page 3
(b) SEVERANCE. The Companies shall pay you severance in an
amount equal to Three Million Two Hundred Thousand Dollars ($3,200,000) reduced
by any interest payments made by PAHI pursuant to Section 3(a)(ii) above from
the date hereof through the earlier of the Refinancing Date or June 30, 1999,
and payable to you by check or wire transfer as directed by you as follows:
(i) Two Million Dollars ($2,000,000) payable on the
earlier of (A) the Transaction Date, or (B) January 1, 2000; and
(ii) The balance payable in twelve equal monthly
installments commencing with the first day of the month next following
the date of the payment under Section 3(b)(i) above.
(c) VESTING OF OUTSTANDING OPTIONS. On the date hereof, all
your outstanding unvested options to purchase Paired Shares shall vest and
remain fully exercisable for the period of their respective terms. In addition,
within six (6) months following the earlier of June 1, 1999 or the date the
stockholders of PAHI and WII approve the Transaction, you may elect to exchange
all your outstanding options to purchase Paired Shares ("Current Options") on a
Black Scholes neutral basis for new options with an exercise price equal to the
fair market value of a Paired Share on the election date (the "New Options").
The Black Scholes calculation will be made based on the most recently available
data relating to volatility and the risk-free interest rate and PAHI's and WII's
then anticipated dividend yield. Such election shall be made in writing and
delivered to PAHI at its headquarters to the attention of its General Counsel.
An election shall not be deemed timely if it is not delivered to PAHI by the
close of business on the first business day next following the expiration of six
(6) months following the earlier of June 1, 1999 or the date the stockholders of
PAHI and WII approve the Transaction. The New Options shall be exercisable
proportionately for terms equal to the respective remaining terms of the Current
Options. For purposes of this Section 3(c), the fair market value of a Paired
Share will be determined based on the closing price of a Paired Share on the New
York Stock Exchange at the close of business on the election date or, if the
election date is not a trading date, at the close of business on the most recent
preceding trading date.
(d) RESTRICTED PAIRED SHARES. On the date hereof, the
restrictions remaining on all restricted Paired Shares previously granted to you
by PAHI shall lapse.
Xx. Xxxx X. Xxxxxxxx
February 26, 1999
Page 4
(e) RESTRICTED PAIRED UNIT AWARD. You are hereby granted a
Restricted Paired Unit Award pursuant to PAHI's Incentive Plan covering the
right to receive 250,000 Paired Shares payable as follows:
(i) 83,334 Paired Shares payable on the date hereof;
(ii) 83,333 Paired Shares payable on the first
anniversary of this Agreement; and
(iii) 83,333 Paired Shares payable on the second
anniversary of this Agreement.
As a condition to receiving the second or third installment of Paired
Shares, you will make yourself reasonably available for Consulting Services (as
defined in Section 4 below) during the Consulting Period (as defined in Section
4 below). In the event you should die or are unavailable to provide Consulting
Services because you become totally disabled, as determined by the Board of PAHI
or WII, in its sole discretion, after the date hereof, you or your estate, as
the case may be, shall thereupon become entitled to receive any unpaid
installment of Paired Shares.
(f) BENEFITS. You may continue to participate in PAHI's
group health and dental plans, and in the life and disability insurance plans
in which, and to the same extent as, you are currently participating for two
(2) years from the Resignation Date, with the cost of the regular premium for
such benefits shared in the same relative proportion by you and the Companies
as in effect for senior executives of PAHI on the Resignation Date; PROVIDED
that nothing in this Section 3(f) shall be construed to affect your or your
dependents' rights thereafter to receive continuation coverage to the extent
authorized by and consistent with 29 U.S.C. Section 1161 ET Seq. (commonly
known as "COBRA") and applicable group health and dental plan terms, entirely
at your or their own cost after your right to cost sharing under this Section
3(f) ends.
(g) COMPANY CAR. The Companies shall maintain your current
company automobile lease on the same terms and conditions for two (2) years from
the Resignation Date.
(h) OFFICE/SECRETARY. The Companies shall make a suitable
office (at a mutually acceptable location) and secretarial support available to
you for three (3) years from the Resignation Date. Compensation for your
secretary (who shall be Xxxx Xxxx so long as
Xx. Xxxx X. Xxxxxxxx
February 26, 1999
Page 5
she remains employed by PAHI), who shall be an employee of PAHI, shall not
exceed $60,000 per year.
(i) OTHER BENEFITS. Except as expressly provided above, your
eligibility to participate in any of the Companies' respective employee benefit
plans and programs ceases on or after the Resignation Date in accordance with
the terms and conditions of each of those benefit plans and programs and your
rights to benefits under any of the employee benefit plans and programs, if any,
are governed by the terms and conditions of each of those employee benefit plans
and programs.
(j) PAYMENTS THROUGH RESIGNATION DATE. You shall continue as
an employee of PAHI and shall continue on PAHI's payroll and receive your base
salary and all other benefits, through the Resignation Date.
4. CONSULTING SERVICES
(a) You hereby agree to provide, or to cause XXXXX Services,
Inc. to furnish your services for, non-exclusive consulting services to the
Companies for a period of two (2) years following the Resignation Date (the
"Consulting Period").
(b) In your capacity as a consultant to the Companies, you
agree upon request from one or more of the Companies to assist with respect to
transitional matters that may arise in connection with your resignation, to
respond to requests for assistance or information concerning business matters
with which you became familiar while employed, to provide service more fully
described in Section 8 below, and to provide assistance with respect to the
Transaction and the Companies' pending restructuring (the "Consulting
Services").
(c) In consideration of the Consulting Services, the Companies
shall pay you a consulting fee (the "Fee") of Seventy-Five Thousand Dollars
($75,000) per month during the first year of the Consulting Period and Fifty
Thousand Dollars ($50,000) per month during the second year of the Consulting
Period.
(d) It is intended and agreed by and between the parties that
while providing Consulting Services, you are, and shall at all times be and
remain, an independent contractor. You understand and agree that during the
Consulting Period, you are not an employee of any of the Companies and shall not
be treated as an employee for any purpose. You understand and agree that as an
independent contractor, you are required to pay and are solely liable for, all
applicable taxes, including, without limitation, federal income tax and state
income tax on
Xx. Xxxx X. Xxxxxxxx
February 26, 1999
Page 6
the Fee and you may be required to pay quarterly estimated income taxes. The
Companies shall promptly reimburse you for all reasonable disbursements,
including first class air travel, incurred by you in connection with providing
Consulting Services, subject to approval and documentation in accordance with
applicable policies as may be in effect from time to time. Nothing in this
Agreement or otherwise shall be construed as identifying you as an employee,
agent or legal representative of any of the Companies during the Consulting
Period for any purpose whatsoever. You will not be authorized to transact
business, incur obligations, sell goods, receive payments, solicit orders or
assign or create any obligation of any kind, express or implied, on behalf of
any of the Companies, or to bind in any way whatsoever, or to make any promise,
warranty or representation on behalf of any of any of the Companies with respect
to any matter, except as expressly authorized in writing by the Companies. You
shall not use any of the Companies' trade names, trademarks, service names or
servicemarks without the prior written approval of the Companies.
During the Consulting Period, you shall be free to pursue other
business opportunities or employment (except to the extent that such other
business opportunities or employment might violate Paragraph 5 of the Employment
Agreement, dated as of April 14, 1997 by and between you and PAHI (the
"Employment Agreement")); PROVIDED, HOWEVER, that you shall remain available to
provide and shall provide, on reasonable notice, Consulting Services to the
Companies.
5. RELEASE OF CLAIMS
(a) RELEASE BY XX. XXXXXXXX. You voluntarily and irrevocably
release and discharge the Companies, their related or affiliated entities, and
their respective predecessors, successors, and assigns, and the current and
former officers, directors, shareholders, employees, and agents of each of the
foregoing (any and all of which are referred to as "Releasees") generally from
all charges, complaints, claims, promises, agreements, causes of action,
damages, and debts that relate in any manner to your employment with or services
for the Companies, known or unknown ("Claims"), which you have, claim to have,
ever had, or ever claimed to have had against any of the Releasees through the
date on which you execute this Agreement. This general release of Claims
includes, without implication of limitation, all Claims for or related to: the
Employment Agreement; the compensation provided to you by the Companies; your
resignations as described in Section 1; wrongful or constructive discharge;
breach of contract; breach of any implied covenant of good faith and fair
dealing; tortious interference with advantageous relations; intentional or
negligent misrepresentation, fraud or deceit; infliction of emotional distress,
and unlawful discrimination under the common law or any statute (including,
without implication of limitation, the Employee Retirement Income
Xx. Xxxx X. Xxxxxxxx
February 26, 1999
Page 7
Security Act, Title VII of the Civil Rights Act of 1964, the American with
Disabilities Act, the Age Discrimination in Employment Act, Tex. Lab. Code
Sections 21.001, ET SEQ., and Tex. Hum. Res. Code Sections 121.001, ET SEQ.).
You also waive any Claim for reinstatement, severance, incentive or retention
pay (except as expressly provided in this Agreement), attorney's fees, or
costs, relating to the above waived claims.
You agree that you will not hereafter pursue any Claim against any
Releasee by filing a lawsuit in any local, state or federal court for or on
account of anything which has occurred up to the present time as a result of
your employment, and you shall not seek reinstatement with, or damages of any
nature, severance, incentive or retention pay, attorney's fees, or costs from
the Companies or any of the other Releasees; PROVIDED, however, that nothing in
this general release shall be construed to bar or limit your rights, if any, to
indemnification subject to and in accordance with the terms of the By-Laws of
PAHI and the Indemnification Agreement, dated as of May 23, 1998, by and among
you, PAHI and WII (the "Indemnification Agreement"), or to enforce your rights
under this Agreement.
(b) RELEASE BY THE COMPANIES. The Companies, on behalf of
themselves and their respective predecessors, successors, assigns, directors
(but only in their capacities as directors of the Companies) and officers (but
only in their capacities as officers of the Companies) voluntarily and
irrevocably release and discharge you and your successors, assigns, heirs and
survivors from any and all charges, complaints, claims, promises, agreements,
causes of action, damages and debts, (including attorney's fees and costs
actually incurred) which any of them have, claim to have, ever had or ever
claimed to have had against you through the date hereof, known or unknown, which
relate to good faith acts or omissions by you during the course of your
employment undertaken or not undertaken in the reasonable belief that such acts
or omissions were in the best interests of the Companies.
The Companies further represent that they do not have any knowledge at
this time of any acts or omissions by you that would give rise claims not
otherwise released in the previous paragraph.
6. EMPLOYMENT AGREEMENT
This Agreement supersedes all provisions of the Employment Agreement
other than Paragraph 5. Paragraph 5 of the Employment Agreement is incorporated
herein by reference and shall continue to bind you in accordance with its terms,
PROVIDED that the terms "Company" and "Wyndham" as used in said Paragraph 5
shall be deemed to refer to the
Xx. Xxxx X. Xxxxxxxx
February 26, 1999
Page 8
Companies as defined herein. The Employment Agreement, except for Paragraph 5
thereof as amended herein, shall terminate on the Resignation Date.
7. RETURN OF PROPERTY
All documents, records, material and all copies of any of the foregoing
pertaining to Confidential Information (as defined in Paragraph 5 of the
Employment Agreement), and all software, equipment, and other supplies, whether
or not pertaining to Confidential Information, that have come into your
possession or been produced by you in connection with your employment
("Property") have been and remain the sole property of the Companies. You
confirm that you have returned all Property to the Companies, except to the
extent such Property is reasonably necessary for you to perform your services
during the Consulting Period or as expressly provided in Section 3 above. All
Property shall be returned to the Companies promptly upon termination of the
Consulting Period. In no event should this provision be construed to require you
to return to the Company any document or other materials concerning your
remuneration and benefits during your employment with the Companies. Subject to
Sections 11(a)(iv) and 11(b)(iii), the Companies agree to return to you,
promptly upon your request, such of your property as may be in the possession of
any of the Companies.
8. LITIGATION COOPERATION
You agree to continue to serve the Companies as a litigation consultant
and, in connection therewith, to cooperate fully with the Companies in (i) the
defense or prosecution of any claims or actions which already have been brought
or which may be brought in the future against or on behalf of the Companies and
(ii) responding to, cooperating with, or contesting any governmental audit,
inspection, inquiry, proceeding or investigation, which relate to events or
occurrences that transpired during your employment with any of the Companies.
Your full cooperation in connection with such claims or actions shall include,
without implication of limitation: promptly notifying the Companies in writing
of any subpoena, interview, investigation, request for information, or other
contact concerning events or occurrences that transpired during your employment
with any of the Companies; being available to meet with counsel for any of the
Companies to prepare for discovery or trial; to testify truthfully as a witness
when reasonably requested and at reasonable times designated by the Companies;
and to meet with counsel or other designated representatives of the Companies;
to prepare responses to and to cooperate with any Company's processing of
governmental audits, inspections, inquiries, proceedings or investigations. The
Companies agree to reimburse you for any reasonable out-of-pocket expenses that
you incur in connection with
Xx. Xxxx X. Xxxxxxxx
February 26, 1999
Page 9
such cooperation, subject to reasonable documentation. The Companies shall
compensate you at the rate of $500 per hour for time that you reasonably spend
complying with your obligations as a litigation consultant under this Section
after expiration of the Consulting Period, except that the Companies shall not,
under any circumstances, compensate you for time spent testifying under oath or
responding to questions from governmental investigators in a capacity as a fact
witness. The Companies will try, in good faith, to exercise their rights under
this Section so as not to unreasonably interfere with your personal schedule or
ability to engage in gainful employment.
In furtherance of your obligations under this Agreement, you agree that
you shall not disclose, provide or reveal, directly or indirectly, any
information concerning the Companies, including without implication of
limitation, their respective operations, plans, strategies or administration, to
any other person or entity unless compelled to do so pursuant to (a) a valid
subpoena or (b) as otherwise required by law, but in either case only after
providing the Companies, through the Office of PAHI's General Counsel, with
prior written notice and opportunity to contest such subpoena or other
requirement. Written notice shall be provided to the Office of PAHI's General
Counsel as soon as practicable, but in no event less than five (5) business days
before any such disclosure is compelled, or, if later, one business day after
you receive notice compelling such disclosure.
9. NONDISPARAGEMENT
You agree not to take any action or make any statement, written or
oral, which disparages or criticizes the Companies or their respective officers,
directors, agents, or management and business practices, or which disrupts or
impairs the Companies' normal operations. The Companies, on behalf of
themselves, agree (a) not to take any action or make any statement, written or
oral, which disparages or criticizes you or your management and business
practices, and (b) to instruct their respective directors and officers not to
take any action or make any statement, written or oral, which disparages or
criticizes you or your management and business practices. The provisions of this
Section 9 shall not apply to any truthful statement required to be made by you
or the Companies, as the case may be, in any legal proceeding or governmental or
regulatory investigation.
You shall be entitled to review and approve, which approval shall not
be unreasonably withheld, the content of any press release or other public
statement issued by the Companies concerning your resignation and participate in
the transaction call announcing your resignation.
Xx. Xxxx X. Xxxxxxxx
February 26, 1999
Page 10
10. SALE OF PARTNERSHIP INTERESTS
As soon after the Resignation Date as practicable, you will sell to WII
all of your interests, whether held directly or indirectly through another
entity such as XXXXX Services, Inc., in PAH Ravinia and PAH Windwatch. As
consideration for your interests, WII shall assume your obligations under the
loans issued in the form of mortgage notes issued by PAHI to PAH Ravinia and PAH
Windwatch. You will execute promptly all documents reasonably necessary or
appropriate for these purposes.
11. ADDITIONAL REPRESENTATIONS, WARRANTIES AND COVENANTS
(a) As a material inducement to the Companies to enter into this
Agreement, you represent, warrant and covenant as follows:
(i) You have not assigned to any third party any Claim
released by this Agreement.
(ii) You have not heretofore filed with any agency or court
any Claim released by this Agreement.
(iii) The Pledged Shares are not subject to any prior claim or
encumbrance, other than to the extent the Pledged Shares are pledged as
collateral on the NationsBank Loan.
(iv) The perpetual free license for use of the Patriot
American servicemark you heretofore granted to PAHI shall continue in
full force and effect and may be transferred by PAHI to WII or a
successor thereto.
(v) You shall not increase the outstanding balance of the
NationsBank Loan.
(vi) During the Consulting Period, you shall not, personally
or through a wholly-owned corporation, call upon, compete for, solicit,
divert or take away, or attempt to divert or take away the business of
any hotel, motel or lodging facility owner, operator, manager or
franchisor with respect to any hotel, motel or lodging facility in such
a manner so as to adversely affect any of the Companies' business
relationships with such hotel, motel or lodging facility owner,
operator, manager or franchisor.
Xx. Xxxx X Xxxxxxxx
February 26, 1999
Page 11
(vii) During the Consulting Period, you shall not, personally
or through a wholly-owned corporation, knowingly solicit or induce any
individual (other than Xxxx Xxxx) who is or within one (1) year has
been employed by the Companies to accept employment with you or with
any business, operation, corporation, partnership, association, agency,
or other person or entity with which you may be associated.
(viii) During the Consulting Period, you shall not, personally
or through a wholly-owned corporation, knowingly employ any individual
who is or within one (1)year has been employed by the Companies without
providing the Companies with ten (10) days' prior written notice of
such proposed employment.
(ix) During the Consulting Period, in the event that you
directly or indirectly invest in or purchase any hotel, motel or
lodging facility, you shall offer, or cause any business, operation,
corporation, partnership, association, agency, or other person or
entity with which you may be associated in making such an investment,
to offer one or more of the Companies a right of first offer to operate
or manage such hotel, motel or lodging facility on competitive terms,
assuming that no other person or entity has an existing right to
operate or manage such hotel, motel or lodging facility; provided,
however, that such right of first offer shall be inapplicable with
respect to facilities for which the Companies are not eligible to serve
as operator or manager so long as you have no role in making the
Companies ineligible.
(x) You acknowledge and agree that the restrictions set forth
in Sections 11(a)(v)-(ix) are appropriate and ancillary to your and the
Companies' agreement to continue your relationship with the Companies
in the capacity of a consultant, are intended to protect the Companies'
interests in their confidential information, commercial relationships
and goodwill (with their customers, prospective customers, vendors,
consultants and employees) to which you will have continued access in
your capacity as a consultant, and are reasonable and appropriate for
these purposes.
(b) As a material inducement to you to enter into this
Agreement, the Companies represent, warrant and covenant as
follows:
(i) The Companies have not assigned to any third party any
claim against you released by this Agreement; and
(ii) The Companies have not heretofore filed with any agency
or court any claim against you released by this Agreement.
Xx. Xxxx X. Xxxxxxxx
February 26, 1999
Page 12
(iii) In the event that PAHI, WII or a successor thereto
ceases to use the Patriot American servicemark for a period of one (1)
consecutive year, the perpetual free license for use of the Patriot
American servicemark referenced in Section 11(a)(iv) above shall
terminate.
12. FURTHER ASSURANCES
Upon the terms and subject to the conditions herein provided, each of
the parties hereto agrees to use its reasonable efforts to take, or cause to be
taken, all action and to do, or cause to be done, all things necessary, proper
or advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement, subject, in the case
of the Companies, to the provisions of any credit agreement or financing
agreement or other contract or agreement by which any of the Companies may be
bound.
13. EXCLUSIVITY
This Agreement sets forth all the consideration to which you are
entitled by reason of your resignation, the consummation by the Companies of any
strategic restructuring or transaction, including, without limitation, the
Transaction, and your provision of Consulting Services, and you shall not be
entitled to or eligible for any payments or benefits under any other Company
severance, bonus, retention or incentive policy, arrangement or plan.
14. TAX MATTERS
(a) All payments and other consideration provided to you
pursuant to this Agreement shall be subject to any deductions, withholding or
tax reporting that the Companies reasonably determine to be required for tax
purposes.
(b) In the event it shall be determined that (i) any payment
or distribution by the Companies to you or for your benefit (whether paid or
payable or distributed or distributable pursuant to the terms of this Agreement
or otherwise) would be a Parachute Payment subject to Excise Tax, and (ii) you
would have been subject to Excise Tax on Parachute Payments even if you had not
received any payments pursuant to Sections 3(e) and 4 hereof, then you shall be
entitled to receive an additional payment (a "Gross-Up Payment") in an amount
such that after your payment of all taxes (and any interest or penalties imposed
with respect to such taxes) including, without limitation, any Federal, state or
local income and employment taxes and Excise Tax imposed upon the Gross-Up
Payment, you retain an amount
Xx. Xxxx X. Xxxxxxxx
February 26, 1999
Page 13
of the Gross-Up Payment equal to the Excise Tax imposed upon all Parachute
Payments other than those described in Sections 3(e) and 4 hereof.
(c) If part or all of the payments or benefits payable to you
hereunder constitute Parachute Payments, the payments to you shall be reduced to
the Threshold Amount; PROVIDED, HOWEVER, that there shall be no reduction in
payments to you if the making of all Parachute Payments to you, along with the
Gross-Up Payment described in Section 14(b) hereof, without such reduction,
would result in a greater net amount to you after all federal, state and local
income and employment taxes and all Excise Tax than the net after-tax amount you
would have received if the reduction applied.
(d) The Company and you jointly shall select a firm of
independent certified public accountants to make any determination required by
this Section 14. For purposes of determining the amount of the Federal income
and employment taxes, and state and local income taxes, you shall be deemed to
pay Federal income taxes at the highest marginal rate of Federal income taxation
applicable to individuals for the calendar year in which the payments and
benefits under this Agreement are payable and state and local income taxes at
the highest marginal rates of individual taxation in the state and locality of
your residence for the calendar year in which the payments and benefits under
this Agreement are payable, net of the maximum reduction in Federal income taxes
which could be obtained from deduction of such state and local taxes.
(e) The Companies will pay the estimated amount of any
Gross-Up Payment due to you hereunder in cash on the Resignation Date. You agree
to reasonably cooperate with the Companies in the determination of the amount of
any such Gross-Up Payment. Further, you and the Companies shall make such
adjustments to the estimated amount of such Gross-Up Payment as may be necessary
to equal the actual amount of such Gross-Up Payment, which in your case will
refer to refund of prior overpayments and in the case of the Companies will
refer to make-up of prior underpayments.
(f) For purposes of this Section 14, the following terms shall
be defined as follows:
"CODE" shall mean the Internal Revenue Code of 1986, as
amended.
"PARACHUTE PAYMENT" shall mean any payment or provision by the
Employer of any amount of benefit to and for the benefit of
you, whether paid or payable or provided or to be provided
under the terms of this Agreement or otherwise, that
Xx. Xxxx X. Xxxxxxxx
February 26, 1999
Page 14
would be considered "parachute payments" within the meaning of
Section 280G(B)(2)(A) of the Code and the regulations
promulgated thereunder.
"THRESHOLD AMOUNT" shall mean three times your "base amount"
within the meaning of Section 280G(b)(3) of the Code and the
regulations promulgated thereunder, less one dollar.
"EXCISE TAX" shall mean the excise tax imposed by Section 4999
of the Code.
15. ARBITRATION OF DISPUTES
Any controversy or claim arising out of or relating to this Agreement
or the breach thereof shall, to the fullest extent permitted by law, be settled
by arbitration in any forum and form agreed upon by the parties or, in the
absence of such an agreement, under the auspices of the American Arbitration
Association ("AAA") in Dallas, Texas in accordance with the then applicable
rules and procedures of the AAA, including, but not limited to, the rules and
procedures applicable to the selection of arbitrators. In the event that any
person or entity other than you or the Companies shall be a party with regard to
any such controversy or claim, such controversy or claim shall be submitted to
arbitration subject to such other person or entity's agreement. Judgment upon
the award rendered by the arbitrator may be entered in any court having
jurisdiction thereof. This Section 15 shall be specifically enforceable.
Notwithstanding the foregoing, this Section 15 shall not preclude either party
from pursuing a court action for the sole purpose of obtaining a temporary
restraining order or a preliminary injunction in circumstances in which such
relief is appropriate, including, without limitation, to enforce Sections 6, 7
and 11 of this Agreement; PROVIDED that any other relief shall be pursued
through an arbitration proceeding pursuant to this Section 15.
16. CONSENT TO JURISDICTION
To the extent that any court action is permitted consistent with or to
enforce Section 16 of this Agreement, the parties hereby consent to the
jurisdiction of the state and federal courts in or for Dallas, Texas.
Accordingly, with respect to any such court action, you and the Companies (a)
submit to the personal jurisdiction of such courts; (b) consent to service of
process; and (c) waive any other requirement (whether imposed by statute, rule
of court, or otherwise) with respect to personal jurisdiction or service of
process.
Xx. Xxxx X. Xxxxxxxx
February 26, 1999
Page 15
17. NOTICES, ACKNOWLEDGMENTS AND OTHER TERMS
(a) You are advised to consult with an attorney before signing
this Agreement.
(b) You acknowledge and agree that the Companies' promises in
this Agreement constitute consideration in addition to anything of value to
which you are otherwise entitled by reason of the termination of your
employment.
(c) You acknowledge that you have been given the opportunity,
if you so desired, to consider this Agreement for twenty-one (21) days before
executing it. If not signed by you and returned to the General Counsel of PAHI
so that it is received by close of business on the twenty-second (22nd) day
after your receipt of the Agreement, this Agreement will not be valid. In
addition, if you breach any of the conditions of the Agreement within the
twenty-one (21) day period, the offer of this Agreement will be withdrawn and
your execution of the Agreement will not be valid. In the event that you execute
and return this Agreement within twenty-one (21) days or less of the date of its
delivery to you, you acknowledge that such decision was entirely voluntary and
that you had the opportunity to consider this letter agreement for the entire
twenty-one (21) day period. The Companies acknowledge that for a period of seven
(7) days from the date of the execution of this Agreement, you shall retain the
right to revoke this Agreement by written notice delivered to the General
Counsel of PAHI before the end of such period, and that this Agreement shall not
become effective or enforceable until the expiration of such revocation period.
(d) By signing this Agreement, you acknowledge that you are
doing so voluntarily and knowingly, fully intending to be bound by this
Agreement. You also acknowledge that you are not relying on any representations
by us or any other representative of the Companies concerning the meaning of any
aspect of this Agreement. You understand that this Agreement shall not in any
way be construed as an admission by the Companies of any liability or any act of
wrongdoing whatsoever by the Companies against you and that the Companies
specifically disclaim any liability or wrongdoing whatsoever against you on the
part of themselves and their respective officers, directors, shareholders,
employees and agents. You understand that if you do not to enter into this
Agreement and bring any claims against the Companies, the Companies will dispute
the merits of those claims and contend that they acted lawfully and for good
business reasons with respect to you.
Xx. Xxxx X. Xxxxxxxx
February 26, 1999
Page 16
(e) In the event of any dispute, this Agreement will be
construed as a whole, will be interpreted in accordance with its fair meaning,
and will not be construed strictly for or against either you or the Companies.
(f) The law of the State of Texas will govern any dispute
about this Agreement, including any interpretation or enforcement of this
Agreement.
(g) In the event that any provision or portion of a provision
of this Agreement shall be determined to be illegal, invalid or unenforceable,
the remainder of this Agreement shall be enforced to the fullest extent possible
and the illegal, invalid or unenforceable provision or portion of a provision
will be amended by a court of competent jurisdiction to reflect the parties'
intent if possible. If such amendment is not possible, the illegal, invalid or
unenforceable provision or portion of a provision will be severed from the
remainder of this Agreement and the remainder of this Agreement shall be
enforced to the fullest extent possible as if such illegal, invalid or
unenforceable provision or portion of a provision was not included.
(h) This Agreement may be modified only by a written agreement
signed by you and authorized representatives of the Companies.
(i) This Agreement constitutes the entire agreement between
the parties with respect to the subject matter hereof and supersedes all prior
agreements between the parties with respect to any related subject matter;
PROVIDED that the Indemnification Agreement shall remain in full force and
effect in accordance with its terms.
(j) This Agreement shall be binding upon each of the parties
and upon their respective heirs, administrators, representatives, executors,
successors and assigns, and shall inure to the benefit of each party and to
their heirs, administrators, representatives, executors, successors, and
assigns.
Xx. Xxxx X. Xxxxxxxx
February 26, 1999
Page 17
If you agree to these terms, please sign and date below and return this
Agreement to the General Counsel of PAHI by March 21, 1999.
Sincerely,
PATRIOT AMERICAN HOSPITALITY, INC.
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------
Xxxxxxx X. Xxxxx III President
WYNDHAM INTERNATIONAL, INC.
By: /s/ Xxxxx X. Xxxxxxxx
-----------------------------------
Xxxxx X. Xxxxxxxx
Chairman and Chief Executive Officer
Accepted and agreed to:
/s/ Xxxx X. Xxxxxxxx February 26, 1999
-------------------------- -----------------------------------
Xxxx X. Xxxxxxxx Date
EXHIBIT A
RECOURSE PROMISSORY NOTE AND SECURITY AGREEMENT
$__________ __________, 1999
FOR VALUE RECEIVED, Xxxx X. Xxxxxxxx, who resides at Dallas, Texas
(hereinafter referred to as "Borrower"), hereby promises to pay to the order of
Wyndham International, Inc., a Delaware corporation with its principal place of
business at 0000 Xxxxxxxx Xxxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000 (hereinafter
referred to as the "Company"), the principal amount of ____________________
Dollars ($________) together with interest thereon as provided below subject to
the terms and conditions set forth herein.
1. PURPOSE AND AUTHORITY. This Promissory Note and Security Agreement
(the "Note") is entered into for the purpose of refinancing Borrower's loan with
NationsBank.
2. SECURITY. Borrower hereby grants the Company a security interest in
449,818 shares of common stock $0.01 par value, of the Company (hereinafter
referred to as the "Collateral Shares") and in any and all distributions and
dividends which may from time to time be, paid or payable on the Collateral
Shares from and after the date hereof. Borrower agrees to take all such actions
and execute all such documents as may from time to time be reasonably requested
by the Company to perfect and maintain the validity and priority of any security
interest granted to the Company pursuant to this Note. Borrower also agrees that
a carbon, photographic or other reproduction of this Promissory Note and
Security Agreement may be filed as a financing statement to the extent that the
Company determines that such filing is necessary for the Company to establish or
maintain its security interest in the Collateral Shares.
3. PAYMENT. The Note will bear interest at the rate provided in Section
4 hereof, payable as provided in Section 4 hereof. The entire principal balance
and all accrued and unpaid interest and other charges as may be due hereunder
shall be due and payable on the sixth anniversary of the date of this Note (the
"Maturity Date").
4. INTEREST. Interest on this Note will accrue on the unpaid principal
balance due under the Note until the Maturity Date, at the higher of the IRS
applicable federal rate under IRC Section 1274(d) as of the date hereof or the
rate of five and one-half percent (5.5%) per annum compounded annually. Such
interest shall accrue and be payable on the Maturity Date.
5. PREPAYMENT. Borrower may prepay the whole or any part of the
principal amount of this Note from time to time without premium or penalty.
6. DEFAULT. The failure by Borrower to pay the entire outstanding
balance of this Note and all accrued interest on or before the Maturity Date
shall constitute a Default under this Note.
(a) Upon the occurrence of a Default under this Note, the
outstanding principal balance hereof, together with all reasonable costs of
collection and/or enforcement of the Note, including reasonable attorney's fees,
shall at the option of the Company become immediately due and payable.
(b) If Borrower is in Default hereunder, the Company may,
except as otherwise provided herein, exercise the rights and remedies accorded a
secured party by the Uniform Commercial Code as enacted in the State of
Delaware.
7. RECOURSE. The Company and Borrower agree that Borrower shall have
personal liability for any deficiency which may arise upon a foreclosure and
sale or other disposition of the Collateral Shares.
8. MODIFICATION. Neither this Note nor any provision hereof may be
modified, altered, or amended in any manner or form except by an agreement in
writing, executed by a duly authorized officer of the Company and Borrower,
which writing shall make specific reference hereto.
9. TRANSFER BY BORROWER. Borrower will not sell, assign, transfer or
otherwise dispose of, directly or indirectly, nor grant any option with respect
to, or pledge or grant any security interest in or otherwise encumber any of the
Collateral Shares or any interest therein, except for the security interest
provided for in this Note.
10. SEVERABILITY. If for any reason any provision or provisions hereof
are determined to be invalid, unenforceable or contrary to any existing or
future law, such invalidity or unenforceability shall not impair the operation
or affect those portions of this Note which are valid.
11. USURY, ETC. All agreements between Borrower and the Company are
hereby expressly limited so that in no contingency or event whatsoever, whether
by reason of Maturity of the indebtedness or otherwise, shall the amount paid or
agreed to be paid to the holder for the use, forbearance or detention of the
indebtedness evidenced hereby exceed the maximum amount which the holder is
permitted to receive under applicable law. If, from any circumstances
whatsoever, fulfillment of any provision of this Note, at the time performance
of such provision shall be due, shall involve payments exceeding such amount,
then the obligation to be fulfilled shall automatically be reduced to the limit
of such maximum amount, and if from any circumstances the holder should ever
receive as interest an amount which would exceed such maximum amount, such
amount which would be excessive interest shall be applied to the reduction of
the principal balance evidenced hereby and not to the payment of interest. As
used herein, the term "applicable law" shall mean the law in effect as of the
date hereof; PROVIDED, HOWEVER, that in the event that there is a change in the
law which results in a higher permissible rate of interest, then this Note shall
be governed by such new law as of its effective date. This provision shall
control every other provision of this Note.
2
12. VALUATION: MANNER OF DISPOSITION. Borrower acknowledges and agrees
that the Company may not be able to effect a public sale of the Collateral
Shares and, accordingly, agrees that in the event of any sale, collection,
realization or other disposition of or upon the Collateral Shares by the
Company, in lieu of such public sale, the Company may transfer all or any
portion of the Collateral Shares to itself and apply the value of such shares
(at a price per share equal to the average of the daily high and low sales
prices, computed to three decimal places, of the shares of common stock, $0.01
par value, of the Company as reported on the New York Stock Exchange (the
"NYSE") for the ten (10) days on which the NYSE is open and for which trades in
the such shares are reported immediately preceding the date of such action by
the Company to the amounts due under or in connection with this Note.
13. GOVERNING LAW. The execution, delivery and performance of this Note
shall be governed by, construed, and enforced in accordance with the laws of the
State of Delaware.
14. WAIVERS. The failure of the Company at any time to exercise any
option or right hereunder shall not constitute a waiver of the Company's right
to exercise such option or right at any other time.
IN WITNESS WHEREOF, this Note has been executed and delivered as a
sealed instrument as of the date first set forth above.
-------------------------
Xxxx X. Xxxxxxxx
Executed, sealed and delivered in the
presence of:
-------------------------
Name of Witness:
3
EXHIBIT B
IRREVOCABLE STOCK POWER
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto Wyndham International, Inc., ______ shares of Common Stock, $.01
par value, of Wyndham International, Inc., a Delaware corporation (the
"Corporation"), standing in the undersigned's name on the books of the
Corporation represented by Certificate No. __ herewith, and does hereby
irrevocably constitute and appoint Wyndham International, Inc. as its
Attorney-in-Fact to transfer the said stock on the books of the Corporation with
full power of substitution in the premises.
-----------------------
Xxxx X. Xxxxxxxx
IN PRESENCE OF
----------------------
Signature
----------------------
Print Name
