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EXHIBIT 10.1
EXECUTIVE EMPLOYMENT AGREEMENT
This EXECUTIVE EMPLOYMENT AGREEMENT ("Agreement") is made as of the 31 day
of May, 2000, between Wyndham International, Inc., a Delaware corporation (the
"Company"), and Richard A. Smith ("Executive"), effective as of April 10, 2000
(the "Effective Date").
WHEREAS, Executive is currently employed by the Company in a senior
executive capacity;
WHEREAS, the Company desires to continue to employ Executive and Executive
desires to continue to be employed by the Company;
WHEREAS, as an additional inducement to Executive to enter into this
Agreement, the Company shall, as of the Effective Date, 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
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"Option"); and
WHEREAS, Executive is desirous of committing to serve the Company on the
terms herein provided.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. Employment. The term of 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 ninety (90) days prior to each such date, either party
shall have given notice to the other that it does not wish to extend this
Agreement; provided, further, that if a Change in Control occurs during the
original or extended term of this Agreement, the term of this Agreement shall
continue in effect until the later of the end of the initial term described
above or the end of the eighteenth (18th) month following the month in which the
Change in Control occurred. The term of this Agreement shall be subject to
termination as provided in Paragraph 6 and may be referred to herein as the
"Period of Employment."
2. Position and Duties. During the Period of Employment, Executive shall serve
as an Executive Vice President 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") or other executive authorized by the Chairman or CEO, provided that such
duties are consistent with Executive's position or other positions that he may
hold from
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time to time. Executive shall devote his full working time and efforts to the
business and affairs of the Company. Notwithstanding the foregoing, Executive
may serve on other boards of directors, with the approval of the Chairman or
CEO, or engage in religious, charitable or other community activities as long as
such services and activities are disclosed to the Chairman or CEO and do not
materially interfere with Executive's performance of his duties to the Company
as provided in this Agreement.
3. Compensation and Related Matters.
(a) Base Salary and Incentive Compensation. Executive's initial annual
base salary ("Base Salary") shall be $325,000. 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 in
an amount to be fixed by the Board of Directors of the Company or a Committee
thereof or a duly authorized officer (the "Board"). The Base Salary, as
redetermined, may be referred to herein as "Adjusted Base Salary." The Base
Salary or Adjusted Base Salary shall be payable in substantially equal bi-weekly
installments and shall in no way limit or reduce the obligations of the Company
hereunder.
In addition to Base Salary or, if applicable, Adjusted Base Salary,
Executive shall be eligible to receive in each fiscal year during the Period of
Employment, on or about the Annual Compensation Determination Date (or earlier
as provided in Paragraph 7 and 8 of this Agreement), cash incentive compensation
(the "Incentive Compensation") in an amount determined annually by the
Compensation Committee of the Board of Directors based on individual
performance, "Employer EBITDA Achievement" (as hereinafter defined), and total
return to shareholders. Incentive Compensation shall be paid to Executive no
later than the date incentive compensation is paid by the Company to similarly
situated executives of the Company. Incentive Compensation shall equal from
zero to one and one-half times the then current Base Salary or, if applicable,
Adjusted Base Salary. "Employer EBITDA Achievement" is the degree to which the
annual budget established by the Company for earnings before interest, taxes,
depreciation, and amortization is achieved. Incentive Compensation shall be
fixed and guaranteed at $325,000 for the year ending December 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 maximum Incentive Compensation payable to
Executive for any fiscal year shall be equal to one hundred fifty percent (150%)
of the Base Salary, or if applicable, Adjusted Base Salary.
"Pro Rata Incentive Compensation" shall be paid to Executive if Executive's
employment is terminated by reason of Executive's death or disability, as
provided in Subparagraphs 6(a) and 6(b), if Executive's employment is terminated
by the Executive for Good Reason, as provided in Subparagraph 6(e), or if
Executive's employment is terminated by the Company without Cause, as provided
in Subparagraph 6(d). Pro Rata Incentive Compensation equals the Incentive
Compensation for the fiscal year of termination multiplied by a fraction, the
numerator of which is the number of days in the current fiscal year through Date
of Termination and the denominator is 365.
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If, for the purpose of calculating Incentive Compensation or Pro Rata
Incentive Compensation, the Incentive Compensation cannot be determined by the
time required to be paid, the Company shall make a good faith estimate of the
pro rata amount based on an amount Executive would have earned had he continued
employment for the entire fiscal year; provided, however, that where the Date of
Termination occurs during the first six months of any fiscal year, the Pro Rata
Incentive Compensation paid to Executive if Executive's employment is terminated
by reason of Executive's death or disability, by the Executive for Good Reason,
or by the Company without Cause shall not exceed fifty percent (50%) of the
maximum Incentive Compensation which could have been paid to Executive in the
fiscal year immediately preceding the fiscal year of termination.
Executive will also participate in such other incentive compensation plans,
policies or practices as the Board shall determine.
(b) Expenses. Executive shall be entitled to receive prompt reimbursement
for all reasonable expenses incurred by him (in accordance with the policies and
procedures then in effect and established by the Company for its senior
executive officers) in performing services hereunder during the Period of
Employment, provided that Executive properly accounts therefor in accordance
with Company policy.
(c) 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 executives and key management employees, subject to and on
a basis consistent with the terms, conditions and overall administration of such
plan or arrangement. Any payments or benefits payable to Executive under a
plan or arrangement referred to in this Subparagraph 3(c) in respect of any
calendar year during which Executive is employed by the Company for less than
the whole of such year shall, unless otherwise provided in the applicable plan
or arrangement, be prorated in accordance with the number of days in such
calendar year during which he is so employed. Should any such payments or
benefits accrue on a fiscal (rather than calendar) year, then the proration in
the preceding sentence shall be on the basis of a fiscal year rather than
calendar year.
(d) 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
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amount not less than the amount of Executive's then current Base Salary or
Adjusted Base Salary. Executive shall have the right to designate the
beneficiary under such policy.
(e) 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.
(f) Disability Insurance. The Company shall pay the premiums on, and
maintain in effect through the Period of Employment, long-term disability
insurance providing for payment of benefits at rates not less than sixty percent
(60%) of Executive's current Base Salary or Adjusted Base Salary.
4. Unauthorized Disclosure.
(a) Confidential Information. 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
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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 4 shall be binding upon Executive's heirs, successors, and
legal representatives. The provisions of this Paragraph 4 shall survive the
termination of this Agreement for any reason.
5. Covenant Not to Compete. In consideration for the Option, the Company's
promise to provide Confidential Information as set forth in Paragraph 4 above,
and for Executive's employment by the Company under the terms provided in this
Agreement, and as a means to aid in the performance and enforcement of the terms
of and preserve the rights of the Company pursuant to the Unauthorized
Disclosure provisions of Paragraph 4, Executive agrees as follows:
(a) during the term of Executive's employment with the Company and for a
period of twenty-four (24) months thereafter, regardless of the reason for
termination of employment, Executive will not, directly or indirectly, as an
owner, director, principal, agent, officer, employee, partner, consultant,
servant, or otherwise, carry on, operate, manage, control, or become involved in
any manner with any business, operation, corporation, partnership, association,
agency, or other person or entity which is in the business of owning, operating,
managing or granting franchise rights with respect to hotels, motels or other
lodging facilities in any area or territory in which the Company conducts
operations; provided, however, that the foregoing shall not prohibit Executive
from owning up to one percent (1%) of the outstanding stock of a publicly held
company engaged in the hospitality business. Notwithstanding the foregoing,
after Executive's employment with the Company has terminated, upon receiving
written permission by the Board, Executive shall be permitted to engage in such
activities with respect to any other hotel, motel or lodging facility that would
be immaterial to the operations of the Company in the area or territory in
question. Immateriality, for purposes of the foregoing sentence, shall be
determined in the sole discretion of the Board in good faith.
(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 any of the customers
(including, without limitation, any hotel owner, lessor or lessee, asset
manager, trustee, consumer with whom the Company from time to time (i) has an
existing agreement or business relationship; (ii) has had an agreement or
business relationship within the two-year period preceding the Executive's last
day of employment with the Company; or (iii) has included as a prospect in its
applicable pipeline) or vendors of the Company in any of the areas or
territories in which the Company conducts operations if such action has the
intent or effect of interfering with the Company's relationship with the vendor
or customer.
(c) during the term of Executive's employment with the Company and for a
period of twenty-four (24) months thereafter, regardless of the reason for
termination of employment,
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Executive will not directly or indirectly solicit or induce any current or
prospective employee of the Company (including, without limitation, any current
or prospective employee of the Company within the six-month period preceding
Executive's last day of employment with the Company or within the 24-month
period of this covenant) to accept employment with Executive or with any
business, operation, corporation, partnership, association, agency, or other
person or entity with which Executive may be associated, and Executive will not
employ or cause any business, operation, corporation, partnership, association,
agency, or other person or entity with which Executive may be associated to
employ any current or prospective employee of the Company 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 in no way
affect any other circumstance or the validity or enforceability of this
Agreement. If any such provision, or any part thereof, is held to be
unenforceable because of the duration of such provision or the 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.
6. Termination. Executive's employment hereunder may be terminated without any
breach of this Agreement under the following circumstances:
(a) Death. Executive's employment hereunder shall terminate upon his
death.
(b) Disability. If, as a result of Executive's incapacity due to physical
or mental illness, Executive shall have been absent from his duties hereunder on
a full-time basis for one hundred eighty (180) calendar days in the aggregate in
any twelve (12) month period, the Company may terminate Executive's employment
hereunder.
(c) Termination by Company For Cause. At any time during the Period of
Employment, the Company may terminate Executive's employment hereunder for Cause
if such
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termination is approved by not less than a majority of the Board of Directors at
a meeting of such Board of Directors called and held for such purpose. Any
determination by the Board of Directors that "Cause" exists shall be made by the
Board of Directors in good faith. For purposes of this Agreement "Cause" shall
mean: (A) conduct by Executive constituting a material act of willful misconduct
in connection with the performance of his duties, including, without limitation,
misappropriation of funds or property of the Company or any of its affiliates
other than the occasional, customary and de minimis use of Company property for
personal purposes; (B) criminal or civil conviction of Executive, a plea of nolo
contendere by Executive or conduct by Executive that would reasonably be
expected to result in material injury to the reputation of the Company if he
were retained in his position with the Company, including, without limitation,
conviction of a felony involving moral turpitude; (C) continued, willful and
deliberate non-performance by Executive of his duties hereunder (other than by
reason of Executive's physical or mental illness, incapacity or disability) and
such non-performance has continued for more than thirty (30) days following
written notice of such non-performance from the Board; (D) a breach by Executive
of any of the provisions contained in Paragraphs 4 and 5 of this Agreement; or
(E) a violation by Executive of the Company's employment policies and such
violation has continued for more than thirty (30) days following written notice
of such violation from the Board.
(d) Termination Without Cause. At any time during the Period of
Employment, the Company may terminate Executive's employment hereunder without
Cause if such termination is approved by a majority of the Board of Directors at
a meeting of the Board of Directors called and held for such purpose. Any
termination by the Company of Executive's employment under this Agreement which
does not constitute a termination for Cause under Subparagraph 6(c) or result
from the death or disability of the Executive under Subparagraph 6(a) or (b)
shall be 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, other than a change in Executive's position or reporting relationship;
(B) any removal, during the Period of Employment, from Executive of his title of
Executive Vice President; (C) an involuntary reduction in Executive's Base
Salary or Adjusted Base Salary or involuntary reduction in cash incentive
compensation plan (but not reduction in incentive compensation appropriate for
level of performance) except for across-the-board salary reductions similarly
affecting all or substantially all management employees; (D) a breach by the
Company of any of its other material obligations under this Agreement and the
failure of the Company to cure such breach within thirty (30) days after written
notice thereof by Executive; (E) the involuntary relocation of the Company's
offices at
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which Executive is principally employed or the involuntary relocation of the
offices of Executive's primary workgroup to a location more than thirty (30)
miles from such offices (other than a relocation in either event to Dallas,
Texas), or the requirement by the Company for Executive to be based anywhere
other than the Company's offices at such location or in Dallas, Texas on an
extended basis, except for required travel on the Company's business to an
extent substantially consistent with Executive's business travel obligations; or
(F) the requirement that Executive report to a person who is below the level of
Chief Financial Officer. "Good Reason Process" shall mean that (i) the Executive
reasonably determines in good faith that a "Good Reason" event has occurred;
(ii) Executive notifies the Company in writing of the occurrence of the Good
Reason event; (iii) Executive cooperates in good faith with the Company's
efforts, for a period not less than ninety (90) days following such notice, to
modify Executive's employment situation in a manner acceptable to Executive and
Company; and (iv) notwithstanding such efforts, one or more of the Good Reason
events continues to exist and has not been modified in a manner acceptable to
Executive. If the Company cures the Good Reason event during the ninety (90) day
period, Good Reason shall be deemed not to have occurred.
(f) Notice of Termination. Except for termination as specified in
Subparagraph 6(a), any termination of Executive's employment by the Company or
any such termination by Executive shall be communicated by written Notice of
Termination to the other party hereto. For purposes of this Agreement, a
"Notice of Termination" shall mean a notice which shall indicate the specific
termination provision in this Agreement relied upon.
(g) Date of Termination. "Date of Termination" shall mean: (A) if
Executive's employment is terminated by his death, the date of his death; (B) if
Executive's employment is terminated on account of disability under Subparagraph
6(b) or by the Company for Cause under Subparagraph 6(c), the date on which
Notice of Termination is given; (C) if Executive's employment is terminated by
the Company under Subparagraph 6(d), sixty (60) days after the date on which a
Notice of Termination is given; and (D) if Executive's employment is terminated
by Executive under Subparagraph 6(e), thirty (30) days after the date on which a
Notice of Termination is given.
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7. Compensation Upon Termination or During Disability.
(a) If Executive's employment terminates by reason of his death, the
Company shall, within ninety (90) days of death, pay in a lump sum amount to
such person as Executive shall designate in a notice filed with the Company or,
if no such person is designated, to Executive's estate, Executive's accrued and
unpaid Base Salary or, if applicable, his Adjusted Base Salary, to the date of
his death, plus accrued and unpaid Incentive Compensation, if any, for the
fiscal year preceding termination and Pro Rata Incentive Compensation, if any,
under Subparagraph 3(a). For a period of one (1) year following the Date of
Termination, the Company shall pay such health insurance premiums as may be
necessary to allow Executive's spouse and dependents to receive health insurance
coverage substantially similar to coverage they received prior to the Date of
Termination. 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 and unpaid Base Salary or, if applicable, his
Adjusted Base Salary and Incentive Compensation payments, if any, under
Subparagraph 3(a), until Executive's employment is terminated due to disability
in accordance with Subparagraph 6(b) or until Executive terminates his
employment in accordance with Subparagraph 6(e), whichever first occurs, at
which point executive shall then receive any accrued and unpaid Incentive
Compensation, if any, for the fiscal year preceding termination and Pro Rata
Incentive Compensation, if any, under Subparagraph 3(a). For a period of one
(1) year following the Date of Termination, the Company shall pay such health
insurance premiums as may be necessary to allow Executive, Executive's spouse
and dependents to receive health insurance coverage substantially similar to
coverage they received prior to the Date of Termination. Upon termination due
to death prior to the termination first to occur as specified in the preceding
sentence, Subparagraph 7(a) shall apply.
(c) If Executive's employment is terminated by Executive other than for
Good Reason as provided in Subparagraph 6(e), then the Company shall, through
the Date of Termination, pay Executive his accrued and unpaid Base Salary or, if
applicable, his Adjusted Base Salary at the rate in effect at the time Notice of
Termination is given. 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 6(e) or if Executive's employment is terminated by the Company
without Cause as provided in Subparagraph 6(d), then the Company shall, through
the Date of Termination, pay Executive his accrued and unpaid Base Salary or, if
applicable, his Adjusted Base Salary at the rate in effect at the time Notice of
Termination is given and accrued and unpaid Incentive
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Compensation, if any, for the fiscal year preceding termination and Pro Rata
Incentive Compensation, if any, under Subparagraph 3(a). In addition, subject to
signing by Executive of a general release of claims in a form and manner
satisfactory to the Company,
(i) the Company shall continue Executive's compensation at a rate
equal to the sum of Executive's Average Base Salary and his Average
Incentive Compensation, payable for the remaining length of the Period of
Employment after the Date of Termination, but in no event for fewer than
twenty-four (24) months (the "Severance Amount"). The Severance Amount
shall be paid out in substantially equal bi-weekly installments, in
arrears; provided, however, that in the event Executive commences any
employment with an employer other than the Company during the twelve (12)
month period ending on the first anniversary of the Date of termination,
the Company shall be entitled to set-off against the remaining Severance
Amount fifty percent (50%) of the amount of any cash compensation received
by Executive from the new employer during such period; provided, further,
that in the event Executive commences any employment with, or is employed
by, any employer other than the Company during the twelve (12) month period
following the first anniversary of the Date of Termination, the Company
shall be entitled to set-off against the remaining Severance Amount twenty-
five percent (25%) of the amount of any cash 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(a) received by Executive
for the three (3) immediately preceding fiscal years or such fewer number
of complete fiscal years as Executive may have been employed by the
Company. In no event shall "Average Incentive Compensation" include any
sign-on bonus, retention bonus or any other special bonus. Notwithstanding
the foregoing, if the Executive breaches any of the provisions contained in
Paragraphs 4 and 5 of this Agreement, all payments of the Severance Amount
shall immediately cease. Notwithstanding the foregoing, in the event
Executive terminates his employment for Good Reason as provided in
Subparagraph 6(e), he shall be entitled to the Severance Amount only if he
provides the Notice of Termination provided for in Subparagraph 6(f) within
thirty (30) days after the occurrence of the event or events which
constitute such Good Reason as specified in clauses (A), (B), (C), (D), (E)
and (F) of Subparagraph 6(e);
(ii) in addition to any other benefits to which Executive may be
entitled in accordance with the Company's then existing severance policies,
the Company shall, for a period of one (1) year commencing on the Date of
Termination, pay such health insurance premiums as may be necessary to
allow Executive, Executive's spouse and dependents to continue to receive
health insurance coverage substantially similar to the coverage they
received prior to his termination of employment.
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(e) If Executive's employment is terminated by the Company for Cause as
provided in Subparagraph 6(c), then the Company shall, through the Date of
Termination, pay Executive his accrued and unpaid Base Salary or, if applicable,
his Adjusted Base Salary at the rate in effect at the time Notice of Termination
is given. Thereafter, the Company shall have no further obligations to
Executive except as otherwise expressly provided under this Agreement, provided
any such termination shall not adversely affect or alter Executive's rights
under any employee benefit plan of the Company in which Executive, at the Date
of Termination, has a vested interest, unless otherwise provided in such
employee benefit plan or any agreement or other instrument attendant thereto.
(f) Regardless of the reason for termination, for a period of five (5)
years beginning on the Date of Termination, the Company will provide such
reasonable assistance and support to Executive as he shall reasonably require in
connection with the preparation and filing of tax returns, statements and forms
insofar as such returns, statements or forms relate to Executive's association
with the Company or any of its predecessors or affiliates. At the Company's
election, such assistance and support shall be provided by either tax personnel
from the Company or certified public accountants selected and compensated by the
Company.
(g) Nothing contained in the foregoing Subparagraphs 7(a) through 7(e)
shall be construed so as to affect Executive's rights or the Company's
obligations relating to agreements or benefits which are unrelated to
termination of employment.
8. Change in Control Payment. The provisions of this Paragraph 8 set forth
certain terms of an agreement reached between Executive and the Company
regarding Executive's rights and obligations upon the occurrence of a Change in
Control of the Company. These provisions are intended to assure and encourage
in advance Executive's continued attention and dedication to his assigned duties
and his objectivity during the pendency and after the occurrence of any such
event. These provisions shall apply in lieu of, and expressly supersede, the
provisions of Subparagraph 7(d)(i) regarding severance pay upon a termination of
employment, if such termination of employment occurs within eighteen (18) months
after the occurrence of the first event constituting a Change of Control;
provided that such first event occurs during the Period of Employment. These
provisions shall terminate and be of no further force or effect beginning
eighteen (18) months after the occurrence of a Change of Control.
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(a) Change in Control.
(i) If within eighteen (18) months after the occurrence of the first
event constituting a Change in Control, Executive's employment is
terminated by the Company without Cause as provided in Subparagraph 6(d) or
Executive terminates his employment for Good Reason as provided in
Subparagraph 6(e), then the Company shall pay Executive the Severance
Amount as provided in Subparagraph 7(d)(i) in substantially bi-weekly
installments, in arrears, over twenty-four (24) months. Notwithstanding
the foregoing, if the Executive breaches any of the provisions contained in
Paragraphs 4 and 5 of this Agreement, all payments of the Severance Amount
shall immediately cease; and
(ii) Within fifteen (15) days after Executive becomes entitled to
receive the Severance Amount under (i) above, the Company shall place funds
in an amount equal to the estimated Severance Amount in escrow, pursuant to
arrangements that are mutually acceptable to the Company and Executive (the
"Escrow Arrangement"). The Escrow Arrangement shall be maintained until
the final installment payment of the Severance Amount has been made;
(iii) Notwithstanding anything to the contrary in any applicable
option agreement or stock-based award, in the event of a Change in Control
during the Period of Employment, any unvested portions of any stock option
or other stock-based award shall fully vest and become exercisable one
hundred eighty (180) days after the date of the Change in Control or, if
earlier, on the date the Executive's employment with the Company is
terminated by the Company without Cause or by the Executive for Good
Reason. Executive shall have three hundred sixty (360) days following the
Date of Termination to exercise all 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 dependents to continue to
receive health insurance coverage substantially similar to the coverage
they received prior to his termination of employment.
(b) Gross Up Payment
(i) Excess Parachute Payment. If Executive incurs the tax (the
"Excise Tax" imposed by Section 4999 of the Internal Revenue Code of 1986
(the "Code") on "excess parachute payments" within the meaning of Section
280G(b)(1) of the Code, the Company will pay to Executive an amount (the
"Gross Up Payment" such that the net amount retained by Executive, after
deduction of any Excise Tax on the excess parachute payment and any
federal, state and local income taxes and employment taxes (together
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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 or 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 as may be necessary to equal the
actual 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 purposes of this Paragraph 8, the following terms
shall have the following meanings:
"Change in Control" shall mean any of the following:
(a) the acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (the
"Acquiring Person"), other than the Company, or any of its Subsidiaries or
any Investor or Excluded Group, of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of thirty-five percent
(35%) or more of the combined voting power or economic interests of the
then outstanding voting securities of the Company entitled to vote
generally in the election of directors; provided, however, that any
transfer from any Investor or Excluded Group will not result in a Change in
Control if such transfer was part of a series of related transactions the
effect of which, absent the transfer to such Acquiring Person by the
Investor or Excluded Group, would not have resulted in the acquisition by
such Acquiring Person of thirty-five percent (35%) or more of the combined
voting power or economic interests of the then outstanding voting
securities; or
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(b) during any period of twelve (12) consecutive months after the
Issuance Date, the individuals who at the beginning of any such 12-month
period constituted a majority of the Class A Directors and Class C
Directors (the "Incumbent Non-Investor Majority") cease for any reason to
constitute at least a majority of such Class A Directors and Class C
Directors; provided that (i) any individual becoming a director whose
election, or nomination for election by the Company's stockholders, was
approved by a vote of the stockholders having the right to designate such
director and (ii) any director whose election to the Board or whose
nomination for election by the stockholders of the Company was approved by
the requisite vote of directors entitled to vote on such election or
nomination in accordance with the Restated Certificate of Incorporation of
the Company, shall, in each such case, be considered as though such
individual were a member of the Incumbent Non-Investor Majority, but
excluding, as a member of the Incumbent Non-Investor Majority, any such
individual whose initial assumption of office is in connection with an
actual or threatened election contest relating to the election of the
directors of the Company (as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act) and further excluding
any person who is an affiliate or associate of an Acquiring Person having
or proposing to acquire beneficial ownership of twenty-five percent (25%)
or more of the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors; or
(c) the approval by the stockholders of the Company of a
reorganization, merger or consolidation, in each case, with respect to
which all or substantially all of the individuals and entities who were the
respective beneficial owners of the voting securities of the Company
immediately prior to such reorganization, merger or consolidation do not,
following such reorganization, merger or consolidation, beneficially own,
directly or indirectly, more than fifty-seven and one-half percent (57.5%)
of the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors of the Company
resulting from such reorganization, merger or consolidation; or
(d) the sale or other disposition of assets representing fifty percent
(50%) or more of the assets of the Company in one transaction or series of
related transactions.
All defined terms used in the definition of "Change in Control" shall have
the same meaning as set forth in the 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.
9. 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:
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if to the Executive:
At his home address as shown
in the Company's personnel records;
if to the Company:
Wyndham International, Inc.
1950 Stemmons Freeway
Suite 6001
Dallas, TX 75207
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.
10. Miscellaneous. No provisions of this Agreement may be modified, waived, or
discharged unless such waiver, modification, or discharge is agreed to in
writing and signed by Executive and such officer of the Company as may be
specifically designated by the Board. No waiver by either party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. This Agreement, with
its Exhibit A, constitutes the entire agreement between the parties with respect
to the subject matter hereof. No agreements or representations, oral or
otherwise, express or implied, unless specifically referred to herein, with
respect to the subject matter hereof have been made by either party which are
not set forth expressly in this Agreement and Exhibit A. This Agreement
supersedes all prior agreements between the parties with respect to any related
subject matter. The validity, interpretation, construction, and performance of
this Agreement shall be governed by the laws of the State of Texas (without
regard to principles of conflicts of laws).
11. Validity. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect. The invalid portion of this Agreement, if any, shall be modified by any
court having jurisdiction to the extent necessary to render such portion
enforceable.
12. Counterparts. This Agreement may be executed in several counterparts, each
of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
13. 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
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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 4 or 5 hereof. Furthermore, should a dispute occur concerning
Executive's mental or physical capacity as described in Subparagraph 6(b), 6(c)
or 7(b), a doctor selected by Executive and a doctor selected by the Company
shall be entitled to examine Executive. If the opinion of the Company's doctor
and Executive's doctor conflict, the Company's doctor and Executive's doctor
shall together agree upon a third doctor, whose opinion shall be binding. Any
amount to which Executive is entitled under this Agreement (including any
disputed amount), which is not paid when due, shall bear interest at a rate
equal to the lesser of eighteen percent (18%) per annum or the maximum lawful
rate.
14. Third-Party Agreements and Rights. Executive represents to the Company
that Executive's execution of this Agreement, Executive's employment with the
Company and the performance of Executive's proposed duties for the Company will
not violate any obligations Executive may have to any employer or other party,
and Executive will not bring to the premises of the Company any copies or other
tangible embodiments of non-public information belonging to or obtained from any
such previous employment or other party.
15. Litigation and Regulatory Cooperation. During and after Executive's
employment, Executive shall reasonably cooperate with the Company in the defense
or prosecution of any claims or actions now in existence or which may be brought
in the future against or on behalf of the Company which relate to events or
occurrences that transpired while Executive was employed by the Company;
provided, however, that such cooperation shall not materially and adversely
affect Executive or expose Executive to an increased probability of civil or
criminal litigation. Executive's cooperation in connection with such claims or
actions shall include, but not be limited to, being available to meet with
counsel to prepare for discovery or trial and to act as a witness on behalf of
the Company at mutually convenient times. During and after Executive's
employment, Executive also shall cooperate fully with the Company in connection
with any investigation or review of any federal, state or local regulatory
authority as any such investigation or review relates to events or occurrences
that transpired while Executive was employed by the Company. The Company shall
also provide Executive with compensation on an hourly basis (to be derived from
the sum of his Base Salary or, if applicable, Adjusted Base Salary and Average
Incentive Compensation) for requested litigation and regulatory cooperation that
occurs after his termination of employment, and reimburse Executive for all
costs and expenses incurred in connection with his performance under this
Paragraph 15, including, but not limited to, reasonable attorneys' fees and
costs.
16. Gender Neutral. Wherever used herein, a pronoun in the masculine gender
shall be considered as including the feminine gender unless the context clearly
indicates otherwise.
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IN WITNESS WHEREOF, the parties have executed this Agreement effective on
the date and year first above written.
WYNDHAM INTERNATIONAL, INC.
By: /s/ MARY WATSON
-----------------------
Its: Sr. VP HR
----------------------
/s/ RICHARD A. SMITH
----------------------
Richard A. Smith
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