Executive Employment Agreement between Wyndham International, Inc. and Fred J. Kleisner

Summary

This agreement is between Wyndham International, Inc. and Fred J. Kleisner, appointing him as Chief Executive Officer and President. It replaces a prior employment agreement and outlines Mr. Kleisner’s duties, compensation, stock options, and other benefits. The agreement has an initial five-year term, with automatic two-year extensions unless either party gives notice. It also provides for additional stock options and an indemnification agreement. The contract specifies conditions for termination, including provisions if there is a change in control of the company.

EX-10.4 3 dex104.txt EXECUTIVE EMPLOYMENT AGREEMENT Exhibit 10.4 EXECUTIVE EMPLOYMENT AGREEMENT This EXECUTIVE EMPLOYMENT AGREEMENT ("Agreement") is entered into as of and shall be effective as of March 27, 2000 (the "Effective Date"), by and between Wyndham International, Inc., a Delaware corporation ("Employer), and Fred J. Kleisner ("Executive'). WHEREAS, Executive has previously entered into an Executive Employment Agreement with Employer pursuant to which he has served as Chief Operating Officer and President of Employer (the "Prior Agreement"); and WHEREAS, Employer, acting by and through the Board of Directors of Employer (the Board") now desires to employ Executive as the Chief Executive Officer and President of Employer and in connection therewith desires to terminate the Prior Agreement and supercede the Prior Agreement with this Agreement; and WHEREAS, Executive, seeking to serve the best interests of Employer, is agreeable to assuming the duties of this new position and is agreeable to terminating the Prior Agreement and superceding the Prior Agreement with this Agreement on the terms herein provided; and WHEREAS, pursuant to the terms of the Prior Agreement, Employer (a) granted Executive an option (the "1999 Stock Option") to purchase 1,100,000 shares of Class A Common Stock of Employer pursuant to the terms of a Stock Option Agreement (the "1999 Option Agreement"), (b) granted Executive 203,000 shares of Class A Common Stock pursuant to the terms of a Restricted Unit Award Agreement (the "Restricted Unit Award Agreement"), and entered into a No Personal Liability Nonrecourse Promissory Note in the original principal amount of $850,000 (the "1999 Note"); and WHEREAS, in March 2000, Employer granted Executive an option (the "2000 Stock Option") to purchase 701,250 shares of Class A Common Stock of Employer pursuant to the terms of a Stock Option Agreement (the "2000 Option Agreement"); and WHEREAS, the terms and provisions of the 1999 Option Agreement, 2000 Option Agreement, Restricted Unit Award Agreement and 1999 Note shall not be affected by this Agreement except to the extent specifically set forth herein; and WHEREAS, as an additional inducement to Executive to enter into this Agreement, Employer shall, on the Effective Date enter into an indemnification agreement with Executive in the form attached hereto as Exhibit A (the Indemnification Agreement"); and WHEREAS, as an additional inducement to Executive to enter into this Agreement, Employer shall, as of the Effective Date, grant Executive an option (the "New Stock Option" and together with the 1999 Stock Option and 2000 Stock Option, the "Stock Options") to purchase 200,000 shares of Class A Common Stock of Employer, as set forth in this Agreement and/or the Agreement attached hereto as Exhibit B (the "New Option Agreement); and WHEREAS, Executive is desirous of committing himself to serve Employer 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 that as of the Effective Date the Prior Agreement (which does not include the 1999 Option Agreement, the 2000 Option Agreement, the Restricted Unit Award Agreement and the 1999 Note, each of which remains in full force and effect) shall be terminated and superseded by this Agreement which provides as follows: -2- 1. Employment. The initial term of this Agreement shall extend from the ---------- Effective Date until the fifth anniversary of the Effective Date. On the third anniversary of the Effective Date amid every odd-numbered calendar year anniversary date thereafter (e.g., 2005, 2007 ...) the term of this Agreement shall be automatically extended for an additional two (2) years unless either party otherwise elects by notice in writing delivered to the other at least ninety (90) days prior to the third anniversary or ninety (90) days prior to the concerned odd-numbered calendar year anniversary date thereafter; provided, however that this sentence shall not be deemed to reduce the five (5) year initial term of this Agreement; provided, further, that if a Change in Control (as hereinafter defined) occurs during the initial or extended term of this Agreement, the term of this Agreement shall continue in effect for a period of not less than eighteen (18) months beyond that month in which that Change in Control occurred. The term of the Agreement shall be subject to termination only as provided in paragraph 7. The term of this Agreement may be referred to herein as the "Period of Employment." 2. Position and Duties. During the Period of Employment, Executive shall ------------------- serve as Chief Executive Officer and President of Employer, reporting to the Board; shall have supervision and control over and responsibility for the day- to-day business and affairs of Employer; and shall have such other powers and duties as may from time to time be prescribed by the Board, provided that such duties are consistent with the normal and customary responsibilities of a Chief Executive Officer and President. Should, commencing with the 2000 annual meeting of stockholders of Employer and continuing throughout the Period of Employment, Executive not be nominated to serve (or, if nominated, not be elected to serve) as a director or member of the Board, then Executive may, as provided in subparagraph 7(e), terminate his employment hereunder, which termination shall be deemed to be for Good Reason, -3- as defined in subparagraph 7(e). Except as provided otherwise herein, Executive shall devote his full working time and working efforts to the business and affairs of Employer. Notwithstanding the foregoing, Executive may serve on other boards of directors or engage in religious, charitable, or other community activities as long as such services and activities are disclosed to the Board and do not materially interfere with Executive's performance of his duties as provided in this Agreement. 3. Compensation and Related Matters. -------------------------------- (a) Base Salary. Initially, Executive shall receive an annual minimum ----------- base salary ("Base Salary") equal to Six Hundred Twenty-Four Thousand Dollars and No/100 Cents ($624,000.00). Thereafter, Executive's Base Salary shall be re- determined at least thirty (30) days before each annual compensation determination date established by Employer during the Period of Employment but in any event no later than the first quarter of the applicable fiscal year (the "Annual Compensation Determination Date") in an amount to be fixed by the Board, but in no event shall such re-determined Base Salary be less than $624,000.00. The Base Salary, as re-determined, is referred to herein as the "Adjusted Base Salary." The Base Salary or, if applicable, the Adjusted Base Salary, shall be payable in substantially equal bi-weekly installments. (b) Incentive Compensation. In addition to Base Salary or, if ---------------------- applicable, Adjusted Base Salary, Executive shall be eligible to receive in each fiscal year during the Period of Employment, on or about the Annual Compensation Determination Date (or earlier as provided in Paragraph 8 and 9 of this Agreement), cash incentive compensation (the "Incentive Compensation") in an amount determined annually by the Compensation Committee of the Board based on individual performance, "Employer EBITDA Achievement" (as hereinafter -4- defined), and total return to shareholders. Incentive Compensation shall equal from zero to three times the then current Base Salary or, if applicable. Adjusted Base Salary. "Employer EBITDA Achievement" is the degree to which the annual budget established by Employer for earnings before interest, taxes, depreciation, and amortization is achieved. Notwithstanding the foregoing, the Incentive Compensation shall equal at least one hundred fifty percent (150%) 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"). "Pro Rata Incentive Compensation" shall be paid to Executive for any termination. Pro Rata Incentive Compensation equals the Incentive Compensation for the fiscal year of termination multiplied by a fraction, the numerator of which is the number of days in the current fiscal year through Date of Termination and the denominator is 365. If, for the purpose of calculating Incentive Compensation or Pro Rata Incentive Compensation, the Incentive Compensation cannot be determined by the time required to be paid, Employer shall make a good faith estimate of this amount, resolving all doubts in favor of Executive and, in calculating the Pro Rata Incentive Compensation, such good faith estimate shall be based on an amount Executive would have earned had he continued employment for the entire fiscal year. Executive will also participate in such other incentive compensation plans, policies or practices as the Board shall determine. (c) Expenses. Executive shall be entitled to receive prompt -------- reimbursement for all reasonable expenses incurred by him (in accordance with the policies and procedures then in effect and established by Employer for its senior executive officers) in performing services -5- hereunder during the Period of Employment, provided that Executive properly accounts therefor in accordance with Employer policy. (d) Country Club Entertainment Benefit. Employer shall, if Executive ---------------------------------- so requests, provide Executive with a country club membership at The Dallas Country Club (or an equivalent club selected by Executive) and pay or reimburse Executive for all charges for goods and services incurred relating to Employer's business and for all membership costs and dues incurred with regard thereto by or on behalf of Executive. (e) Automobile Allowance. Employer shall provide Executive with a -------------------- company car or allowance therefor, which car or allowance shall be for, or sufficient for, a Lexus LS400 or equivalent selected by Executive. (f) Air Travel Allowance. Executive, and, when requested by Executive, -------------------- his spouse, shall be provided with or reimbursed for the cost of first-class aircraft travel when Executive is traveling on Employer's business, as and when Executive deems such travel to be required or convenient. (g) Other Benefits. During the Period of Employment, Executive shall -------------- be entitled to continue to participate in or receive benefits under all of Employer'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 Employer on the date hereof and enhancements thereof hereafter made. To -6- the extent that the scope or nature of benefits described in this section are determined 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 Employer equal to the actual time of Executive's service with Employer. During the Period of Employment, Executive shall be entitled to participate in or receive benefits under any of the Employee Benefit Plans or arrangements that may, in the future, be made available by Employer to its executives and key management employees, subject to and on a basis consistent with the terms, conditions, and overall administration of such plans or arrangements. Nothing paid to Executive under the Employee Benefit Plans presently in effect or any employee benefit plan or arrangement that may be made available in the future shall be deemed to be in lieu of compensation otherwise payable to Executive under subparagraphs 3(a) and 3(b) and elsewhere in this Agreement. Any payments or benefits payable to Executive under a plan or arrangement referred to in this subparagraph 3(g) iii respect of any calendar year during which Executive is employed by Employer for less than the whole of such year shall, unless otherwise provided in such 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. (h) Life Insurance. Employer shall pay the premiums on, and maintain, -------------- in effect throughout the Period of Employment, a life insurance policy on the life of Executive in an amount of not less than $2,000,000.00. Executive shall have the right to designate the beneficiary under such policy. (i) Vacations. Executive shall be entitled to a minimum of twenty (20) --------- days of paid vacation in each calendar year or such greater number of days as is determined by -7- Employer from time to time for its senior executive officers. Executive shall also be entitled to all paid holidays given by Employer to its senior executive officers. To the extent that the Scope or nature of benefits described in this section are determined under the polities of Employer, based in whole or iii part on the seniority or tenure of an employee's service, Executive shall be deemed to have a tenure with Employer equal to the actual time of Executive's service with Employer. (j) Disability Insurance. Employer shall pay the premiums on, and -------------------- maintain in effect throughout the Period of Employment, long-term disability insurance providing for payment of benefits at rates not less than 60% of Executive's Base Salary or, if applicable, hit Adjusted Base Salary. (k) Employer Property Usage Policy. During the Period of Employment ------------------------------ sad thereafter, unless Executive's employment by Employer terminates "For Cause" as that turn 'a defined in subparagraph 7(c), Executive shall be provided with rights and benefits comparable to the standard rights and benefits provided to the Directors who are currently serving on the Board. (l) Comparability. Notwithstanding anything to the contrary in the ------------- foregoing provisions of this paragraph 3, so long as Executive Serves as the Chief Executive Officer of Employer, the sum of Executive's Base Salary or, if applicable, Adjusted Base Salary, and Target Incentive Compensation shall in no event be less than one hundred fifty percent (l50%) of the sum of the Salary and Target Incentive Compensation paid to the next highest paid employee of the Employer (other than the Chairman of the Board) and one hundred percent (100%) of owl and all benefits under Employee Benefit Plans or otherwise awarded to any other emplo9ee of Employer (other than the Chairman of the Board). All other terms and provisions of this Agreement shall at all times be deemed amended to the end that such terms and provision are at -8- all times, and from time to time, at least as favorable to Executive as such terms and provisions would be under any other employment agreement to which Employer is a party (other than the employment agreement with the Chairman of the Board). 4. Board Service. Executive agrees to serve as a director of Employer, ------------- if elected or appointed, provided he is forever indemnified for serving in such capacities as set forth in the Indemnification Agreement which indemnity shall survive the termination of the Indemnification Agreement and the termination of this Agreement. Employer will provide appropriate Directors' and Officers' Insurance naming Executive as a named insured with hilts of no less than that provided to other officers and directors. 5. Unauthorized Disclosure. ----------------------- (a) Confidential Information. Executive acknowledges that in the con ------------ ----------- of his employment with Employer (and, if applicable, the predecessors of Employer), he has been allowed to become, and will continue to be allowed to become, acquainted with Employer's, business affairs, information, trade secrets, and other matters that are of a proprietary or confidential nature, such as 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 Employer's and its predecessors' business. Employer agrees to provide, on an ongoing basis, such Confidential Information as Employer 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 Employer, except as he deems reasonably necessary or appropriate in connection with performing his duties on behalf -9- of Employer. 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 Employer. At such time as Executive shall cease to be employed by Employer, he will immediately turn over to Employer 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 Employer. (b) Heirs. Successors, and Legal Representatives. The foregoing -------------------------------------------- provisions of this paragraph 5 shall be binding upon Executive's heirs, successors, and legal representatives. The provisions of this paragraph 5 shall survive the termination of this Agreement for any reason. 6. Covenant Not to Compete. In consideration for the Stock Options, the ----------------------- Employer's promise to provide Confidential Information as set forth in Paragraph 5 above, and for Executive's employment by the Employer under the terms provided in this Agreement, and as a means to aid in the performance and enforcement of and preserve the rights of the Employer pursuant to the terms of the Unauthorized Disclosure provisions of Paragraph 5, Executive agrees as follows: (a) during the term of Executive's employment with the Employer 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 fights with respect to the top ten branded hotel companies, as -10- defined by accepted industry consultants, such as PricewaterhouseCoopers, in any city in which the Employer, or any subsidiary or affiliate of the Employer, operates any facility during Executive's term of Employment; 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 or holding as a purely passive investor of less than a controlling interest in any other entity. Notwithstanding the foregoing, after Executive's employment with the Employer has terminated, upon receiving written permission by the Board, Executive shall be permitted to engage in such activities with respect to any other hotel, motel or lodging facility that shall be determined in the sole discretion of the Board in faith to be immaterial to the operations of the Employer, or any subsidiary or affiliate of the Employer, in the area or territory in question. (b) during the term of Executive's employment with the Employer and for a period of twenty-four (24) months thereafter, regardless of the reason for termination of employment, Executive will not, directly or indirectly, either for himself or for any other business, operation, corporation, partnership, association, agency, or other person or entity, call upon, compete for, solicit, divert, or take away, or attempt to divert or take away current or prospective customers (including, without limitation, any hotel owner, lessor or lessee, asset manager, trustee, consumer with whom the Employer, or any subsidiary or affiliate of the Employer, (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 Employer; or (iii) has included as a prospect in its applicable pipeline) or any subsidiary or affiliate of the Employer. -11- (c) during the term of Executive's employment with the Employer and for a period of twenty-four (24) months thereafter, regardless of the reason for termination of employment, Executive will not directly or indirectly solicit or induce any current or prospective employee of the Employer, or any subsidiary or affiliate of the Employer (including, without limitation, any current or prospective employee of the Employer within the six-month period preceding the Executive's last day of employment with the Employer 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 Employer, or any subsidiary or affiliate of the Employer, without providing the Employer 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 Employer's business interests and Confidential Information after the Effective Date of this Agreement. If any provision of this noncompetition covenant as applied to any party or to any circumstance is adjudged by a court to be invalid or unenforceable, the same will no in way affect any other circumstance or the validity or enforceability of this Agreement. If any such provision, or any part thereof, is held to be unenforceable because of the duration of such provision or the area covered thereby, the parties agree that the court making such determination shall have the power to reduce the duration and/or area of such provision, and/or to delete specific words or phrases, and in its reduced form, such provision shall then be enforceable and -12- shall be enforced. The parties agree and acknowledge that the breach of this noncompetition covenant will cause irreparable damage to the Employer, and upon breach of any provision of this noncompetition covenant, the Employer 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 Employer 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 Employer 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. (f) Should, however, Employer fail to timely pay any sums or otherwise fail to timely provide any benefit due and owing to Executive, his family, or his estate within ten (10) days after Executive or a representative or his family or estate notifies Employer in writing of a failure to timely pay any such sums or timely provide any such benefits, the provisions of this paragraph 6 shall no longer be binding and shall have no force or effect, unless and until Executive is, after a full and final hearing, found to be in material breach of this Agreement in an arbitrator's award made by an arbitrator appointed under paragraph 17 of this Agreement. 7. Termination. Executive's employment hereunder may be terminated ----------- without any breach of this Agreement under the following circumstances: (a) Death. Executive's employment hereunder shall terminate upon his ----- death. (b) Disability. Employer shall be entitled to terminate the ---------- Executive's employment because of the Executive's Disability during the Period of Employment. "Disability" means that as a result of Executive's incapacity due to physical or mental illness -13- 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 (such period to not include, however, any time that Executive is on leave of absence as authorized by this Agreement or Employer's leave policies). A termination of the Executive's employment by Employer for Disability, shall after the 180 calendar day period described above in this subparagraph 7(b), be communicated to the Executive by written notice, and shall be effective on the 60th day after receipt of such notice by the Executive (the "Disability Effective Date"), unless the Executive returns to full-time performance of the Executive's duties before the Disability Effective Date. (c) Termination by Employer For Cause. At any time during the Period --------------------------------- of Employment, Employer may terminate Executive's employment hereunder for Cause if such termination is approved by not less than a majority of the entire membership of the Board at a meeting of the Board called and held for such purpose. For purposes of this Agreement "Cause" shall mean: (i) the willful and continued failure of the Executive substantially to perform the Executive's duties under this Agreement (other than as a result of physical or mental illness or injury), after the Board delivers to the Executive a written demand for substantial performance and such nonperformance has continued for more than 60 days following written notice of nonperformance from the Board that specifically identifies the manner in which the Board believes that the Executive has not substantially performed the Executive's duties (provided, however, that Executive shall not be deemed to be in nonperformance if within such 60-day time period following receipt by Executive of such notice he has taken steps reasonably calculated to resolve such nonperformance); (ii) illegal conduct or gross misconduct by the Executive, that has -14- resulted in material injury to the reputation of Employer; or (iii) a material breach by Executive of the covenants contained in paragraph 5 of this Agreement. (d) Termination Without Cause. At any time during the Period of ------------------------- Employment, Employer may terminate Executive's employment hereunder without (i.e., not for) Cause if such termination is approved by not less than a majority of the entire membership of the Board at a meeting of the Board called and held for such purpose. Further, any termination by Employer of Executive's employment that is not otherwise governed by this paragraph 7 shall also be deemed a termination without, or not for, 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" (as hereinafter defined). For purposes of this Agreement "Good Reason" shall mean that Executive has complied with the "Good Reason Process" (as hereinafter defined) following the occurrence of any of the following events (referred to individually as a "Good Reason Event" and collectively as "Good Reason Events"): (A) any substantial adverse change, not consented to by Executive in a writing signed by him, in the nature or scope of Executive's responsibilities, authorities, powers, functions, or duties exercised by Executive immediately prior to the Effective Date, except as provided in paragraph 11; (B) any removal, during the Period of Employment, of Executive from, or any failure by management to nominate, or, if nominated, any failure by the stockholders to re-elect Executive to, any of the positions indicated in paragraph 2; (C) an involuntary reduction in Executive's Base Salary or Adjusted Base Salary or Target Incentive Compensation; (D) a breach by Employer of any of its other material obligations under this Agreement and the failure of Employer to cure such breach within thirty days after written notice thereof by Executive; (E) the relocation of Employer's primary -15- offices at which Executive is principally employed to a location more than thirty (30) miles from Executive's current offices, or the requirement by Employer for Executive to be based anywhere other than Employer's primary offices at such current location (or more than 30 miles therefrom) on an extended basis, except for required travel on Employer's business to an extent substantially consistent with Executive's current business travel obligations; or (F) Employer gives notice of non-extension of the Period of Employment under paragraph 1 of this Agreement. "Good Reason Process" shall mean that (i) the Executive reasonably determines in good faith that a Good Reason Event has occurred; (ii) Executive notifies Employer in writing of the occurrence of the Good Reason Event; (iii) Executive cooperates in good faith with Employer's efforts, for a period not more than thirty (30) days following such notice, to modify Executive's employment situation in a manner acceptable to Executive and Employer; and (iv) notwithstanding such efforts, one or more of the Good Reason Events continues to exist for a period of more than thirty (30) days following such notice and has not been modified in a manner acceptable to Executive. (f) Notice of Termination. Except for termination as specified --------------------- in subparagraph 7(a), any termination of Executive's employment by Employer 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 that shall indicate the specific provision in this Agreement relied upon. (g) Date of Termination. "Date of Termination" shall mean: (A) if ------------------- Executive's employment is terminated by his death, the date of his death; (B) if Executive's employment is terminated on account of Disability under subparagraph 7(b) on the Disability Effective Date unless Executive returns to full-time performance of Executive's duties before the -16- Disability Effective Date; (C) if Executive's employment is terminated by Employer under subparagraphs 7(c) or (d), thirty (30) days after the date on which a Notice of Termination is given; and (D) if Executive's employment is terminated by Executive under subparagraph 7(e), thirty (30) days after the date on which a Notice of Termination is given. 8. Compensation Upon Termination or During Disability. -------------------------------------------------- (a) Death. If Executive's employment terminates by reason of ----- his death, Employer shall, within thirty (30) days of death, pay in a lump sum amount to such person as his estate shall designate in a notice filed with Employer or, if no such person is designated, to Executive's estate, (i) Executive's accrued and unpaid Base Salary or, if applicable, his Adjusted Base Salary, through the date of his death, and (ii) any accrued and any unpaid Incentive Compensation and Pro Rata Incentive Compensation. Upon such death, all unvested stock options and stock-based grants shall immediately vest in Executive's estate or other legal representatives and become exercisable, and Executive's estate or other legal representatives shall have the remaining option term to exercise the stock options. For a period of five (5) years following the Date of Termination, Employer shall pay such health insurance premiums as may be necessary to allow Executive's spouse and other dependents to receive health insurance coverage substantially similar to the coverage they received prior to the Date of Termination. (b) Disability. During any period that Executive is unable to perform ---------- his duties hereunder as a result of incapacity due to physical or mental illness or injury, Executive shall continue to receive his accrued and unpaid Base Salary or, if applicable, his Adjusted Base Salary, and accrued and unpaid Incentive Compensation payments under subparagraph 3(b), until and unless Executive's employment is terminated due to Disability in accordance with subparagraph 7(b) or until Executive terminates his employment in accordance with -17- subparagraph 7(e), whichever first occurs. In the event of termination due to Disability Employer shall, within thirty (30) days of the Disability Effective Date, pay in a lump sum amount to Executive (i) his accrued and unpaid Base Salary or, if applicable, his Adjusted Base Salary through the Date of Termination, plus (ii) any accrued and unpaid Incentive Compensation and Pro Rata Incentive Compensation. Upon the Disability Effective Date, all unvested stock options and stock-based grants shall immediately vest and become exercisable and Executive shall have the remaining option term to exercise the stock options. For a period of two (2) years following the Date of Termination, Employer shall pay such health insurance premiums as may be necessary to allow Executive and Executive's spouse and other dependents, to receive health insurance coverage substantially similar to the coverage they received prior to the Date of Termination. Upon termination due to death prior to the Disability Effective Date, subparagraph 8(a) shall apply. (c) By Executive Not for Good Reason. If Executive's employment is -------------------------------- terminated by Executive other than for Good Reason as provided in subparagraph 7(e), then Employer shall, through the Date of Termination, pay Executive (i) his accrued and unpaid Base Salary or, if applicable, his Adjusted Base Salary at the rate in effect on the date Notice of Termination is given, and (ii) any accrued, earned, and unpaid Incentive Compensation plus, (iii) such other benefits as are available under any Employer policy or practice then in effect. If Executive's employment is terminated by Executive other than for Good Reason as provided in subparagraph 7(e), all unvested stock options are forfeited on the Date of Termination and Executive shall have 90 days from the Date of Termination to exercise any previously unexercised but then vested stock options. -18- (d) By Executive for Good Reason by Employer Without Cause. If ------------------------------------------------------ Executive terminates his employment for Good Reason as provided in subparagraph 7(e) or if -Executive's employment is terminated by Employer without Cause as provided in subparagraph 7(d), then Employer shall, through the Date of Termination, pay Executive (i) his accrued ad unpaid Base Salary or, if applicable, his Adjusted Base Salary at the rate in effect on the date Notice of Termination is given, plus (ii) any accrued and unpaid Incentive Compensation and Pro Rata Incentive Compensation. Upon the Date of Termination, all unvested stock options and stock-based grants shall immediately vest and become exercisable, and Executive shall have three (3) years from the Date of Termination, or the remaining option term, if earlier, to exercise the stock options. For a period of three (3) years following the Date of Termination, Employer shall pay such health insurance premiums as may be necessary to allow Executive and Executive's spouse and other dependents to receive health insurance coverage substantially similar to coverage they received prior to the Date of Termination. In addition, subject to signing by Executive of a general release of claims in a form and manner satisfactory to the Executive and Employer: (1) Employer shall pay Executive, on the Date of Termination, such additional amounts to which Executive may be entitled in accordance with Employer's then current severance policies (the "Severance Amount"), provided that, at a minimum, Executive shall be entitled to receive an amount in a lump sum (the "Minimum Severance Amount) equal to the greater of (A) $3,000,000.00 or (B) three (3) times the sum of the "Applicable Base Salary" plus the "Average Incentive Compensation" For purposes of this Agreement, "Applicable Base Salary" shall mean the greater of (aa) $624,000.00, or, (bb) such of the following alternatives as is applicable: -19- (aaa) prior to January 1, 2001, Executive's Base Salary, or if applicable, Adjusted Base Salary for the fiscal year ending December 31, 2000; or (bbb) on or after January 1, 2001, the average of the annual Base Salary and, if applicable, Adjusted Base Salary, payable to Executive for the year of termination and the immediately preceding complete fiscal year which he was employed by Employer. The fiscal year ending December 31, 2000, shall be treated as a complete fiscal year. For purposes of this Agreement, "Average Incentive Compensation" shall mean such of the following alternatives as is applicable: (aaaa) prior to January 1, 2001, Executive's Target Incentive Compensation for the fiscal year ending December 31, 2000; (bbbb) on or after January 1, 2001, and before January 1, 2002, the sum of Executive's Incentive Compensation for the fiscal year ending December 31, 2000, and Executive's Target Incentive Compensation for the fiscal year ending December 31, 2001, divided by two (2); (cccc) on or after January 1, 2002, the total of the annual Incentive Compensation payable to Executive for the two (2) immediately preceding complete fiscal years divided by two (2). The fiscal year ending December 31, 2000, shall be treated as a complete fiscal year. The Applicable Base Salary and Average Incentive Compensation shall each be determined as of the date of Notice of Termination or the Termination Date, whichever is more favorable to Executive. Notwithstanding the foregoing, in the event Executive terminates his employment for Good Reason as provided in subparagraph 7(e), he shall be entitled to the Severance Amount -20- or, if applicable, the Minimum Severance Amount only if he provides the Notice of Termination provided for in subparagraph 7(f) within one hundred and twenty (120) days after Executive has informed Employer in writing of the occurrence of the Good Reason Event(s), on which his termination is based, pursuant to the provisions of subparagraph 7(e). Should Executive commence any new employment as an employee during the twenty-four (24) months following the Date of Termination, then Employer shall be entitled to offset against the remaining Severance Amount (1) 50% of the lesser of (i) all Executive's Base Salary, or if applicable, Adjusted Base Salary in effect at the Date of Termination or (ii) all sums paid to Executive as base compensation for such new employment (but not as incentive or other compensation) within the first twelve (12) months following the Date of Termination; and (2) 25% of the lesser of (i) all Executive's Base Salary, or if applicable, Adjusted Base Salary in effect at the Date of Termination or (ii) all sums paid to Executive as base compensation for such new employer (but not as incentive or other compensation) within the second twelve (12) months following the Date of Termination. The provisions of the preceding sentence shall not, however, apply to payments of the "Parachute Amount" (as herein defined). (2) In addition to any other benefits to which Executive may be entitled in accordance with Employer's then existing severance plans, policies or practices (for which Executive shall not be required to sign the above- referenced general release of claims), Employer shall: (aa) for a period of three (3) years commencing on the Date of Termination, provide Executive, at Employer's expense, with an office and all reasonable occupancy expenses associated therewith, and related telephone and telefax facilities, and an -21- assistant at a location of Executive's choosing, provided that the office facilities shall be comparable to Executive's office at Employer on the Date of Termination; and (bb) for a period of one (1) year commencing on the Date of Termination, pay for the cost of executive outplacement services selected by Executive for use in connection with obtaining alternate employment. (e) For Cause. If Executive's employment is terminated by Employer --------- for Cause as provided in subparagraph 7(c), then Employer 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 on the date Notice of Termination is given, plus his accrued, earned and unpaid Incentive Compensation. (f) Continuing Assistance. Regardless of the reason for the --------------------- termination of Executive's employment, for a period of five (5) years beginning on the Date of Termination or the end of the Period of Employment, Employer will provide such reasonable assistance and support to Executive or his estate as he or such estate 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 employment or other association with Employer, or any of its predecessors or affiliates. At Employer's election, such assistance and support shall be provided by either tax personnel from Employer or certified public accountants selected and compensated by Employer. (g) Payment Place and Due Date. All amounts due under this Agreement -------------------------- to Executive or his estate by Employer following the Date of Termination or the end of the Period of Employment shall be due and payable in Dallas County, Texas. On or before the tenth (10/th/) day following such Date of Termination or the date upon which the end of the Period of -22- Employment occurs, except as otherwise expressly set forth in this Agreement, Employer shall (i) escrow all amounts due to Executive or his estate for the severance amount or minimum severance amount whichever is applicable (the "Escrowed Severance Payment"), and (ii) pay to Executive or his estate all other amounts due to Executive or his estate. The Escrowed Severance Payment shall be due and payable to Executive or his estate without notice or demand of any kind, in thirty-six (36) equal monthly payments, with the first such payment being due and payable thirty (30) days following the Date of Termination or the end of the Period of Employment, provided however: (aa) that in the event a payment of Escrowed Severance Payment is for any reason not paid within 10 days after Executive notifies Employer in writing of a failure to timely make such payment, then, in that event, without further notice or demand of any kind the entire unpaid balance of the Escrowed Severance Payment shall at once become due and payable in full to Executive or his estate, unless, prior to that time, Executive shall, after full and final hearing, be found to be in material breach of this Agreement by an arbitrator appointed under paragraph 18 of this Agreement; and (bb) advances of the payments of the Escrowed Severance Payment shall, if Executive so requests, be made to Executive to the extent income taxes on unpaid payments are reasonably determined by Executive to be due, with such advances to be proportionately offset against all unpaid future payments. If Executive so elects at any time, the unpaid balance of the Escrowed Severance Payment shall be paid over by Employer to an independent third party escrow keeper, to be held pursuant to written arrangements mutually acceptable to Employer and Executive providing for -23- timely payment to Executive of the payments due therefrom, whereupon such escrowed finds shall no longer be an asset of the Employer. (h) Other Obligations. The foregoing subparagraphs 8(a) through 8(g) ----------------- shall not adversely affect or alter Executive's rights (or the rights of his estate, spouse or other dependents) under any Employee Benefit Plan or other plans of Employer, except to the extent otherwise expressly provided therein or in any agreement or other instrument attendant thereto. 9. Parachute Payment. The provisions of this paragraph 9 set forth the ----------------- terms of an agreement reached between Executive and Employer regarding Executive's rights and obligations upon the occurrence of a "Change in Control" (as hereinafter defined) of Employer. 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 Change in Control. These provisions shall apply in lien of, and expressly supersede, the provisions of subparagraph 8(d)(1) if Executive's employment is terminated or Notice of Termination is given ninety (90) days' prior to or within eighteen (18) months after the occurrence of an event constituting a Change in Control. (a) Escrow. Within fifteen (15) days after the occurrence of the ------ first event constituting a Change in Control (irrespective of whether Executive has actual knowledge of such event), Employer shall place immediately negotiable finds in escrow in an amount equal to the Five Million Dollars ($5,000,000.00) attributable to subparagraph 9(c), plus such additional amount as equals the "Gross Up Payment" (as hereinafter defined) thereon. Such escrow shall be conducted pursuant to written arrangements that are mutually acceptable to Employer aid Executive providing for the timely payment to Executive of the amounts held in such escrow in the event Executive becomes entitled thereto under the applicable provisions of this Agreement -24- (the "Escrow Arrangement"). Further, the remaining portion of the "Parachute Amount" (as hereinafter defined) shall also, within such fifteen (15) days after the occurrence of the first event constituting a "Hostile Takeover" (as hereinafter defined), be funded by Emp1oyer in immediately negotiable funds into such escrow pursuant to such Escrow Arrangement. The Escrow Arrangement shall be maintained until the earlier of (A) nineteen (19) months after the occurrence of an event constituting a Change in Control or (B) the payment to Executive of all sums escrowed. (b) Change in Control. If, within 90 days prior to, or within ----------------- eighteen (18) months after the occurrence of an event constituting a Change in Control, Executive's employment is terminated or a Notice of Termination is given for any reason other than (A) his death, (B) his Disability, or (C) by Executive Without Good Reason, then such termination shall be deemed to be a "Termination Due to Change in Control" (herein so called), in which event Employer shall pay Executive, in a lump sum, on or prior to the tenth (10/th/) day following the Executive's Date of Termination: (1) an amount equal to the applicable Parachute Amount (including any Gross Up Payment); and (2) Executive's accrued and unpaid Base Salary or, if applicable, his Adjusted Base Salary, through such Date of Termination; and (3) accrued and unpaid Incentive Compensation and Pro Rata Incentive Compensation. (c) Stock Option Floor. Upon the occurrence of the first event ------------------ constituting a Change in Control, all stock options and other stock-based grants to Executive by Employer shall, irrespective of any provisions of the 1999 Option Agreement, the 2000 Option Agreement -25- or the New Option Agreement, immediately and irrevocably vest and become exercisable as of the date of such first event whereupon, at any time during the Option Term as defined in the respective Option Agreement (but not to exceed five (5) years after such event), Executive or his estate may by five (5) days' advance written notice given to Employer, and irrespective of whether Executive is then employed by Employer or then living, and solely at the election of Executive or his estate, require Employer to: (1) immediately purchase all Stock Options from Executive or his estate in exchange for the sum of Five Million Dollars ($5,000,000.00) cash delivered in immediately negotiable funds in Dallas County, Texas, to Executive or his estate, or, (2) allow Executive to exercise all or any part of such Stock Options at the option prices therefor specified in the grant of the Stock Options. Employer shall also loan to Executive pursuant to the provisions of the Master Note otherwise referenced and described in this Agreement all funds due by Executive for income taxes (federal, state, or local), including but not limited to on capital gains as well as on ordinary income, by reason of the provisions of the existence of any of the provisions of this subparagraph 9(c) or the carrying out of all or any part of such provisions. Taxes for purposes of the above computation shall be computed at the highest marginal rate, of federal income taxation for the tax year for which such taxes are or will be due, and state and local taxes at the highest marginal rate at the end of such year, net of the maximum reduction (if any) in federal income taxes that could be obtained from the deduction of deductible state and local taxes. (d) Gross Up Payment. ---------------- (1) 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 -26- "Excess Parachute Payments" within the meaning of Section 280G(b)(1) of the Code, Employer 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 both the Excess Parachute Payment and any federal, state and local income tax (together with penalties and interest) as well as the Excise Tax upon the payment provided for by this subparagraph 9(d)(1), will be equal to the Parachute Amount. (2) 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 where taxes thereon are lawfully due, net of the maximum reduction (if any) in federal income taxes that could be obtained from deduction of deductible state and local taxes. (3) 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 Employer, which approval will not be unreasonably withheld or delayed. 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 (d). (4) Payment. Employer will pay the estimated amount of the Gross ------- Up Payment in cash to Executive at the time specified in this Agreement. Executive and Employer agree to reasonably cooperate in the determination of the actual amount of the Gross Up Payment. Further, Executive and Employer agree to make such adjustments to the estimated -27- 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 by Employer and in the case of Employer will refer to additional payments to Executive to make up for prior underpayments. (e) Definitions. For purposes of this paragraph 9, the following ----------- terms shall have the following meanings: "Change in Control" shall mean any of the following: ----------------- (1) 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 Employer, or any of its Subsidiaries or any Investor or Excluded Group, of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 35% or more of the combined voting power or economic interests of the then outstanding voting securities of Employer entitled to vote generally in the election of directors; provided however, that any transfer from any Investor or Excluded Group will not result in a Change in Control if such transfer was part of a series of related transactions the effect of which, absent the transfer to such Acquiring Person by the Investor or Excluded Group, would not have resulted in the acquisition by such Acquiring Person of 35% or more of the combined voting power or economic interests of the then outstanding voting securities; or (2) during any period of 12 consecutive months after June 30, 1999, 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 -28- Employer'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 Employer 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 Employer, 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 Employer (as such terms are used in Rule 14a-ll of Regulation 14A promulgated under the Exchange Act) and further excluding any person who is an affiliate or associate of an Acquiring Person having or proposing to acquire beneficial ownership of 25% or more of the combined voting power of the then outstanding voting securities of Employer entitled to vote generally in the election of directors; or (3) the approval by the stockholders of Employer 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 Employer immediately prior to such reorganization, merger, or consolidation do not, following such reorganization, merger, or consolidation, beneficially own, directly or indirectly, more than 57.5% of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors of Employer resulting from such reorganization, merger, or consolidation; or (4) the sale or other disposition of assets representing 50% or more of the assets of Employer in one transaction or series of related transactions; or -29- (5) a "Fundamental Change in Business" a hereinafter defined. Except as otherwise specified herein, defined terms used in the definition of "Change in Control" shall have the same meaning as set forth in the Certificate of Designation of Series B Convertible Preferred Stock of Wyndham International, Inc. "Employer" shall mean not only Wyndham International, Inc., but -------- also its successors by merger or otherwise. "Fundamental Change in Business" shall mean that Employer, at any ------------------------------ time, no longer earns at least fifty percent (50%) of its gross revenues from hotel, or hotel-related businesses. "Hostile Takeover" shall mean any Change in Control which at any ---------------- time is declared by at least a majority of the Board, directly or indirectly, to be hostile or not in the best interests of Employer, or in which an attempt is made (irrespective of whether successful) to wrest control away from the incumbent management of Employer, or with respect to which the Board makes any effort to resist. "Parachute Amount" shall mean an amount equal to (i) the greater ---------------- of $3,000,000,00 or the Severance Amount or, if applicable, the Minimum Severance Amount provided for in subparagraph 8(d)(i), plus (ii) any amount computed by reference to subparagraphs 9(c) or 9(d) of this Agreement or otherwise which are deemed to be a "Parachute Payment" within the meaning of Section 280G(b)(2) of the Code. 10. Notice. For purposes of this Agreement, notices and all other ------ communications provided for in the Agreement shall be in writing and shall be deemed to have been duly given when delivered or mailed by United States certified mail, return receipt requested, postage prepaid, addressed as follows: -30- if to the Executive: At his home address as shown in Employer's personnel records; if to Employer: Wyndham International, Inc. 1950 Stemmons Freeway, Suite 6001 Dallas, Texas 75207 Attn.: General Counsel or to such other address as either party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt. 11. Tag Along and Piggyback Rights. Employer shall make best efforts to ------------------------------ allow Executive an equitable opportunity to participate to the extent of any shares of stock he may then own in Employer or any affiliate of or successor to Employer (or have the right to own by the exercise of then vested options held by Executive) in any shelf offering, secondary offering, follow-up offering. Any resulting costs for the registration of such shares of Executive shall be paid by Employer. Further, if at any time or times from and after the date hereof during the Period of Employment, Employer intends to file a registration statement for the registration of common stock with a governmental body permitting the registration of registrable stock, then Employer shall notify Executive at least thirty (30) days prior to each such filing of such intention to file such a registration statement. Such notice shall state the amount and type of securities proposed to be registered thereby, the underwriters involved, if any, and whether such underwriting is to be distributed on a firm commitment or best efforts basis. Upon the written request of Executive given within 20 days after receipt of any such notice stating the number of shares of registrable stock to be disposed of by the Executive and the intended method of disposition, Employer will use its best efforts to cause the aggregate of the registrable stock designated by Executive to be included in such registration so as to permit the disposition (in -31- accordance with the methods specified by Executive) of the registrable stock so registered subject to the following: (a) If the proposed registration involves an underwritten offering of common stock, whether or not for sale for the account of Employer, to be distributed (on a best efforts or firm commitment basis) by or through one or more underwriters, and the managing underwriter of such underwritten offering shall advise Employer in writing that, in its opinion, the registration of all or a specified portion of registrable stock concurrently with the common stock will adversely affect the distribution of such common stock by such underwriters, then Employer may require, by written notice to Executive that the distribution of all or a specified portion of the registrable stock be excluded from such registration; (b) Employer may in its discretion withdraw any registration statement filed pursuant to this subparagraph subsequent to its filing and prior to its effective date without liability to the Executive; and (c) If the Series B preferred shareholders of Employer restrict the registration of common shares of Employer held by other holders of common shares of Employer then, in that event, they may also so restrict to the same extent the registration rights hereunder of Executive. Employer shall, and hereby does, indemnify and hold harmless, to the extent permitted by law, Executive against all losses, claims, damages, liabilities, and expenses resulting from any untrue or misleading statement or alleged untrue or misleading statement of a material fact contained in any registration statement or prospectus (preliminary or otherwise), whether or not such untrue or misleading statement or alleged untrue or misleading statement is caused by Executive's negligence, except in so far as such losses, claims, damages, liabilities, or expenses -32- are caused by any untrue statement intentionally furnished or made by Executive. The foregoing indemnity is in addition to, and does not limit, Executive's right to indemnity, or actual indemnity provided by Employer, pursuant to the Indemnification Agreement, any Directors' and Officers' insurance provided to Executive under paragraph 4 of this Agreement, or any other agreement or insurance 12. Master Note. Attached hereto as Exhibit C is a non-negotiable and ----------- unsecured Master Note executed by Executive and payable to Employer. Without further action, all loans hereafter made by Employer to Executive pursuant to the provisions of this Agreement shall be deemed to have been made pursuant to the provisions of the Master Note dated as of the date the funds are advanced for concerned loans and in the original principal amount equal to the amount of such funding and due and payable four (4) years from the date of the concerned advance. 13. 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 Employer as may be specifically designated by the Board. No waiver by either party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, unless specifically referred to herein, with respect to the subject matter hereof have been made by either party that are not set forth expressly in this Agreement. The validity, interpretation, construction, and performance of the Agreement shall be governed by the laws of the State of Texas (without regard to principles of conflicts of laws) and, where applicable, the laws of the United States. -33- 14. 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. 15. 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. 16. No Mitigation. In no event shall the Executive be obligated to seek ------------- other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement and such amounts shall not be reduced, regardless of whether the Executive obtains other employment, except strictly as provided in subparagraph 8(d)(i) of this Agreement. 17. Arbitration; Other Disputes. In the event of any dispute or --------------------------- controversy arising under or in connection with this Agreement, the parties shall first promptly try in good faith to settle such dispute or controversy by mediation under the applicable rules of the American Arbitration Association before resorting to arbitration. In the event such dispute or controversy remains unresolved in whole or in part for a period of thirty (30) days after it arises, the parties will settle any remaining dispute or controversy exclusively by arbitration in Dallas, Texas in accordance with the rules of the American Arbitration Association then in effect. Judgement may be entered on the arbitrator's award in any court having jurisdiction. All administration fees and arbitration fees shall be paid solely by Employer. Notwithstanding the above, Employer shall be entitled to seek a restraining order or injunction in any court of competent jurisdiction to prevent -34- any continuation of any violation of paragraph 5 or 6 hereof. The prevailing party may recover attorneys' fees in any dispute or controversy arising under or in connection with this Agreement. Should a dispute occur concerning Executive's mental or physical capacity as described in subparagraphs 7(b) or 8(b), a doctor selected by Executive and a doctor selected by Employer shall be entitled to examine Executive. If the opinion of Employer's doctor and Executive's doctor conflict, Employer's doctor and Executive's doctor shall together agree upon a third doctor, whose opinion shall be binding. Any amount to which Executive is entitled under this Agreement (including any disputed amount) which is not paid when due shall bear interest from the date due but not paid at a rate equal to the lesser of eighteen percent (18%) per annum or the maximum lawful rate. 18. Third-Party Agreements and Rights. Executive represents to Employer --------------------------------- that upon Executive's execution of this Agreement, Executive's employment with Employer, and the performance of Executive's proposed duties for Employer, will not violate any obligations Executive may have to any employer prior to Employer, and Executive will not bring to the premises of Employer any copies of other tangible embodiments of non-public information belonging to or obtained from any such previous employment prior to that with Employer. 19. Legal Fees. Employer agrees to pay all legal fees incurred by the ---------- Executive in connection with the negotiation and preparation of this Agreement, up to a maximum of sixty thousand dollars ($60,000.00). 20. Litigation and Regulatory Cooperation. During and after Executive's ------------------------------------- employment, Executive shall reasonably cooperate with Employer in the defense or prosecution of any claims or actions now in existence or that may be brought in the future against or on behalf of Employer that relate to events or occurrences that transpired while Executive was -35- employed by Employer; 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 Employer at mutually convenient times. During and after Executive's employment, Executive also shall cooperate fully with Employer in connection with any investigation or review by 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 Employer. Employer shall also provide Executive with compensation on an hourly basis calculated at his final Annual Base Salary, or if applicable, Annual Adjusted Base Salary divided by 2000 hours for requested litigation and regulatory cooperation that occurs after his termination of employment, and shall reimburse Executive for all costs and expenses incurred in connection with his performance under this paragraph 20, including, but not limited to, reasonable attorneys' fees and costs. 21. Conflicts. In the event of any conflict between the provisions of --------- this Agreement and the 1999 Option Agreement, the 2000 Option Agreement, the New Option Agreement or any other option granted heretofore or hereafter made, or any agreement between Executive ad Employer heretofore executed, this Agreement shall govern and rule supreme. 22. Note Prepayment. Executive shall, at the time of receipt of same, pay --------------- to Employer as payment on the Master Note (but not on the 1999 Note) to the extent such Master Note is unpaid, twenty-five percent (25%) of the after tax Incentive Compensation and a total of fifty percent (50%) of any after tax gain received as the result of the exercise and sale of any Stock Options provided to Executive under the 1999 Option Agreement, the 2000 Option -36- Agreement or the New Option Agreement. For purposes of this paragraph, Executive will be deemed to pay federal income taxes at the highest marginal rate of federal taxation in the applicable calendar year and state and local taxes at the highest marginal rates of taxation in the state and locality where taxes thereon are lawfully due, net of the maximum reduction (if any) in federal income taxes that could be obtained from deduction of deductible state and local taxes. 23. Effective Date. This Agreement is effective March 27, 2000. -------------- IN WITNESS WHEREOF, the parties have executed this Agreement effective on the date and year above written. WYNDHAM INTERNATIONAL, INC. By: ________________________ Its:_______________________ _______________________ Fred J. Kleisner -37- Exhibit A --------- INDEMNIFICATION AGREEMENT This Indemnification Agreement made and entered into as of this 27/th/ day of March, 2000 ("Agreement"), by and between Wyndham International, Inc., a Delaware corporation (the "Company," which term shall include, where appropriate, any Entity (as hereinafter defined)controlled directly or indirectly by the Company) and Fred J. Kleisner ("Indemnitee"): WHEREAS, it is essential to the Company that it be able to retain and attract as directors and/or officers the most capable persons available; WHEREAS, increased corporate litigation has subjected directors and/or officers to litigation risks and expenses, and the limitations on the availability of directors and officers liability insurance have made it increasingly difficult for the Company to attract and retain such persons; WHEREAS, the Company's by-laws require it to indemnify its directors and/or officers to the fullest extent permitted by law and permit it to make other indemnification arrangements and agreements; and WHEREAS, the Company desires to provide Indemnitee with specific contractual assurance of Indemnitee's rights to full indemnification against litigation risks and expenses (regardless, among other things, of any amendment to or revocation of any such by-laws or any change in the ownership of the Company or the composition of its Board of Directors): NOW, THEREFORE, in consideration of the promises and the covenants contained herein, the Company and Indemnitee do hereby covenant and agree as follows: 1. Definitions. (a) "Corporate Status" describes the status of a person who is serving or has served (i) as a director or officer of the Company, (ii) in any capacity with respect to any employee benefit plan of the Company, or (iii) as a director, partner, trustee, officer, employee, or agent of any other Entity at the request of the Company. For purposes of subsection (iii) of this Section 1(a), an officer or director of the Company who is serving or has served as a director, partner, trustee, officer, employee or agent of a Subsidiary shall be deemed to be serving at the request of the Company. (b) "Entity" shall mean any corporation, partnership, limited liability company, joint venture, trust, foundation, association, organization or other legal entity. (c) "Expenses" shall mean all fees, costs and expenses incurred in connection with any Proceeding (as defined below), including, without limitation, attorneys' fee, disbursements and retainers (including, without limitation, any such fees, disbursements and retainers incurred by Indemnitee pursuant to Sections 10 and 11(c) of this 1 Agreement), fees and disbursements of expert witnesses, private investigators and professional advisors (including, without limitation, accountants and investment bankers), court costs, transcript costs, fees of experts, travel expenses, duplicating, printing and binding costs, telephone and fax transmission charges, postage, delivery services, secretarial services, and other disbursements and expenses. (d) "Indemnifiable Expenses," "Indemnifiable Liabilities" and "Indemnifiable Amounts" shall have the meanings ascribed to those terms in Section 3(a) below. (e) "Liabilities" shall mean judgments, damages, liabilities, losses, penalties, excise taxes, fines and amounts paid in settlement. (f) "Proceeding" shall mean any threatened, pending or completed claim, action, suit, arbitration, alternate dispute resolution process, investigation, administrative hearing, appeal, or any other proceeding, whether civil, criminal, administrative, arbitrative or investigative, whether formal or informal, including a proceeding initiated by Indemnitee pursuant to Section 10 of this Agreement to enforce Indemnitee's rights hereunder. (g) "Subsidiary" shall mean any corporation, partnership, limited liability company, joint venture, trust or other Entity of which the Company owns (either directly or through or together with another Subsidiary of the Company) either (i) a general partner, managing member or other similar interest or (ii) (A) 50% or more of the voting power of the voting capital equity interests of such corporation, partnership, limited liability company, joint venture or other Entity, or (B) 50% or more of the outstanding voting capital stock or other voting equity interests of such corporation, partnership, limited liability company, joint venture or other Entity. 2. Services of Indemnitee. In consideration of the Company's covenants and commitments hereunder, Indemnitee agrees to serve or continue to serve as a Director and/or Officer of the Company. However, this Agreement shall not impose any obligation on Indemnitee or the Company to continue Indemnitee's service to the Company beyond any period otherwise required by law or by other agreements or commitments of the parties, if any. 3. Agreement to Indemnify. The Company agrees to indemnify Indemnitee as follows: (a) Subject to the exceptions contained in Section 4(a) below, if Indemnitee was or is a party or is threatened to be made a party to any Proceeding (other than an action by or in the right of the Company) by reason of Indemnitee's Corporate Status, Indemnitee shall be indemnified by the Company against all Expenses and Liabilities incurred or paid by Indemnitee in connection with such Proceeding (referred to herein as "Indemnifiable Expenses" and "Indemnifiable Liabilities," respectively, and collectively as "Indemnifiable Amounts"). (b) Subject to the exceptions contained in Section 4(b) below, if Indemnitee was or is a party or is threatened to be made a party to any Proceeding by or in the right of the Company to procure a judgment in its favor by reason of Indemnitee's Corporate 2 Status, Indemnitee shall be indemnified by the Company against all Indemnifiable Expenses. 4. Exceptions to Indemnification. Indemnitee shall be entitled to indemnification under Sections 3(a) and 3(b) above in all circumstances other than the following: (a) If indemnification is requested under Section 3(a) and it has been adjudicated finally by a court of competent jurisdiction that, in connection with the subject of the Proceeding out of which the claim for indemnification has arisen, Indemnitee failed to act (i) in good faith and (ii) in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, or, with respect to any criminal action or proceeding, Indemnitee had reasonable cause to believe that Indemnitee's conduct was unlawful, Indemnitee shall not be entitled to payment of Indemnifiable Amounts hereunder. (b) If indemnification is requested under Section 3(b) and: (i) it has been adjudicated finally by a court of competent jurisdiction that, in connection with the subject of the Proceeding out of which the claim for indemnification has arisen, Indemnitee failed to act (A) in good faith and (B) in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, Indemnitee shall not be entitled to payment of Indemnifiable Expenses hereunder; or (ii) it has been adjudicated finally by a court of competent jurisdiction that Indemnitee is liable to the Company with respect to any claim, issue or matter involved in the Proceeding out of which the claim for indemnification has arisen, including, without limitation, a claim that Indemnitee received an improper personal benefit, no Indemnifiable Expenses shall be paid with respect to such claim, issue or matter unless the Court of Chancery or another court in which such Proceeding was brought shall determine upon application that, despite the adjudication of liability, but in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnity for such Indemnifiable Expenses which such court shall deem proper. 5. Procedure for Payment of Indemnifiable Amounts. Indemnitee shall submit to the Company a written request specifying the Indemnifiable Amounts for which Indemnitee seeks payment under Section 3 of this Agreement and a short description of the basis for the claim. The Company shall pay such Indemnifiable Amounts to Indemnitee within twenty (20) calendar days of receipt of the request. At the request of the Company, Indemnitee shall furnish such documentation and information as are reasonably available to Indemnitee and necessary to establish that Indemnitee is entitled to indemnification hereunder. 6. Indemnification for Expenses of a Party Who is Wholly or Partly Successful. Notwithstanding any other provision of this Agreement, and without limiting any such provision, to the extent that Indemnitee is, by reason of Indemnitee's Corporate Status, a party to and is successful, on the merits or otherwise, in any Proceeding, Indemnitee shall be indemnified 3 against all Expenses reasonably incurred by Indemnitee or on Indemnitee's behalf in connection therewith. If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee against all Expenses reasonably incurred by Indemnitee or on Indemnitee's behalf in connection with each successfully resolved claim, issue or matter. For purposes of this Agreement the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter. 7. Effect of Certain Resolutions. Neither the settlement or termination of any Proceeding nor the failure of the Company to award indemnification or to determine that indemnification is payable shall create an adverse presumption that Indemnitee is not entitled to indemnification hereunder. In addition, the termination of any proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent shall not create a presumption that Indemnitee did not act in good faith and in a manner which Indemnitee reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal action or proceeding, had reasonable cause to believe that Indemnitee's action was unlawful. 8. Agreement to Advance Expenses; Conditions. The Company shall pay Indemnitee all Indemnifiable Expenses incurred by Indemnitee in connection with any Proceeding, including a Proceeding by or in the right of the Company, in advance of the final disposition of such Proceeding. To the extent required by Delaware law, Indemnitee hereby undertakes to repay the amount of Indemnifiable Expenses paid to Indemnitee if it is finally determined by a court of competent jurisdiction that Indemnitee is not entitled under this Agreement to indemnification with respect to such Expenses. This undertaking is an unlimited general obligation of Indemnitee. 9. Procedure for Advance Payment of Expenses. Indemnitee shall submit the Company a written request specifying the Indemnifiable Expenses for which Indemnitee seeks an advancement under Section 8 of this Agreement, together with documentation evidencing that Indemnitee has incurred such Indemnifiable Expenses. Payment of Indemnifiable Expenses under Section 8 shall be made no later than twenty (20) calendar days after the Company's receipt of such request. 10. Remedies of Indemnitee. (a) Right to Petition Court. In the event that Indemnitee makes a ----------------- ----- request for payment of Indemnifiable Amounts under Sections 3 and 5 above or a request for an advancement of Indemnifiable Expenses under Sections 8 and 9 above and the Company fails to make such payment or advancement in a timely manner pursuant to the terms of this Agreement, Indemnitee may petition the Court of Chancery to enforce the Company's obligations under this Agreement. (b) Burden of Proof. In any judicial proceeding brought under Section --------------- 10(a) above, the Company shall have the burden of proving that Indemnitee is not entitled to payment of Indemnifiable Amounts hereunder. 4 (c) Expenses. The Company agrees to reimburse Indemnitee in full for any -------- Expenses incurred by Indemnitee in connection with investigating, preparing for, litigating, defending or settling any action brought by Indemnitee under Section 10(a) above, or in connection with any claim or counterclaim brought by the Company in connection therewith. (d) Validity of Agreement. The Company shall be precluded from asserting --------------------- in any Proceeding, including, without limitation, an action under Section 10(a) above that the provisions of this Agreement are not valid, binding and enforceable or that there is insufficient consideration for this Agreement and shall stipulate in court that the Company is bound by all the provisions of this Agreement. (e) Failure to Act Not a Defense. The failure of the Company (including ---------------------------- its Board of Directors or any committee thereof, independent legal counsel, or stockholders) to make a determination concerning the permissibility of the payment of Indemnifiable Amounts or the advancement of Indemnifiable Expenses under this Agreement shall not be a defense in any action brought under Section 10(a) above, and shall not create a presumption that such payment or advancement is not permissible. 11. Defense of the Underlying Proceeding. (a) Notice by Indemnitee. Indemnitee agrees to notify the Company promptly -------------------- upon being served with any summons, citation, subpoena, complaint, indictment, information, or other document relating to any Proceeding which may result in the payment of Indemnifiable Amounts or the advancement of Indemnifiable Expenses hereunder provided, however, that the failure to give any such notice shall not disqualify Indemnitee from the right to receive payments of Indemnifiable Amounts or advancements of Indemnifiable Expenses unless the Company's ability to defend in such Proceeding is materially and adversely prejudiced thereby. (b) Defense by Company. Subject to the provisions of the last sentence of ------------------ this Section 11(b) and of Section 11(c) below, the Company shall have the right to defend Indemnitee in any Proceeding which may give rise to the payment of Indemnifiable Amounts hereunder; provided, however that the Company shall notify Indemnitee of any such decision to defend within ten (10) days of receipt of notice of any such Proceeding under Section 11(a) above. The Company shall not, without the prior written consent of Indemnitee, consent to the entry of any judgment against Indemnitee or enter into any settlement or compromise which (i) includes an admission of fault of Indemnitee or (ii) does not include, as an unconditional term thereof, the full release of Indemnitee from all liability in respect of such Proceeding, which release shall be in form and substance reasonably satisfactory to Indemnitee. This Section 11(b) shall not apply to a Proceeding brought by Indemnitee under Section 10(a) above or pursuant to Section 19 below. (c) Indemnitee's Right to Counsel. Notwithstanding the provisions of ----------------------------- Section 11(b) above, if in a Proceeding to which Indemnitee is a party by reason of Indemnitee's Corporate Status, Indemnitee reasonably concludes that he may have separate defenses or counterclaims to assert with respect to any issue which may not be 5 consistent with the position of other defendants in such Proceeding, or if the Company fails to assume the defense of such proceeding in a timely manner, Indemnitee shall be entitled to be represented by separate legal counsel of Indemnitee's choice at the expense of the Company. In addition, if the Company fails to comply with any of its obligations under this Agreement or in the event that the Company or any other person takes any action to declare this Agreement void or unenforceable, or institutes any action, suit or proceeding to deny or to recover from Indemnitee the benefits intended to be provided to Indemnitee hereunder, Indemnitee shall have the right to retain counsel of Indemnitee's choice, at the expense of the Company, to represent Indemnitee in connection with any such matter. 12. Representations and Warranties of the Company. The Company hereby represents and warrants to Indemnitee as follows: (a) Authority. The Company has all necessary power and authority to --------- enter into, and be bound by the terms of, this Agreement, and the execution, delivery and performance of the undertakings contemplated by this Agreement have been duly authorized by the Company. (b) Enforceability. This Agreement, when executed and delivered by -------------- the Company in accordance with the provisions hereof, shall be a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, moratorium, reorganization or similar laws affecting the enforcement of creditors' rights generally. 13. Insurance. The Company shall, from time to time, make the good faith determination whether or not it is practicable for the Company to obtain and maintain a policy or policies of insurance with a reputable insurance company providing the Indemnitee with coverage for losses from wrongful acts, and to ensure the Company's performance of its indemnification obligations under this Agreement. Among other considerations, the Company will weigh the costs of obtaining such insurance coverage against the protection afforded by such coverage. In all policies of director and officer liability insurance, Indemnitee shall be named as an insured in such a manner as to provide Indemnitee the same rights and benefits as are accorded to the most favorably insured of the Company's officers and directors. Notwithstanding the foregoing, the Company shall have no obligation to obtain or maintain such insurance if the Company determines in good faith that such insurance is not reasonably available, if the premium costs for such insurance are disproportionate to the amount of coverage provided, or if the coverage provided by such insurance is limited by exclusions so as to provide an insufficient benefit. The Company shall promptly notify Indemnitee of any good faith determination not to provide such coverage. 14. Contract Rights Not Exclusive. The rights to payment of Indemnifiable Amounts and advancement of Indemnifiable Expenses provided by this Agreement shall be in addition to, but not exclusive of, any other rights which Indemnitee may have at any time under applicable law, the Company's by-laws or certificate of incorporation, or any other agreement, vote of stockholders or directors (or a committee of directors), or otherwise, both as to action in 6 Indemnitee's official capacity and as to action in any other capacity as a result of Indemnitee's serving as a director of the Company. 15. Successors. This Agreement shall be (a) binding upon all successors and assigns of the Company (including any transferee of all or a substantial portion of the business, stock and/or assets of the Company and any direct or indirect successor by merger or consolidation or otherwise by operation of law) and (b) binding on and shall inure to the benefit of the heirs, personal representatives, executors and administrators of Indemnitee. This Agreement shall continue for the benefit of Indemnitee and such heirs, personal representatives, executors and administrators after Indemnitee has ceased to have Corporate Status. 16. Subrogation. In the event of any payment of Indemnifiable Amounts under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of contribution or recovery of Indemnitee against other persons, and Indemnitee shall take, at the request of the Company, all reasonable action necessary to secure such rights, including the execution of such documents as are necessary to enable the Company to bring suit to enforce such rights. 17. Change in Law. To the extent that a change in Delaware law (whether by statute or judicial decision) shall permit broader indemnification or advancement of expenses than is provided under the terms of the by-laws of the Company and this Agreement Indemnitee shall be entitled to such broader indemnification and advancements, and this Agreement shall be deemed to be amended to such extent. 18. Severability. Whenever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Agreement, or any clause thereof, shall be determined by a court of competent jurisdiction to be illegal, invalid or unenforceable, in whole or in part, such provision or clause shall be limited or modified in its application to the minimum extent necessary to make such provision or clause valid, legal and enforceable, and the remaining provisions and clauses of this Agreement shall remain fully enforceable and binding on the parties. 19. Indemnitee as Plaintiff. Except as provided in Section 10(c) of this Agreement and in the next sentence, Indemnitee shall not be entitled to payment of Indemnifiable Amounts or advancement of Indemnifiable Expenses with respect to any Proceeding brought by Indemnitee against the Company, any Entity which it controls, any director or officer thereof, or any third party, unless the Company has consented to the initiation of such Proceeding. This Section shall not apply to counterclaims or affirmative defenses asserted by Indemnitee in an action brought against Indemnitee. 20. Modifications and Waiver. Except as provided in Section 17 above with respect to changes in Delaware law which broaden the right of Indemnitee to be indemnified by the Company, no supplement modification or amendment of this Agreement shall be binding unless executed in writing by each of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions of this Agreement (whether or not similar), nor shall such waiver constitute a continuing waiver. 7 21. General Notices. All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given (a) when delivered by hand, (b) when transmitted by facsimile and receipt is acknowledged, or (c) if mailed by certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed: (i) if to Indemnitee, to: At his home address as shown on the signature page to this Agreement; (ii) If to the Company, to: Wyndham International, Inc. 1950 Stemmons Freeway Suite 6001 Dallas, TX 75207 Attention: General Counsel or to such other address as may have been furnished in the same manner by any party to the others. 22. Governing Law. This Agreement shall be governed by and construed and enforced under the laws of Delaware without giving effect to the provisions thereof relating to conflicts of law. 23. Consent to Jurisdiction. The Company hereby irrevocably and unconditionally consents to the jurisdiction of the courts of the State of Delaware and the United States District Court for the District of Delaware. The Company hereby irrevocably and unconditionally waives any objection to the laying of venue of any Proceeding arising out of or relating to this Agreement in the courts of the State of Delaware or the United States District Court for the District of Delaware, and hereby irrevocably and unconditionally waives and agrees not to plead or claim that any such Proceeding brought in any such court has been brought in an inconvenient forum. [END OF TEXT] 8 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. WYNDHAM INTERNATIONAL, INC. By:____________________________ Its:________________________ INDEMNITEE _______________________________ Print Name: Fred J. Kleisner Address: [Address] 9 Exhibit B --------- WYNDHAM INTERNATIONAL, INC. NON-QUALIFIED STOCK OPTION AGREEMENT Dated as of March 27, 2000 Wyndham International, Inc., a corporation organized under the laws of Delaware (to "Company"), hereby grants to Fred J. Kleisner, an Employee of the Company (the "Optionee"), as of March 27, 2000 (the "Date of Grant"), a non- qualified option (the "Option") to purchase from the Company 200,000 shares of Class A common stock of the Company ("Shares"), at the price of $2.00 per Share, subject to the terms and conditions set forth below. Such grant is pursuant to the Wyndham International, Inc. 1997 Incentive Plan (the "Plan") and is made as an inducement to Optionee to enter into the Employment Agreement between Optionee and the Company of even date herewith (the "Employment Agreement"). 1. Option Subject to Acceptance of Option Agreement and Employment Agreement. ------------------------------------------------------------------------- The Option may not be exercised unless the Optionee accepts this Option Agreement and the Employment Agreement by executing both the Option Agreement and the Employment Agreement and returning such original execution copies to the Company. 2. Time and Manner of Exercise of Option. ------------------------------------- (a) Maximum Term of Option. The Expiration Date of this Option is the date ---------------------- that is ten years from the Date of Grant. This Option may not be exercised on or after the Expiration Date. (b) Vesting Schedule. No portion of this Option may be exercised until ---------------- such portion shall have vested. Except as set forth in Section 3 of this Agreement, this Option shall be vested and exercisable with respect to the following number of Shares on the dates indicated below: ======================================================== Vesting Schedule Additional Number of Shares Exercisable Vesting Date ======================================================== 40,000 1 year after Date of Grant -------------------------------------------------------- 40,000 2 years after Date of Grant -------------------------------------------------------- 40,000 3 years after Date of Grant -------------------------------------------------------- 40,000 4 years after Date of Grant -------------------------------------------------------- 40,000 5 years after Date of Grant ======================================================== Notwithstanding the foregoing, if the Company achieves 100% of its internal budgeted EBITDA for 2000, then the following vesting schedule shall instead apply and the Option shall be vested and exercisable with respect to the following number of Shares on the dates indicated below: =================================================== Alternative Vesting Schedule =================================================== Number of Shares Exercisable Vesting Date --------------------------------------------------- 50,000 (25%) 1 year after Date of Grant --------------------------------------------------- 50,000 (25%) 2 year after Date of Grant --------------------------------------------------- 50,000 (25%) 3 year after Date of Grant --------------------------------------------------- 50,000 (25%) 4 year after Date of Grant --------------------------------------------------- In the event of a Change in Control during the Period of Employment (each as defined in the Employment Agreement), any unvested portions of this Option shall fully vest and become exercisable on the date of the Change in Control. Furthermore, any unvested portions of this Option shall fully vest and become exercisable on the date the Optionee's employment with the Company is terminated by the Company without Cause (as defined in the Employment Agreement) or by the Optionee for Good Reason (as defined in the Employment Agreement) or on the date the Optionee's employment is terminated due to death or Disability (as defined in the Employment Agreement). A partial exercise of this Option shall not affect Optionee's right to exercise this Option with respect to the remaining Shares. (c) Method of Exercise of Option. Subject to the limitations set forth in this ---------------------------- Agreement, the Option may be exercised by the Optionee (1) by giving written notice to the Company specifying the number of whole Shares to be purchased and accompanied by payment of the Option price in full (or arrangement made for such payment to the Company's satisfaction) either (i) in cash or cash equivalent acceptable to the Committee, (ii) in previously owned whole Shares (which the Optionee has held for at least six months prior to the delivery of such Shares or which the Optionee purchased on the open market and for which the Optionee has good title, free and clear of all liens and encumbrances) having a Fair Market Value, determined as of the date of exercise, equal to the aggregate purchase price payable pursuant U, to Option by reason of such exercise, (iii) in cash or a check payable and acceptable to the Company by a broker-dealer acceptable to the Company to whom the Optionee has submitted an irrevocable notice of exercise or (iv) a combination of two or more of the foregoing, and (2) by executing such documents as the Company may reasonably request. Any fraction of a Share which would be required to pay such purchase price shall be disregarded and the remaining amount due shall be paid in cash by the Optionee. 2 The delivery of certificates representing the Shares subject to the Option will be contingent upon the Company's receipt from Optionee of (1) full payment of the Option price, as set forth above, and (2) any agreement, statement or other evidence that the Company may require to satisfy itself that the issuance of Shares to be purchased pursuant to the exercise of the Option and the subsequent resale of Shares will be in compliance with applicable laws and regulations. 3. Exercise After Termination of Employment. If the Optionee's employment by ---------------------------------------- the Company or an Affiliate is terminated, the period within which to exercise the Option may be subject to earlier termination as set forth below. Any transfer of employment from the Company to any Affiliate of the Company shall not be deemed to be a termination of employment for purposes of this Agreement. (a) Termination Due to Death. If the Optionee's employment terminates by ------------------------ reason of death, the Option held by the Optionee shall vest and become exercisable as set forth in Section 2(b). The Optionee's legal representative or legatee may exercise the Option to the extent exercisable in accordance with this Section 3(a) until the Expiration Date. (b) Termination Due to Disability. Optionee's employment terminates by ----------------------------- reason of Disability (as defined in the Employment Agreement), the Option held by the Optionee shall vest and become exercisable as set forth in Section 2(b). The Optionee may exercise the Option to the extent exercisable in accordance with this Section 3(b) until the Expiration Date. (c) Termination without Cause or for Good Reason. If the Optionee's -------------------------------------------- employment is terminated by the Company without Cause (as defined in the Employment Agreement) or the Optionee resigns from the Company for Good Reason (as defined in the Employment Agreement), the Option held by the Optionee shall vest and become exercisable as set forth in Section 2(b). The Optionee may exercise the Option, to the extent exercisable in accordance with this Section 3(c), for a period of three years from the date of termination or until the Expiration Date, if earlier. Any portion of the Option that is not exercisable at the end of 24 months following termination of employment shall terminate immediately upon termination of employment and be of no further force or effect. Notwithstanding the foregoing, if Optionee breaches any of the provisions contained in Paragraph 4 or 5 of the Employment Agreement, (i) any portion of the Option that vested or will vest by virtue of this Section 3(c) shall immediately terminate and be of no force and effect, and (ii) to the extent any portion of the Option that vested by virtue of this Section 3(c) has been exercised, Optionee shall be required to disgorge to the Company the difference between the Fair Market Value per Share on the date of exercise and the Option price per Share, multiplied by the number of Shares acquired by Optionee. 3 (d) Termination for Cause. If the Optionee's employment is terminated for --------------------- Cause (as defined in the Employment Agreement), the Option held by the Optionee shall terminate immediately upon termination of employment and be of no further force and effect. (e) Other Termination. If the Optionee's employment terminates for any ----------------- reason not covered in Subsections (a), (b), (c) or (d) of this Section 3, the Option held by the Optionee may be exercised, to the extent exercisable on the date of termination pursuant to the Vesting Schedule in Section 2(b), for a period of three (3) months from the date of termination or until the Expiration Date, if earlier. Any portion of the Option that is not exercisable at such time shall terminate immediately upon termination of employment and be of no further force or effect. 4. Incorporation of Plan. Notwithstanding anything herein to the contrary, --------------------- this Option shall be subject to and governed by all the terms and conditions of the Plan. Capitalized terms in this Agreement shall have the meaning specified in the Plan, unless a different meaning is specified herein. All references herein to the Plan shall mean the Plan in effect as of the date hereof. In the event of any conflict between the provisions in the Plan and the provisions in this Agreement, the provisions of the Plan shall govern. 5. Additional Terms and Conditions of Option. ----------------------------------------- (a) Nontransferability of Option. This Agreement is personal to the ---------------------------- Optionee, is non-assignable and is not transferable in any manner, by operation of law or otherwise, other than by will or the laws of descent and distribution. This Option is exercisable, during the Optionee's lifetime, only by the Optionee, and thereafter only by the Optionee's legal representative or legatee. (b) Delivery of Certificates. Upon the exercise of the Option, in whole or ------------------------ in part, the Company shall deliver or cause to be delivered one or more certificates representing the number of Shares purchased against full payment therefor. The Company shall pay all original issue or transfer taxes and all fees and expenses incident to such delivery. (c) Option Confers No Rights as Stockholder. The Optionee shall not be --------------------------------------- entitled to any privileges of ownership with respect to Shares subject to the Option unless and until purchased and delivered upon the exercise of the Option, in whole or in part, and the Optionee becomes a stockholder of record with respect to such delivered Shares; and the Optionee shall not be considered a stockholder of the Company with respect to any such Shares not so purchased and delivered. (d) Decisions of Committee. The Committee shall have the right to resolve ---------------------- all questions which may arise in connection with the Option or its exercise. Any interpretation, determination or other action made or taken by the Committee regarding this Agreement shall be final, binding and conclusive. 4 (e) Reservation of Shares. The Company shall at all times prior to the --------------------- expiration or termination of the Option reserve or cause to be reserved and keep or cause to be kept available, either in its treasury or out of its authorized but unissued shares of common stock, the full number of shares of common stock of the Company subject to the Option from time to time. (f) Change in Capital Structure. The terms of this Option shall be --------------------------- adjusted as the Committee determines is equitably required in the event the Company effects one or more stock dividends, stock split- ups, subdivisions or consolidations of shares or other similar changes in capitalization. (g) Fractional Shares. Fractional shares shall not be issuable hereunder, ----------------- and when any provision hereof may entitle Optionee to a fractional share such fraction shall be disregarded. 6. Tax Withholding. The Optionee shall, not later than the date as of which --------------- the exercise of this Option becomes a taxable event for Federal income tax purposes, pay to the Company or make arrangements satisfactory to the Committee for payment of any Federal, state, at local taxes required by law to be withheld on account of such taxable event. Subject to the approval of the Committee, the Optionee may elect to have the minimum tax withholding obligation satisfied, in whole or in part, by (i) authorizing the Company to withhold from Shares to be issued, or (ii) transferring to the Company a number of previously owned whole Shares (which the Optionee has held for at least six months prior to the delivery of such Shares or which the Optionee purchased on the open market and for which the Optionee has good title, free and clear of all liens and encumbrances) having an aggregate Fair Market Value, determined as of the date of exercise, that would satisfy the minimum withholding amount due. 7. Miscellaneous Provisions. ------------------------ (a) Designation as Non-Qualified Stock Option. The Option is hereby ----------------------------------------- designated as not constituting an "incentive stock option" within the meaning of Section 422 of the Code. This Agreement shall be interpreted and treated consistently with such designation. (b) Successors. This Agreement shall be binding upon and inure to the ---------- benefit of any successor or successors of the Company and any person or persons who shall, upon the death of the Optionee, acquire any rights hereunder in accordance with this Agreement or the Plan. (c) Notices. All notices, requests or other communications provided for in ------- this Agreement shall be made, if to the Company, to the Secretary of the Company at the Company's principal executive office, and if to the Optionee, to his or her address on the books of the Company (or to such other address as the Company or the Optionee may give to the other for purposes of notice hereunder). 5 All notices, requests or other communications provided for in this Agreement shall be made in writing either (a) by personal delivery to the party entitled thereto, (b) by facsimile with confirmation of receipt, (c) by mailing in the United States mail to the last known address of the party entitled thereto or (d) by express courier service. The notice, request or other communication shall be deemed to be received upon personal delivery, upon confirmation of receipt of facsimile transmission or upon receipt by the party entitled thereto if by United States mail or express courier service; provided, however, that if a notice, request or other communication in not received during regular business hours, it shall be deemed to be received on the next succeeding business day of the Company. (d) Governing Law. This Agreement and all determinations made and actions ------------- taken pursuant hereto and thereto, to the extent not governed by the laws of the United States, shall be governed by the laws of the State of Delaware and construed in accordance therewith without giving effect to principles of conflicts of laws. (e) Counterparts. This Agreement may be executed in two counterparts, each ------------ of which shall be deemed an original and both of which together shall constitute one and the same instrument. (f) Further Assurances. The Company and the Optionee shall execute and ------------------ deliver such further instruments and take such additional action as each party may reasonably request to effect, consummate, confirm or evidence the grant of the Option to the Optionee, and they shall each execute such documents as may be reasonably necessary to assist each other in preserving or perfecting their respective rights in the Option. (g) No Right to Continued Employment. This Agreement does not confer upon -------------------------------- Optionee any right to continue in the employ of the Company or an Affiliate, nor shall it interfere in any way with the right of the Company or an Affiliate to terminate such employment at any time. 8. Duplicate Agreement. Optionee and the Company acknowledge that they may ------------------- have previously executed an Option Agreement in the form of this Option Agreement but without this Section 8, and that such previously executed Option Agreement has been lost (the "Lost Option Agreement"). This Option Agreement is being executed in lieu of the Lost Option Agreement. Employee agrees to indemnify, defend and hold harmless the Company, its successors and assigns, and its shareholders from any and all damages arising, directly or indirectly, out of the execution of this Option Agreement in lieu of the Lost Option Agreement and to deliver or cause to be delivered to the Company the Lost Option Agreement for cancellation whenever and as soon as it is found. 6 WYNDHAM INTERNATIONAL, INC. By: _______________________________ Title: _______________________________ Accepted this 27/th/ day of March, 2000. Optionee Name: Fred J. Kleisner Signature: _____________________________ 7 Exhibit C --------- MASTER NOTE ----------- Dallas, Texas FOR VALUE RECEIVED, FRED J. KLEISNER (referred to herein as the "Maker"), promises to pay to WYNDHAM INTERNATIONAL. INC., a Delaware corporation (referred to herein as the "Payee"), or its assigns, the sum determined pursuant to the Employment Agreement hereinafter described, together with interest on the unpaid principal balance as set forth below. 1. Certain Definitions. The following items, when used in this Note, ------------------- shall have the meanings assigned to them below: (a) Stated Rate. Until March 27, 2005, the term "Stated Rate" means ------------ the rate of six percent (6%) per annum, compounded annually, and thereafter, the term "Stated Rate" means the interest rate as the same may be adjusted from time to time, paid by Payee during the term of this Note pursuant to the revolving line of credit of the Payee as it may exist from time to time. (b) Maximum Rate. The term "Maximum Rate" shall mean, on any day, the ------------- highest nonusurious rate of interest (if any) permitted by applicable law on such day. For purposes of Tex. Rev. Civ. Stat. Ann. Art. 5069-1.04(b), as it may from time to time be amended, the "applicable rate ceiling" shall be the "indicated rate" ceiling from time to time in effect as limited by Art 5069- 1.04(b); provided, however, that to the extent permitted by applicable law, Payee reserves the right to change the "applicable rate ceiling" from time to tutu by further notice and disclosure to Maker; and, provided farther, that the "highest nonusurious, rate of interest permitted by applicable law" for purposes of this Note shall not be limited to the applicable rate ceiling under Art. 5069-1.04 if federal laws or other state laws now or hereafter in effect and applicable to this Note (and the interest contracted for, charged and collected hereunder) shall permit a higher rate of interest. (c) Employment Agreement. The term "Employment Agreement" shall mean -------------------- the Executive Employment Agreement dated as of March 27, 2000, between Maker and Payee. 2. Interest Rate. The unpaid principal balance from the date hereof until ------------- maturity shall bear interest at a rate per annum equal to the lesser of the Stated Rate or the Maximum Rate. Interest on the unpaid principal balance hereof shall be calculated at a daily rate equal to 1/365th of the rate per annum herein provided, and shall be charged and collected on the actual number of days elapsed. After maturity, unpaid principal and, to the extent permitted by law, interest on this Note shall bear interest at a rate equal to the lesser of (i) four (4) percentage points over the Stated Rate or (ii) the Maximum Rate. 1 3. Payment of Principal and Interest. The entire principal balance an --------------------------------- accrued interest on this Note shall become due and payable on the earlier of (i) the fourth anniversary of the date of the concerned principal advance, or (ii) thirty (30) days after "Date of Termination" (as defined in the Employment Agreement) of Maker's employment with Payee in the event Maker's employment with Payee is terminated for "Cause" (as such term is defined ii subparagraph 7(c) of the Employment Agreement) or not for "Good Reason" (as such term is defined in subparagraph 7(e) of the Employment Agreement). Maker shall also be required to make prepayments on this Note in the amounts and in the manner required by paragraph 22 of the Employment Agreement. 4. Events of Default. ----------------- (a) The occurrence of any one or more of the following events shall be deemed an event of default hereunder ("Event of Default"): (i) The failure of Maker to make any payment on this Note when the same becomes due and payable and such failure continues for ten (10) days after notice of such failure to pay is received by Maker from Payee; or (ii) Maker shall commence any case, proceeding or other action seeking reorganization, arrangement or adjustment of his debts under any bankruptcy, insolvency or reorganization law, or seek the appointment of a receiver, trustee or custodian for Maker or for all of his property; or (iii) Any case, proceeding or other action shall be commenced against Maker seeking reorganization, arrangement or adjustment of his debts under any bankruptcy, insolvency or reorganization law or seeking the appointment of a receiver, custodian or trustee for Maker or for all or substantially all of his property, and such case, proceeding or other action remains undismissed for a period of sixty (60) days after commencement thereof. (b) Upon the occurrence of an Event of Default hereunder, Payee, at its option, may declare the entire unpaid principal balance and accrued interest on this Note to be immediately due and payable without notice of any kind to Maker and without any other presentment, demand, protest or notice of any kind, all of which are hereby expressly waived by Maker, and may, at its option, exercise any other right or remedy existing at law or in equity. Failure to exercise any such right or remedy shall not constitute a waiver of the right to exercise the same in the event of any subsequent default. 5. Voluntary Prepayment. Maker shall have the right and privilege from -------------------- time to time to prepay in whole or in part this Note without premium or penalty. All such prepayments shall be first applied to all then accrued interest and then to principal, and the accrual of interest shall immediately cease on any principal amount so prepaid. 6. Waiver. Maker waives demand, presentment for payment, notice of ------ nonpayment, protest and notice of protest and agrees to any substitution, subordination or release of any parties primarily or secondarily liable hereon. No waiver by Payee of any of its rights or remedies hereunder or under any other document evidencing or securing this Note or otherwise 2 shall be considered a waiver of any other subsequent right to remedy of Payee; and no delay or omission in the exercise or enforcement by Payee of any rights or remedies shall be construed as a waiver of any right or remedy of Payee. 7. Attorney's Fees. If this Note is not paid pursuant to the terms --------------- hereof and is placed in the hands of an attorney for collection, or if it is collected through bankruptcy or any other court proceeding after maturity, then Payee shall be entitled to reasonable attorneys' fees for collection. 8. Limitation on Agreements. It is the intention of Maker and Payee to ------------------------ comply with applicable usury laws. In furtherance thereof, Maker and Payee stipulate and agree that, notwithstanding any provision contained in this Note, or in any other agreement between Maker and Payee, Payee shall never be entitled to receive, collect or apply as interest on this Note, any amount in excess of the Maximum Rate, and, in the event Payee ever receives, collects or applies as interest any such excess, such amount that would be excessive interest shall be deemed to be a partial prepayment of principal and treated hereunder as such, and if the principal amount of the Note is paid in full, any remaining excess shall forthwith be paid to Maker. In determining whether the interest paid or payable, under any specific contingency, exceeds the Maximum Rate, Maker and Payee shall, to the maximum extent permitted under applicable law, (i) characterize any non-principal payments (other than payments hereunder) as an expense, fee or premium rather than as interest (ii) exclude voluntary prepayments and the effects thereof, and (iii) amortize, prorate, allocate and spread in equal parts the total amount of interest throughout the entire contemplated term of this Note so that the interest rate is uniform throughout such term. 9. Governing Law and Venue. This Note is being executed and delivered and ----------------------- is intended to be performed in the State of Texas. This Note shall be construed as to both validity and performance and enforced in accordance with and governed by the laws of the State of Texas. 10. Notices. All notices or other communications required or permitted ------- hereunder shall be in writing and shall be deemed to have been duly given if delivered personally or sent by certified or registered mail, postage prepaid, with return receipt requested, addressed to Maker to Payee as follows: If to Payee to: Wyndham International, Inc. 1950 Stemmons Freeway Suite 6001 Dallas, Texas 75207 Attention: General Counsel If to Maker to: Fred J. Kleisner 3510 Turtle Creek #17A 3 Dallas, Texas 75219 or such other address as shall be furnished in writing by Maker or Payee to the other, it accordance with the above provisions, and such notice or communication shall be deemed to have been given as of the date so delivered in the case of personal delivery or three (3) days after deposit in the mail in the case of certified or registered mail. 11. Arbitration. Maker and Payee agree that any claim, controversy or ----------- dispute arising out of or relating to this Note that cannot be amicably settled shall be referred to binding arbitration as hereinafter provided. If arbitration is required to resolve a dispute between Maker and Payee, Payee will notify the American Arbitration Association ("AAA") and request AAA to select one person to act as the arbitrator for resolution of this dispute, The selected arbitrator will establish the rule for arbitration of the dispute and such rules will be binding upon all parties to the arbitration proceeding. The arbitrator may use the rules of the AAA for commercial arbitration but is encouraged to adopt such rules as the arbitrator deems appropriate to accomplish the arbitration in the quickest and least expensive manner possible. Accordingly, the arbitrator may (i) dispense with any formal rules of evidence and allow hearsay testimony so as to limit the number of witnesses required, (ii) minimize discovery procedures as the arbitrator deems appropriate, (iii) act upon his understanding or interpretation of the law on any issue without the obligation to research such issue or accept or act upon briefs of the issue prepared by any party, (iv) limit the time for presentation of any party's case as well as the amount of information or number of witnesses to be presented in connection with any hearing, (v) prevent any party from allowing an attorney to present or argue the party's case before the arbitrator in any hearing, and (vi) impose any other rules which the arbitrator believes appropriate to effect a resolution of the dispute as quickly and inexpensively as possible. The arbitration shall take place in Dallas, Texas. The arbitrator will have the exclusive authority to determine and award costs of arbitration and the cost incurred by any party for attorneys, advisors and consultants. Any award made by the arbitrator shall be binding on Maker, Payee and all parties to the arbitration and shall be enforceable to the fullest extent of the law. 12. Master Note. This Note is to the extent specified in the ----------- Employment Agreement intended to document certain principal advances which may hereafter be made under the Employment Agreement by Payee to Maker. This Note shall for purposes of each separate principal advance be deemed dated as of the date of the concerned advance. MAKER ___________________________________________ FRED J. KLEISNER 4