EXHIBIT 10.29
[CANDLEWOOD HOTEL COMPANY, INC. LETTERHEAD]
May __, 2002
[Executive]
c/o Candlewood Hotel Company, Inc.
8621 E. 21st Street North, Suite 200
Wichita, KS 67206
Dear [Executive]:
Candlewood Hotel Company, Inc. (the "Corporation") considers it
essential to the best interests of its shareholders to foster the continuous
employment of key management personnel. In connection with this, the
Corporation's Board of Directors (the "Board") recognizes that, as is the case
with many publicly held corporations, the possibility of a change in control of
the Corporation may exist and that the uncertainty and questions that it may
raise among management could result in the departure or distraction of
management personnel to the detriment of the Corporation and its shareholders.
The Board has decided to reinforce and encourage the continued attention
and dedication of members of the Corporation's management, including yourself,
to their assigned duties without the distraction arising from the possibility of
a change in control of the Corporation.
In order to induce you to remain in the employ of the Corporation or any
of its affiliates (collectively, the "Company"), the Corporation hereby agrees
that after this letter agreement (this "Agreement") has been fully executed, you
shall receive the severance benefits set forth in Section 5 of this Agreement in
the event your employment with the Company is terminated under the circumstances
described in Section 4 of this Agreement subsequent to a Change in Control (as
defined in Section 2).
1. Term of Agreement. This Agreement shall commence on the date hereof
and shall continue in effect through the termination of the Company's engagement
of Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"), as
provided in the engagement letter between the Company and Merrill Lynch dated
May __, 2002 (the "Engagement Letter") or for so long as Merrill Lynch is
entitled to any fee under the Engagement Letter; provided, further, that if a
Change in Control (as defined in Section 2), occurs during the term of this
Agreement, the term of this Agreement shall continue in effect for a period of
not less than forty-two (42) months beyond the month in which such Change in
Control occurred.
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2. Change in Control.
No benefits shall be payable under Section 4 of this Agreement unless
there has been a Change in Control. For purposes of this Agreement, a Change in
Control shall be deemed to occur if:
(a) any Person (as defined in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) is or becomes the
Beneficial Owner (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Corporation representing 40% or more of the
combined voting power of the Corporation's then outstanding securities
("Outstanding Corporation Voting Securities"); provided, however, that for
purposes of this subsection (a), the following shall not constitute a Change in
Control: (i) the direct or indirect acquisition of stock of the Corporation,
including any rights to acquire any voting interests whether expressed as
rights, options, warrants, convertible securities or otherwise, by a Person that
currently owns preferred shares of the Corporation pursuant to the terms of the
Certificate of Designation for such preferred shares filed with the Delaware
Secretary of State (a "Preferred Certificate of Designation"); (ii) any
acquisition of stock of the Corporation by the Corporation or any corporation
controlled by the Corporation, (iii) any acquisition of stock of the Corporation
by any employee benefit plan (or related trust) sponsored or maintained by the
Corporation or any corporation controlled by the Corporation, or (iv) any
acquisition by a Person of 40% of the Outstanding Corporation Voting Securities
as a result of an acquisition of common stock of the Corporation by the
Corporation which, by reducing the number of shares of common stock of the
Corporation outstanding, increases the proportionate number of shares
beneficially owned by such Person to 40% or more of the Outstanding Corporation
Voting Securities; provided, however, that if a Person shall become the
beneficial owner of 40% or more of the Outstanding Corporation Voting Securities
by reason of a share acquisition by the Corporation as described above and
shall, after such share acquisition by the Corporation, become the beneficial
owner of any additional shares of common stock of the Corporation, then such
acquisition shall constitute a Change in Control;
(b) during any period of two consecutive years (not including any period
prior to the execution of this Agreement), individuals who at the beginning of
such period constitute the Board, and any new director (other than a director
designated by a person who has entered into an agreement with Corporation to
effect a transaction described in Sections 2(a), (c), (d) or (e)) whose election
by the Board or nomination for election by the Corporation's stockholders was
approved by a vote of at least two-thirds (K) of the directors then still in
office who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved (hereinafter
referred to as "Continuing Directors"), cease for any reason to constitute at
least a majority thereof;
(c) the consummation by the Corporation of a merger or consolidation of
Corporation with any other corporation (or other entity), other than a merger or
consolidation which would result in the voting securities of the Corporation
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) 50% or more of the combined voting power of the voting
securities of the Corporation or such surviving entity outstanding immediately
after such
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merger or consolidation; provided, however, that a merger or consolidation
effected to implement a recapitalization of the Corporation (or similar
transaction) in which no Person acquires more than 40% of the Outstanding
Corporation Voting Securities shall not constitute a Change in Control;
(d) the stockholders of the Corporation approve a plan of complete
liquidation of the Corporation, other than through bankruptcy; or
(e) the consummation of an agreement (or agreements) providing for the
sale or disposition by the Corporation of all or substantially all of the
Corporation's assets other than a sale or disposition which would result in the
voting securities of the Corporation outstanding immediately prior thereto
continuing to represent 50% or more of the combined voting power of the
Corporation or such surviving entity outstanding immediately after such sale or
disposition.
3. Accelerated Vesting Upon a Change in Control.
Notwithstanding any provisions of the Company's stock option plans,
incentive plans, or other similar plans, all outstanding options ("Options"), if
any, granted to you under any of the Company's stock option plans, incentive
plans, or other similar plans (or options substituted therefor covering the
stock of a successor corporation) shall become fully vested and exercisable
immediately prior to the Change in Control as to all shares of stock covered
thereby, and the restricted period with respect to any restricted stock or any
other equity award granted to you thereunder shall lapse and such shares shall
be distributed to you immediately prior to the Change in Control, unless it
would adversely affect the Corporation's ability to use pooling of interest
accounting in a Change in Control transaction in which such accounting is
intended to be used.
4. Termination of Employment Following a Change in Control.
(a) General. During the term of this Agreement, if any of the events
described in Section 2 constituting a Change in Control shall have occurred, you
shall be entitled to the benefits provided in Section 5(c) upon the subsequent
termination of your employment, provided that such termination occurs during the
term of this Agreement and within the two (2) year period immediately following
the date of such Change in Control, unless such termination is (i) because of
your death, (ii) by the Company for Cause (as defined in Section 4(c)), or (iii)
by you other than (1) for Good Reason (as defined in Section 4(d)), or (2) in a
Covered Resignation (as defined in Section 4(e)). In the event that you are
entitled to such benefits, such benefits shall be paid notwithstanding the
subsequent expiration of the term of this Agreement.
(b) Disability. If, as a result of your incapacity due to physical or
mental illness, you shall have been absent from the full-time performance of
your duties with the Company for six (6) consecutive months, and within thirty
(30) days after written notice of termination is given you shall not have
returned to the full-time performance of your duties, you or the Company may
terminate your employment for "Disability."
(c) Cause. Termination by the Company of your employment for "Cause"
shall mean termination (i) upon your willful and continued failure to
substantially perform your
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duties with the Company (other than any such failure resulting from your
incapacity due to physical or mental illness or any such actual or anticipated
failure after your issuance of a Notice of Termination (as defined in Section
4(f) for Good Reason), after a written demand for substantial performance is
delivered to you by the Board, which demand specifically identifies the manner
in which the Board believes that you have not substantially performed your
duties, (ii) upon your willful and continued failure to substantially follow and
comply with the specific and lawful directives of the Board, as reasonably
determined by the Board (other than any such failure resulting from your
incapacity due to physical or mental illness or any such actual or anticipated
failure after your issuance of a Notice of Termination for Good Reason), after a
written demand for substantial performance is delivered to you by the Board,
which demand specifically identifies the manner in which the Board believes that
you have not substantially performed your duties, (iii) upon your willful
commission of an act of fraud or dishonesty resulting in material economic or
financial injury to the Company, or (iv) upon your willful engagement in illegal
conduct or gross misconduct, in each case which is materially and demonstrably
injurious to the Company. For purposes of this Section 4(c), no act, or failure
to act, on your part shall be deemed "willful" unless done, or omitted to be
done, by you not in good faith. Notwithstanding the foregoing, you shall not be
deemed terminated for Cause pursuant to Sections 4(c)(i), (ii) or (iv) hereof
unless and until there shall have been delivered to you a copy of a resolution
duly adopted by the affirmative vote of not less than three-quarters (3/4) of
the entire membership of the Board at a meeting of the Board (after reasonable
notice to you, an opportunity for you, together with your counsel, to be heard
before the Board and a reasonable opportunity to cure), finding that in the
Board's good faith opinion you were guilty of conduct set forth above in this
Section 4(c) and specifying the particulars thereof in reasonable detail.
(d) Good Reason. You shall be entitled to terminate your employment for
Good Reason. For purposes of this Agreement, "Good Reason" shall mean, without
your express written consent, the occurrence after a Change in Control of any of
the following circumstances unless, in the case of Sections 4(d)(i), (v), (vi),
or (vii), such circumstances are fully corrected (provided such circumstances
are capable of correction) prior to the Date of Termination (as defined in
Section 4(g)) specified in the Notice of Termination given in respect thereof:
(i) the assignment to you of any duties inconsistent with the
position in the Company that you held immediately prior to the Change in
Control, a significant adverse alteration in the nature or status of
your responsibilities or the conditions of your employment from those in
effect immediately prior to such Change in Control, or any other action
by the Company that results in a material diminution in your position,
authority, duties or responsibilities;
(ii) the Company's reduction by more than 10% of your annual
total compensation as in effect on the date hereof or as the same may be
increased from time to time;
(iii) the relocation of the Company's offices at which you are
principally employed immediately prior to the date of the Change in
Control (your
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"Principal Location") which results in the one-way commuting distance
for you increasing by more than thirty (30) miles from such location, or
the Company's requiring you, without your written consent, to be based
anywhere other than your Principal Location, except for required travel
on the Company's business to an extent substantially consistent with
your present business travel obligations;
(iv) the Company's failure to pay to you any portion of your
current compensation or to pay to you any portion of an installment of
deferred compensation under any deferred compensation program of the
Company within seven (7) days after the date such compensation is due;
(v) the Company's failure to continue in effect any material
compensation or benefit plan in which you participate immediately prior
to the Change in Control, unless an equitable arrangement (embodied in
an ongoing substitute or alternative plan) has been made with respect to
such plan, or the Company's failure to continue your participation
therein (or in such substitute or alternative plan) on a basis not
materially less favorable, both in terms of the amount of benefits
provided and the level of your participation relative to other
participants, as existed at the time of the Change in Control;
(vi) the Corporation's failure to obtain a satisfactory
agreement from any successor to assume and agree to perform this
Agreement, as contemplated in Section 6 hereof; or
(vii) any purported termination of your employment that is not
effected pursuant to a Notice of Termination satisfying the requirements
of Section 4(f) hereof (and, if applicable, the requirements of Section
4(c) hereof), which purported termination shall not be effective for
purposes of this Agreement.
Your right to terminate your employment pursuant to this Section 4(d) shall not
be affected by your incapacity due to physical or mental illness. Your continued
employment shall not constitute consent to, or a waiver of rights with respect
to, any circumstance constituting Good Reason hereunder. Any good faith
determination by you that Good Reason exists shall be presumed correct and shall
be binding upon the Corporation.
(e) Voluntary Termination and Covered Resignation. You shall be entitled
to voluntarily terminate your employment for any reason or no reason at any time
after a Change in Control. Any such termination which occurs within the thirty
(30)-day period following the first anniversary of the occurrence of a Change in
Control (a "Covered Resignation") shall constitute a resignation which entitles
you to receive benefits under this Agreement.
(f) Notice of Termination. Any purported termination of your employment
by the Company or by you (other than termination due to death which shall
terminate your employment automatically) shall be communicated by written Notice
of Termination to the other party hereto in accordance with Section 7. "Notice
of Termination" shall mean a notice that shall indicate the specific termination
provision in this Agreement relied upon and shall set forth
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in reasonable detail the facts and circumstances claimed to provide a basis for
termination of your employment under the provision so indicated.
(g) Date of Termination, Etc. "Date of Termination" shall mean (a) if
your employment is terminated due to your death, the date of your death; (b) if
your employment is terminated for Disability, thirty (30) days after Notice of
Termination is given (provided that you shall not have returned to the full-time
performance of your duties during such thirty (30)-day period), and (c) if your
employment is terminated pursuant to Section 4(c), Section 4(d) or Section 4(e)
or for any other reason (other than death or Disability), the date specified in
the Notice of Termination (which, in the case of a termination for Cause shall
not be less than thirty (30) days from the date such Notice of Termination is
given, and in the case of a termination for Good Reason or in connection with a
Covered Resignation shall not be less than fifteen (15) nor more than sixty (60)
days from the date such Notice of Termination is given).
5. Compensation Upon Termination or During Disability Following A Change
in Control.
Following a Change in Control during the term of this Agreement, you
shall be entitled to the benefits described below during a period of disability,
or upon termination of your employment, as the case may be, provided that such
period or termination occurs during the term of this Agreement and within the
two (2) year period immediately following the date of such Change in Control.
The benefits to which you are entitled, subject to the terms and conditions of
this Agreement, are:
(a) During any period during which you fail to perform your full-time
duties with the Company as a result of incapacity due to physical or mental
illness, you shall continue to receive your base salary at the rate in effect at
the commencement of any such period, together with all compensation payable to
you under the Company's disability plan or program or other similar plan during
such period, until this Agreement is terminated pursuant to Section 4(b) hereof.
Upon a termination pursuant to Section 4(b), you shall be entitled to the
benefits provided for in Section 5(c) of this Agreement. In the event your
employment is terminated by reason of your death, your benefits shall be
determined under the Company's retirement, insurance and other compensation
programs then in effect in accordance with the terms of such programs.
(b) If your employment shall be terminated (i) by the Company for Cause
or (ii) by you other than for Good Reason or pursuant to a Covered Resignation,
the Corporation shall pay you (1) your full base salary, when due, through the
Date of Termination at the rate in effect at the time Notice of Termination is
given, (2) the unpaid portion, if any, of any annual bonus for any prior year,
and (3) all other amounts to which you are entitled under any compensation plan
of the Company at the time such payments are due, and the Corporation shall have
no further obligations to you under this Agreement.
(c) If your employment by the Company shall be terminated by you for
Good Reason, pursuant to a Covered Resignation, for Disability or by the Company
other than for Cause, then you shall be entitled to the benefits provided below:
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(i) the Corporation shall pay to you (1) your full base salary,
when due, through the Date of Termination at the rate in effect at the
time Notice of Termination is given, at the time specified in Section
5(d), (2) the unpaid portion, if any, of any annual bonus, plus an
amount equal to your targeted annual bonus, pro rated from January 1 of
the termination year through the Date of Termination, and (3) all other
amounts to which you are entitled under any compensation plan of the
Company at the time such payments are due;
(ii) in lieu of any further salary payments to you for periods
subsequent to the Date of Termination, the Corporation shall pay as
severance pay to you, at the time specified in Section 5(d), a lump sum
severance payment equal to the sum of one and one-half (1.5) times your
annual base salary as in effect as of the Date of Termination or
immediately prior to the Change in Control, whichever is greater, and
one and one-half (1.5) times your targeted annual bonus as in effect as
of the Date of Termination or the average annual bonus received by you
with respect to the three (3) years immediately prior to the Change in
Control, whichever is greater;
(iii) for a period of eighteen (18) months, the Corporation
shall continue to provide you and your eligible family members, based on
the cost sharing arrangement between you and the Company on the date of
the Change in Control, with disability insurance, life insurance and
medical and dental health benefits at least equal to those which would
have been provided to you and them if your employment had not been
terminated or, if more favorable to you, as in effect generally at any
time thereafter, provided, however, that if you become re-employed with
another employer and are eligible to receive disability insurance, life
insurance and medical and dental health benefits under another
employer's plans, the Corporation's obligations under this Section
5(c)(iii) shall be reduced to the extent comparable benefits are
actually received by you, and any such benefits actually received by you
shall be reported to the Corporation. In the event you are ineligible
under the terms of such benefit plans or programs to continue to be so
covered, in such event, the Corporation shall provide you with
substantially equivalent coverage through other sources or will provide
you with a lump sum payment in such amount that, after all taxes on that
amount, shall be equal to the cost to you of providing yourself such
benefit coverage. At the termination of the benefits coverage under the
second preceding sentence, you, your spouse and your dependents shall be
entitled to continuation coverage pursuant to Section 4980B of the
Internal Revenue Code of 1986, as amended (the "Code"), Sections 601-608
of the Employee Retirement Income Security Act of 1974, as amended, and
under any other applicable law, to the extent required by such laws, as
if you had terminated employment with the Company on the date such
benefits coverage terminates;
(iv) for a period of two (2) years following the Date of
Termination, the Corporation shall, at its sole expense as incurred,
provide you with outplacement services, the scope and provider of which
shall be selected by
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you in your sole discretion, at an aggregate cost to the Corporation not
to exceed twenty five percent (25%) of your annual base salary as in
effect as of the Date of Termination or immediately prior to the Change
in Control, whichever is greater;
(v) you shall be fully vested in your accrued benefits under any
qualified or nonqualified pension, profit sharing, deferred compensation
or supplemental plans maintained by the Company for your benefit, except
to the extent that the acceleration of vesting of such benefits would
violate any applicable law or require the Corporation to accelerate the
vesting of the accrued benefits of all participants in such plan or
plans, in which case the Corporation may elect to pay you a lump sum
payment at the time specified in Section 5(d) in an amount equal to the
value of such unvested accrued benefits in lieu of accelerating the
vesting of your benefits, plus the Corporation shall pay to you an
amount equal to the amount the Company would have contributed to your
account under the Company's 401(k) plan as a matching contribution had
you remained employed by the Company for eighteen (18) months after your
Date of Termination and had you made the maximum elected deferral
contributions;
(vi) the Corporation shall furnish you for six (6) years
following the Date of Termination (without reference to whether the term
of this Agreement continues in effect) with directors' and officers'
liability insurance insuring you against insurable events which occur or
have occurred while you were a director or officer of the Company, such
insurance to have policy limits aggregating not less than the amount in
effect immediately prior to the Change in Control, and otherwise to be
in substantially the same form and to contain substantially the same
terms, conditions and exceptions as the liability insurance policies
provided for officers and directors of the Company in force from time to
time, provided, however, that such terms, conditions and exceptions
shall not be, in the aggregate, materially less favorable to you than
those in effect on the date hereof; provided, further, that if the
aggregate annual premiums for such insurance at any time during such
period exceed one hundred and fifty percent (150%) of the per annum rate
of premium currently paid by the Company for such insurance, then the
Corporation shall provide the maximum coverage that will then be
available at an annual premium equal to one hundred and fifty percent
(150%) of such rate;
(vii) in any situation where under applicable law the
Corporation has the power to indemnify (or advance expenses to) you in
respect of any judgments, fines, settlements, loss, cost or expense
(including attorneys' fees) of any nature related to or arising out of
your activities as an agent, employee, officer or director of the
Company or in any other capacity on behalf of or at the request of the
Company, the Corporation shall promptly on written request, indemnify
(and advance expenses to) you to the fullest extent permitted by
applicable law, including but not limited to making such findings and
determinations and taking any and all such actions as the Corporation
may, under applicable law, be permitted to have the discretion to take
so as to effectuate such
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indemnification or advancement. Such agreement by the Corporation shall
not be deemed to impair any other obligation of the Corporation
respecting your indemnification otherwise arising out of this or any
other agreement or promise of the Corporation or under any statute; and
(d) The payments provided for in Sections 5(c)(i), (ii), (iii) shall be
made not later than the fifth day following the Date of Termination; provided,
however, that if the amounts of such payments cannot be finally determined on or
before such day, the Corporation shall pay to you on such day an estimate, as
determined in good faith by the Corporation, of the minimum amount of such
payments and shall pay the remainder of such payments (together with interest at
the rate provided in Section 1274(b)(2)(B) of the Code) as soon as the amount
thereof can be determined but in no event later than the thirtieth day after the
Date of Termination. In the event that the amount of the estimated payments
exceeds the amount subsequently determined to have been due, such excess shall
constitute a loan by the Corporation to you, payable on the fifth day after
demand by the Corporation (together with interest at the rate provided in
Section 1274(b)(2)(B) of the Code).
(e) You shall not be required to mitigate the amount of any payment
provided for in this Section 5 by seeking other employment or otherwise nor,
except as provided in Section 5(c)(iii), shall the amount of any payment or
benefit provided for in this Section 5 be reduced by any compensation earned by
you as the result of employment by another employer or self-employment, by
retirement benefits, by offset against any amount claimed to be owed by you to
the Corporation, or otherwise.
(f) Notwithstanding any other provision of this Agreement, if by reason
of Section 280G of the Code any payment or benefit received or to be received by
you in connection with a Change in Control or the termination of your employment
(whether payable pursuant to the terms of this Agreement ("Contract Payments")
or any other plan, arrangements or agreement with the Corporation or an
Affiliate (as defined below) (collectively with the Contract Payments, "Total
Payments")) would not be deductible (in whole or part) by the Corporation, an
Affiliate or other person making such payment or providing such benefit, then
the Severance Payment shall be reduced (to zero if necessary) and, if the
Severance Payment is reduced to zero, other Contract Payments shall be reduced
(to zero if necessary) and, if Contract Payments are reduced to zero, other
Total Payments shall be reduced (to zero if necessary) until no portion of the
Total Payments is not deductible by reason of Section 280G of the Code,
provided, however, that no such reduction shall be made unless the net after-tax
benefit received by you shall after such reduction would exceed the net
after-tax benefit received by you if no such reduction was made. The foregoing
determination and all determinations under this Section 5(f) shall be made by
the Accountants (as defined below). For purposes of this section, "net after-tax
benefit" shall mean (i) the Total Payments that would constitute "parachute
payments" within the meaning of Section 280G of the Code, less (ii) the amount
of all federal, state and local income taxes payable with respect to such
payments calculated at the maximum marginal income tax rate for each year in
which the foregoing shall be paid to you (based on the rate in effect for such
year as set forth in the Code as in effect at the time of the first payment of
the foregoing), less (iii) the amount of excise taxes imposed with respect to
the payments and benefits described in (i) above by Section 4999 of the Code.
For purposes of the foregoing
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determinations, (a) no portion of the Total Payments the receipt or enjoyment of
which you shall have effectively waived in writing prior to the date of payment
of the Severance Payment shall be taken into account; (b) no portion of the
Total Payments shall be taken into account which in the opinion of the
Accountants does not constitute a "parachute payment" within the meaning of
Section 280G(b)(2) of the Code (without regard to subsection (A)(ii) thereof);
(c) the Severance Payment (and, thereafter, other Contract Payments and other
Total Payments) shall be reduced only to the extent necessary so that the Total
Payments in their entirety constitute reasonable compensation for services
actually rendered within the meaning of Section 280G(b)(4) of the Code, in the
opinion of the Accountants; and (d) the value of any non-cash benefit or any
deferred payment or benefit included in the Total Payments shall be determined
by the Accountants in accordance with the principles of Sections 280G(d)(3) and
(4) of the Code. For purposes of this Section 5(f), the term "Affiliate" means
the Corporation's successors, any Person whose actions result in a Change in
Control or any corporation affiliated (or which, as a result of the completion
of the transactions causing a Change in Control shall become affiliated) with
the Corporation within the meaning of Section 1504 of the Code and "Accountants"
shall mean the Corporation's independent certified public accountants serving
immediately prior to the Change in Control, unless the Accountants are also
serving as accountant or auditor for the individual, entity or group effecting
the Change in Control, in which case the Corporation shall appoint another
nationally recognized public accounting firm to make the determinations required
hereunder (which accounting firm shall then be referred to as the Accountants
hereunder). For purposes of making the determinations and calculations required
herein, the Accountants may make reasonable assumptions and approximations
concerning applicable taxes and may rely on reasonable, good faith
interpretations concerning the application of Sections 280G and 4999 of the
Code, provided that the Accountant's determinations must be made on the basis of
"substantial authority" (within the meaning of Section 6662 of the Code). All
fees and expenses of the Accountants shall be borne solely by the Corporation.
6. Successors; Binding Agreement.
(a) The Corporation shall require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Corporation to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Corporation would be required to perform it if no such
succession had taken place. Failure of the Corporation to obtain such assumption
and agreement prior to the effectiveness of any such succession shall be a
breach of this Agreement and shall entitle you to terminate your employment and
receive compensation from the Corporation in the same amount and on the same
terms to which you would be entitled hereunder if you terminate your employment
for Good Reason following a Change in Control, except that for purposes of
implementing the foregoing, the date on which any such succession becomes
effective shall be deemed the Date of Termination. Unless expressly provided
otherwise, "Corporation" as used herein shall mean the Corporation as defined in
this Agreement and any successor to its business and/or assets as aforesaid.
(b) This Agreement shall inure to the benefit of and be enforceable by
you and your personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees and legatees. If you should die while
any amount would still be payable to
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you hereunder had you continued to live, all such amounts, unless otherwise
provided herein, shall be paid in accordance with the terms of this Agreement to
your devisee, legatee or other designee or, if there is no such designee, to
your estate.
7. Notice. For the purpose of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
certified or registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth on the first page of this
Agreement, provided that all notices to the Corporation shall be directed to the
attention of the Board with a copy to the Secretary of the Corporation, or to
such other address as either party may have furnished to the other in writing in
accordance herewith, except that notice of change of address shall be effective
only upon receipt.
8. Confidentiality and Non-Solicitation Covenants.
(a) Confidentiality. You hereby agree that commencing on the Date of
Termination, you shall not, directly or indirectly, disclose or make available
to any person, firm, corporation, association or other entity for any reason or
purpose whatsoever, any Confidential Information (as defined below). You agree
that, upon termination of your employment with the Company, all Confidential
Information in your possession that is in written or other tangible form
(together with all copies or duplicates thereof, including computer files) shall
be returned to the Corporation and shall not be retained by you or furnished to
any third party, in any form except as provided herein; provided, however, that
you shall not be obligated to treat as confidential, or return to the
Corporation copies of any Confidential Information that (i) was publicly known
at the time of disclosure to you, (ii) becomes publicly known or available
thereafter other than by any means in violation of this Agreement or any other
duty owed to the Company by any person or entity, or (iii) is lawfully disclosed
to you by a third party. As used in this Agreement, the term "Confidential
Information" means: information disclosed to you or known by you as a
consequence of or through your relationship with the Company, about the
customers, employees, business methods, public relations methods, organization,
procedures or finances, including, without limitation, information of or
relating to customer lists, of the Company.
(b) Non-Solicitation. You hereby agree that, for the period commencing
on the Date of Termination and terminating on the first anniversary thereof, you
shall not, either on your own account or jointly with or as a manager, agent,
officer, employee, consultant, partner, joint venturer, owner or shareholder or
otherwise on behalf of any other person, firm or corporation, directly or
indirectly solicit or attempt to solicit away from the Company any of its
officers or employees or offer employment to any person who, on or during the
six (6) months immediately preceding the date of such solicitation or offer, is
or was an officer or employee of the Company; provided, however, that a general
advertisement to which an employee of the Company responds shall in no event be
deemed to result in a breach of this Section 8(b).
9. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed on a non-exclusive basis by the
laws of the State of Kansas without giving effect to its conflicts of laws
rules.
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10. Joint and Several Liability. Any successors or assigns shall be
jointly and severally liable with the Corporation under this Agreement.
11. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by you and such officer as may be specifically designated
by the Board. No waiver by either party hereto at any time of any breach by the
other 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, with respect to the subject matter hereof have been made by either
party which are not expressly set forth in this Agreement. All references to
sections of the Exchange Act or the Code shall be deemed also to refer to any
successor provisions to such sections. Any payments provided for hereunder shall
be paid net of any applicable withholding required under federal, state or local
law. Any obligations of the Corporation under Sections 5 and 6 shall survive the
expiration of the term of this Agreement. The section headings contained in this
Agreement are for convenience only, and shall not affect the interpretation of
this Agreement.
12. Severability. The invalidity or unenforceability of any provision 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.
13. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
14. Legal Fees.
If any legal action, arbitration or other proceeding, is brought for the
enforcement of this Agreement, or because of an alleged dispute, breach or
default in connection with any of the provisions of this Agreement, the
prevailing party shall be entitled to reasonable attorney's fees and other costs
incurred in that action or proceeding, in addition to any other relief to which
that party would be entitled.
15. At-Will Employment. Nothing in the foregoing diminishes or alters
the Company's policy of at-will employment for all employees, where both the
Company and you may terminate the employment relationship at any time and for
any reason, with or without cause or notice.
16. Entire Agreement. This Agreement sets forth the entire agreement of
the parties hereto in respect of the subject matter contained herein and
supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto; and any prior agreement
of the parties hereto in respect of the subject matter contained herein,
including, without limitation, any prior severance agreements, is hereby
terminated and cancelled. Any of your rights hereunder shall be in addition to
any rights you may otherwise have under benefit plans or agreements of the
Company to which you are a party or in which you are a participant,
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including, but not limited to, any Company sponsored employee benefit plans and
stock options plans. Provisions of this Agreement shall not in any way abrogate
your rights under such other plans and agreements.
If this letter sets forth our agreement on the subject matter hereof,
kindly sign and return to the Corporation the enclosed copy of this letter,
which shall then constitute our agreement on this subject.
Sincerely,
CANDLEWOOD HOTEL COMPANY, INC.
By: _____________________________
Its: ____________________________
Agreed to this ____ day
of May, 2002.
_______________________________
[Executive]
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SCHEDULE OF CERTAIN EXECUTIVE OFFICERS RELATING TO LETTER AGREEMENT
NAME AMOUNT OF SEVERANCE PAYMENT TERM OF AGREEMENT
Warren Fix 18 months salary, plus target bonus, plus a Coterminous with the
performance based incentive to be determined Engagement Letter
by the Compensation Committee
Jim Roos 18 months salary, plus target bonus, plus a Coterminous with the
performance based incentive to be Engagement Letter
determined by the Compensation Committee
Tom Kennalley 15 months salary, plus target bonus, plus a Coterminous with the
performance based incentive to be Engagement Letter
determined by the Compensation Committee
Tim Johnson 15 months salary, plus target bonus, plus a Coterminous with the
performance based incentive to be Engagement Letter
determined by the Compensation Committee
Charles Armstrong, Jr. 15 months salary, plus target bonus, plus a Coterminous with the
performance based incentive to be Engagement Letter
determined by the Compensation Committee
H. Steven Meadows 15 months salary, plus target bonus, plus a Coterminous with the
performance based incentive to be Engagement Letter
determined by the Compensation Committee
David Redfern 15 months salary, plus target bonus, plus a Coterminous with the
performance based incentive to be Engagement Letter
determined by the Compensation Committee