EX-10.1






Exhibit 10.1




EMPLOYMENT AGREEMENT




This Employment Agreement (the “Agreement”) dated as of July 25, 2005 is entered between La
Quinta Corporation (the “Company”) and Steven A. Schumm (the “Executive”).



NOW, THEREFORE, for good and valuable consideration, the delivery and receipt of which is
hereby acknowledged by the parties hereto, respectively, said parties hereby agree as follows:



ARTICLE I




Employment, Duties and Responsibilities



1.1 Employment. The Executive shall serve as the Executive Vice President and Chief
Financial Officer of the Company. The Executive hereby accepts such employment. The Executive
agrees to devote substantially all of his time and efforts to promoting the interests of the
Company.



1.2 Duties and Responsibilities. Subject to the supervision of and direction by the
Chief Executive Officer, the Executive shall perform such duties as are customarily associated with
the position of Executive Vice President and Chief Financial Officer of the Company, and such
related duties and responsibilities with comparable levels of responsibilities and skill set
requirements as the Company may assign, from time to time.



1.3 Base of Operation. The Executive’s principal base of operation for the
performance of his duties and responsibilities under this Agreement shall be the offices of the
Company in Dallas, Texas.



ARTICLE II




Term




2.1 Term. The term of this Agreement (the “Term”) shall commence on the date of this
Agreement as indicated above, and shall continue for a period of three years from the commencement
date hereof. The Term and this Agreement will be renewed automatically thereafter for successive
one-year terms unless 6 months notice of non-renewal is given by either party to the other.
Regardless of the term remaining on this Agreement determined as provided above, upon the
occurrence of a Change of Control of the Company, the Term of this Agreement shall not expire until
the later of the end of the remaining term then in effect or two years from the date of such Change
of Control.



ARTICLE III




Compensation and Expenses




3.1 Salary and Benefits. As compensation and consideration for the performance by the
Executive of his obligations under this Agreement, the Executive shall be entitled to the following
(subject, in each case, to the provisions of Article V hereof):



(a) The Company shall pay the Executive a base salary, payable in accordance with the ordinary
payment procedures of the Company and subject to such withholdings and other ordinary employee
deductions as may be required by law. The total base salary paid to the Executive through the date
of his next regular annual salary review shall be $350,000. The base salary to be paid the
Executive during the Term for subsequent years shall be reviewed on an annual basis, by the Board
of Directors of the Company (the “Board”) or by the Compensation Committee of the Board, (the
“Compensation Committee”) subject to increase based upon performance and competitive market data as
determined by the Compensation Committee in its sole discretion. In no event shall such base
salary be less than $350,000 per annum.



(b) The Executive shall participate during the Term in the annual cash bonus plan maintained
by the Company, subject to the performance goals and procedures established by the Compensation
Committee, from time to time. Subject to the terms and conditions of the annual cash bonus plan,
the Executive’s base target bonus opportunity for each fiscal year for satisfaction of goals for
such fiscal year shall be 75 percent of the Executive’s base salary as actually paid in the
applicable calendar year (“Base Target”). In the event the Executive significantly exceeds annual
goals for any fiscal year, he may receive a cash bonus of up to 150 percent of the Executive’s base
salary as actually paid in the applicable calendar year. Actual payments under the annual cash
bonus plan will be determined by the Compensation Committee, in its sole discretion.



(c) The Executive shall participate during the Term in such retirement, pension, health,
disability and medical insurance plans, and in such other employee benefit plans and programs, as
may be maintained from time to time during the Term by the Company for the benefit of the employees
of the Company, in each case to the extent and in such manner available to other executive officers
of the Company and subject to the terms and provisions of such plans or programs.



(d) The Executive shall be entitled to an annual paid vacation period (but not necessarily
consecutive vacation weeks) during the Term, in accordance with the Company’s employee benefit
policies, but in no event less than four weeks per year.



(e) The Executive shall be paid a signing bonus of $150,000 (subject to standard tax
withholding) upon commencement of employment.



3.2 Expenses. The Company will reimburse the Executive for reasonable
business-related expenses incurred by him in connection with the performance of his duties
hereunder during the Term subject, however, to the Company’s policies relating to business-related
expenses as in effect from time to time during the Term. The Company will reimburse the Executive,
in accordance with the Company’s relocation policy, for all reasonable and normal costs related to
relocating his residence to Dallas, Texas, “grossed-up” to the greater amount so that the net
benefit to the Executive after taxes equals his actual costs relating to such relocation. Company
standard relocation loans will be limited or unavailable to the extent restricted by the
Sarbanes-Oxley Act or any other applicable laws or regulations.



3.3 Long Term Incentives. The Company may provide the Executive with additional
opportunities to earn long-term incentive awards in the future, from time to time, at levels that
are competitive with external market place opportunities for the Executives’ position and in line
with the Company’s compensation philosophies as in effect, from time to time, as may be approved by
the Compensation Committee, in its sole discretion.



As compensation and in consideration for the performance by the Executive of his obligations
under this Agreement, the Executive has received the following (subject, in each case, to the
provisions of Article V hereof):



(a) Performance Shares. The Company will make an initial grant to the Executive of
50,000 shares of the common stock of La Quinta Corporation and shares of the common stock of La
Quinta Properties, Inc. which are paired for trading purposes (“Paired Shares”), and may grant
additional awards in the future, in accordance with the provisions of the agreements pursuant to
which such awards have been or will be granted (the “Award Agreements”) and the terms of the La
Quinta Corporation 2005 Incentive Compensation Plan and any additional or modified plans as may be
adopted from time to time, as applicable, (the “Award” of the “Performance Shares” under the
“Plans”).



(b) Stock Options. The Company will also make an initial grant to the Executive of
140,000 options to purchase Paired Shares and may grant additional awards in the future (the
“Options”) in accordance with the provisions of the agreements pursuant to which such awards have
been or will be granted (the “Option Agreements”) and the terms of the Plans.



In the event of a Change in Control (as hereafter defined and provided for in Section 5.7),
all Performance Shares and Options shall become fully vested immediately prior to the consummation
of the Change in Control.



3.4 Automobile Allowance. In lieu of an automobile furnished by the Company, the
Executive shall receive an automobile allowance of $1,100 per month. All gas, insurance, and
maintenance will be at the Executive’s expense.



ARTICLE IV




Exclusivity, Etc.




4.1 Exclusivity. The Executive agrees to perform his duties, responsibilities and
obligations hereunder efficiently and to the best of his ability. The Executive agrees that he
will devote substantially all of his working time, care and attention and best efforts to such
duties, responsibilities and obligations throughout the Term. The foregoing shall not be
interpreted to prohibit the Executive from serving as director or trustee of one or more
corporations or foundations (either for-profit or not-for-profit) other than the Company, after
obtaining consent from the Board, which shall not be unreasonably withheld. The Executive also
agrees so long as he is employed by the Company that he will not engage in any other business
activities, pursued for gain, profit or other pecuniary advantage, that are competitive with the
activities of the Company.



4.2 Other Business Ventures. The Executive agrees that, so long as he is employed by
the Company, he will not own, directly or indirectly, any controlling or substantial stock or other
beneficial interest in any business enterprise which is engaged in, or competitive with, any
business engaged in by the Company. Notwithstanding the foregoing, the Executive may own, directly
or indirectly, up to 5% of the outstanding capital stock of any business having a class of capital
stock which is traded on any national stock exchange or in the over-the-counter market.



4.3 Confidentiality. The Executive agrees that he will not, at any time during or
after the Term, make use of or divulge to any other person, firm or corporation any trade or
business secret, process, method or means, or any other confidential information concerning the
business or policies of the Company, which he may have learned in connection with his employment
hereunder. For purposes of this Agreement, a “trade or business secret, process, method or means,
or any other confidential information” shall mean and include written information treated as both
confidential and as a trade secret by the Company. The Executive’s obligation under this Section
4.3 shall not apply to any information which (a) is known publicly; (b) is in the public domain or
hereafter enters the public domain without the fault of the Executive; (c) is known to the
Executive prior to his receipt of such information from the Company, as evidenced by written
records of the Executive; or (d) is hereafter disclosed to the Executive by a third party not under
an obligation of confidence to the Company. The Executive agrees not to remove from the premises
of the Company, except as an employee of the Company in pursuit of the business of the Company or
except as specifically permitted in writing by the Company, any document or other object containing
or reflecting any such confidential information. The Executive recognizes that all such documents
and objects, whether developed by him or by someone else, will be the sole and exclusive property
of the Company. Upon termination of his employment hereunder, the Executive shall forthwith
deliver to the Company all such confidential information, including without limitation all lists of
lessees, customers, correspondence, accounts, records and any other documents or property made or
held by him or under his control in relation to the business or affairs of the Company, and no
copy of any such confidential information shall be retained by him. The provisions of this Section
4.3 shall survive any termination of this Agreement.



4.4 Noncompetition and Non Disparagement. During the period commencing on the date
hereof and ending on the first anniversary of the date on which the Executive’s employment is
terminated, (the “Restricted Period”) whether before or after the Term the Executive shall not,
directly or indirectly, whether as an employee, consultant, independent contractor, partner, joint
venturer or otherwise, (A) solicit or induce, or in any manner attempt to solicit or induce, any
person employed by, or as agent of, the Company to terminate such person’s employment or agency, as
the case may be, with the Company or (B) divert, or attempt to divert, any person, concern, or
entity from doing business with the Company (including entering into a lease), nor will he attempt
to induce any such person, concern or entity to cease being a lessee, customer or supplier of the
Company. Furthermore, during the Restricted Period, the Executive shall not make disparaging
remarks about the Company. If the Executive is terminated by the Company for other than Cause or
by the Executive for Good Reason, or after a Change of Control and Executive Termination Event, the
provisions of this Section 4.4 relating to non-competition shall not be binding on the Executive.
The provisions of this Section 4.4 shall survive the termination of this Agreement.



ARTICLE V




Termination




5.1 Termination by the Company.



(a) The Company shall have the right to terminate the Executive’s employment at any time with
or without “Cause”. For purposes of this Agreement, “Cause” shall mean that, prior to any
termination the Executive shall have committed: (i) an act of willful misconduct, fraud,
embezzlement, theft, or any other act constituting a felony, involving moral turpitude or causing
material harm, financial or otherwise, to the Company; (ii) a demonstrably intentional and
deliberate act or failure to act, including a gross neglect in duties, (other than as a result of
incapacity due to physical or mental illness), which is committed in bad faith by the Executive,
which causes or can be expected to cause material financial injury to the Company; or (iii) an
intentional and material breach of this Agreement that is not cured by the Executive within 30 days
after written notice from the Chief Executive Officer specifying the breach and requesting a cure.
For purposes of this Agreement, no act, or failure to act, on the part of the Executive shall be
deemed “intentional” if it was due primarily to an error in judgment or negligence, but shall be
deemed “intentional” only if done, or omitted to be done, by the Executive not in good faith and
without reasonable belief that his action or omission was in, or not opposed to, the best interest
of the Company. Notwithstanding the foregoing, the Executive shall not be deemed to have been
terminated for “Cause” hereunder unless and until there shall have been delivered to the Executive
a copy of a resolution duly adopted by the affirmative vote of not less than three-quarters of the
Board then in office at a meeting of the Board of Directors called and held for such purpose (after
reasonable notice to the Executive and an opportunity for the Executive, together with his counsel,
to be heard before the Board), finding that, in the good faith opinion of the Board, the Executive
had committed an act set forth above and specifying the particulars thereof in detail. Nothing
herein shall limit the right of the Executive or his beneficiaries to contest the validity or
propriety of any such determination.



(b) The end of the Term, due to the exercise by the Company of its non-renewal right under
Section 2.1, shall also constitute termination by the Company of the Executive’s employment, with
the giving of such notice by the Company creating a severance payment obligation, which is payable
at the end of the notice period.



5.2 Death. In the event the Executive dies during the Term, this Agreement shall
automatically terminate, such termination to be effective on the date of the Executive’s death.



5.3 Disability. In the event that the Executive shall suffer a disability which shall
have prevented him from performing satisfactorily his obligations hereunder for a period of at
least 120 consecutive days, the Company shall have the right to terminate this Agreement, such
termination to be effective upon the giving of notice thereof to the Executive in accordance with
this Agreement.



5.4 Termination by the Executive for Good Reason. The Executive’s employment may be
terminated during the Term by the Executive for Good Reason, by giving to the Company 30 days
advance written notice specifying the event or circumstance which the Executive alleges constitutes
Good Reason. Such notice of resignation will take effect, if not revoked by the Executive, at the
conclusion of such thirty-day period. For purposes of this Agreement, the following circumstances
shall constitute “Good Reason” if not cured prior to the expiration of such thirty-day period:



(a) the assignment to the Executive of duties that are materially inconsistent with the
Executive’s position or with his authority, duties or responsibilities as contemplated by Sections
1.1 and 1.2 of this Agreement, or any other action by the Company or its successor which results in
a material diminution or material adverse change in such position, authority, duties or
responsibilities;



(b) any material breach by the Company or its successor of the provisions of this Agreement;



(c) the Company shall relocate its principal executive offices or require the Executive to
have his principal location of work changed, in either case, to any location which is in excess of
45 miles from its current location; or



(d) the reduction of the Executive’s base salary below its then current level or the reduction
of the Executive’s Base Target bonus percentage factor.



5.5 Effect of Termination.



(a) In the event of termination of the Executive’s employment for any reason or by reason of
the Executive’s death or disability, the Company shall pay to the Executive (or his beneficiary in
the event of his death) within 30 days after termination of employment any base salary, bonus,
vested benefits in accordance with the Company’s plans, and any other compensation earned but not
paid to the Executive prior to the effective date of such termination and, other than the
circumstances of termination by the Company for Cause or by the Executive voluntarily without Good
Reason, the pro rata amount of the annual cash bonus payable under the plan based on the Base
Target bonus for the year during which such termination occurs, based on the number of days worked
during such year. Upon such termination, the Company’s obligation to pay base salary, annual bonus
and long term incentives ceases except to the extent vested, in accordance with the plans, or as
otherwise payable pursuant to this Agreement.



(b) In the event of termination of the Executive’s employment (other than a termination
following a Change of Control as hereafter defined and provided for in Section 5.7, which shall
govern in such event) (i) by the Company other than for Cause or (ii) by the Executive for Good
Reason, (subject to the signing by the Executive of the Company’s standard form of general release
of employment claims as generally used prior to the Change in Control and the expiration of the
statutory revocation period) the Company shall pay to the Executive, within 30 days after
termination of employment in addition to the amounts described in Section 5.5(a) hereof, a lump sum
equal to one time the sum of Executive’s then current base salary and then current Base Target
bonus.



(c) In the event of the termination of the Executive’s employment (other than a termination
following a Change in Control as hereafter defined and provided for in Section 5.7, which shall
govern in such event) (i) by the Company other than for Cause, (ii) by the Executive for Good
Reason or (iii) on account of the Executive’s death or disability, for 12 months (or, if later, the
date the Executive becomes eligible for Medicare if his employment terminates on account of
disability) following the Termination Date, the Company shall arrange to provide the Executive with
insurance benefits (medical, dental, life and disability) on the same terms and conditions
applicable to active executive officers of the Company, and in the event of the Executive’s death,
the Company shall arrange to provide the Executive’s surviving spouse and dependents with such
benefits if they were provided with such benefits by the Company at the time of the Executive’s
death. If and to the extent that such benefits shall not or cannot be paid or provided under any
policy, plan, program or arrangement of the Company solely due to the fact that the Executive is no
longer an officer or employee of the Company, then the Company shall pay to the Executive, his
dependents and beneficiaries, the amount of premiums that would have been incurred by the Company
were the Company able to provide such coverage through its plan, program or arrangement. Such
benefits shall be discontinued prior to the end of the specified continuation period if the
Executive receives comparable coverage from a subsequent employer (except to the extent that the
subsequent employer does not cover the preexisting medical conditions of the Executive or a
previously covered member of the Executive’s family).



5.6 Termination Following a Change of Control.



(a) Definitions. As used herein, the following terms shall have the following
meanings:




(i) Change in Control. “Change in Control” shall mean




(1) any transaction, or series of transactions, including, but not
limited to any merger, consolidation, or reorganization, which results when
any “person” as defined in Section 3(a)(9) of the Securities Exchange Act of
1934 (the “Exchange Act”) and as used in Sections 13(d) and 14(d) thereof,
including a “group” as defined in Section 13(d) of the Exchange Act, but
excluding the Company, any subsidiary of the Company, and any employee
benefit plan sponsored or maintained by the Company or any subsidiary of the
Company, directly or indirectly, becomes the “beneficial owner” (as defined
in Rule 13d-3 under the Exchange Act) of securities of the Company
representing more than 50% of the combined voting power of the Company’s
then outstanding securities;




(2) when, during any period of 24 consecutive months the individuals
who, at the beginning of such period, constitute the Board (the “Incumbent
Directors”) cease for any reason other than death to constitute at least a
majority of the Board; provided, however, that a director who was not a
director at the beginning of such 24-month period shall be deemed to have
satisfied such 24-month requirement (and be an Incumbent Director) if such
director was elected by, or on the recommendation of or with the approval
of, at least two-thirds of the directors who then qualified as Incumbent
Directors either actually (because they were directors at the beginning of
such 24-month period) or by prior operation of this Section; or




(3) upon the closing of a transaction comprising: a stockholder
approved plan of complete liquidation of the Company; or an agreement for
the sale or disposition of substantially all of the Company’s assets; or a
merger, consolidation, or reorganization of the Company in which
stockholders of the Company immediately prior to the transaction own less
than 50% of the combined voting power of the surviving entity.




(ii) “Termination Date” shall mean the date on which the Executive’s employment
with the Company is terminated.



(b) Termination by the Company. Following a Change in Control, the Executive’s
employment may be terminated by the Company (a “Company Termination Event”) and the Executive shall
not be entitled to the severance benefits provided under Section 5.7, provided that the Executive’s
termination occurs as a result of one or more of the following events:




(i) The Executive’s death;




(ii) The Executive’s disability, provided the Executive actually begins to
receive disability benefits pursuant to the long-term disability plan in effect for
senior executives of the Company immediately prior to the Change in Control; or



(c) Executive Termination Event. If at any time during the two year period commencing
on the date of a Change in Control, the Company or the Executive terminates his employment
following the occurrence of one or more of the following events (each, an “Executive Termination
Event”), the Executive shall be entitled to the severance benefits provided in Section 5.7 below:




(i) Any termination by the Company of the Executive’s employment during such
two year period for any reason, other than for Cause, as a result of the Executive’s
death, or by reason of the Executive’s disability and the actual receipt of
disability benefits pursuant to the long-term disability plan in effect for senior
executives of the Company immediately prior to the Change in Control.




(ii) Termination by the Executive of his employment with the Company at any
time within two years after the Change in Control upon the occurrence of any of the
following events:




(1) The Company’s failure to elect, re-elect or otherwise maintain the
Executive in the office or position in the Company which the Executive held
immediately prior to a Change in Control.




(2) A significant, adverse change (increase or decrease) in the nature
or scope of the authorities, powers, functions, responsibilities or duties
attached to the position with the Company which the Executive held
immediately prior to the Change in Control, or a reduction in the aggregate
of the Executive’s base pay or annual incentive bonus opportunity (and
relative level of goal achievement) in which the Executive participated
immediately prior to the Change in Control, or the termination of the
Executive’s rights to any employee benefits to which she was entitled
immediately prior to the Change in Control, or a reduction in scope or value
of such benefits, without prior written consent of the Executive, any of
which is not remedied within 10 calendar days after receipt by the Company
of a written notice from the Executive of such change, reduction, or
termination, as the case may be;




(3) The Company or its successor becomes a subsidiary of another
company and the Executive does not hold the position stated in Section 1.1
of the ultimate parent company;




(4) The Company shall relocate its principal executive offices, or
require the Executive to have his principal location of work changed, to any
location which is in excess of 45 miles from the location thereof
immediately prior to the Change in Control; or




(5) Without limiting the generality or effect of the foregoing, any
material breach of this Agreement by the Company or any successor thereto.



5.7 Severance Benefits. In the event the Executive’s employment is terminated within
two years of the date of a Change in Control as a result of an Executive Termination Event, the
Executive shall be entitled to the benefits set forth below, subject to the signing by the
Executive of the Company’s standard form of general release of employment claims as generally used
prior to the Change in Control and the expiration of any statutory revocation period. All amounts
payable under this Section 5.7(a) (b) (c) and (d) shall be paid to the Executive in one lump sum
within 30 days after his termination of employment.



(a) The Company shall pay to the Executive an amount equal to two times the greater of: (i)
average of his annual base salary for the three fiscal years (or such fewer fiscal years that the
Executive is actually employed by the Company) preceding the Change in Control or (ii) his then
current base salary (“average Base Salary”) and two times the greater of: i) the average of his
cash bonuses paid with respect to the last two fiscal years (or such fewer fiscal years that the
Executive is actually employed by the Company) preceding the Change in Control, or ii) his Base
Target bonus.



(b) The Company shall pay the Executive his full base salary through the Executive’s
Termination Date. The Company shall also pay the Executive an amount equal to the pro rata amount
of the Base Target bonus award available to the Executive under the bonus plan during the year of
termination, based on the number of days of the year elapsed prior to the Termination Date. Any
cash-based long-term incentives shall be cashed out on a pro-rata basis, based on the greater of
actual goal achievement or target.



(c) All Performance Shares, Options, Award Grants and retirement benefits (such as 401k) shall
become vested in accordance with the applicable plan documents as in effect on the dates of the
respective grants.



(d) The Company will provide outplacement assistance from a service selected by the Executive
for a period of one year from the Termination Date. All associated costs will be paid by the
Company, up to a maximum of thirty percent (30%) of the Executive’s average Base Salary.



(e) For a period of two years following the Executive’s termination of employment the Company
shall arrange to provide the Executive with insurance benefits (medical, dental, life and
disability) substantially similar to those which the Executive was receiving or entitled to receive
immediately prior to the Termination Date with all costs paid by the Company. If and to the extent
that such benefits shall not or cannot be paid or provided under any policy, plan, program or
arrangement of the Company solely due to the fact that the Executive is no longer an officer or
employee of the Company, then the Company shall pay to the Executive, his dependents and
beneficiaries, the amount of premiums that would have been incurred by the Company were the Company
able to provide such coverage through its plan, program or arrangement. Such insurance benefits
shall be discontinued prior to the end of the specified continuation period if the Executive
receives comparable coverage from a subsequent employer (except to the extent that the subsequent
employer does not cover the preexisting medical conditions of the Executive or a previously covered
member of the Executive’s family).



5.8 Other Rights. A termination of the Executive’s employment by the Company pursuant
to this Agreement or by the Executive shall not affect adversely any rights which the Executive may
have pursuant to any agreement, employment contract, policy, plan, program or arrangement of the
Company providing employee benefits, which rights shall be governed by the terms of such employee
benefit plan.



5.9 Retirement. The Executive will be entitled to retirement benefits and all other
applicable benefits if any, pursuant to the terms of any of the Company’s plans. The Company’s
obligation to pay base salary, annual bonus and long-term incentives ceases upon retirement except
to the extent vested, in accordance with the plans, or as otherwise payable pursuant to this
Agreement.



ARTICLE VI




Indemnification




The Company will indemnify the Executive to the fullest extent that would be permitted by law
(including a payment of expenses in advance of final disposition of a proceeding) as in effect at
the time of the subject act or omission, or by the charter or by-laws of the Company as in effect
at such time, or by the terms of any indemnification agreement between the Company and the
Executive, whichever affords greatest protection to the Executive, and the Executive shall be
entitled to the protection of any insurance policies the Company may elect to maintain generally
for the benefit of its officers and/or, during the Executive’s service in such capacity (if
applicable), directors (and to the extent the Company maintains such an insurance policy or
policies, in accordance with its or their terms to the maximum extent of the coverage available for
any Company officer or director); against all costs, charges and expenses whatsoever incurred or
sustained by the Executive (including but not limited to any judgment entered by a court of law) at
the time such costs, charges and expenses are incurred or sustained, in connection with any action,
suit or proceeding to which the Executive may be made a party by reason of his being or having been
an officer or employee of the Company, or serving as a director, officer or employee of an
affiliate of the Company, at the request of the Company, other than any action, suit or proceeding
brought against the Executive by or on account of his breach of the provisions of an employment
agreement with a third party that has not been disclosed by the Executive to the Company. The
provisions of this Article VI shall survive any termination of this Agreement.



ARTICLE VII




Taxes and Miscellaneous Other Provisions




7.1 Tax Considerations. Notwithstanding anything herein to the contrary, in the event any
payments or benefits provided to the Executive hereunder upon a Change in Control are determined by
the Company to be subject to the tax imposed by Section 4999 of the Internal Revenue Code (the
“Code”, with all Code Section references used herein being deemed to include any regulations
thereunder), or any similar federal or state excise tax, FICA tax, or any interest or penalties are
incurred by the Executive with respect to such excise tax (such excise tax, together with any such
interest and penalties are hereinafter collectively referred to as the “Excise Tax”), the Company
shall pay to the Executive at the time specified in Section 5.5 (b) or 5.7 above (whichever
applies), an additional amount (the “Gross-Up Payment”) such that after the payment by the
Executive of all federal, state, or local income taxes, Excise Taxes, FICA tax, or other taxes
(including any interest or penalties imposed with respect thereto) imposed upon the receipt of the
Gross-Up Payment, Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed on the severance payments and benefits provided herein.



(a) For purposes of determining whether any payments or benefits to the Executive hereunder
will be subject to the Excise Tax and the amount of such Excise Tax:




(i) all payments or benefits received or to be received by the Executive in
connection with a Change in Control or the termination of employment (whether
pursuant to the terms of this Agreement or of any other plan, arrangement or
agreement with the Company) shall be treated as “parachute payments” within the
meaning of Section 280G(b)(2) of the Code, and all “excess parachute payments”
within the meaning of Section 280G(b)(1) shall be treated as subject to the Excise
Tax, unless in the opinion of tax counsel selected by the Company and acceptable to
the Executive, such payments or benefits (in whole or in part) do not constitute
parachute payments under Section 280G of the Code, or such excess parachute payments
(in whole or in part) represent reasonable compensation for services actually
rendered within the meaning of Section 280G(b)(4) of the Code;




(ii) the amount of the severance payments which shall be treated as subject to
the Excise Tax shall be equal to the amount of excess parachute payments within the
meaning of Sections 280G(b)(1) and (4) (after applying clause (a), above); and




(iii) the parachute value of any noncash benefits or any deferred payment or
benefit shall be determined by Company in accordance with the principles of Sections
280G(d)(3) and (4) of the Code.



(b) If the Excise Tax is subsequently determined to be less than the amount taken into account
hereunder at the time of termination of employment, the Executive shall repay to the Company, at
the time the reduction in Excise Tax is finally determined, the portion of the Gross-Up Payment
attributable to such reduction. If the Excise Tax is determined to exceed the amount taken into
account hereunder at the time of termination of employment, the Company shall make an additional
Gross-Up Payment to the Executive in respect of such excess at the time the amount of such excess
is finally determined. The Executive shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the Company of the
Gross-Up Payment. Such notification shall be given as soon as practicable but no later that ten
business days after the Executive is informed in writing of such claim and shall apprise the
Company of the nature of such claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the 30 calendar day period following
the date on which it gives such notice to the Company (or such shorter period ending on the date
that any payment of taxes with respect to such claim is due). If the Company notifies the
Executive in writing prior to the expiration of such period that it desires to contest such claim,
the Executive shall:




(i) give the Company any information reasonably requested by the Company
relating to such claim,




(ii) take such action in connection with contesting such claim as the Company
shall reasonably request in writing from time to time, including, without
limitation, accepting legal representation with respect to such claim by an attorney
reasonably selected by the Company,




(iii) cooperate with the Company in good faith in order to effectively contest
such claim, and




(iv) permit the Company to participate in any proceedings relating to such
claim;



provided, however, that the Company shall bear and pay directly all costs and expenses (including
legal and accounting fees and additional interest and penalties) incurred in connection with such
contest and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise
Tax, FICA tax or income tax (including interest and penalties with respect thereto) imposed as a
result of such representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this section, the Company shall control all proceedings taken in connection
with such contest and, at its sole option, may pursue or forgo any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect of such claim and may,
at its sole option, either direct the Executive to pay the tax claimed and sue for a refund or
contest the claim in any permissible manner, and the Executive agrees to prosecute such contest to
a determination before any administrative tribunal, in a court of initial jurisdiction and in one
or more appellate courts, as the Company shall determine; provided, however, that if the Company
directs the Executive to pay such claim and sue for a refund, the Company shall advance the amount
of such payment to the Executive, on an interest-free basis, and shall indemnify and hold the
Executive harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or
penalties with respect thereto) imposed with respect to such advance or with respect to any imputed
income with respect to such advance; and further provided that any extension of the statute of
limitations relating to payment of taxes for the taxable year of the Executive with respect to
which such contested amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company’s control of the contest shall be limited to issues with respect to which
a Gross-Up Payment would be payable hereunder and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue Service or any other
taxing authority.



If any such claim referred to in this Section is made by the Internal Revenue Service and the
Company does not request the Executive to contest the claim within the 30 calendar day period
following notice of the claim, the Company shall pay to the Executive the amount of any Gross-Up
Payment owed to the Executive, but not previously paid pursuant to Section 7.1(b), immediately upon
the expiration of such 30 calendar day period. If any such claim is made by the Internal Revenue
Service and the Company requests the Executive to contest such claim, but does not advance the
amount of such claim to the Executive for purposes of such contest, the Company shall pay to the
Executive the amount of any Gross-Up Payment owed to the Executive, but not previously paid under
the provisions of Section 7.1(b), within 5 business days of a Final Determination of the liability
of the Executive for such Excise Tax. For purposes of this Agreement, a “Final Determination”
shall be deemed to occur with respect to a claim when (i) there is a decision, judgment, decree or
other order by any court of competent jurisdiction, which decision, judgment, decree or other order
has become final, i.e., all allowable appeals pursuant to this section have been exhausted by
either party to the action, (ii) there is a closing agreement made under Section 7121 of the Code,
or (iii) the time for instituting a claim for refund has expired, or if a claim was filed, the time
for instituting suit with respect thereto has expired.



If, after the receipt by the Executive of an amount advanced by the Company pursuant to this
section, the Executive becomes entitled to receive any refund with respect to such claim, the
Executive shall (subject to the Company’s complying with the requirements of this Section) promptly
pay to the Company the amount of such refund (together with any interest paid or credited thereon
after taxes applicable thereto). If, after the receipt by the Executive of an amount advanced by
the Company pursuant to this Section, a determination is made by the Internal Revenue Service that
the Executive is not entitled to any refund with respect to such claim and the Company does not
notify the Executive in writing of its intent to contest such denial of refund prior to the
expiration of 30 calendar days after such determination, then such advance shall be forgiven and
shall not be required to be repaid and the amount of such advance shall offset, to the extent
thereof, the amount of Gross-Up Payment required to be paid.



7.2 No Set-Off. There shall be no set-off or counterclaim against, or delay in, any
payment of severance benefits by the Company to the Executive provided for in this Agreement with
respect to any claim against or debt or obligation of the Executive, whether arising hereunder or
otherwise except for insurance benefits as provided in Sections 5.5(c) or 5.7(e).



7.3 No Mitigation Obligation. The Executive’s benefits hereunder shall be payable to
him as severance pay in consideration of his services under this Agreement. The Company hereby
acknowledges that it will be difficult, and may be impossible, for the Executive to find reasonably
comparable employment following the Termination Date. Accordingly, the parties hereto expressly
agree that the payment of the severance benefits by the Company to the Executive in accordance with
the terms of this Agreement will be liquidated damages, and that the Executive shall not be
required to mitigate the amount of any payment provided for in this Agreement by seeking other
employment or otherwise, nor shall any profits, income, earnings or other benefits from any source
whatever create any mitigation, offset, reduction or any other obligation on the part of the
Executive hereunder or otherwise.



7.4 Enforcement Costs. The Company is aware that, upon the occurrence of a Change in
Control, the Board of Directors or a shareholder of the Company, or the Company’s successor in
interest, may then cause or attempt to cause the Company to refuse to comply with its obligations
under this Agreement, or may cause or attempt to cause the Company to institute, or may institute
litigation seeking to have this Agreement declared unenforceable, or may take, or attempt to take,
other action to deny the Executive the benefits intended under this Agreement. In these
circumstances, the purpose of this Agreement could be frustrated. It is the intent of the Company
that the Executive not be required to incur the expenses associated with the enforcement of his
rights under this Agreement by litigation or other legal action, nor be bound to negotiate any
settlement of his rights hereunder under threat of incurring such expenses because the cost and
expense thereof would substantially detract from the benefits intended to be extended to the
Executive hereunder. Accordingly, if following a Change in Control the Executive should conclude
in good faith that the Company has failed 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 litigation or other legal action designed to
deny, diminish or to recover from the Executive the benefits intended to be provided to the
Executive hereunder, the Company irrevocably authorizes the Executive from time to time to retain
legal counsel of his choice at the expense of the Company to represent the Executive in connection
with the initiation or defense of any litigation or other legal action, whether by or against the
Company or any director, officer, stockholder or other person affiliated with the Company. The
reasonable fees and expenses of counsel selected from time to time by the Executive as provided
herein shall be paid or reimbursed to the Executive by the Company on a regular, periodic basis
upon presentation by the Executive of a statement or statements prepared by his counsel in
accordance with its customary practices. In any action involving this Agreement, the Executive
shall be entitled to prejudgment interest on any amounts found to be due him as of the date such
amounts would have been payable to the Executive pursuant to this Agreement at an annual rate of
interest of 10%.



7.5 Arbitration. The Company and the Executive hereby agree that certain issues
and/or disagreements arising in connection with this Agreement shall be settled by arbitration.
Accordingly, in the event the Company or the Executive believes that the other party has violated
any provision of this Agreement, including but not limited to any action by the Company which the
Executive believes would entitle the Executive to terminate his employment with severance benefits
in accordance with Article V hereof, the party alleging such violation shall notify the other party
in writing of such alleged violation. In the event the party receiving such violation notice
disagrees with the position taken by the other party in such written notice, the recipient of the
violation notice may, within 20 days of receipt of such written notice, notify the other party, in
writing, that it has elected to submit such disagreement to arbitration. Arbitration of such
dispute shall be settled in Dallas, Texas, in accordance with the then applicable rules of the
American Arbitration Association. The Company shall bear all costs associated with such
arbitration. In the event the party receiving a violation notice does not elect to submit any
issue or disagreement to arbitration within 10 days of its receipt of the written violation notice,
such party will be deemed to have accepted the position taken in such written notice.
Notwithstanding anything herein to the contrary, neither the Company nor the Executive shall be
required to arbitrate the basis of any involuntary termination of the Executive’s employment with
the Company by the Company or its successor.



7.6 Employment Rights. Nothing expressed or implied in this Agreement shall create
any right or duty on the part of the Company or the Executive to have the Executive remain in the
employment of the Company prior to any Change in Control, provided, however, that any event which
would constitute an Executive Termination Event had a Change in Control occurred following the
commencement of active negotiations with a third party (which negotiations are evidenced by the
delivery of evaluation material) that ultimately results in a Change in Control shall be deemed to
be a termination or removal of the Executive by the Company other than for Cause after a Change in
Control for purposes of this Agreement.



7.7 Benefit of Agreement; Assignment; Beneficiary. This Agreement shall inure to the
benefit of and be binding upon the Company and its successors and assigns, including, without
limitation, any corporation or person which may acquire all or substantially all of the Company’s
assets or business, or with or into which the Company may be consolidated or merged. This
Agreement shall also inure to the benefit of, and be enforceable by, the Executive and his personal
or legal representatives, executors, administrators, successors, heirs, distributees, devisees and
legatees. If the Executive should die while any amount would still be payable to the Executive
hereunder if he had continued to live, all such amounts shall be paid in accordance with the terms
of this Agreement to the Executive’s beneficiary, devisee, legatee or other designee, or if there
is no such designee, to the Executive’s estate.



7.8 Notices. Any notice required or permitted hereunder shall be in writing and shall
be sufficiently given if personally delivered or if sent by telegram or telex or by registered or
certified mail, postage prepaid, with return receipt requested, addressed:



(a) in the case of the Company, La Quinta Corporation, 909 Hidden Ridge, Suite 600, Irving,
Texas 75038, Attention: General Counsel; and



(b) in the case of the Executive, to Steven A. Schumm, C/O La Quinta Corporation 909 Hidden
Ridge, Suite 600, Irving, Texas 75038, or such other address as the Executive may specify in
writing to the Company.



7.9 Entire Agreement; Amendment. This Agreement contains the entire agreement of the
parties hereto with respect to the terms and conditions of the Executive’s employment during the
Term and supersedes any and all prior agreements and understandings, whether written or oral,
between the parties hereto with respect to compensation due for services rendered hereunder. This
Agreement may not be changed or modified except by an instrument in writing signed by both of the
parties hereto.



7.10 Waiver. The waiver by either party of a breach of any provision of this
Agreement shall not operate or be construed as a continuing waiver or as a consent to or waiver of
any subsequent breach hereof.



7.11 Headings. The article and section headings herein are for convenience of
reference only, do not constitute a part of this Agreement and shall not be deemed to limit or
affect any of the provisions hereof.



7.12 Governing Law. This Agreement shall be governed by, and construed and
interpreted in accordance with, the internal laws of the State of Texas without reference to the
principles of conflict of laws.



7.13 Agreement to Take Actions. Each party hereto shall execute and deliver such
documents, certificates, agreements and other instruments, and shall take such other actions, as
may be reasonably necessary or desirable in order to perform his or its obligations under this
Agreement or to effectuate the purposes hereof.



7.14 Survivorship. The respective rights and obligations of the parties hereunder
shall survive any termination of this Agreement to the extent necessary for the intended
preservation of the rights and obligations under this Agreement.



7.15 Severability. 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.



7.16 Counterparts. This Agreement may be executed in one or more counterparts, each
of which shall be deemed to be an original but all of which together will constitute one and the
same instrument.



7.17 Corporate Authorization. The Company hereby represents that the execution,
delivery and performance by the Company of this Agreement are within the corporate powers of the
Company, and that the Chief Executive Officer has the requisite authority to bind the Company
hereby.



7.18 Third Party Agreements and Rights. The Executive represents to the Company that
the Executive’s execution of this Agreement, the Executive’s employment with the Company and the
performance of the Executive’s duties for the Company will not violate any obligations the
Executive may have to any employer, former employer or other party, and the Executive does not
possess tangible embodiments of non-public information belonging to or obtained from any such
previous employment or other party. Further, the Executive represents and acknowledges that to the
extent that he is under any continuing obligation under any agreement with any employer, former
employer or other party with regard to non-solicitation, non-inducement and confidentiality, he
shall not violate any such obligation.



7.19 Litigation and Regulatory Cooperation. During and after the Executive’s
employment, the Executive shall reasonably cooperate with the Company in the defense or prosecution
of any claims or actions now in existence or which may be brought in the future against or on
behalf of the Company which relate to events or occurrences that transpired while the Executive was
employed by the Company; provided, however, that such cooperation shall not materially and
adversely affect the Executive or expose the Executive to an increased probability of civil or
criminal litigation. The Executive’s cooperation in connection with such claims or actions shall
include, but not be limited to, being available to meet with counsel to prepare for discovery or
trial and to act as a witness on behalf of the Company at mutually convenient times. During and
after the Executive’s employment, the Executive also shall cooperate fully with the Company in
connection with any investigation or review of any federal, state or local regulatory authority as
any such investigation or review relates to events or occurrences that transpired while the
Executive was employed by the Company. The Company shall also provide the Executive with
compensation on an hourly basis (to be derived from his then current or last applicable level of
base compensation, as paid by the Company) for requested litigation and regulatory cooperation that
occurs after his termination of employment, and reimburse the Executive for all costs and expenses
incurred in connection with his performance under this Section 7.19, including, but not limited to,
reasonable attorneys’ fees and costs.



IN WITNESS WHEREOF, each of the parties hereto has duly executed this Agreement as of the date
first above written.



LA QUINTA CORPORATION



By: /s/ Francis W. Cash


Francis W. Cash

Chairman of the Board and Chief Executive Officer



EXECUTIVE



/s/ Steven A. Schumm


Steven A. Schumm