MERGER SEVERANCE AGREEMENT
THIS MERGER SEVERANCE AGREEMENT (this "Agreement") is made as of this 1st
day of September, 1997, between PROMUS HOTEL CORPORATION (the "Company") and
(the "Executive").
RECITALS
WHEREAS, the Company considers it essential to the best interest of its
stockholders to xxxxxx the continuous employment of key management personnel,
and believes that the possibility of a reorganization event of the Company and
the uncertainty and questions which it may raise among management may result in
the departure or distraction of management personnel to the detriment of the
Company and its stockholders; and
WHEREAS, the Board of Directors has determined that appropriate steps
should be taken to reinforce and encourage the continued attention and
dedication of members of the Company's management, including the Executive, to
their assigned duties without distraction in the face of potentially disturbing
circumstances arising from the possibility of a reorganization event of the
Company;
NOW, THEREFORE, in consideration of the mutual premises set forth below and
for other good and valuable consideration, in order to induce the Executive to
remain in the employ of the Company, the Company agrees that the Executive shall
receive the severance benefits set forth in this agreement (this "Agreement") in
the event his employment with the Company terminates subsequent to a
"Reorganization Event" of the Company under the circumstances described below.
AGREEMENT
1. DEFINITIONS
The following terms used in this Agreement shall have the meanings given
below:
(a) "ANNUAL BASE SALARY" shall mean the Executive's gross annual
salary before any deductions, exclusions or any deferrals or contributions under
any Company plan or program, but excluding bonuses, incentive compensation,
employee benefits or any other non-salary form of compensation (determined
without regard to any reduction in Annual Base Salary that results in "Good
Reason" termination).
(b) "BOARD" shall mean the Board of Directors of the Company.
(c) "BONUS AMOUNT" shall mean the greater of (i) the dollar amount of
the annual bonus that would be payable to the Executive under the Company's
annual bonus plan applicable to the Executive, assuming payment at the target
level for the Executive's then current salary grade level for the then-current
full fiscal year (determined without regard to any reduction in target bonus
percentage that results in "Good Reason" termination), or (ii) the dollar amount
of
the bonus paid or payable to the Executive under the Company's annual bonus
plan for the most recently completed fiscal year under such plan.
Notwithstanding the foregoing, if the Executive is a participant in the
Company's Development Bonus Plan (or any successor plan), the "Bonus Amount"
shall mean the greater of (i) the dollar amount of the annual bonus that
would be payable at the Executive's then current grade level under the
Company's Annual Management Bonus Plan (as opposed to the Development Bonus
Plan), or (ii) the dollar amount of the bonus actually paid to the Executive
during the most recently completed fiscal year under the Company's
Development Bonus Plan, subject to a maximum amount equal to the target bonus
under the Company's Annual Management Bonus Plan at the Executive's salary
grade level for such plan year.
(d) "CODE" shall mean the Internal Revenue Code of 1986, as amended.
(e) "COMPANY" shall mean Promus Hotel Corporation, or any successor
corporation that assumes this Agreement under Section 14 hereof or otherwise
becomes bound by this Agreement.
(f) "COVERED TERMINATION" shall have the meaning given in Section 3
hereof.
(g) "DATE OF TERMINATION" shall mean the effective date of the
Executive's Covered Termination pursuant to Section 3 hereof.
(h) "DISABILITY" shall mean the absence of the Executive from the
full-time performance of his duties with the Company for six consecutive months
as a result of incapacity due to physical or mental illness, provided the
Company has given 30-day advance written notice to the Executive and he has not
returned to the full-time performance of his duties.
(i) "REORGANIZATION EVENT" shall mean the occurrence of any of the
following after the date hereof:
(i) any "person" (as such term is used in Section 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
other than an employee benefit plan of the Company, or a trustee or other
fiduciary holding securities under an employee benefit plan of the Company,
becomes a "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of 25% or more of the Company's then outstanding voting
securities carrying the right to vote in elections of persons to the Board,
regardless of comparative voting power of such voting securities, and regardless
of whether or not the Board shall have approved such Reorganization Event; or
(ii) during any period of two (2) consecutive years (not
including any period prior to the execution of this Agreement), individuals who
at the beginning of such period constitute the Board (the "Incumbent Board") and
any other new director (other than a director designated by a person who shall
have entered into an agreement with the Company to effect a transaction
described in clauses (i) or (iii) of this subsection) whose election by the
Board or nomination for election by the Company's stockholders was approved by a
vote of at least two-thirds (2/3) of the directors then still in office who
either were directors at the beginning of the
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period or whose election or nomination for election was previously so
approved (each such new director being considered a member of the "Incumbent
Board"), cease for any reason to constitute a majority thereof; or
(iii) the holders of securities of the Company entitled to
vote thereon approve of the following:
(A) a merger or consolidation of the Company with any other
corporation regardless of which entity is the surviving company, other than a
merger or consolidation which would result in the voting securities of the
Company carrying the right to vote in elections of persons to the board
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least 66 2/3% of the Company's then-outstanding voting
securities carrying the right to vote in elections of persons to the board or
such securities of such surviving entity outstanding immediately after such
merger or consolidation, or
(B) a plan of complete liquidation of the Company or an agreement
for the sale or disposition by the Company of all or substantially all of the
Company's assets.
Notwithstanding the definition of "Reorganization Event" of the Company as
set forth in this Agreement, the Board shall have full and final authority,
which shall be exercised in its discretion, to determine conclusively whether a
Reorganization Event of the Company has occurred, and the date of the occurrence
of such Reorganization Event and any incidental matters relating thereto, with
respect to a transaction or series of transactions which have resulted or will
result in a substantial portion of the assets or business of the Company (as
determined immediately prior to the transaction or series of transactions by the
Board in its sole discretion which determination shall be final and conclusive)
being held by a corporation at least 66 2/3% of whose voting securities are
held, immediately following such transaction or series of transactions, by
holders of the voting securities of the Company (determined immediately prior to
such transaction or series of transactions). The Board may exercise such
discretionary authority without regard to whether one or more of the
transactions in such series of transactions would otherwise constitute a
Reorganization Event of the Company under the definition set forth in this
Agreement. It is hereby understood and agreed that the consummation of the
business combination contemplated by the Agreement and Plan of Merger dated as
of September 1, 1997 among Doubletree Corporation, the Company and Parent
Holding Corp. shall constitute a Reorganization Event for purposes of this
Agreement.
2. TERM OF AGREEMENT
This Agreement shall commence on the date first written above and shall
continue in effect though December 31, 1998; provided, however, that commencing
on January 1, 1999 and each January 1 thereafter, the term of this Agreement
shall automatically be extended for one additional year unless, not later than
September 30 of the preceding year, the Company shall have given notice that it
does not wish to extend this Agreement; and provided further, that the incumbent
Board may terminate this agreement at any time prior to the consummation of the
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business combination contemplated by the above referenced Agreement and Plan of
Merger (the "Merger") if the Board finds that the consummation of the Merger is
no longer viable or in the best interest of the Company. Notwithstanding the
foregoing, no notice of non-renewal given by the Board shall be effective with
respect to a particular Reorganization Event if given after the occurrence of
the following events: (i) the Company enters into an agreement or letter of
intent, the consummation of which would result in such Reorganization Event,
(ii) any "person" makes a public announcement of its intention to take or
consider taking actions that would result in such Reorganization Event, or (iii)
any "person" (as defined above) initiates a tender offer which, if consummated,
would result in such Reorganization Event (it being understood that this
sentence shall not apply with respect to any unrelated Reorganization Event).
If a Reorganization Event of the Company shall have occurred during the original
or extended term of this Agreement, the term of this Agreement shall continue in
force and effect until the satisfaction of all of the Company's obligations to
the Executive as provided hereunder.
3. COVERED TERMINATION
(a) GENERAL. The Executive shall be treated as having incurred a
"Covered Termination" hereunder if the Company terminates his employment other
than for cause, or if the Executive gives notice of voluntary termination,
within the "Coverage Period" defined below. The Executive shall not be treated
as having incurred a Covered Termination if his employment is terminated as a
result of death or Disability. For purposes hereof, the Coverage Period shall
be a period of two (2) years following the consummation of a Reorganization
Event provided, however, that if the Reorganization Event is a result of the
proposed merger (the "Proposed Merger") between Doubletree Corporation and
Promus Hotel Corporation pursuant to the terms of an Agreement of Plan and
Merger dated September 1, 1997, the Coverage Period shall be the period
commencing on the consummation date of the Proposed Merger and expiring on the
later of (i) the second anniversary of such consummation date or (ii) the date
that is one year after Xxxxxxx X. Xxxxxxx ceases to be the Chairman of the Board
and Chief Executive Officer of Parent Holding Corp.
(b) TERMINATION FOR CAUSE. Termination by the Company of the
Executive's employment for "Cause" shall mean termination as a result of:
(i) the Executive engaging in willful gross neglect of his
duties with the Company, or the Executive's fraud or dishonesty in connection
with his performance of duties to the Company, in either case which has a
materially detrimental effect on the business or operations of the Company; or
(ii) the Executive's conviction by a court of competent
jurisdiction of any crime (or upon entering a plea of guilty or nolo contendere
to a charge of any crime) constituting a felony.
The Date of Termination for a termination for Cause shall be the date
specified by the Company.
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(c) TERMINATION BY EXECUTIVE. The Executive may give notice of his
intent to terminate his employment for any reason during the Covered Period, and
it shall be treated as a Covered Termination hereunder. The Executive shall
provide the Company with 30-days advance written notice, and the Date of
Termination shall be the expiration of such 30-day period.
4. SEVERANCE PAYMENT
The amount of the severance payment to be paid to the Executive upon
Covered Termination shall be the amount determined by multiplying 3.00 times the
sum of:
(a) the Executive's Annual Base Salary as in effect immediately prior
to the Date of Termination; plus,
(b) the Executive's Bonus Amount applicable for the fiscal year in
which the Date of Termination occurs; plus,
(c) a benefit allowance of 25% of the Executive's Annual Base Salary
as in effect immediately prior to the Date of Termination.
5. OTHER SEVERANCE BENEFITS
In addition to the severance payment provided under Section 4 hereof, the
Executive shall be entitled to the following benefits and other rights in the
event of the his Covered Termination:
(a) ACCRUED RIGHTS. The Executive shall be entitled to the following
payments and benefits in respect of accrued compensation rights upon a Covered
Termination, in addition to other rights provided under this Agreement:
(i) payment of any accrued but unpaid Annual Base Salary through
the Date of Termination and payment of any annual bonus (for any completed
fiscal year) that is awarded subsequent to the Date of Termination by the
Company in its sole discretion under the terms of the annual bonus plan then in
effect.
(ii) payment of a pro-rata portion of the Bonus Amount for the
fiscal year of the Company in which the Covered Termination occurs, based on the
number of days of such year prior to the Date of Termination;
(iii) all benefits and rights accrued under the employee
benefit plans, fringe benefits programs and payroll practices of the Company in
accordance with their terms (including, without limitations, employee pension,
employee welfare, incentive bonus, stock incentive plans, and any accrued
vacation or sick pay time); and
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(iv) a payment equal to the forfeited portion of the Executive's
account balance under the Company's tax qualified deferred compensation plan as
a result of failure to satisfy vesting requirements due to a Covered
Termination.
(b) OUTPLACEMENT SERVICES. Upon the occurrence of a Covered
Termination, the Executive shall be provided, at the Company's sole expense,
with professional outplacement services consistent with the Executive's duties
or profession and of a type and level customary for persons in his position, as
selected by the Company, subject to reasonable limitations established by the
Company on a uniform basis for similarly situated executives as to duration and
dollar amounts.
(c) Equity Rights.
(i) Upon the occurrence of a Covered Termination as a result of a
termination by the Company other than for "Cause," all outstanding awards of
stock options and restricted stock which have been granted to the Executive
shall immediately become fully vested and exercisable.
(ii) Upon the occurrence of a Covered Termination as a result of
the Executive's voluntary termination, all outstanding awards of stock options
and restricted stock that could otherwise have become exercisable (either based
on continued service or performance vesting standards) on or before the second
anniversary of the Date of Termination shall become vested and exercisable. Any
remaining unvested portion of the awards shall be forfeited on the Date of
Termination (unless otherwise provided in the applicable award agreement).
6. EXCISE TAX REIMBURSEMENT
In the event it shall be determined that any payment or distribution by the
Company or any other person or entity to or for the Executive's benefit, whether
paid or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise, or whether prior to or following the Covered Termination
in connection with, or arising out of, the Executive's employment with the
Company or a Reorganization Event of the Company (a "Payment") will be subject
to the tax (the "Excise Tax") imposed by section 4999 of the Code, the Company
shall pay to the Executive at the time specified in Section 7 hereof, an
additional amount (the "Gross-Up Payment") such that the net amount retained by
the Executive, after deduction of any Excise Tax on the Payments and any federal
(and state and local) income tax, employment tax, and Excise Tax upon the
payment provided for by this paragraph, shall be equal to the amount of the
Payments. For purposes of determining whether any of the Payments will be
subject to the Excise Tax and the amount of such Excise Tax the following will
apply:
(a) any payments or benefits received or to be received by the
Executive in connection with a Reorganization Event of the Company or his
termination of employment (whether pursuant to the terms of this Agreement or
any other plan, arrangement or agreement with the Company, any person whose
actions result in a Reorganization Event of the Company or any person affiliated
with the Company or such person) shall be treated as "parachute
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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's independent auditors and acceptable to the
Executive such other payments or benefits (in whole or in part) do not
constitute parachute payments, 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 in excess of the base
amount within the meaning of section 280G(b)(3) of the Code, or are otherwise
not subject to the Excise Tax; and
(b) the value of any non-cash benefits or any deferred payment or
benefit shall be determined by the Company's independent auditors in accordance
with proposed, temporary or final regulations under Sections 280G(d)(3) and (4)
of the Code or, in the absence of such regulations, in accordance with the
principles of Section 280G(d)(3) and (4) of the Code. For purposes of
determining the amount of the Gross-Up Payment, the Executive shall be deemed to
pay federal income taxes at the highest marginal rate of federal income taxation
in the calendar year in which the Gross-Up Payment is to be made and state and
local income taxes at the highest marginal rate of taxation in the state and
locality of the Executive's residence on the Date of Termination, net of the
maximum reduction in federal income taxes which could be obtained from deduction
of such state and local taxes. In the event that the amount of Excise Tax
attributable to Payments is subsequently determined to be less than the amount
taken into account hereunder at the time of termination of the Executive's
employment, he shall repay to the Company at the time that the amount of such
reduction in Excise Tax is finally determined the portion of the Gross-Up
Payment attributable to such reduction (plus the portion of the Gross-Up Payment
attributable to the Excise Tax, employment tax and federal (and state and local)
income tax imposed on the Gross-Up Payment being repaid by the Executive if such
repayment results in a reduction in Excise Tax and/or a federal (and state and
local) income tax deduction) plus interest on the amount of such repayment at
the rate provided in section 1274(b)(2) (B) of the Code. In the event that the
Excise Tax attributable to Payments is determined to exceed the amount taken
into account hereunder at the time of the termination of the Executive's
employment (including by reason of any payment the existence or amount of which
cannot be determined at the time of the Gross-Up Payment), the Company shall
make an additional gross-up payment in respect of such excess (plus any interest
payable with respect to such excess) at the time that the amount of such excess
is finally determined.
7. METHOD OF PAYMENT
The payments provided for in Sections 4, 5 and 6 hereof shall be made in a
cash lump-sum payment, net of any required tax withholding, upon the later of
(i) the fifth (5th) business day following the Date of Termination or (ii) the
expiration of the seven (7) day revocation period applicable under the release
of claims referred to in Section 10 hereof; provided, however, that if the
amounts of such payments cannot be finally determined on or before such day, the
Company shall pay on such day an estimate, as determined in good faith by the
Company, of the minimum amount of such payments. Any payment required under
Sections 4, 5 or 6 or any other provision of this Agreement that is not made in
a timely manner shall bear interest at a rate equal to one-hundred twenty (120)
percent of the monthly compounded applicable federal rate, as in
7
effect under Section 1274(d) of the Code for the month in which the payment
is required to be made. 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 Company payable on the fifth day after
demand by the Company with interest at the rate provided under Section
1274(d) of the Code until paid.
8. RELOCATION EXPENSES
The Executive shall be entitled to a reimbursement payment from the Company
equal to his reasonable moving expenses (determined in accordance with Company's
relocation policy) incurred in connection with the Executive's written
acceptance of a position with the Company requiring his relocation to a
metropolitan area, other than the metropolitan area where his office is located
at the time of the Reorganization Event of the Company. The Company shall pay
the Executive an additional payment in an amount such that the net amount
retained by the Executive after deduction for any federal, state, and local
income tax, employment tax and any excise tax on the reimbursement payment shall
equal the amount of the reimbursement payment.
9. NO MITIGATION OR OFFSET
The Executive shall not be required to mitigate the amount of any severance
payment or benefit provided under this Agreement by seeking other employment or
otherwise. The amount of any payment or benefit to which the Executive becomes
entitled hereunder shall not be reduced by any compensation earned by the
Executive as the result of employment by another employer, by retirement
benefits, nor by offset against any amount claimed to be owed to the Company by
reason of a claimed breach by the Executive of his obligations under Sections 11
or 12 hereof or otherwise (except that offset shall apply as specifically
provided in Section 8 hereof concerning relocation expenses and Section 21
hereof concerning other severance payments).
10. RELEASE OF CLAIMS
As conditions of Executive's entitlement to the severance payments and
benefits provided by this Agreement, the Executive shall be required to execute
and honor the terms of a waiver and release of claims against the Company
substantially in the form attached hereto as Exhibit A (as may be modified
consistent with the purposes of such waiver and release to reflect changes in
law following the date hereof).
11. RESTRICTION ON CONDUCT OF EXECUTIVE
(a) GENERAL. The Executive and the Company understand and agree that
the purpose of the provisions of this Section 11 is to protect legitimate
business interests of the Company, as more fully described below, and is not
intended to impair or infringe upon the Executive's right to work, earn a
living, or acquire and possess property from the fruits of his labor. The
Executive hereby acknowledges that the post-employment restrictions set forth in
this Section 11 are reasonable and that they do not, and will not, unduly impair
his ability to earn a living after the termination of his employment with the
Company. Therefore, subject to the
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limitations of reasonableness imposed by law upon restrictions set forth
herein, the Executive shall be subject to the restrictions set forth in this
Section 11.
(b) DEFINITIONS. The following capitalized terms used in this
Section 11 shall have the meanings assigned to them below, which definitions
shall apply to both the singular and the plural forms of such terms:
"CONFIDENTIAL INFORMATION" means any confidential or proprietary
information possessed by the Company without limitation, any confidential
"know-how", customer lists, details of client or consultant contracts,
current and anticipated customer requirements, pricing policies, price lists,
market studies, business plans, operational methods, marketing plans or
strategies, product development techniques or plans, computer software
programs (including object code and source code), data and documentation,
data base technologies, systems, structures and architectures, inventions and
ideas, past, current and planned research and development, compilations,
devices, methods, techniques, processes, financial information and data,
business acquisition plans, new personnel acquisition plans and any other
information that would constitute a trade secret under the common law or
statutory law of the State of Delaware.
"DETERMINATION DATE" means the date of termination of the Executive's
employment with the Company for any reason whatsoever or any earlier date
(during the Restricted Period) of an alleged breach of the Restrictive Covenants
by the Executive.
"PERSON" means any individual or any corporation, partnership, joint
venture, association or other entity or enterprise.
"PRINCIPAL OR REPRESENTATIVE" means a principal, owner, partner,
shareholder, joint venturer, member, trustee, director, officer, manager,
employee, agent, representative or consultant.
"PROTECTED EMPLOYEES" means employees of the Company or its affiliated
companies who were employed by the Company or its affiliated companies at any
time within six (6) months prior to the Determination Date.
"RESTRICTED PERIOD" means the period of the Executive's employment with the
Company plus a period extending two (2) years from the date of termination of
employment.
"RESTRICTIVE COVENANTS" means the restrictive covenants contained in
Section 11(c) hereof.
(c) RESTRICTIVE COVENANTS.
(i) RESTRICTION ON DISCLOSURE AND USE OF CONFIDENTIAL
INFORMATION. The Executive understands and agrees that the Confidential
Information constitutes a valuable asset of the Company and its affiliated
entities, and may not be converted to the Executive's own use. Accordingly, the
Executive hereby agrees that the Executive shall not, directly or indirectly, at
any time during the Restricted Period reveal, divulge or disclose to any Person
not expressly
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authorized by the Company any Confidential Information, and the
Executive shall not, directly or indirectly, at any time during the Restricted
Period use or make use of any Confidential Information in connection with any
business activity other than that of the Company. The parties acknowledge and
agree that this Agreement is not intended to, and does not, alter either the
Company's rights or the Executive's obligations under any state or federal
statutory or common law regarding trade secrets and unfair trade practices.
(ii) NONSOLICITATION OF PROTECTED EMPLOYEES. The Executive
understands and agrees that the relationship between the Company and each of its
Protected Employees constitutes a valuable asset of the Company and may not be
converted to the Executive's own use. Accordingly, the Executive hereby agrees
that during the Restricted Period the Executive shall not directly or indirectly
on the Executive's own behalf or as a Principal or Representative of any Person
solicit any Protected Employee to terminate his or her employment with the
Company.
(iii) NONINTERFERENCE WITH COMPANY OPPORTUNITIES. The
Executive understands and agrees that all hotel development opportunities with
which he is involved during his employment with the Company constitute valuable
assets of the Company and its affiliated entities, and may not be converted to
Executive's own use. Accordingly, the Executive hereby agrees that during the
Restricted Period the Executive shall not directly or indirectly on the
Executive's own behalf or as a Principal or Representative of any Person,
interfere with, solicit, pursue, or in any way make use of any such hotel
development opportunities.
(d) EXCEPTIONS FROM DISCLOSURE RESTRICTIONS. Anything herein to the
contrary notwithstanding, the Executive shall not be restricted from disclosing
or using Confidential Information that: (i) is or becomes generally available to
the public other than as a result of an unauthorized disclosure by the Executive
or his agent; (ii) becomes available to the Executive in a manner that is not in
contravention of applicable law from a source (other than the Company or its
affiliated entities or one of its or their officers, employees, agents or
representative) that is not bound by a confidential relationship with the
Company or its affiliated entities or by a confidentiality or other similar
agreement; (iii) was known to the Executive on a non-confidential basis and not
in contravention of applicable law or a confidentiality or other similar
agreement before its disclosure to the Executive by the Company or its
affiliated entities or one of its or their officers, employees, agents or
representatives; or (iv) is required to be disclosed by law, court order or
other legal process; provided, however, that in the event disclosure is required
by law, the Executive shall provide the Company with prompt notice of such
requirement so that the Company may seek an appropriate protective order prior
to any such required disclosure by the Executive.
(e) ENFORCEMENT OF THE RESTRICTIVE COVENANTS.
(i) RIGHTS AND REMEDIES UPON BREACH. In the event the Executive
breaches, or threatens to commit a breach of, any of the provisions of the
Restrictive Covenants, the Company shall have the right and remedy to enjoin,
preliminarily and permanently, the Executive from violating or threatening to
violate the Restrictive Covenants and to have the Restrictive Covenants
specifically enforced by any court of competent jurisdiction, it being
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agreed that any breach or threatened breach of the Restrictive Covenants
would cause irreparable injury to the Company and that money damages would
not provide an adequate remedy to the Company. The rights referred to in the
preceding sentence shall be independent of any others and severally
enforceable, and shall be in addition to, and not in lieu of, any other
rights and remedies available to the Company at law or in equity.
(ii) SEVERABILITY OF COVENANTS. The Executive acknowledges and
agrees that the Restrictive Covenants are reasonable and valid in time and space
and in all other respects. If any court determines that any Restrictive
Covenants, or any part thereof, is invalid or unenforceable, the remainder of
the Restrictive Covenants shall not thereby be affected and shall be given full
effect, without regard to the invalid portions.
12. COOPERATION IN FUTURE MATTERS
The Executive hereby agrees that, for a period of three (3) years following
his Date of Termination, he shall cooperate with the Company's reasonable
requests relating to matters that pertain to the Executive's employment by the
Company, including, without limitation, providing information or limited
consultation as to such matters, participating in legal proceedings,
investigations or audits on behalf of the Company, or otherwise making himself
reasonably available to the Company for other related purposes. Any such
cooperation shall be performed at times scheduled taking into consideration the
Executive's other commitments, and the Executive shall be compensated at a
reasonable hourly or per diem rate to be agreed by the parties to the extent
such cooperation is required on more than an occasional and limited basis. The
Executive shall not be required to perform such cooperation to the extent it
conflicts with any requirements of exclusivity of service for another employer
or otherwise, nor in any manner that in the good faith belief of the Executive
would conflict with his rights under or ability to enforce this Agreement.
13. INDEMNIFICATION
(a) Following the Date of Termination, the Company agrees that it
will, indemnify and hold harmless the Executive, against any costs or expenses
(including attorneys' fees), judgments, fines, losses, claims, damages,
liabilities or amounts paid in settlement incurred in connection with any claim,
action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of or pertaining to matters
existing or occurring at or prior to the Date of Termination, whether asserted
or claimed prior to, at or after the Date of Termination, to the fullest extent
that the Company would have been permitted under Delaware law and its
certificate of incorporation or bylaws in effect on the date hereof to indemnify
the Executive (and the Company shall also advance expenses as incurred to the
fullest extent permitted under applicable law, provided the Executive provides
an undertaking to repay advances if it is ultimately determined that the
Executive is not entitled to indemnification).
(b) For a period of six years after the Date of Termination, the
Company shall maintain (to the extent available in the market) in effect a
director's and officer's liability insurance policy covering with coverage in
amount and scope at least as favorable as the
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Company's existing coverage on the Date of Termination; provided that in no
event shall the Company be required to expend in the aggregate in excess of
200% of the annual premium paid by the Company for such coverage as of the
Date of Termination; and if such premium would at any time exceed 200% of the
such amount, then the Company shall maintain insurance policies which provide
the maximum and best coverage available at an annual premium equal to 200% of
such amount.
(c) The provisions of this Section 13 are intended to be an addition
to the rights otherwise available to the Executive by law, charter, statute,
bylaw or separate agreement between the Company and the Executive. The Company
shall continue to honor any indemnification agreement between the Company and
the Executive entered into prior to the Date of Termination in accordance with
the terms thereof.
14. SUCCESSORS, BINDING AGREEMENT.
(a) The Company will 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 Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. Failure of the Company to obtain such assumption and agreement
prior to the effectiveness of any such succession shall be a breach of this
Agreement and shall entitle the Executive to compensation from the Company in
the same amount and on the same terms as the Executive would be entitled to
hereunder if he terminated his employment for Good Reason following a
Reorganization Event of the Company, except that for purposes of implementing
the foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. As used in this Agreement, "Company" shall mean
the Company as herein before defined and any successor to its business and/or
assets as aforesaid which assumes and agrees to perform this Agreement by
operation of law, or otherwise.
(b) This Agreement shall inure to the benefit of and be enforceable
by the Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devises and legatees. If the Executive should
die while any amount remains payable to him hereunder, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the Executive's devisee, legatee or other designee or, if there is
no such designee, to the Executive's estate.
15. NOTICE
Any notice required or permitted to be given by this Agreement shall be
effective only if in writing, delivered personally against receipt therefor or
mailed by certified or registered mail, return receipt requested, to the parties
at the addresses hereinafter set forth, or at such other places that either
party may designate by notice to the other.
Notice to the Company shall be addressed to:
Promus Hotel Corporation
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000 Xxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxxxx 00000
Attention: General Counsel
Notice to the Executive shall be addressed to him at the business address
of the Company where the Executive is employed, with a copy to him at his home
address as follows:
All such notices shall be deemed effectively given five (5) days after the
same has been deposited in a post box under the exclusive control of the United
States Postal Service.
16. 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 the
Executive and such officer of the Company 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 agreement 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. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of Delaware. 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.
17. COUNTERPARTS
This Agreement may be executed in several counterparts, each of which shall
be deemed to be an original but all of which together will constitute one and
the same instrument.
18. ARBITRATION
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration in Memphis, Tennessee
accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any court having
jurisdiction.
19. PAYMENT OF LEGAL FEES
The Company shall pay all reasonable legal fees and expenses incurred by
the Executive in connection with any arbitration (or other proceeding whether or
not instituted by the Company or the Executive), relating to the interpretation
or enforcement of any provision of this Agreement (including any action seeking
to obtain or enforce any right or benefit provided by this Agreement) or in
connection with any tax audit or proceeding relating to the application of
Section 4999 of the Code to any payment or benefit provided by the Company.
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20. NO RESTRICTIONS ON EMPLOYMENT RIGHTS
Nothing in this Agreement shall confer on the Executive any right to
continue in the employ of the Company or shall interfere with or restrict in any
way the rights of the Company, which are hereby expressly reserved, to discharge
the Executive at any time for any reason whatsoever, with or without Cause,
subject to the requirements of this Agreement. Nothing in this Agreement shall
restrict the right of the Executive to terminate his employment with the Company
at any time for any reason whatsoever, with or without Good Reason.
21. OTHER SEVERANCE AGREEMENTS
This Agreement is not intended to, and shall not, in any way supersede,
amend or affect the Executive's Severance Agreement, dated as of June 30, 1995
with the Company (the "Existing Severance Agreement"), as the Existing Severance
Agreement is being amended concurrently herewith. However, in no event shall
the Executive receive payments or other benefits under both the Existing
Severance Agreement and this Agreement. In the event that the Executive becomes
entitled to receive severance payment or other benefits under both the Existing
Severance Agreement and under this Agreement, the Executive may elect which
agreement shall apply for all purposes, including payments and benefits (but,
e.g., may not elect one particular benefit under one agreement and another
benefit under the other agreement) by filing a written election with the Company
at any time before the Executive receives his first severance payment under
either of such agreements.
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22. HOSTILE TRANSACTION PROVISION
Notwithstanding anything elsewhere in this Agreement to the contrary:
(a) In the event of consummation of a Hostile Transaction, the provisions
of Section 11 hereof and Section 12 hereof shall not be applicable to the
Executive.
(b) For purposes, hereof, a "Hostile Transaction" shall be any
Reorganization Event which has, at any time prior to the consummation thereof,
been designated such by a resolution of the incumbent Board.
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IN WITNESS WHEREOF, the parties have executed these presents as of the day
and year first above written.
PROMUS HOTEL CORPORATION
________________________________
Name: Xxxxx X. Lake
Title: Senior Vice President
EXECUTIVE
________________________________
Name:
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