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EXHIBIT 10.8
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EMPLOYMENT AGREEMENT
THIS AGREEMENT (the "Agreement"), made as of the 3rd day of December,
1998, between Promus Hotel Corporation, a Delaware corporation with its
executive offices at 000 Xxxxxxxxx Xxxx, Xxxxxxx, Xxxxxxxxx (the "Company") and
Xxxxxx X. Xxxxx, Xx. (the "Executive"). The Company and the Executive agree as
follows:
1. Effective Date and Term.
The Company desires to secure the services of the Executive and the
Executive is willing to execute this Agreement with respect to his employment.
The employment of the Executive shall become effective upon the appointment of
the Executive to the Board of Directors of the Company (the "Effective Date").
If the Board fails to appoint the Executive to the Board by December 11, 1998,
this entire Agreement shall be null and void ab initio. The Agreement will
expire three years after the Effective Date. This Agreement supersedes any
prior employment agreement, letter of intent, or other written or oral
communications between Executive and the Company.
2. Agreement of Employment.
The Company agrees to, and hereby does, employ the Executive, and the
Executive agrees to, and hereby does accept, employment by the Company, in a
full-time capacity, pursuant to the provisions of this Agreement and of the
By-Laws of the Company and subject to the control of the Board of Directors of
the Company (the "Board"). The Executive shall, effective as of the Effective
Date, hold the position of Chairman, President, and Chief Executive Officer of
the Company.
3. Executive's Obligations.
During the period of his service under this Agreement, the Executive
shall devote substantially all of his time and energies during business hours
to the supervision and conduct, faithfully and to the best of his ability, of
the business and affairs of the Company and to the furtherance of its
interests, and to such other duties as directed by the Board.
In connection with his employment, Executive agrees to spend at least
one million dollars ($1,000,000) in purchasing the Company's common stock
within 180 days after the Effective Date. The purchase will be in accordance
with applicable securities laws and the Company's policy against xxxxxxx
xxxxxxx. The Company will extend the 180 day time frame if necessary to comply
with such laws or policy.
4. Compensation.
(a) The Company shall pay to Executive a salary at the rate of
$700,000 per year, in equal bi-weekly installments; provided, however, that the
Human Resources Committee of the Board (the "Human Resources Committee") shall
in good faith review the salary of the
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Executive, on an annual basis, with a view to consideration of appropriate
merit increases in such salary. In addition, during the term of this Agreement,
the Executive shall be entitled to participate in incentive compensation
programs and to receive the employee benefits and perquisites that the Company
provides to other senior officers. Such benefits include, but are not limited
to (i) the annual bonus plan for which senior executives of the Company are
generally eligible (which is further described in sub-section (b) below), (ii)
awards under any stock option, restricted stock, or equity based incentive
compensation plan or arrangement maintained by the Company for which senior
executives of the Company are generally eligible (as further described in
sub-section (f) below), and (iii) all employee benefit plans, programs and
arrangements of the Company for which senior executives of the Company are
generally eligible.
(b) During the term of this Agreement, the Executive's target bonus
under the annual bonus plan shall be at least 60% of salary and the maximum
bonus will be 100% of salary. The Company guarantees payment of at least a
target bonus for the 1999 bonus plan year (which will be paid in the first
quarter of 2000).
(c) Executive will receive a signing bonus in the net amount after
deductions for federal, state and local income and payroll taxes as determined
by the chairman of the Human Resources Committee to compensate Executive for
individual and incidental expenses, including, but not limited to, a Memphis
country club or other club initiation fee, certain relocation expenses,
reimbursement for cost of canceled vacation, reasonable attorneys fees incurred
by Executive in the review and negotiation of this Agreement, and use of
company aircraft to travel to and from his current residence at his discretion
until permanently relocated in Memphis;
(d) Executive will receive relocation benefits under the Company's
relocation policy for executive officers which shall include temporary housing
allowance through June 1, 1999, which payments will be grossed up to cover
applicable taxes as described in the relocation policy;
(e) On the Effective Date of the Agreement, the Company will grant to
Executive as a signing bonus a total of 600,000 options to purchase the
Company's common stock. 500,000 of these options will be granted out of and
pursuant to the Company's Equity Participation Plan (the "Plan") and will have
an exercise price equal to the "Fair Market Value" on the date of the grant, as
defined in the Plan. 100,000 options will be outside of the Plan (but
administered according to the Plan's Administrative Regulations and registered
on Form S-8) and will have an exercise price of $50 per share. All such options
will have a ten year term and will vest in 3 equal annual installments
beginning one year after the Effective Date of the contract and vesting in full
on December 2, 2001. If Executive is terminated for Cause or quits without Good
Reason (as described in Section 11) or quits at the end of the contract term
without the approval of the Board as further described below, unvested options
are forfeited and options that are vested on the date of termination may be
exercised up to six months after termination or they will be forfeited. If
Executive is terminated without Cause, quits for Good Reason, dies or becomes
disabled as provided in Article 9 of the Agreement, or quits with the approval
of the Board at the end of the contract term, which approval shall not be
withheld provided Executive has identified a successor reasonably suitable to
the Board, all unvested options vest upon termination, and all options may be
exercised any time during the remaining term of the option. In all other
respects
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the terms and conditions of the options will be administered according to the
Plan and the Plan's Administrative Regulations.
(f) The Company will award a minimum of 200,000 options to Executive
as part of the Company's Annual Grants. These options will have a ten year term
and will vest in 4 equal annual installments beginning one year after the grant
date provided, however, the first grant shall vest in 4 equal annual
installments beginning on December 2, 1999. If Executive is terminated for
Cause or quits without Good Reason (as described in Section 11), unvested
options are forfeited and options that are vested on the date of termination
may be exercised up to six months after termination or they will be forfeited.
If Executive is terminated without Cause, quits for Good Reason, dies or
becomes disabled as provided in Article 9 of the Agreement, or quits with the
approval of the Board at the end of the contract term, which approval shall not
be withheld provided Executive has identified a successor reasonably suitable
to the Board, all unvested options vest upon termination and all options may be
exercised up to 3 years after termination. In all other respects the terms and
conditions of the options will be according to the Plan and the Plan's
Administrative Regulations.
(g) The Company will pay the following expenses on behalf of the
Executive (it being understood that Executive will be subject to income tax on
such payments where required by law or regulation): (i) the cost of Executive's
wife accompanying him on all business trips; and (ii) dues and assessments for
membership in a country or other club located in the greater Memphis
metropolitan area.
(h) Executive shall also be entitled to the benefits under a Severance
Agreement substantially in the form of the attached Exhibit A (the "Severance
Agreement"), which will continue in force subject to its terms and conditions
including the termination and amendment provisions thereof, and which will
affect the Company's obligations under this Agreement as described in Section
10 hereof.
(i) For security purposes, the Executive may use the Company's
aircraft for personal business for himself and his family. The Company will
also provide Executive, with appropriate security arrangements at his
residence.
5. Benefits After Termination from Employment.
After the date of Executive's termination from employment at any time
for any reason, he and his spouse will be entitled to participate at the
Company's expense for his and his spouse's lifetimes in the Company's group
health plans applicable to corporate executives, including family coverage as
applicable (medical, dental and vision coverage) or shall be provided with
coverage substantially equivalent to the benefits provided under such plans.
His group health insurance benefits after any termination of employment may be
changed by the Company but will not be less than those offered to corporate
officers of the Company, or if no such benefits are offered, then benefits
substantially equivalent to those offered by the Company on the Effective Date,
and he will be entitled to any later enhancements in such benefits. The
Corporation shall pay to the Executive at least annually an amount which shall
be sufficient on an after-tax basis to
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compensate the Executive and his spouse for all additional taxes incurred by
reason of income realized as a result of the continued coverage under this
Section 5 on a grossed-up basis at the highest marginal tax rate for
individuals.
6. Termination Without Cause or Resignation with Good Reason.
6.01 The Executive shall be treated as having incurred a "Covered
Termination" hereunder if his employment is terminated prior to the end of the
term (i) by the Company other than for Cause (as defined in Section 11.01
hereof) or (ii) by the Executive for Good Reason (as defined in Section 11.02
hereof). The Executive shall not be treated as having incurred a Covered
Termination if his employment is terminated as a result of death or disability,
as provided in Sections 8 and 9 hereof, respectively, or if this agreement
expires without being renewed.
6.02 (a) The amount of the severance payment to be paid to the
Executive upon a Covered Termination shall be the amount determined by
multiplying 3.00 times the sum of:
(1) the Executive's Annual Base Salary as in effect
immediately prior to the Date of Termination; plus,
(2) the Executive's Bonus Amount applicable for the
fiscal year in which the Date of Termination occurs;
plus,
(3) a benefit allowance of 25% of the Executive's
Annual Base Salary as in effect immediately prior to
the Date of Termination.
(b) In addition to the severance payment provided under
Paragraph 6.02(a) hereof, the Executive shall be entitled to the following
benefits and other rights in the event of his Covered Termination:
(1) 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 and annual bonus (for
any completed fiscal year) through the Date
of Termination;
(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; and
(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 limitation, employee
pension, employee welfare, incentive bonus,
stock incentive plans, and any accrued
vacation or sick pay time).
(iv) the benefits described in Section 5
hereof.
(2) Outplacement Services. Upon the occurrence of a
Covered Termination, the Executive shall be
provided, at the Company's sole
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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 as
to duration and dollar amounts.
6.03 For purposes of this Agreement:
(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) "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 the Executive is
employed by the Company throughout the term of the then current fiscal year and
assuming also payment at the Executive's target 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. For the
purposes hereof, the "Bonus Amount" shall not include any special bonuses paid
outside of the Company's generally applicable annual bonus plan.
7. Termination For Cause or Resignation Without Good Reason.
7.01 The Board will have the right to terminate Executive at any
time from his then current position for Cause (as defined in paragraph 11.01
herein).
7.02 If Executive is terminated for Cause or if he resigns his
position without Good Reason, then (i) all of his rights and benefits under
this Agreement shall thereupon terminate and his employment shall be deemed
terminated on the date of such termination or resignation except to the extent
provided in clause (iii) of this Section 7.02, (ii) he shall be entitled to all
accrued rights, payments and benefits vested or payable in respect of periods
ending on or before such date under the Company's plans and programs, and (iii)
he will be entitled to the other benefits as and to the extent described in
Sections 5 and 17 hereof.
8. Death.
In the event of Executive's death during his employment under this
Agreement, his salary and all rights and benefits under this Agreement will
terminate, (except for his accrued rights, payments, and benefits vested or
payable in respect of periods ending on or before his death). His estate and
beneficiary(ies) will receive the benefits they are entitled to under the terms
of the Company's benefit plans and programs by reason of a participant's death
during active employment and the applicable rights and benefits under the
Company's stock plans and the benefits described in Sections 4(e), 4(f), 5 and
17 hereof.
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9. Disability.
In the event of Executive's disability during his employment under
this Agreement, he will be entitled to apply at his option for the Company's
long term disability benefits. If he is accepted for such benefits, then the
terms and provisions of the Company's benefit plans and programs that are
applicable in the event of such disability of an employee shall apply in lieu
of the salary and benefits under this Agreement, except that he and his spouse
will be entitled to benefits described in Sections 4(e), 4(f), and 5 hereof. If
Executive is disabled so that he cannot perform his duties (as determined by
the Human Resources Committee), and if he does not apply for long term
disability benefits or is not accepted for such benefits, then the Board may
terminate his duties under this Agreement and, in such event, he will receive
two years' salary continuation together with all other benefits and the
benefits under Sections 4(e), 4(f), 5 hereof. However, during such period of
salary continuation for disability, Executive will not be eligible to
participate in the annual bonus plan nor will he be eligible to receive further
stock option or restricted stock grants or any other long-term incentive awards
except to the extent approved by the Human Resources Committee.
10. Severance Agreement.
Notwithstanding anything elsewhere in this Agreement to the contrary,
in the event that the Executive incurs a "Covered Termination" as defined in
his Severance Agreement within the time period specified therein, he will be
entitled to all the rights, payments and benefits provided under his Severance
Agreement in lieu of the rights and benefits that would otherwise apply under
this Agreement by virtue of such termination; provided, however that he will
also be entitled to the other benefits described in Sections 4(e), 4(f), 5
hereof.
11. Definitions of Cause and Good Reason.
11.01 Cause. Termination by the Company of the Executive's
employment for "Cause" shall mean termination as a result of:
(a) 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
(b) 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; provided that Executive shall have received written
notice of such failure or misconduct and shall have continued to engage in such
failure or misconduct after 30 days following receipt of such notice from the
Board, which notice specifically identifies the manner in which the Board
believes that Executive has engaged in such failure or misconduct. For
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purposes of this Paragraph, no act, or failure to act, on the Executive's part
shall be deemed "willful" unless done, or omitted to be done, by the Executive
not in good faith and without reasonable belief that the Executive's action or
omission was in the best interest of the Company. Notwithstanding the
foregoing, the Executive shall not be deemed to have been terminated for Cause
under Section 11.01(a) hereof 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 entire membership of the Board at a meeting
of the Board called and held for such purposes (after reasonable notice to the
Executive and an opportunity for him, together with his counsel, to be heard
before the Board), finding that in the good faith opinion of the Board the
Executive was guilty of failure to substantially perform his duties or of
misconduct in accordance with the first sentence of this paragraph, and of
continuing such failure to substantially perform his duties or misconduct as
aforesaid after notice from the Board, and specifying the particulars thereof
in detail.
11.02 Good Reason. "Good Reason" shall mean, without Executive's
express written consent, the occurrence of any of the following circumstances,
unless, in the case of subparagraphs (a), (b), (f), (g) or (h) such
circumstances are fully corrected prior to the date of termination specified in
the written notice given by Executive notifying the Company of his resignation
for Good Reason. Such notice must be given at least 30 days in advance of the
Date of Termination, and shall set forth in reasonable detail the facts and
circumstances claimed to provide the basis for the termination. Such notice may
be given at any time within two years following the occurrence of the events
that provide the basis for the termination, but not later than the date that is
30 days prior to the expiration of the then-current term of this Agreement.
(a) Any adverse change by the Company in the Executive's position or
title described in Section 2 hereof, whether or not any such change has been
approved by a majority of the members of the Board.
(b) The assignment to Executive of any duties inconsistent with his
status as President and Chief Executive Officer and Chairman of the Board of
the Company or a substantial adverse alteration in the nature or status of his
responsibilities;
(c) A reduction by the Company in his annual base salary of $700,000
or as the same may be increased from time to time pursuant to Section 4 hereof;
(d) The relocation of the Company's principal executive offices where
Executive is working to a location more than 50 miles from the location of such
offices on the date of this Agreement, or the Company's requiring Executive to
be based anywhere other than the location of the Company's principal offices
where Executive is working on the date of this Agreement except for required
travel on the Company's business to an extent substantially consistent with
Executive's present business travel obligations;
(e) The failure by the Company, without Executive's consent, to pay
to him any portion of his current compensation, except pursuant to a
compensation deferral elected by the Executive, or to pay to Executive any
portion of an installment of deferred compensation under
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any deferred compensation program of the Company within thirty days of the date
such compensation is due;
(f) Except as permitted by this Agreement, the failure by the Company
to continue in effect any compensation plan (or substitute or alternative plan)
in which Executive is entitled to participate under Section 4 hereof which is
material to Executive's total compensation, including, but not limited to, the
Company's annual bonus plan and equity incentive plan, or the failure by the
Company to continue Executive's participation therein on a basis that is
materially as favorable both in terms of the amount of benefits provided and
the level of Executive's participation relative to other participants at
Executive's grade level;
(g) The failure by the Company to continue to provide Executive with
benefits substantially similar to those enjoyed by him under the Company's
pension and deferred compensation plans, if any, except as required by law, and
the life insurance, medical, health and accident, and disability plans in which
Executive is entitled to participate under Section 4 hereof, or the taking of
any action by the Company which would directly or indirectly materially reduce
any of such benefits or deprive Executive of any material fringe benefit
enjoyed by Executive pursuant to Section 4 hereof, or the failure by the
Company to provide Executive with the number of paid vacation days to which
Executive is entitled; or
(h) The failure of the Company to obtain a satisfactory agreement
from any successor to assume and agree to perform this Agreement, as
contemplated in Section 19 hereof.
(i) The failure of the Company to amend or to maintain, as the case
may be, its Bylaws within 90 days of the Effective Date to provide as follows,
or any failure of the Company or the Board to comply with such Bylaw
provisions:
(1) The Company's Board of Directors will create two new
committees of the Board consisting of up to three non-management
directors, as follows: (i) the Nominating and Governing Committee,
which will handle nominations for the Company's Board of Directors and
issues of corporate governance, including recommendations or changes
to the company Policy on Composition and Function of the Board; and
(ii) the Finance Committee, which will handle large capital
transactions, as further described in the Company's Board Policy;
(2) In connection with the election of the Company's members
of the Board of Directors at the next three annual shareholders
meetings (beginning in 1999), if a vacancy occurs due to resignation,
retirement, or performance, the Executive will recommend nominees to
stand for election, and the Nominating and Governing Committee will
not unreasonably refuse to accept Executive's recommendation(s). The
Executive's sole remedy in the event the committee does not accept his
recommendation will be to have Good Reason to terminate under his
employment agreement.
(3) The Executive will have the right to recommend the
members of the two new Committees and other Committees of the Board,
and if the Board unreasonably refuses to
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accept his recommendations, the Executive's sole remedy will be to
have Good Reason to terminate his employment agreement.
(4) The Executive will have the right to name replacements
for up to three members of the Board of Directors who will be
resigning immediately after the Effective Date.
(j) The failure of the Company to adopt within 30 days after the
Effective Date amendments to the By-laws of the Company described in the draft
resolutions attached hereto as Exhibit B.
(k) The failure of the Board to establish, maintain, and enforce
Board policies reasonably acceptable to Executive.
Executive's right to terminate his employment pursuant to this
Agreement for Good Reason shall not be affected by Executive's incapacity due
to physical or mental illness. Executive's continued employment shall not
constitute consent to, or a waiver of rights with respect to, any circumstance
constituting Good Reason hereunder.
12. Excise Tax Reimbursement.
12.01 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 (as such term is defined in the
Severance Agreement) 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 13 below, 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
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
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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 applicable 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 (including 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 and/or penalties payable by the
Executive with respect to such excess) at the time that the amount of such
excess is finally determined.
13. Method of Payment.
The payments provided for in Sections 6 and 12 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 14 hereof. Any payment required under Sections
6 and 12 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 effect under Section
1274(d) of the Code for the month in which the payment is required to be made.
14. Release of Claims.
As conditions of Executive's entitlement to the severance payments and
benefits provided by Sections 6 and 12 this Agreement, the Executive shall be
required to execute after the covered
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termination and honor the terms of a waiver and release of claims against the
Company substantially in the form attached hereto as Exhibit C (as may be
modified consistent with the purposes of such waiver and release to reflect
changes in law following the date hereof).
15. Executive Covenants.
15.01 General. The Executive and the Company understand and agree
that the purpose of the provisions of this Section 15 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 15 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 limitations of reasonableness
imposed by law upon restrictions set forth herein, the Executive shall be
subject to the restrictions set forth in this Section 15.
15.02 Definitions. The following capitalized terms used in this
Section 15 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 by 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
15.03 hereof.
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15.03 Restrictive Covenants.
(a) 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
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.
(b) 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.
(c) 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 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,
interfere with, solicit, pursue, or in any way make use of any such hotel
development opportunities.
15.04 Exceptions from Disclosure Restrictions. Anything herein to
the contrary notwithstanding, the Executive shall not be restricted from
disclosing or using Confidential Information that: (a) is or becomes generally
available to the public other than as a result of an unauthorized disclosure by
the Executive or his agent; (b) 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 known by the Executive bound by a
confidential relationship with the Company or its affiliated entities or by a
confidentiality or other similar agreement; (c) 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 (d) is required to be
disclosed by law, court order or other legal process; provided, however, that
in the event disclosure is required by law, court order or legal process, 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.
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15.05 Enforcement of the Restrictive Covenants.
(a) 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 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.
(b) 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.
16. 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 also be reimbursed
for all reasonable out of pocket expenses. 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.
17. 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
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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 with coverage in amount and
scope at least as favorable as the 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 17 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
any predecessor of the Company and the Executive entered into prior to the date
of termination in accordance with the terms thereof.
18. Binding Arbitration and Legal Fees.
18.01 Any dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration in accordance
with the rules of the American Arbitration Association then in effect. Judgment
may be entered on the arbitrator's award in any court having jurisdiction. Each
party shall bear its own costs and expenses.
19. Assumption of Agreement on Merger, Consolidation or Sale of Assets.
The Company agrees that, until the termination of this Agreement as
above provided, it will not enter into any merger or consolidation with another
company in which the Company is not the surviving company, or sell or dispose
of all or substantially all of its assets, unless the company which is to
survive such merger or consolidation or the prospective purchaser of such
assets first makes a written agreement with the Executive either (1) assuming
the Company's financial obligations to the Executive under this Agreement, or
(2) making such other provision for the Executive as is satisfactory to the
Executive and approved by him in writing in lieu of assuming the Company's
financial obligations to him under this Agreement.
20. Assurances on Liquidation.
The Company agrees that, until the termination of this Agreement as
above provided, it will not voluntarily liquidate or dissolve without first
making a full settlement, or, at the discretion of the Executive, a written
agreement with the Executive satisfactory to and approved by him in writing, in
fulfillment of or in lieu of its obligations to him under this Agreement.
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21. Amendments.
This Agreement may not be amended or modified orally, and no provision
hereof may be waived, except in a writing signed by the parties hereto.
22. Assignment.
22.01 Except as otherwise provided in paragraph 21.02, this
Agreement cannot be assigned by either party hereto except with the written
consent of the other. Any assignment of this Agreement by either party hereto
shall not relieve such party of its or his obligations hereunder.
22.02 The Company may elect to perform any or all of its
obligations under this Agreement through a wholly-owned subsidiary or other
subsidiary, and if the Company so elects, Executive will be an employee of such
wholly-owned subsidiary, or such other subsidiary. Notwithstanding any such
election, the Company's obligations to Executive under this Agreement will
continue in full force and effect as obligations of the Company, and the
Company shall retain primary liability for their performance.
23. Binding Effect.
This Agreement shall be binding upon and inure to the benefit of the
personal representatives and successors in interest of the Company.
24. Choice of Law.
This Agreement shall be governed by the law of the State of Tennessee
as to all matters, including, but not limited to, matters of validity,
construction, effect and performance.
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25. Severability of Provisions.
In case any one or more of the provisions contained in this Agreement
shall be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby, and this Agreement shall be
interpreted as if such invalid, illegal or unenforceable provision were not
contained herein.
IN WITNESS WHEREOF, the Executive has hereunto set his hand and the
Company has caused this Agreement to be executed in its name and on its behalf
and its corporate seal to be hereunto affixed and attested by its corporate
officers thereunto duly authorized.
EXECUTIVE
/s/ Xxxxxx X. Xxxxx, Xx.
------------------------------------
Xxxxxx X. Xxxxx, Xx.
PROMUS HOTEL CORPORATION
By: /s/
---------------------------------
ATTEST: /s/
-----------------------------
Secretary
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EXHIBIT C
RELEASE OF CLAIMS AND COVENANT NOT TO XXX
This RELEASE OF CLAIMS AND COVENANT NOT TO XXX (this "Agreement") is
executed and delivered by ________________________ (the "Executive") to
_______________________ (the "Company").
In consideration of the agreement by the Company to make the payments in
Section 6 and 12 enter into the Employment Agreement between the Executive and
the Company dated December __, 1998 (the "Employment Agreement"), the Executive
hereby agrees as follows:
Section 1. Release and Covenant. Executive, of his own free will, voluntarily
releases and forever discharges the Company, its subsidiaries, affiliates,
their officers, employees, agents, stockholders, successors and assigns (both
individually and in their official capacities with the Company) from, and
covenants not to xxx or proceed against any of the foregoing on the basis of,
any and all past or present causes of action, suits, agreements or other claims
which Executive, his dependents, relatives, heirs, executors, administrators,
successors and assigns has or have against the Company upon or by reason of any
matter arising out of his employment by the Company and the cessation of said
employment, and including, but not limited to, any alleged violation of the
Civil Rights Acts of 1964 and 1991, the Equal Pay Act of 1963, the Age
Discrimination in Employment Act of 1967, the Rehabilitation Act of 1973, the
Older Workers Benefit Protection Act of 1990, the Family and Medical Leave Act
of 1993, the Americans with Disabilities Act of 1990, and any other federal or
state law, regulation or ordinance, or public policy, contract or tort law,
having any bearing whatsoever on the terms and conditions or cessation of his
employment with the Company. This release shall not, however, constitute a
waiver of any of the Executive's rights upon termination of employment under
(i) the Employment Agreement, (ii) any indemnification agreement or other
rights to indemnification or insurance referred to in Section 16 of the
Employment Agreement, (iii) any severance agreement between the Executive and
the Company or any affiliate or (iv) the terms of any employee benefit plan of
the Company or any affiliate in which the Executive is participating.
Section 2. Due Care. Executive acknowledges that he has received a copy of this
Agreement prior to its execution and has been advised hereby of his opportunity
to review and consider this Agreement for twenty-one (21) days prior to its
execution. Executive further acknowledges that he has been advised hereby to
consult with an attorney prior to executing this Agreement. Executive enters
into this Agreement having freely and knowingly elected, after due
consideration, to execute this Agreement and to fulfill the promises set forth
herein. This Agreement shall be revocable by Executive during the 7-day period
following its execution, and shall not become effective or enforceable until
the expiration of such 7-day period. In the event of such a revocation,
Executive shall not be entitled to the consideration for this Agreement set
forth above.
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Section 3. Reliance by Executive. Executive acknowledges that, in his decision
to enter into this Agreement, he has not relied on any representations,
promises or arrangement of any kind, including oral statements by
representatives of the Company, except as set forth in this Agreement.
This RELEASE OF CLAIMS AND COVENANT NOT TO XXX is executed by Executive and
delivered to the Company on __________________________.
EXECUTIVE
------------------------------------
Name:
[Not to be signed upon execution of Employment Agreement]
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