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Exhibit 10.Y
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EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (this "Agreement"), dated as of May 15, 1995, between
Xxxx X. Xxxxxx ("Executive") and Prime Hospitality Corp., a Delaware
corporation ("Employer").
In consideration of the premises and the mutual covenants hereinafter set
forth and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties hereto hereby agree as follows:
1. EMPLOYMENT OF EXECUTIVE
Employer hereby agrees to employ Executive, and Executive hereby agrees to be
and remain in the employ of Employer, upon the terms and conditions hereinafter
set forth.
2. EMPLOYMENT PERIOD
Subject to earlier termination as provided in section 5, the term of
Executive's employment under this Agreement (the "Employment Period") shall
commence as of the date hereof and shall continue for a period of three (3)
years. Either party may terminate this Agreement at the end of three (3) years
or this Agreement may be renewed on a day to day basis pending the negotiation
of a new agreement.
3. DUTIES AND RESPONSIBILITIES
3.1 GENERAL. During the Employment Period, Executive (i) shall have the
titles of Executive Vice President and Chief Financial Officer of Employer and
(ii) shall devote substantially all of his business time and expend his best
efforts, energies and skills to the business of Employer.
Executive shall perform such duties, consistent with his status as Executive
Vice President and Chief Financial Officer of Employer, as he may be assigned
from time to time by Employer's Chief Executive Officer.
4. COMPENSATION AND RELATED MATTERS
4.1 BASE SALARY. For each twelve-month period of the Employment Period,
commencing with the twelve-month period beginning on the date of this Agreement
(each such period, an "Employment Year"), Employer shall pay to Executive a
base salary (the "Base Salary") equal to $280,000 for the first Employment Year
and for each ensuing Employment Year, the greater of (x) $280,000 and (y)
$280,000 multiplied by a fraction, (i) the numerator of which shall be the
Consumer Price Index for Urban Wage Earners and Clerical Workers (1967
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= 100) (the "Index"), published by the Bureau of Labor Statistics of the United
States Department of Labor in the column for the New York- Northern New Jersey
area entitled "All Items" for the month in which such ensuing Employment Year
commences and (ii) the denominator of which shall be such Index number for the
month of May, 1995. If publication of the Index is discontinued, the parties
shall accept comparable statistics on the cost of living for the New
York-Northern New Jersey area as computed and published by any recognized
authority acceptable to the parties. the Base Salary for each Employment Year
shall be payable in equal weekly installments.
4.2 ANNUAL BONUS. For each calendar year (the "Bonus Year"), at the
discretion of the Board of Directors, Executive may receive a cash bonus
("Bonus") based upon attainment of annual performance objectives to be
reasonably established by the Chief Executive Officer and approved by the Board
of Directors for the Bonus Year in consultation with Executive, such
performance objectives to be established as soon as possible following the
beginning of the Bonus Year. The Bonus earned for the Bonus Year shall be
payable promptly following the determination thereof, on the earlier of (i)
fifteen (15) days after the members of the Board of Directors have received the
audited financial statements for the Bonus Year, or (ii) the next meeting of
the Board of Directors. The Bonus Year 1995 will be deemed to commence on
January 1. To the extent specifically provided in Section 6 hereof, the Bonus
payable for the Bonus Year in which the Employment Period terminates shall
equal the Bonus that would have been paid had the Employment Period not so
terminated, multiplied by a fraction, the numerator of which shall be the
number of days of the Employment Period within the Bonus Year and the
denominator of which shall be 365.
4.3 LIFE INSURANCE. Employer shall maintain in effect at all times during
the Employment Period, at Employer's expense, a policy of term insurance on the
life of Executive in the amount equal to $1,000,000 naming such person as
Executive shall designate from time to time as the owner and beneficiary
thereof. Executive agrees that Employer shall have the right to obtain other
life insurance on Executive's life, at Employer's sole expense and with
Employer or an affiliate thereof as the sole beneficiary thereof. Executive
shall (i) cooperate fully with Employer in obtaining all such insurance, (ii)
sign any necessary consents, applications and other related forms or documents,
and (iii) take any required medical examinations.
4.4 AUTOMOBILE. Employer shall provide Executive with the use of a vehicle
at Employer's expense. Executive will be entitled to continue to use that
automobile for the term of this Agreement. Employer shall be responsible for
all expenses of use, maintenance and operation of that vehicle, except if
Executive's operation of the vehicle causes penalty insurance rates, in which
case Executive will bear such costs.
4.5 OTHER BENEFITS. During the Employment Period, subject to, and to the
extent Executive is eligible under their respective terms, Executive shall be
entitled to receive such
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fringe benefits as are, or are from time to time hereafter generally provided
by Employer to Employer's senior management employees or other employees
(other than those provided under or pursuant to separately negotiated
individual employment agreements or arrangements) under any pension or
retirement plan, disability plan or insurance, group life insurance, medical
and dental insurance, travel accident insurance, phantom stock or other similar
plan or program of Employer. Executive's Base Salary shall (where applicable)
constitute the compensation on the basis of which the amount of Executive's
benefits under any such plan or program shall be fixed and determined.
4.6 EXPENSE REIMBURSEMENT. Employer shall reimburse Executive for all
business expenses reasonably incurred by him in the performance of his duties
under this Agreement upon his presentation of signed, itemized accounts of such
expenditures, all in accordance with Employer's procedures and policies as
adopted and in effect from time to time and applicable to its senior management
employees.
4.7 VACATIONS. Executive shall be entitled to 20 days vacation for each
calendar year during the Employment Period with reasonable one year carry-over
allowances, which vacations shall be taken at such time or times as shall not
unreasonably interfere with Executive's performance of his duties under this
Agreement.
4.8 STOCK OPTIONS. On the date hereof and on the first and second
anniversary dates of this Agreement (with respect to each such date the "Option
Grant Date"), Employer shall grant to Executive an option to purchase 80,000
shares of Common Stock pursuant and subject to the provisions of Employer's
1995 Employee Stock Option Plan. With respect to each grant, the exercise
price per share for the grant shall be equal to the share price of Employer's
stock on the New York Stock Exchange as of the close of business on the Option
Grant Date. Each grant shall vest and be exercisable in equal installments of
one-third each (1/3) on the first, second and third anniversaries of the Option
Grant Date with respect to such grant, subject, however, to Executive's
continuing employment with Employer on the date of vesting. In the event of
the termination of Executive for any reason (except for termination for cause),
the Executive will have the right to all options which are provided for in this
Agreement.
4.9 TAX GROSS-UP. To the extent that payments made by Employer to or on
behalf of Executive pursuant to the provisions of Sections 4.3 and 4.4 hereof
are subject to federal, state or local income taxes, Employer shall pay to
Executive, not later than forty-five (45) days after the end of the calendar
year for which such payments are includable in Executive's gross income, the
amount of such additional taxes, calculated by assuming application of the
highest applicable tax rates, plus such additional amount as shall be necessary
to hold harmless Executive, as nearly as practicable, from the obligation to
pay such taxes in respect of amounts payable pursuant to this Section 4.9.
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5. TERMINATION OF EMPLOYMENT PERIOD
5.1 TERMINATION WITHOUT CAUSE. Employer may, by notice to Executive at any
time during the Employment Period, terminate the Employment Period without
cause. The effective date of termination from the Employer to the Executive
shall be the date on which such notice is given.
5.2 BY EMPLOYER FOR CAUSE. Employer may, at any time during the Employment
Period by notice to Executive (but only after compliance with the procedure
hereinafter set forth in this Section 5.2 in the event of the cause specified
in clause (ii) below), terminate the Employment Period "for cause" effective
immediately. Such notice shall specify the conduct which is the basis for
termination for cause in reasonable detail. For the purposes hereof, "for
cause" means:
(i) the conviction of Executive in a court of competent jurisdiction of a
crime constituting a felony in such jurisdiction involving money or
other property of the Company or any of its affiliates or any other
felony (whether or not involving money or other property of the
Company) involving moral turpitude; or
(ii) the willful engaging in misconduct that is materially injurious to
Employer, monetarily or otherwise. For the purposes hereof, no act,
or failure to act, on Executive's part shall be considered "willful"
unless done, or omitted to be done, by Executive not in good faith and
without reasonable belief that such action or omission was in or not
opposed to the best interests of Employer.
Termination "for cause" pursuant to clause (ii) of the preceding sentence
shall be effected only if (i) Employer has delivered to Executive a copy of a
notice of termination that complies with the foregoing paragraph and that gives
Executive, on at least ten business days' prior notice, the opportunity,
together with Executive's counsel, to be heard before Employer's Board of
Directors, and (ii) the Board of Directors (after such notice and opportunity
to be heard), adopts a resolution that in the good faith opinion of the Board
of Directors Executive was guilty of conduct set forth in clause (ii) of the
preceding sentence, and specifying the particulars thereof in reasonable
detail.
5.3 BY EXECUTIVE FOR GOOD REASON. Executive may, at any time during the
Employment Period by notice to Employer, terminate the Employment Period under
this Agreement "for good reason" effective immediately. For the purposes
hereof, "good reason" means any material breach by Employer of any provision of
this Agreement. Without limiting the generality of the foregoing, each of the
following shall be deemed to be a material breach of
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this Agreement by Employer: (i) a failure by the Employer to comply with any
provision of this Agreement which has not been cured within ten (10) days after
notice of such noncompliance has been given by Executive to the Employer, (ii)
the assignment to Executive by Employer of duties inconsistent with Executive's
position, responsibilities or status with Employer as in effect on the date of
this Agreement including, but not limited to, any reduction whatsoever in such
position, duties, responsibilities or status, any change in Executive's titles,
offices or perquisites, as then in effect, or any removal of Executive from, or
any failure to re-elect Executive to, any of such positions (except for
Executive's election to the Board of Directors), except in connection with the
termination of his employment on account of his death, disability, or for
cause, (iii) any failure to pay (or any reduction in) compensation (including
benefits) paid or payable to Executive pursuant to the provisions of Section 4
hereof, or (iv) any purported termination of Executive's employment for cause
which is not effected in accordance with the requirements of Section 5.2
hereof (and for purposes of this Agreement no such purported termination shall
be effective).
5.4 DISABILITY. During the Employment Period, if, as a result of physical
or mental incapacity or infirmity, Executive shall be unable to perform his
duties under this Agreement for (i) a continuous period of at least 180 days,
or (ii) periods aggregating at least 270 days during any period of 12
consecutive months (each a "Disability Period"), and at the end of the
Disability Period there is no reasonable probability that Executive can
promptly resume his duties hereunder, Executive shall be deemed disabled (the
"Disability") and Employer, by notice to Executive, shall have the right to
terminate the Employment Period for Disability at, as of or after the end of
the Disability Period. The existence of the Disability shall be determined by
a reputable, licensed physician mutually selected by Employer and Executive,
whose determination shall be final and binding on the parties. Executive shall
cooperate in all reasonable respects to enable an examination to be made by
such physician. Notwithstanding the foregoing, Employer may conclusively
determine Executive to be disabled at any time after the end of the Disability
Period if Executive has then commenced receiving benefits under the long-term
disability insurance policy obtained pursuant to Section 4.5 hereof.
5.5 DEATH. The Employment Period shall end on the date of Executive's
death.
6. TERMINATION COMPENSATION
6.1 TERMINATION WITHOUT CAUSE BY EMPLOYER OR FOR GOOD REASON BY EXECUTIVE.
If the Employment Period is terminated by Employer pursuant to the provisions
of Section 5.1 hereof or by Executive pursuant to the provisions of Section 5.3
hereof, Employer will pay to Executive (i) within thirty (30) days following
the date of termination an amount equal to the greater of the (a) Base Salary
for the balance of the Employment Period (assuming no termination) and (b) one
year's Base Salary (calculated in each case at the Base Salary rate then in
effect); and (ii) on the date due pursuant to the provisions of Section 4.2
hereof, the bonus for
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the then current Bonus Year, without proration. All other benefits provided
for in Sections 4.3, 4.4, 4.5 and Section 4.9 shall be continued at the expense
of Employer for the longer of the balance of the unexpired of the Employment
Period (assuming no termination) and twelve months from the date of
termination.
6.2 CERTAIN OTHER TERMINATIONS. If the Employment Period is terminated by
Employer pursuant to the provisions of Section 5.2, or by death, pursuant to
the provisions of Section 5.5, Employer shall pay to Executive, within thirty
(30) days of the date of termination, Executive's Base Salary through the date
of termination. Provided the date of termination is after the end of a
calendar year for which a Bonus is payable, but prior to the date of payment,
Employer shall also pay to Executive, when due pursuant to provisions of
Section 4.2 hereof, the Bonus for the Bonus Year in which the date of
termination occurred. Employer shall have no obligation to continue any other
benefits provided for in Section 4 past the date of termination.
6.3 TERMINATION FOR DISABILITY. If the Employment Period is terminated by
Employer pursuant to the provisions of Section 5.4, Employer shall make all
payments and continue all benefits for the period specified in Section 6.1;
provided, however, that such payment shall be reduced by any amounts actually
paid to Executive pursuant to any disability insurance or other such similar
program maintained by Employer, including amounts paid pursuant to any
long-term disability policy purchased pursuant to Section 4.5 hereof.
6.4 NO OTHER TERMINATION COMPENSATION. Executive shall not, except as set
forth in this Section 6, be entitled to any compensation following termination
of the Employment Period.
6.5 MITIGATION. Executive shall not be required to mitigate the amount of
any payments or benefits provided for hereunder upon termination of the
Employment Period by seeking employment with any other person, or otherwise,
nor shall the amount of any such payments or benefits be reduced by any
compensation, benefit or other amount earned by, accrued for or paid to
Executive as the result of Executive's employment by or consultancy or other
association with any other person or entity, provided, that any medical, dental
or hospitalization insurance or benefits provided to Executive in connection
with his employment by or consultancy with any person or entity unaffiliated
with the Employer during such period shall be primary to the benefits to be
provided to Executive pursuant to this Agreement for the purposes of
coordination of benefits. Notwithstanding the foregoing, if Executive elects
to be covered by the insurance or benefits provided by an entity or person
unaffiliated with the Employer, Executive agrees that Employer may terminate
any insurance or benefits provided to the Executive.
7. INDEMNIFICATION
Employer shall indemnify and hold Executive harmless from and against any
expenses
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(including reasonable attorneys' fees of the attorneys selected by Executive to
represent him, which shall be advanced as incurred), judgments, fines and
amounts paid in settlement incurred by him by reason of his being made a party
or threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of any act or omission to act by Executive during or
before the Employment Period or otherwise by reason of the fact that he is or
was an employee, director or officer of Employer, or of Prime Motor Inns, Inc.,
or of any subsidiary or affiliate included as a part of the Company, or of
Prime Motor Inns, Inc., to the fullest extent and in the manner set forth and
permitted by the General Corporation Law of the State of Delaware and any other
applicable law as from time to time in effect. If any action, suit or
proceeding is brought or threatened against Executive in respect of which
indemnity may be sought against Employer, its subsidiaries, affiliates or
predecessors pursuant to the foregoing, Executive shall notify Employer in
writing of the institution of such action, suit or proceeding. In any such
action, suit or proceeding Executive shall have the right to designate separate
counsel acceptable to Executive in his sole discretion.
8. CONFIDENTIALITY
Unless otherwise required by law or judicial process, Executive shall retain
in confidence after termination of Executive's employment with Employer
pursuant to this Agreement all confidential information known to the Executive
concerning the Company and its businesses for the shorter of one (1) year
following such termination or until such information is publicly disclosed by
the Company or otherwise becomes publicly disclosed other than through
Executive's actions.
9. SUCCESSORS; BINDING AGREEMENT
(a) This Agreement shall be binding upon and inure to the benefit of
Employer and any successor of Employer, including, without limitation, any
corporation or corporations acquiring directly or indirectly all or a
substantial portion of the stock, business or assets of Employer, whether by
merger, restructuring, reorganization, consolidation, division, sale or
otherwise (and such successor shall thereafter be deemed "the Employer" for the
purposes of this Agreement).
(b) This Agreement and all rights of the Executive hereunder shall inure to
the benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If Executive should die while any amounts would still
be payable to him hereunder if he had continued to live, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to Executive's devisee, legatee, or other beneficiary or, if
there be no such beneficiary, to Executive's estate.
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10. SURVIVORSHIP
The respective rights and obligations of the parties hereunder shall survive
any termination of this Agreement to the extent necessary to the intended
preservation of such rights and obligations.
11. MISCELLANEOUS
11.1 NOTICES. Any notice, consent or authorization required or permitted to
be given pursuant to this Agreement shall be in writing and sent to the party
for or to whom intended, at the address of such party set forth below, by
registered or certified mail, postage paid (deemed given five days after
deposit in the U.S. mails) or personally or by facsimile transmission (deemed
given upon receipt), or at such other address as either party shall designate
by notice given to the other in the manner provided herein.
If to Employer: Prime Hospitality Corp.
000 Xxxxx 00 Xxxx
X.X. Xxx 0000
Xxxxxxxxx, XX 00000-0000
Attn.: Secretary
If to Executive: Xx. Xxxx X. Xxxxxx
Prime Hospitality Corp.
000 Xxxxx 00 Xxxx
X.X. Xxx 0000
Xxxxxxxxx, XX 00000-0000
11.2 LEGAL FEES. Employer shall promptly reimburse the Executive for the
reasonable legal fees and expenses incurred by Executive in connection with
enforcement of Executive's rights hereunder, provided that Executive shall not
be reimbursed for legal fees and expenses in the event Executive has not acted
in good faith.
11.3 TAXES. Employer is authorized to withhold (from any compensation or
benefits payable hereunder to Executive) such amounts for income tax, social
security, unemployment compensation and other taxes as shall be necessary or
appropriate in the reasonable judgment of Employer to comply with applicable
laws and regulations.
11.4 GOVERNING LAW. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New Jersey applicable to
agreements made and to be performed therein.
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11.5 ARBITRATION. Any dispute or controversy arising under or in connection
with this Agreement shall be settled exclusively by arbitration in Fairfield,
New Jersey in accordance with the rules of the American Arbitration Association
then in effect. Judgment may be entered on the arbitration award in any court
having jurisdiction; provided, however, that Executive shall be entitled to
seek specific performance of his right to be paid until expiration of the
Employment Period during the pendency of any arbitration.
11.6 HEADINGS. All descriptive headings in this Agreement are inserted for
convenience only and shall be disregarded in construing or applying any
provision of this Agreement.
11.7 COUNTERPARTS. This Agreement may be executed in counterparts, each of
which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument.
11.8 SEVERABILITY. If any provision of this Agreement, or any part thereof,
is held to be unenforceable, the remainder of such provision and this
Agreement, as the case may be, shall nevertheless remain in full force and
effect.
11.9 ENTIRE AGREEMENT AND REPRESENTATION. This Agreement contains the entire
agreement and understanding between Employer and Executive with respect to the
subject matter hereof. No representations or warranties of any kind or nature
relating to Employer or its several businesses, or relating to Employer's
assets, liabilities, operations, future plans or prospects have been made by or
on behalf of Employer to Executive. This Agreement supersedes any prior
agreement between the parties relating to the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
PRIME HOSPITALITY CORP.
BY:
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XXXX X. XXXXXX
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