EXHIBIT 10.7
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
Xxxxxx X. Xxxxxxx (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 occurs after the
consummation of a Reorganization Event).
(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
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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 ("the Merger") 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 Board may terminate this agreement at any time prior to the
consummation of the business combination contemplated by the above referenced
Agreement and Plan of Merger (the
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"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 December 31, 1999.
(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 Coverage
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
(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.
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(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) EMPLOYMENT AGREEMENT. In the event that the Executive's
termination of employment constitutes a termination without "cause" or for
"good reason" under the employment agreement between Executive and Promus
Hotel Corporation (f.k.a. Parent Holding Corp.) dated November ___, 1997 (the
"Employment Agreement") all outstanding awards of stock options and
restricted stock that have been granted to the Executive shall continue to
become vested and exercisable following the Date of Termination at the same
times and on the same basis as if the Executive had remained employed by the
Company and, in the case of stock options, shall remain exercisable following
the vesting thereof until the expiration of the original full term.
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
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
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(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 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.
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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 21(a) 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 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:
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"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 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.
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(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 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.
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(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 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.
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(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 as a Covered Termination 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
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:
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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.
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
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this Agreement shall restrict the right of the Executive to terminate his
employment with the Company at any time for any reason whatsoever.
21. OTHER 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.
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: Secretary and General Counsel
EXECUTIVE
_____________________________________
Name: Xxxxxx X. Xxxxxxx
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