MERGER SEVERANCE AGREEMENT
THIS MERGER SEVERANCE AGREEMENT (this "Agreement") is made as of this __th
day of December, 1997, between PARENT HOLDING CORP. (the "Company") and
[Name of Employee] (the "Employee").
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 Employee, 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 Employee to
remain in the employ of the Company, the Company agrees that the Employee 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 Employee's gross annual
salary before any deductions, exclusions or any deferrals or contributions under
any Company plan or program, but excluding bonuses, incentive compensation,
employee benefits or any other non-salary form of compensation (determined
without regard to any reduction in Annual Base Salary that results in "Good
Reason" termination).
(b) "BOARD" shall mean the Board of Directors of the Company.
(c) "BONUS AMOUNT" shall mean the greater of (i) the dollar amount of
the annual bonus that would be payable to the Employee under the Company's
annual bonus plan applicable to the Employee, assuming payment at the target
level for the Employee's then current salary grade level for the then-current
full fiscal year (determined without regard to any reduction in target bonus
percentage that results in "Good Reason" termination), or (ii) the dollar amount
of
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the bonus paid or payable to the Employee under the Company's annual bonus
plan for the most recently completed fiscal year under such plan.
Notwithstanding the foregoing, if the Employee 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 Employee'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 Employee 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 Employee'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
Employee's Covered Termination pursuant to Section 3 hereof.
(h) "DISABILITY" shall mean the absence of the Employee 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 Employee 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 period or whose election or
nomination for election was previously so approved (each such new
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director being considered a member of the "Incumbent Board"), cease for
any reason to constitute a majority thereof; or
(iii) the holders of securities of the Company entitled to
vote thereon approve of the following:
(A) a merger or consolidation of the Company with any other
corporation regardless of which entity is the surviving company, other than a
merger or consolidation which would result in the voting securities of the
Company carrying the right to vote in elections of persons to the board
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least 66 2/3% of the Company's then-outstanding voting
securities carrying the right to vote in elections of persons to the board or
such securities of such surviving entity outstanding immediately after such
merger or consolidation, or
(B) a plan of complete liquidation of the Company or an agreement
for the sale or disposition by the Company of all or substantially all of the
Company's assets.
Notwithstanding the definition of "Reorganization Event" of the Company as
set forth in this Agreement, the Board shall have full and final authority,
which shall be exercised in its discretion, to determine conclusively whether a
Reorganization Event of the Company has occurred, and the date of the occurrence
of such Reorganization Event and any incidental matters relating thereto, with
respect to a transaction or series of transactions which have resulted or will
result in a substantial portion of the assets or business of the Company (as
determined immediately prior to the transaction or series of transactions by the
Board in its sole discretion which determination shall be final and conclusive)
being held by a corporation at least 66 2/3% of whose voting securities are
held, immediately following such transaction or series of transactions, by
holders of the voting securities of the Company (determined immediately prior to
such transaction or series of transactions). The Board may exercise such
discretionary authority without regard to whether one or more of the
transactions in such series of transactions would otherwise constitute a
Reorganization Event of the Company under the definition set forth in this
Agreement. It is hereby understood and agreed that the consummation of the
business combination contemplated by the Agreement and Plan of Merger dated as
of September 1, 1997 among Doubletree Corporation, the Company and Parent
Holding Corp. shall constitute a Reorganization Event for purposes of this
Agreement.
2. TERM OF AGREEMENT
This Agreement shall commence on the date first written above and shall
continue in effect though December 31, 1998; provided, however, that commencing
on January 1, 1999 and each January 1 thereafter, the term of this Agreement
shall automatically be extended for one additional year unless, not later than
September 30 of the preceding year, the Company shall have given notice that it
does not wish to extend this Agreement; and provided further, that the incumbent
Board may terminate this agreement at any time prior to the consummation of the
business combination contemplated by the above referenced Agreement and Plan of
Merger (the "Merger") if the Board finds that the consummation of the Merger is
no longer viable or in the
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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
Employee as provided hereunder.
3. COVERED TERMINATION
(a) GENERAL. The Employee shall be treated as having incurred a
"Covered Termination" hereunder if his employment is terminated by the Company
other than for cause or if the Employee gives notice of termination for Good
Reason (as described below) within a period of two (2) years following the
consummation of a Reorganization Event of the Company. The Employee shall not
be treated as having incurred a Covered Termination if his employment is
terminated as a result of death or Disability.
(b) TERMINATION FOR CAUSE. Termination by the Company of the
Employee's employment for "Cause" shall mean termination as a result of:
(i) the Employee engaging in willful gross neglect of his duties
with the Company, or the Employee'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 Employee'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.
(c) TERMINATION FOR GOOD REASON. For purposes hereof, the Employee
may terminate his employment for "Good Reason" as a result of:
(i) a material adverse change in the Employee's position or
title as in effect at the time of the Reorganization Event of the Company;
(ii) a substantial reduction in the Employee's overall level of
authority and responsibility with the Company as in effect at the time of the
Reorganization Event of the Company;
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(iii) any reduction in the Employee's Annual Base Salary as
in effect at the time of the Reorganization Event of the Company;
(iv) any reduction in the Employee's target or maximum bonus
percentage under the Company's annual bonus plan from the percentage in effect
at the time of the Reorganization Event of the Company; or
(v) a relocation by more than 50 miles from the Employee's
principal place of business at the time of the Reorganization Event of the
Company, or the Company's requiring the Employee to locate anywhere that is more
than 50 miles from the Employee's principal place of business at the time of the
Reorganization Event.
Notwithstanding the foregoing, the Employee shall not be entitled to
terminate his employment for Good Reason under items (i), (ii), (iii) or (iv)
above solely on the basis of his assignment to a new position with the Company
or its successor (which may otherwise constitute a Good Reason under one or more
of such items) if the Employee has accepted such assignment in writing. Any
such acceptance shall not waive the Employee's rights as to any other or any
future Good Reason events.
The Employee shall provide the Company with 30-day advance written notice
of a termination for Good Reason setting forth in reasonable detail the facts
and circumstances claimed to provide a basis for the termination. Such notice
may be given at any time following the occurrence of the events that provide the
basis for the termination during the two (2) year period following the
Reorganization Event of the Company; provided, however, that where a termination
for Good Reason is on account of relocation, as provided in item (v) above, such
notice shall be provided within one (1) year of the effective date of such
relocation (but not later than the expiration of the 2-year period above). If
within the thirty (30) day period, the Company takes actions reasonably
satisfactory to the Employee to remedy the basis for the Good Reason
termination, such notice of termination shall be considered null and void;
provided, however that the Company shall not have the right to remedy a Good
Reason termination occurring on the basis of a relocation as described in item
(v) above. The Date of Termination for a termination for Good Reason shall be
the expiration of the 30-day notice period provided for above.
4. SEVERANCE PAYMENT
The amount of the severance payment to be paid to the Employee upon Covered
Termination shall be the amount determined by multiplying 2.00 times the sum of:
(a) the Employee's Annual Base Salary as in effect immediately prior
to the Date of Termination; plus,
(b) the Employee's Bonus Amount applicable for the fiscal year in
which the Date of Termination occurs; plus,
(c) a benefit allowance of 25% of the Employee's Annual Base Salary
as in effect immediately prior to the Date of Termination.
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5. OTHER SEVERANCE BENEFITS
In addition to the severance payment provided under Section 4 hereof, the
Employee shall be entitled to the following benefits and other rights in the
event of the his Covered Termination:
(a) ACCRUED RIGHTS. The Employee 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 Employee's
account balance under the Company's tax qualified deferred compensation plan as
a result of failure to satisfy vesting requirements due to a Covered
Termination.
(b) OUTPLACEMENT SERVICES. Upon the occurrence of a Covered
Termination, the Employee shall be provided, at the Company's sole expense, with
professional outplacement services consistent with the Employee'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 Employees as to duration and
dollar amounts.
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 Employee'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 Employee'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 Employee at the time specified in Section 7 hereof, an
additional amount (the "Gross-Up Payment") such that the net amount retained by
the Employee, 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
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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
Employee 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 Employee such other
payments or benefits (in whole or in part) do not constitute parachute payments,
or such excess parachute payments (in whole or in part) represent reasonable
compensation for services actually rendered within the meaning of section
280G(b)(4) of the Code in excess of the base amount within the meaning of
section 280G(b)(3) of the Code, or are otherwise not subject to the Excise Tax;
and
(b) the value of any non-cash benefits or any deferred payment or
benefit shall be determined by the Company's independent auditors in accordance
with proposed, temporary or final regulations under Sections 280G(d)(3) and (4)
of the Code or, in the absence of such regulations, in accordance with the
principles of Section 280G(d)(3) and (4) of the Code. For purposes of
determining the amount of the Gross-Up Payment, the Employee 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 Employee'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 Employee'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 Employee 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 Employee'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
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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.
8. RELOCATION EXPENSES
The Employee 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 Employee'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 Employee an
additional payment in an amount such that the net amount retained by the
Employee 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. If the employment of the Employee is
terminated for Good Reason on the basis of his relocation under Section 3
hereof, the payment to which the Employee is entitled to under Section 4 hereof
will be reduced by 25% of the relocation payment, including tax reimbursement,
that the Employee received from the Company under this Section 8.
9. NO MITIGATION OR OFFSET
The Employee 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 Employee becomes
entitled hereunder shall not be reduced by any compensation earned by the
Employee 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 Employee of his obligations under Sections 11
or 12 hereof or otherwise (except that offset shall apply as specifically
provided in Section 8 hereof concerning relocation expenses and Section 21
hereof concerning other severance payments).
10. RELEASE OF CLAIMS
As conditions of Employee's entitlement to the severance payments and
benefits provided by this Agreement, the Employee 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).
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11. RESTRICTION ON CONDUCT OF EMPLOYEE
(a) GENERAL. The Employee 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 Employee's right to work, earn a living,
or acquire and possess property from the fruits of his labor. The Employee
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 Employee shall be subject to the
restrictions set forth in this Section 11.
(b) DEFINITIONS. The following capitalized terms used in this
Section 11 shall have the meanings assigned to them below, which definitions
shall apply to both the singular and the plural forms of such terms:
"CONFIDENTIAL INFORMATION" means any confidential or proprietary
information possessed by the Company without limitation, any confidential
"know-how", customer lists, details of client or consultant contracts,
current and anticipated customer requirements, pricing policies, price lists,
market studies, business plans, operational methods, marketing plans or
strategies, product development techniques or plans, computer software
programs (including object code and source code), data and documentation,
data base technologies, systems, structures and architectures, inventions and
ideas, past, current and planned research and development, compilations,
devices, methods, techniques, processes, financial information and data,
business acquisition plans, new personnel acquisition plans and any other
information that would constitute a trade secret under the common law or
statutory law of the State of Delaware.
"DETERMINATION DATE" means the date of termination of the Employee'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 Employee.
"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 Employee'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.
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(c) RESTRICTIVE COVENANTS.
(i) RESTRICTION ON DISCLOSURE AND USE OF CONFIDENTIAL
INFORMATION. The Employee 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 Employee's own use. Accordingly, the
Employee hereby agrees that the Employee 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
Employee 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 Employee's obligations under any state or federal
statutory or common law regarding trade secrets and unfair trade practices.
(ii) NONSOLICITATION OF PROTECTED EMPLOYEES. The Employee
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 Employee's own use. Accordingly, the Employee hereby agrees
that during the Restricted Period the Employee shall not directly or indirectly
on the Employee'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
Employee 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
Employee's own use. Accordingly, the Employee hereby agrees that during the
Restricted Period the Employee shall not directly or indirectly on the
Employee'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 Employee 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 Employee
or his agent; (ii) becomes available to the Employee 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 Employee on a non-confidential basis and not
in contravention of applicable law or a confidentiality or other similar
agreement before its disclosure to the Employee 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 Employee
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 Employee.
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(e) ENFORCEMENT OF THE RESTRICTIVE COVENANTS.
(i) RIGHTS AND REMEDIES UPON BREACH. In the event the Employee
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 Employee 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.
(ii) SEVERABILITY OF COVENANTS. The Employee 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 Employee 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 Employee'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
Employee's other commitments, and the Employee 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
Employee 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 Employee
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 Employee, 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 Employee (and the Company shall also advance expenses as incurred to the
fullest extent
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permitted under applicable law, provided the Employee provides an undertaking
to repay advances if it is ultimately determined that the Employee 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.
(c) The provisions of this Section 13 are intended to be an addition
to the rights otherwise available to the Employee by law, charter, statute,
bylaw or separate agreement between the Company and the Employee. The Company
shall continue to honor any indemnification agreement between the Company and
the Employee 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 Employee to compensation from the Company in the
same amount and on the same terms as the Employee would be entitled to hereunder
if he terminated his employment for Good Reason following a Reorganization Event
of the Company, except that for purposes of implementing the foregoing, the date
on which any such succession becomes effective shall be deemed the Date of
Termination. As used in this Agreement, "Company" shall mean the Company as
herein before defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
(b) This Agreement shall inure to the benefit of and be enforceable
by the Employee's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devises and legatees. If the Employee 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 Employee's devisee, legatee or other designee or, if there is
no such designee, to the Employee'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,
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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 Employee shall be addressed to him at the business address of
the Company where the Employee is employed, with a copy to him at his home
address as follows:
All such notices shall be deemed effectively given five (5) days after the
same has been deposited in a post box under the exclusive control of the United
States Postal Service.
16. MISCELLANEOUS
No provision of this Agreement may be modified, waived or discharged unless
such waiver, modification or discharge is agreed to in writing and signed by the
Employee 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 Employee in connection with any arbitration (or other proceeding whether or
not instituted by the Company
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or the Employee), 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 Employee 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 Employee at any time for any reason whatsoever, with or without Cause,
subject to the requirements of this Agreement. Nothing in this Agreement shall
restrict the right of the Employee to terminate his employment with the Company
at any time for any reason whatsoever, with or without Good Reason.
21. HOSTILE TRANSACTION PROVISION
(a) Notwithstanding anything elsewhere in this Agreement to the contrary,
in the event of consummation of a "Hostile Transaction" (as defined below), the
definition of "Good Reason" set forth in Section 3(c) hereof shall be
substituted with the following definition, which shall apply for all purposes of
this Agreement:
"TERMINATION FOR GOOD REASON. For purposes hereof, the Employee may
terminate his employment for "Good Reason" as a result of:
(i) any adverse change in the Employee's position or title as in
effect at the time of the Reorganization Event of the Company, or the
assignment to the Employee of duties inconsistent with such position or
title;
(ii) any reduction in the Employee's overall level of authority and
responsibility with the Company as in effect at the time of the
Reorganization Event of the Company;
(iii) any reduction in the Employee's Annual Base Salary as in
effect at the time of the Reorganization Event of the Company;
(iv) any reduction in the Employee's target or maximum bonus
percentage under the Company's annual bonus plan from the percentage in
effect at the time of the Reorganization Event of the Company;
(v) a relocation by more than 50 miles of the Employee's principal
place of business at the time of the Reorganization Event of the Company,
or the Company's requiring the Employee to locate anywhere that is more
than 50 miles from the Employee's principal place of business at the time
of the Reorganization Event;
(vi) the failure by the Company to continue in effect any compensation
plan in which the Employee is participating immediately prior to the
Reorganization Event of the
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Company which is material to his total compensation, including but not
limited to, the bonus plans, deferred compensation plans, equity
incentive plans, unless an equitable arrangement (embodied in an ongoing
substitute or alternative plan) has been made with respect to such plan,
or the failure by the Company to continue the Employee's participation
therein (or in such substitute or alternative plan) on a basis not
materially less favorable, both in terms of the amount of benefits
provided and the level of his participation relative to other
participants, as existed immediately prior to the Reorganization Event
of the Company;
(vii) the failure by the Company to continue to provide the
Employee with benefits substantially similar to those enjoyed by the
Employee under any of the Company's pension, savings and retirement plan,
life insurance, medical, health and accident, or disability plans in which
he was participating at the time of the Reorganization Event of the
Company, the taking of any action by the Company which would directly or
indirectly materially reduce any of such benefits or deprive the Employee
of any material fringe benefit enjoyed by him at the time of the
Reorganization Event of the Company, or the failure by the Company to
provide the Employee with the number of paid vacation days to which he is
entitled on the basis of years of service with the Company in accordance
with the Company's normal vacation policy in effect at the time of the
Reorganization Event of the Company; or
(viii) 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 14 hereof.
The Employee's right to terminate his employment pursuant to this Agreement
for Good Reason shall not be affected by his incapacity due to physical or
mental illness. The Employee's continued employment shall not constitute
consent to, or a waiver of rights with respect to, any circumstance constituting
Good Reason hereunder."
(b) In the event of consummation of a Hostile Transaction, the provisions
of Section 11 hereof (concerning restricted conduct) and Section 12 hereof
(concerning required cooperation) shall not be applicable to the Employee.
(c) For purposes hereof, a "Hostile Transaction" shall be any
Reorganization Event which has, at any time prior to the consummation thereof,
been designated by a resolution of the Board as potentially having an impact on
the Employee and other of the Company's Employees, such that it would be
appropriate for the Employee (and such other Employees) to be provided with the
additional protection afforded by the foregoing definition of "Good Reason."
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IN WITNESS WHEREOF, the parties have executed these presents as of the day
and year first above written.
PARENT HOLDING CORP.
____________________________________
Name: Xxxxx X. Lake
Title: Secretary and General Counsel
EMPLOYEE
____________________________________
Name:
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