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EXHIBIT 10.18
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SEVERANCE AGREEMENT
THIS SEVERANCE AGREEMENT (this "Agreement") is made as of this 15th day
of September, 1997, between DOUBLETREE CORPORATION (the "Company") and Xxxxxx X.
Xxxxxx (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
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non-salary form of compensation (determined without regard to any reduction in
Annual Base Salary that results in "Good Reason" termination).
(b) "Board" shall mean the Board of Directors of the Company.
(c) "Bonus Amount" shall mean the greater of (i) the dollar amount of
the annual bonus that would be payable to the Executive under the Company's
annual bonus plan applicable to the Executive, assuming payment at the
Executive's target level for the then-current full fiscal year (determined
without regard to any reduction in target bonus percentage that results in "Good
Reason" termination), or (ii) the dollar amount of the bonus paid or payable to
the Executive under the Company's annual bonus plan for the most recently
completed fiscal year under such plan. Notwithstanding the foregoing, if the
Executive is a participant in the Company's New Business Bonus Plan (or any
successor plan), the "Bonus Amount" shall mean the dollar amount of the bonus
actually paid to the Executive during the most recently completed fiscal year
under such plan, subject to a maximum limitation equal to the dollar amount of
the annual bonus that would have been payable to the Executive under the
Company's generally applicable annual bonus plan for such year, assuming for
this purpose that he was a participant in such plan and that he would receive a
bonus at the maximum level (as a percentage of salary) that applies under such
plan for such year to other executives with the same title as the Executive. For
the purposes hereof, the "Bonus Amount" shall not include any special bonuses
paid outside of the Company's generally applicable annual bonus plan or the
Company's New Business Bonus Plan (or any successor plan).
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(e) "Company " shall mean Doubletree 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:
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(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; provide, however,
that an acquisition after the date hereof by the General Electric Pension Trust
or its affiliates, by Xxxxxxx Xxxxxx, or by Xxxxx Xxxxxxxxx of 25% or more of
the Company's then-outstanding securities shall not be deemed a "Reorganization
Event" of the Company; 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 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.
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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, Promus Hotel Corporation 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 through 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. 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 his employment is terminated, within a period
of two (2) years following the consummation of a Reorganization Event of the
Company, by the Company other than for Cause or by the Executive for Good
Reason. The Executive
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shall not be treated as having incurred a Covered Termination if his employment
is terminated as a result of death or Disability. NOTE that, as described below,
the Executive must give 30-days advance written notice of termination for Good
Reason, thus effectively requiring that such notice be given no later than 30
days prior to the expiration of the two (2) year period described above (in
order for the Date of Termination to occur prior to the expiration of such
period).
(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.
(c) Termination for Good Reason. For purposes hereof, the Executive may
terminate his employment for "Good Reason" as a result of:
(i) a material adverse change in the Executive's position or
title as in effect at the time of the Reorganization Event of the
Company;
(ii) a substantial reduction in the Executive'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 Executive's Annual Base Salary as
in effect at the time of the Reorganization Event of the Company;
(iv) any reduction in the Executive'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 Executive's
principal place of business at the time of the Reorganization Event of
the Company, or the Company's requiring the Executive to locate
anywhere that is more than 50 miles from the Executive's principal
place of business at the time of the Reorganization Event; or
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(vi) a notice of termination given by the Executive for any
reason (including, without limitation, retirement) during the thirty
(30) day period immediately following the first (1st) anniversary of
the consummation of the Reorganization Event of the Company.
Notwithstanding the foregoing, the Executive 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 Executive has accepted such assignment in writing. Any
such acceptance shall not waive the Executive's rights as to any other or any
future Good Reason events.
The Executive 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, but not later than the date that is 30
days prior to the second anniversary date of the consummation of the
Reorganization Event of the Company; provide, however, that (a) 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 date that is 30 days prior to the
second anniversary date of the consummation of the Reorganization Event of the
Company), and (b) where a termination for Good Reason is claimed under item (vi)
above, such notice shall be provided within the thirty (30) day notice period
referred to therein. If within the thirty (30) day period, the Company takes
actions reasonably satisfactory to the Executive 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 or on the basis of the termination notice described in item (vi)
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 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.
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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 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;
(ii) if the Executive is a participant in the Company's annual
bonus plan, payment of (1) any earned but unpaid bonus under such plan
for any completed fiscal year prior to the Date of Termination, as
determined by the Company in its sole discretion and (2) 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) if the Executive is a participant in the Company's New
Business Bonus Plan (or any successor plan) payment of any earned but
unpaid bonus under such plan for periods prior to the Date of
Termination, as determined by the Company in its sole discretion;
(iv) 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 accrued sick pay time); and
(v) a payment equal to the forfeited portion of the account
balance of the Executive under the Company's tax qualified and
non-qualified pension and deferred compensation plans as a result of
failure to satisfy vesting requirements due to the Covered Termination.
(b) Outplacement Services. Upon the occurrence of a Covered
Termination, the Executive shall be provided, at the Company's sole expense,
with professional outplacement services consistent with the Executive's duties
or profession and of a type and level customary for persons in his position, as
selected by the Company, subject to reasonable limitations established by the
Company on a uniform basis for similarly situated executives as to duration and
dollar amounts.
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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
(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
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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. 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.
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. If the employment of the
Executive is terminated for Good Reason on the basis of his relocation under
Section 3 hereof, the payment to which the Executive is entitled to under
Section 4 hereof will be reduced by 25% of the relocation payment, including tax
reimbursement, that the Executive received from the Company under this Section
8.
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9. NO MITIGATION OR OFFSET
The Executive shall not be required to mitigate the amount of any
severance payment or benefit provided under this Agreement by seeking other
employment or otherwise. The amount of any payment or benefit to which the
Executive becomes entitled hereunder shall not be reduced by any compensation
earned by the Executive as the result of employment by another employer, by
retirement benefits, nor by offset against any amount claimed to be owed to the
Company by reason of a claimed breach by the Executive of his obligations under
Sections 11 or 12 hereof or otherwise (except that offset shall apply as
specifically provided in Section 8 hereof concerning relocation expenses and
Section 21 hereof concerning other severance payments).
10. RELEASE OF CLAIMS
As conditions of Executive's entitlement to the severance payments and
benefits provided by this Agreement, the Executive shall be required to execute
and honor the terms of a waiver and release of claims against the Company
substantially in the form attached hereto as Exhibit A (as may be modified
consistent with the purposes of such waiver and release to reflect changes in
law following the date hereof).
11. RESTRICTION ON CONDUCT OF EXECUTIVE
(a) General. The Executive and the Company understand and agree that
the purpose of the provisions of this Section 11 is to protect legitimate
business interests of the Company, as more fully described below, and is not
intended to impair or infringe upon the Executive's right to work, earn a
living, or acquire and possess property from the fruits of his labor. The
Executive hereby acknowledges that the post-employment restrictions set forth in
this Section 11 are reasonable and that they do not, and will not, unduly impair
his ability to earn a living after the termination of his employment with the
Company. Therefore, subject to the limitations of reasonableness imposed by law
upon restrictions set forth herein, the Executive shall be subject to the
restrictions set forth in this Section 11.
(b) Definitions. The following capitalized terms used in this Section
11 shall have the meanings assigned to them below, which definitions shall apply
to both the singular and the plural forms of such terms:
"Confidential Information" means any confidential or proprietary
information possessed by the Company without limitation, any confidential
"know-how", customer lists, details of client or consultant contracts, current
and anticipated customer requirements, pricing policies, price lists, market
studies, business plans, operational methods, marketing plans or strategies,
product development techniques or plans, computer software programs (including
object code and source code), data and documentation, data base technologies,
systems, structures and architectures, inventions and ideas, past, current and
planned research and development, compilations, devices,
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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.
(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
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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, court order or legal process, the Executive shall provide the Company
with prompt notice of such requirement so that the Company may seek an
appropriate protective order prior to any such required disclosure by the
Executive.
(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 them 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
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the Company be required to expend in the aggregate in excess of 200% of the
annual premium paid by the Company for such coverage as of the Date of
Termination; and if such premium would at any time exceed 200% of the such
amount, then the Company shall maintain insurance policies which provide the
maximum and best coverage available at an annual premium equal to 200% of such
amount.
(c) The provisions of this Section 13 are intended to be an addition to
the rights otherwise available to the Executive by law, charter, statute, bylaw
or separate agreement between the Company and the Executive. The Company shall
continue to honor any indemnification agreement between the Company and the
Executive entered into prior to the Date of Termination in accordance with the
terms thereof.
14. SUCCESSORS, BINDING AGREEMENT.
(a) The Company will require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
Failure of the Company to obtain such assumption and agreement prior to the
effectiveness of any such succession shall be a breach of this Agreement and
shall entitle the Executive to compensation from the Company in the same amount
and on the same terms as the Executive would be entitled to hereunder if he
terminated his employment for Good Reason following a Reorganization Event of
the Company, except that for purposes of implementing the foregoing, the date on
which any such succession becomes effective shall be deemed the Date of
Termination. As used in this Agreement, "Company" shall mean the Company as
herein before defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.
(b) This Agreement shall inure to the benefit of and be enforceable by
the Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devises and legatees. If the Executive should
die while any amount remains payable to him hereunder, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the Executive's devisee, legatee or other designee or, if there is
no such designee, to the Executive's estate.
15. NOTICE
Any notice required or permitted to be given by this Agreement shall be
effective only if in writing, delivered personally against receipt therefor or
mailed by certified or registered mail, return receipt requested, to the parties
at the addresses hereinafter set forth, or at such other places that either
party may designate by notice to the other.
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Notice to the Company shall be addressed to:
Doubletree Corporation
000 Xxxxx 00xx Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attn: Corporate Secretary
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:
Xxxxxx X. Xxxxxx
0000 X. Xxxxxx Xxxxx, #000
Xxxxxxxxxx, XX 00000
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.
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18. ARBITRATION
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration in accordance with the
rules of the American Arbitration Association then in effect. Judgment may be
entered on the arbitrator's award in any court having jurisdiction.
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 this Agreement shall
restrict the right of the Executive to terminate his employment with the Company
at any time for any reason whatsoever, with or without Good Reason.
21. OTHER SEVERANCE AGREEMENTS
Any severance payments provided to the Executive under Section 4 hereof
shall be offset by the dollar amount of any other cash severance payments to
which the Executive is entitled under any other severance or termination pay
plan, policy or agreement with the Company or its affiliates (including, without
limitation, the severance or termination pay plans, policies and agreements of
Red Lion Hotels, Inc.).
22. 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 Executive may
terminate his employment for "Good Reason" as a result of:
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(i) any adverse change in the Executive's position or title as in
effect at the time of the Reorganization Event of the Company, or the assignment
to the Executive of any duties inconsistent with such position or title;
(ii) any reduction in the Executive'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 Executive's Annual Base Salary as in effect
at the time of the Reorganization Event of the Company;
(iv) any reduction in the Executive'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 Executive's principal
place of business at the time of the Reorganization Event of the Company, or the
Company's requiring the Executive to locate anywhere that is more than 50 miles
from the Executive'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 Executive is participating immediately prior to the
Reorganization Event of the 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 Executive'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 Executive
with benefits substantially similar to those enjoyed by the Executive 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 Executive 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 Executive 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;
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(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; or
(ix) a termination by the Executive for any reason (including,
without limitation, retirement) during the thirty (30) day period
immediately following the first (1st) anniversary of the consummation
of the Reorganization Event of the Company.
The Executive'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 Executive'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
Executive.
(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 Executive and other of the Company's executives, such that it would be
appropriate for the Executive (and such other executives) 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.
DOUBLETREE CORPORATION
/s/ Xxxxx X. Xxxxxxx
--------------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Senior Vice President
General Counsel and Secretary
EXECUTIVE
/s/ Xxxxxx X. Xxxxxx
--------------------------------------------
Name: Xxxxxx X. Xxxxxx
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