TIER I
SEVERANCE AGREEMENT
THIS SEVERANCE AGREEMENT (this "Agreement") is made as of this ____ day
of December, 1997, between DOUBLETREE CORPORATION (the "Company") and
______________________(the "Executive").
RECITALS
WHEREAS, the Company considers it essential to the best interest of its
stockholders to xxxxxx the continuous employment of key management personnel,
and believes that the possibility of a reorganization event of the Company
and the uncertainty and questions which it may raise among management may
result in the departure or distraction of management personnel to the
detriment of the Company and its stockholders; and
WHEREAS, the Board of Directors has determined that appropriate steps
should be taken to reinforce and encourage the continued attention and
dedication of members of the Company's management, including the Executive,
to their assigned duties without distraction in the face of potentially
disturbing circumstances arising from the possibility of a reorganization
event of the Company;
NOW, THEREFORE, in consideration of the mutual premises set forth below
and for other good and valuable consideration, in order to induce the
Executive to remain in the employ of the Company, the Company agrees that the
Executive shall receive the severance benefits set forth in this agreement
("this Agreement") in the event his employment with the Company terminates
subsequent to a "Reorganization Event" of the Company under the circumstances
described below.
AGREEMENT
1. DEFINITIONS
The following terms used in this Agreement shall have the meanings given
below:
(a) "ANNUAL BASE SALARY" shall mean the Executive's gross annual salary
before any deductions, exclusions or any deferrals or contributions under any
Company plan or program, but excluding bonuses, incentive compensation,
employee benefits or any other non-salary form of compensation (determined
without regard to any reduction in Annual Base Salary that results in "Good
Reason" termination).
1
(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:
(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
2
power of such voting securities, and regardless of whether or not the
Board shall have approved such Reorganization Event; PROVIDED, 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.
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
3
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 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. 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 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
4
(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
(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; PROVIDED, 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
5
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.
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;
6
(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.
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
7
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 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)
8
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.
9
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, 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.
10
"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 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
11
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.
(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,
12
investigations or audits on behalf of the Company, or otherwise making
himself reasonably available to the Company for other related purposes. Any
such cooperation shall be performed at times scheduled taking into
consideration the Executive's other commitments, and the Executive shall be
compensated at a reasonable hourly or PER DIEM rate to be agreed by the
parties to the extent such cooperation is required on more than an occasional
and limited basis. The Executive shall not be required to perform such
cooperation to the extent it conflicts with any requirements of exclusivity
of service for another employer or otherwise, nor in any manner that in the
good faith belief of the Executive would conflict with his rights under or
ability to enforce this Agreement.
13. INDEMNIFICATION
(a) Following the Date of Termination, the Company agrees that it will,
indemnify and hold harmless the Executive, against any costs or expenses
(including attorneys' fees), judgments, fines, losses, claims, damages,
liabilities or amounts paid in settlement incurred in connection with any
claim, action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of or pertaining to matters
existing or occurring at or prior to the Date of Termination, whether
asserted or claimed prior to, at or after the Date of Termination, to the
fullest extent that the Company would have been permitted under Delaware law
and its certificate of incorporation or bylaws in effect on the date hereof
to indemnify the Executive (and the Company shall also advance expenses as
incurred to the fullest extent permitted under applicable law, provided the
Executive provides an undertaking to repay advances if it is ultimately
determined that the Executive is not entitled to indemnification).
(b) For a period of six years after the Date of Termination, the Company
shall maintain (to the extent available in the market) in effect a director's
and officer's liability insurance policy covering with coverage in amount and
scope at least as favorable as the Company's existing coverage on the Date of
Termination; provided that in no event shall the Company be required to expend
in the aggregate in excess of 200% of the annual premium paid by the Company for
such coverage as of the Date of Termination; and if such premium would at any
time exceed 200% of the such amount, then the Company shall maintain insurance
policies which provide the maximum and best coverage available at an annual
premium equal to 200% of such amount.
(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
13
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.
14
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:
__________________________
__________________________
__________________________
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.
15
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:
16
(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;
(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
17
(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."
18
IN WITNESS WHEREOF, the parties have executed these presents as of the day
and year first above written.
DOUBLETREE CORPORATION
________________________________
Name: Xxxxx X. Xxxxxxx
Title: Senior Vice President
General Counsel and Secretary
EXECUTIVE
________________________________
Name:
19
