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EXHIBIT 10.20
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MERGER SEVERANCE AGREEMENT
THIS MERGER SEVERANCE AGREEMENT (this "Agreement") is made as of this
1st day of September, 1997, between PROMUS HOTEL CORPORATION (the "Company") and
Xxxxx 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 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 target
level for the Executive's then current salary grade level for the then-current
full fiscal year (determined without regard to any reduction in target bonus
percentage that results in "Good Reason" termination), or (ii) the dollar amount
of
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the bonus paid or payable to the Executive under the Company's annual
bonus plan for the most recently completed fiscal year under such plan.
Notwithstanding the foregoing, if the Executive is a participant in the
Company's Development Bonus Plan (or any successor plan), the "Bonus Amount"
shall mean the greater of (i) the dollar amount of the annual bonus that would
be payable at the Executive's then current grade level under the Company's
Annual Management Bonus Plan (as opposed to the Development Bonus Plan), or (ii)
the dollar amount of the bonus actually paid to the Executive during the most
recently completed fiscal year under the Company's Development Bonus Plan,
subject to a maximum amount equal to the target bonus under the Company's Annual
Management Bonus Plan at the Executive's salary grade level for such plan year.
(d) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(e) "Company" shall mean Promus Hotel Corporation, or any successor
corporation that assumes this Agreement under Section 14 hereof or otherwise
becomes bound by this Agreement.
(f) "Covered Termination" shall have the meaning given in Section 3
hereof.
(g) "Date of Termination" shall mean the effective date of the
Executive's Covered Termination pursuant to Section 3 hereof.
(h) "Disability" shall mean the absence of the Executive from the
full-time performance of his duties with the Company for six consecutive months
as a result of incapacity due to physical or mental illness, provided the
Company has given 30-day advance written notice to the Executive and he has not
returned to the full-time performance of his duties.
(i) "Reorganization Event" shall mean the occurrence of any of the
following after the date hereof.
(i) any "person" (as such term is used in Section 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), other
than an employee benefit plan of the Company, or a trustee or other fiduciary
holding securities under an employee benefit plan of the Company, becomes a
"beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly
or indirectly, of 25% or more of the Company's then outstanding voting
securities carrying the right to vote in elections of persons to the Board,
regardless of comparative voting power of such voting securities, and regardless
of whether or not the Board shall have approved such Reorganization Event; or
(ii) during any period of two (2) consecutive years (not including
any period prior to the execution of this Agreement), individuals who at the
beginning of such period constitute the Board (the "Incumbent Board") and any
other new director (other than a director designated by a person who shall have
entered into an agreement with the Company to effect a transaction described in
clauses (i) or (iii) of this subsection) whose election by the Board or
nomination for election by the Company's stockholders was approved by a vote of
at least two-thirds (2/3) of the directors then still in office who either were
directors at the beginning of the
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period or whose election or nomination for election was previously so approved
(each such new director being considered a member of the "Incumbent Board"),
cease for any reason to constitute a majority thereof; or
(iii) the holders of securities of the Company entitled to vote
thereon approve of the following:
(A) a merger or consolidation of the Company with any other
corporation regardless of which entity is the surviving company, other
than a merger or consolidation which would result in the voting securities of
the Company carrying the right to vote in elections of persons to the board
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least 66 2/3% of the Company's then-outstanding voting
securities carrying the right to vote in elections of persons to the board or
such securities of such surviving entity outstanding immediately after such
merger or consolidation, or
(B) a plan of complete liquidation of the Company or an agreement
for the sale or disposition by the Company of all or substantially all of the
Company's assets.
Notwithstanding the definition of "Reorganization Event" of the Company
as set forth in this Agreement, the Board shall have full and final authority,
which shall be exercised in its discretion, to determine conclusively whether a
Reorganization Event of the Company has occurred, and the date of the occurrence
of such Reorganization Event and any incidental matters relating thereto, with
respect to a transaction or series of transactions which have resulted or will
result in a substantial portion of the assets or business of the Company (as
determined immediately prior to the transaction or series of transactions by the
Board in its sole discretion which determination shall be final and conclusive)
being held by a corporation at least 66 2/3% of whose voting securities are
held, immediately following such transaction or series of transactions, by
holders of the voting securities of the Company (determined immediately prior to
such transaction or series of transactions). The Board may exercise such
discretionary authority without regard to whether one or more of the
transactions in such series of transactions would otherwise constitute a
Reorganization Event of the Company under the definition set forth in this
Agreement. It is hereby understood and agreed that the consummation of the
business combination contemplated by the Agreement and Plan of Merger dated as
of September 1, 1997 among Doubletree Corporation, the Company and Parent
Holding Corp. shall constitute a Reorganization Event for purposes of this
Agreement.
2. TERM OF AGREEMENT
This Agreement shall commence on the date first written above and shall
continue in effect though December 31, 1998; provided, however, that commencing
on January 1, 1999 and each January I thereafter, the term of this Agreement
shall automatically be extended for one additional year unless, not later than
September 30 of the preceding year, the Company shall have given notice that it
does not wish to extend this Agreement; and provided further, that the incumbent
Board may terminate this agreement at any time prior to the consummation of the
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business combination contemplated by the above referenced Agreement and Plan
of Merger (the "Merger") if the Board finds that the consummation of the
Merger is no longer viable or in the best interest of the Company.
Notwithstanding the foregoing, no notice of non-renewal given by the Board
shall be effective with respect to a particular Reorganization Event if given
after the occurrence of the following events: (i) the Company enters into an
agreement or letter of intent, the consummation of which would result in such
Reorganization Event, (ii) any "person" makes a public announcement of its
intention to take or consider taking actions that would result in such
Reorganization Event, or (iii) any "person" (as defined above) initiates a
tender offer which, if consummated, would result in such Reorganization Event
(it being understood that this sentence shall not apply with respect to any
unrelated Reorganization Event). If a Reorganization Event of the Company
shall have occurred during the original or extended term of this Agreement,
the term of this Agreement shall continue in force and effect until the
satisfaction of all of the Company's obligations to the Executive as provided
hereunder.
3. COVERED TERMINATION
(a) General. The Executive shall be treated as having incurred a
"Covered Termination" hereunder if his employment is terminated by the Company
other than for cause or if the Executive gives notice of termination for Good
Reason (as described below) within a period of two (2) years following the
consummation of a Reorganization Event of the Company. The Executive shall not
be treated as having incurred a Covered Termination if his employment is
terminated as a result of death or Disability.
(b) Termination for Cause. Termination by the Company of the
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;
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(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 from 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 during the two (2) year period following
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
of such relocation (but not later than the expiration of the 2-year period
above) and (b) where a termination for Good Reason is claimed under item (vi)
above, such notice shall be provided within the thirty (30) day 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.
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4. SEVERANCE PAYMENT
The amount of the severance payment to be paid to the Executive upon
Covered Termination shall be the amount determined by multiplying 3.00 times the
sum of:
(a) the Executive's Annual Base Salary as in effect immediately prior
to the Date of Termination; plus,
(b) the Executive's Bonus Amount applicable for the fiscal year in
which the Date of Termination occurs; plus,
(c) a benefit allowance of 25% of the Executive's Annual Base Salary as
in effect immediately prior to the Date of Termination.
5. OTHER SEVERANCE BENEFITS
In addition to the severance payment provided under Section 4 hereof,
the Executive shall be entitled to the following benefits and other rights in
the event of the his Covered Termination:
(a) Accrued Rights. The Executive shall be entitled to the following
payments and benefits in respect of accrued compensation rights upon a Covered
Termination, in addition to other rights provided under this Agreement:
(i) payment of any accrued but unpaid Annual Base Salary through
the Date of Termination and payment of any annual bonus (for any completed
fiscal year) that is awarded subsequent to the Date of Termination by the
Company in its sole discretion under the terms of the annual bonus plan then in
effect.
(ii) payment of a pro-rata portion of the Bonus Amount for the
fiscal year of the Company in which the Covered Termination occurs, based on the
number of days of such year prior to the Date of Termination;
(iii) all benefits and rights accrued under the employee benefit
plans, fringe benefits programs and payroll practices of the Company in
accordance with their terms (including, without limitations, employee pension,
employee welfare, incentive bonus, stock incentive plans, and any accrued
vacation or sick pay time); and
(iv) a payment equal to the forfeited portion of the Executive's
account balance under the Company's tax qualified deferred compensation plan as
a result of failure to satisfy vesting requirements due to a Covered
Termination.
(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
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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 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
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portion of the Gross-Up Payment attributable to such reduction (plus
the portion of the Gross-Up Payment attributable to the Excise Tax, employment
tax and federal (and state and local) income tax imposed on the Gross-Up Payment
being repaid by the Executive if such repayment results in a reduction in Excise
Tax and/or a federal (and state and local) income tax deduction) plus interest
on the amount of such repayment at the rate provided in section 1274(b)(2)(B)
of the Code. In the event that the Excise Tax attributable to Payments is
determined to exceed the amount taken into account hereunder at the time of the
termination of the Executive's employment (including by reason of any payment
the existence or amount of which cannot be determined at the time of the
Gross-Up Payment), the Company shall make an additional gross-up payment in
respect of such excess (plus any interest payable with respect to such excess)
at the time that the amount of such excess is finally determined.
7. METHOD OF PAYMENT
The payments provided for in Sections 4, 5 and 6 hereof shall be made
in a cash lump-sum payment, net of any required tax withholding, upon the later
of (i) the fifth (5th) business day following the Date of Termination or (ii)
the expiration of the seven (7) day revocation period applicable under the
release of claims referred to in Section 10 hereof, provided, however, that if
the amounts of such payments cannot be finally determined on or before such day,
the Company shall pay on such day an estimate, as determined in good faith by
the Company, of the minimum amount of such payments. Any payment required under
Sections 4, 5 or 6 or any other provision of this Agreement that is not made in
a timely manner shall bear interest at a rate equal to one-hundred twenty (120)
percent of the monthly compounded applicable federal rate, as in effect under
Section 1274(d) of the Code for the month in which the payment is required to be
made. In the event that the amount of the estimated payments exceeds the amount
subsequently determined to have been due, such excess shall constitute a loan by
the Company payable on the fifth day after demand by the Company with interest
at the rate provided under Section 1274(d) of the Code until paid.
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 I 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.
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"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 II (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. I
(iii) Noninterference with Company Opportunities. The
Executive understands and agrees that all hotel development opportunities with
which the is involved during his employment with the Company constitute valuable
assets of the Company and its affiliated
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entities, and may not be converted to Executive's own use. Accordingly,
the Executive hereby agrees that during the Restricted Period the Executive
shall not directly or indirectly on the Executive's own behalf or as a Principal
or Representative of any Person, interfere with, solicit, pursue, or in any way
make use of any such hotel development opportunities.
(d) Exceptions from Disclosure Restrictions. Anything herein to the
contrary notwithstanding, the Executive shall not be restricted from disclosing
or using Confidential Information that: (i) is or becomes generally available to
the public other than as a result of an unauthorized disclosure by the Executive
or his agent; (ii) becomes available to the Executive in a manner that is not in
contravention of applicable law from a source (other than the Company or its
affiliated entities or one of its or their officers, employees, agents or
representative) that is not bound by a confidential relationship with the
Company or its affiliated entities or by a confidentiality or other similar
agreement; (iii) was known to the Executive on a non-confidential basis and not
in contravention of applicable law or a confidentiality or other similar
agreement before its disclosure to the Executive by the Company or its
affiliated entities or one of its or their officers, employees, agents or
representatives; or (iv) is required to be disclosed by law, court order or
other legal process; provided, however, that in the event disclosure is required
by law, the Executive shall provide the Company with prompt notice of such
requirement so that the Company may seek an appropriate protective order prior
to any such required disclosure by the Executive.
(e) Enforcement of the Restrictive Covenants.
(i) Rights and Remedies upon Breach. In the event the Executive
breaches, or threatens to commit a breach of, any of the provisions of the
Restrictive Covenants, the Company shall have the right and remedy to enjoin,
preliminarily and permanently, the Executive from violating or threatening to
violate the Restrictive Covenants and to have the Restrictive Covenants
specifically enforced by any court of competent jurisdiction, it being agreed
that any breach or threatened breach of the Restrictive Covenants would cause
irreparable injury to the Company and that money damages would not provide an
adequate remedy to the Company. The rights referred to in the preceding sentence
shall be independent of any others and severally enforceable, and shall be in
addition to, and not in lieu of, any other rights and remedies available to the
Company at law or in equity.
(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
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information or limited consultation as to such matters, participating
in legal proceedings, investigations or audits on behalf of the Company, or
otherwise making himself reasonably available to the Company for other related
purposes. Any such cooperation shall be performed at times scheduled taking into
consideration the Executive's other commitments, and the Executive shall be
compensated at a reasonable hourly or per diem rate to be agreed by the parties
to the extent such cooperation is required on more than an occasional and
limited basis. The Executive shall not be required to perform such cooperation
to the extent it conflicts with any requirements of exclusivity of service for
another employer or otherwise, nor in any manner that in the good faith belief
of the Executive would conflict with his rights under or ability to enforce this
Agreement.
13. INDEMNIFICATION
(a) Following the Date of Termination, the Company agrees that it will,
indemnify and hold harmless the Executive, against any costs or expenses
(including attorneys' fees), judgments, fines, losses, claims, damages,
liabilities or amounts paid in settlement incurred in connection with any claim,
action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of or pertaining to matters
existing or occurring at or prior to the Date of Termination, whether asserted
or claimed prior to, at or after the Date of Termination, to the fullest extent
that the Company would have been permitted under Delaware law and its
certificate of incorporation or bylaws in effect on the date hereof to indemnify
the Executive (and the Company shall also advance expenses as incurred to the
fullest extent permitted under applicable law, provided the Executive provides
an undertaking to repay advances if it is ultimately determined that the
Executive is not entitled to indemnification).
(b) For a period of six years after the Date of Termination, the
Company shall maintain (to the extent available in the market) in effect a
director's and officer's liability insurance policy covering with coverage in
amount and scope at least as favorable as the Company's existing coverage on the
Date of Termination; provided that in no event shall the Company be required to
expend in the aggregate in excess of 200% of the annual premium paid by the
Company for such coverage as of the Date of Termination; and if such premium
would at any time exceed 200% of the such amount, then the Company shall
maintain insurance policies which provide the maximum and best coverage
available at an annual premium equal to 200% of such amount.
(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
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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.
Notice to the Company shall be addressed to:
Promus Hotel Corporation
000 Xxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxxxx 00000
Attention: General Counsel
Notice to the Executive shall be addressed to him at the business
address of the Company where the Executive is employed, with a copy to him at
his home address as follows:
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
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waiver of similar or dissimilar provisions or conditions at the same or
at any prior or subsequent time. No agreement or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof have
been made by either party which are not expressly set forth in this Agreement.
The validity, interpretation, construction and performance of this Agreement
shall be governed by the laws of the State of Delaware. The invalidity or
unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement, which shall
remain in full force and effect.
17. COUNTERPARTS
This Agreement may be executed in several counterparts, each of which
shall be deemed to be an original but all of which together will constitute one
and the same instrument.
18. ARBITRATION
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration in Memphis, Tennessee
accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any court having
jurisdiction.
19. PAYMENT OF LEGAL FEES
The Company shall pay all reasonable legal fees and expenses incurred
by the Executive in connection with any arbitration (or other proceeding whether
or not instituted by the Company or the Executive), relating to the
interpretation or enforcement of any provision of this Agreement (including any
action seeking to obtain or enforce any right or benefit provided by this
Agreement) or in connection with any tax audit or proceeding relating to the
application of Section 4999 of the Code to any payment or benefit provided by
the Company.
20. NO RESTRICTIONS ON EMPLOYMENT RIGHTS
Nothing in this Agreement shall confer on the Executive any right to
continue in the employ of the Company or shall interfere with or restrict in any
way the rights of the Company, which are hereby expressly reserved, to discharge
the Executive at any time for any reason whatsoever, with or without Cause,
subject to the requirements of this Agreement. Nothing in 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
This Agreement is not intended to, and shall not, in any way supersede,
amend or affect the Executive's Severance Agreement, dated as of June 30, 1995
with the Company (the "Existing Severance Agreement"), as the Existing Severance
Agreement is being amended concurrently herewith. However, in no event shall the
Executive receive payments or other benefits under both the Existing Severance
Agreement and this Agreement. In the event that the Executive becomes entitled
to receive severance payment or other benefits under both the
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Existing Severance Agreement and under this Agreement, the Executive may elect
which agreement shall apply for all purposes, including payments and benefits
(but, e.g., may not elect one particular benefit under one agreement and another
benefit under the other agreement) by filing a written election with the Company
at any time before the Executive receives his first severance payment under
either of such agreements.
22. HOSTILE TRANSACTION PROVISION
(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:
(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 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
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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
(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 and Section 12 hereof 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.
PROMUS HOTEL CORPORATION
/s/ Xxxxx X. Lake
---------------------------
Name: Xxxxx X. Lake
Title: Senior Vice President
EXECUTIVE
/s/ Xxxxx X. Xxxxxx
---------------------------
Name: Xxxxx X. Xxxxxx
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EXHIBIT A
RELEASE OF CLAIMS AND COVENANT NOT TO XXX
This RELEASE OF CLAIMS AND COVENANT NOT TO XXX (this "Agreement") is
executed and delivered by Xxxxx X. Xxxxxx (the "Executive") to Promus Hotel
Corporation (the "Company").
In consideration of the agreement by the Company to enter into the
Severance Agreement between the Executive and the Company dated September 1,
1997 (the "Severance Agreement"), the Executive hereby agrees as follows:
Section 1. Release and Covenant. Executive, of his own free will,
voluntarily releases and forever discharges the Company, its subsidiaries,
affiliates, their officers, employees, agents, stockholders, successors and
assigns (both individually and in their official capacities with the Company)
from, and covenants not to xxx or proceed against any of the foregoing on the
basis of, any and all past or present causes of action, suits, agreements or
other claims which Executive, his dependents, relatives, heirs, executors,
administrators, successors and assigns has or have against the Company upon or
by reason of any matter arising out of his employment by the Company and the
cessation of said employment, and including, but not limited to, any alleged
violation of the Civil Rights Acts of 1964 and 1991, the Equal Pay Act of 1963,
the Age Discrimination in Employment Act of 1967, the Rehabilitation Act of
1973, the Older Workers Benefit Protection Act of 1990, the Family and Medical
Leave Act of 1993, the Americans with Disabilities Act of 1990, and any other
federal or state law, regulation or ordinance, or public policy, contract or
tort law, having any bearing whatsoever on the terms and conditions or cessation
of his employment with the Company. This release shall not, however, constitute
a waiver of any of the Executive's rights upon termination of employment under
(i) the Severance Agreement, (ii) any indemnification agreement referred to in
Section 13 of the Severance Agreement, or (iii) the terms of any employee
benefit plan of the Company in which the Executive is participating.
Section 2. Due Care. Executive acknowledges that he has received a copy
of this Agreement prior to its execution and has been advised hereby of his
opportunity to review and consider this Agreement for twenty-one (21) days
prior to its execution. Executive further acknowledges that he has been advised
hereby to consult with an attorney prior to executing this Agreement. Executive
enters into this Agreement having freely and knowingly elected, after due
consideration, to execute this Agreement and to fulfill the promises set forth
herein. This Agreement shall be revocable by Executive during the 7-day period
following its execution, and shall not become effective or enforceable until the
expiration of such 7-day period. In the event of such a revocation, Executive
shall not be entitled to the consideration for this Agreement set forth above.
Section 3. Reliance by Executive. Executive acknowledges that, in his
decision to enter into this Agreement, he has not relied on any representations,
promises
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or arrangement of any kind, including oral statements by representatives of the
Company, except as set forth in this Agreement.
This RELEASE OF CLAIMS AND COVENANT NOT TO XXX is executed by
Executive and delivered to the Company on.
EXECUTIVE:
---------------------------
Name: Xxxxx X. Xxxxxx
[NOT TO BE SIGNED AS PART OF SEVERANCE AGREEMENT]
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