EXHIBIT 10.1
EMPLOYMENT AGREEMENT DATED AS OF
JUNE 10, 3996 BETWEEN THE COMPANY AND
HENRY R. SILVERMAN
Employment Agreement, dated as of September 30, 1991, between HFS
Incorporated (formerly Hospitality Franchise Systems, Inc.), a Delaware
corporation (the "Company"), and Henry R. Silverman (the "Execu tive"), as
amended April 20, 1992, March 1, 1993, June 25, 1993, November 22, 1994 and
October 11, 1995, and as amended and restated June , 1996 (the "Effective
Date").
The Executive is presently the Chairman of the Board and Chief Executive
Officer of the Company pursuant to the employment agreement described above (the
"Prior Agreement").
The Board of Directors of the Company (the "Board") recognizes that the
Executive's contribution to the growth and success of the Company has been
substantial. The Board desires to provide for the continued employment of the
Executive and to provide the Executive with employment arrange ments with the
Company which the Board has determined will reinforce and encourage the
increased attention and dedication to the Company by the Executive as a member
of the Company's management, in the best interests of the Company and its
stockholders. The Executive is willing to commit himself to serve the Company on
the terms and conditions herein provided.
In order to effect the foregoing, the Company and the Executive wish to
enter into an amended and restated employment agreement on the terms and
conditions set forth below. Accordingly, the parties hereto agree as follows:
1. Term of Employment. The employment of the Executive by the Company
pursuant to this Agreement will commence on the Effective Date and end on
December 31, 2000, unless sooner terminated as hereinafter provided.
2. Position and Duties. The Executive shall serve as Chairman of the Board
and Chief Executive Officer of the Company and shall have such commensurate
responsibilities, duties and authority as may from time to time be assigned to
the Executive by the Board. The Executive shall devote his full time and
attention to the affairs of the Company and its subsidiaries and his duties in
such positions.
3. Place of Performance. In connection with the Executive's employment, the
Company shall provide him an office, office furniture and a secretary of his
selection in midtown Manhattan of the New York City metropolitan area, which
shall be his base except for required travel on the Company's business. The
Company shall pay all the Executive's reasonable business expenses which relate
to the Company at such location.
4. Compensation and Related Matters. (a) Salary. During the period of the
Executive's employment, the Company shall pay him an annual base salary at a
rate of $1,500,000 per year, such salary to be paid in substantially equal
semi-monthly or bi-weekly installments. Such annual salary shall be in creased
on each October 1, commencing October 1, 1996, during the term of this Agreement
(an "Adjust ment Date") as follows: if the "Consumer Price Index" for the
calendar month immediately preceding the applicable Adjustment Date shall exceed
the Consumer Price Index for the corresponding month during the prior year, then
such salary (as previously adjusted) shall be determined by multiplying the
amount of such salary (as previously adjusted) by a fraction, the numerator of
which shall be the Consumer Price Index for the calendar month immediately
preceding the applicable Adjustment Date, and the denominator of which shall be
the Consumer Price Index for the applicable month during the prior year. Each
adjustment shall be made as promptly as practicable after publication of the
Consumer Price Index for the month immediately preceding the applicable
Adjustment Date. Immediately after such publication, the Company shall pay to
the Executive such additional amount as shall be required to bring the aggregate
of the semimonthly installments of the then current annual salary paid to the
Executive on and after the applicable Adjustment Date up to the total dollar
amount required by reason of such adjustment; thereafter, all monthly
installments of the adjusted annual salary for the balance of the 12 months
shall be made at the newly adjusted rate. In no event shall such annual salary
(as previously adjusted) be decreased to reflect a decline in the Consumer Price
Index. As used in this Agreement, "Consumer Price Index" shall mean the Consumer
Price Index, Urban Wage Earners and Clerical Workers, U.S. City Average, All
Items (1982-4 = 100), published by the Bureau of Labor Statistics of the United
States Department of Labor. The applicable number in such Index, for purposes of
this Agreement, shall be the number for "All Items" (which number for the month
of July 1991 was 134.3). In the event a substantial change is made with respect
to the information used to determine the Consumer Price Index, or in the event
another publication is used because the Consumer Price Index is not published,
appropriate adjustment shall be made in the corresponding numbers for prior
periods so that after such adjustment the same result will be produced as would
have resulted had there been no such change in the Consumer Price Index or had
it continued to be published.
(ii) As used in this Agreement, "Change-of-Control Transaction" shall have
the meaning set forth in the Company's 1993 Stock Option Plan, as amended and
restated (the "Plan"), as in effect on the date hereof.
(c) Expenses. During the term of the Executive's employment hereunder, the
Executive shall be entitled to receive prompt reimbursement for all reasonable
and customary expenses incurred by him in performing services hereunder,
including all travel expenses and living expenses while away from home on
business or at the request of and in the service of the Company; provided, that
such expenses are incurred and accounted for in accordance with the policies and
procedures established by the Company and approved by the Board. The Company
shall provide the Executive with a driver (but not a car) and the Executive
shall reimburse the Company (in accordance with policies and procedures
established by the Company and approved by the Board) for any use of the driver
not connected with the Executive's performance of services under this Agreement.
(d) Other Benefits. The Executive shall be entitled to participate in or
receive benefits under any employee benefit plan, arrangement or perquisite made
available by the Company now or in the future to its executives and key
management employees, subject to and on a basis consistent with the terms,
conditions and overall administration of such plans, arrangements and
perquisites (other than any bonus plan). Nothing paid to the Executive under any
plan, arrangement or perquisite presently in effect or made available in the
future shall be deemed to be in lieu of the salary and other compensation
payable to the Executive pursuant to this Section 4. Any payments or benefits
payable to the Executive hereunder in respect of any year during which the
Executive is employed by the Company for less than the entire such year shall,
unless otherwise provided in the applicable plan or arrangement, be prorated in
accordance with the number of days in such year during which he is so employed.
(e) Indemnification. In addition to any indemnification provided by the
Certificate of Incorporation or By-Laws of the Company or otherwise, the Company
shall indemnify and provide reason able advances for expenses to the Executive,
to the fullest extent permitted by the laws of the State of Delaware, if the
Executive is made a party, or threatened to be made a party, to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that the Executive is or
was an officer, director or employee of the Company or any subsidiary or
affiliate thereof, in which capacity the Executive is or was serving at the
Company's request, against expenses (including reasonable attorneys' fees and
expenses), judgments, fines and amounts paid in settlement incurred by him in
connection with such action, suit or proceeding.
(f) Bonus. In addition to the annual base salary provided for above in
Section 4(a), with respect to each fiscal year of the Company during the term of
the Executive's employment hereunder beginning with the Company's 1996 fiscal
year, the Company shall, as approved by the Company's stockholders in accordance
with the requirements of Section 162(m) of the Internal Revenue Code of 1986, as
amended, pay to the Executive an annual bonus in an amount equal to .75% of the
Company's EBITDA, as defined below, for the applicable fiscal year; provided,
however, that such bonus payment shall in no event exceed 150% of the annual
base salary in effect on the first day of such fiscal year, and provided further
that any such bonus for any partial year shall be prorated based upon the number
of days in such year falling within the term of the Agreement (the "Bonus").
EBITDA shall mean the Company's earnings before interest, taxes, depreciation
and amortization, adjusted for any extraordinary gains or losses, as reflected
in the Company's audited Consolidated Statements of Income, and further adjusted
downward by the cost of capital related to acquisitions or mergers completed by
the Company. For purposes of determining such cost of capital, interest at a
rate of 12% per annum will be applied to the purchase price or merger
consideration incurred by the Company, including all capitalized related costs,
in connection with the applicable transaction. The Bonus, with respect to any
fiscal year of the Company, shall be paid to the Executive no later than 90 days
following the end of such year, or as soon as practicable thereafter if the
amount of such Bonus cannot be determined by such date. Notwithstanding the
foregoing, a prorated Bonus shall not be paid for a partial year if the
Executive's employment is terminated for Cause pursuant to Section 6(a)(iii) or
by a voluntary resignation pursuant to Section 6(b).
(g) Options. (i) The Company shall grant to the Executive on or before July
1 of each calendar on the date of grant and shall be exercisable at an exercise
price per share equal to the Fair Market Value (as defined in the Plan) of the
Company's common stock, par value $.01 per share (the "Stock"), on the date of
grant. The vesting of each stock option previously granted to the Executive
under the Plan is hereby accelerated and shall be exercisable in full as of the
date hereof.
(ii) The Executive may not sell more than two million (2,000,000) shares of
Stock in any calendar year; provided, however, that the foregoing limitation
shall apply only with respect to shares of Stock acquired by the Executive
pursuant to the exercise of options granted under any stock option or other plan
of the Company.
(iii) The number of shares of Stock granted under each option pursuant to
subsection (g)(i) above and the number of shares of Stock which the Executive
may sell in a calendar year pursuant to subsection (g)(ii) above shall be
adjusted to reflect any Change in Capitalization as such term is defined in the
Plan.g)(ii) above shall be adjusted to reflect any Change in Capitalization as
such term is defined in the Plan.
(iv) Notwithstanding the foregoing (A) in the event that a
Change-of-Control Transaction shall occur pursuant to which the stockholders of
the Company receive consideration substantially in the form of stock or other
equity securities of the Successor or of any other entity (a "Stock
Transaction"), then the Executive shall be automatically granted, effective
immediately prior to the consummation of such Change-of-Control Transaction, all
of the options that would have been granted to the Executive under Section
4(g)(i) hereof if the Executive had remained employed with the Company until
December 31, 2000 (the "Remaining Options"), each at an exercise price equal to
the Fair Market Value of the Stock at the time of grant (i.e., the date of such
Change-of-Control Transaction) and otherwise in accordance with Section 4(g)(i)
and 4(g)(iii) hereof (which Remaining Options shall be fully vested and
exercisable upon the grant thereof), (B) in the event that a Change-of-Control
Transaction shall occur which does not consti tute a Stock Transaction, then the
Company (or a Successor, if applicable) shall pay the Executive a lump sum
amount equal to the value (the "Option Value") of the Remaining Options and (C)
Section 4(g)(ii) shall become inapplicable from and after the date of such
Change-of-Control Transaction. For purposes of this Section 4(g), the Option
Value of the Remaining Options (x) shall be determined by an independent
compensation consultant or investment banker, selected by the Executive and
reasonably acceptable to the Company and (y) shall appropriately reflect the
ten-year term of the Remaining Options, the volatility of the Stock, current
interest rates and such other factors as the independent compensation consultant
or investment banker deems relevant. The Company hereby agrees to take all
actions necessary and appropri ate to effectuate the grant, pursuant to clause
(A) above, of the Remaining Options, including, without limitation, amending
Company-sponsored option plans to reserve thereunder a sufficient number of
shares and obtaining the requisite approvals of the stockholders of the Company
at or prior to the consummation of the Change-of-Control Transaction.
5. Additional Potential Compensation. Nothing in this Agreement shall
prohibit the Compensation Committee of the Company's Board of Directors from
awarding additional compensation to the Executive if, in its sole
discretion, the Compensation Committee determines that such a payment is
warranted based upon the Executive's performance.
6. Termination. (a) The Executive's employment may be terminated by the
Company only under the following circumstances:
(i) Death. The Executive's employment shall terminate upon his death. If
the Executive's employment is terminated pursuant to this paragraph his estate
or legal representative shall receive his accrued annual base salary through the
date his employment is terminated and a Bonus prorated for the period ending on
the date his employment is terminated.
(ii) Disability. If, in the written opinion of a qualified physician
selected by the Company and reasonably approved by the Executive, the Executive
shall become unable to perform his duties hereunder due to physical or mental
illness, and has failed, because of such illness, to render, for four and
one-half successive months or for six out of any nine successive months,
services of the character contemplated by this Agreement, the Company may
terminate the Executive's employment. If the Executive's employment is
terminated pursuant to this paragraph he shall receive his accrued annual base
salary through the date his employment is terminated and a Bonus prorated for
the period ending on the date his employment is terminated.
(ii) Cause. The Company may terminate the Executive's employment for Cause.
As used in this Agreement, "Cause" shall mean (I) the willful and continued
failure by the Executive substantially to perform his duties hereunder (other
than any such failure resulting from the Executive's incapacity due to physical
or mental illness); (II) any act of fraud, misappropriation, dishonesty,
embezzlement or similar conduct against the Company, as finally determined
through arbitration or final judgment of a court of competent jurisdiction
(which arbitration or judgment, due to the passage of time or otherwise, is not
subject to further appeal); or (III) conviction of a felony or any crime
involving moral turpitude (which conviction, due to the passage of time or
otherwise, is not subject to further appeal). The Executive's employment shall
not be deemed to have been terminated for Cause unless the Company shall have
given or delivered to the Executive (A) reasonable notice setting forth the
reasons for the Company's intention to terminate the Executive's employment for
Cause, (B) an opportunity for the Executive to cure any such breach during the
30-day period after the Executive's receipt of such notice, (C) a reasonable
opportunity, at any time during the 30-day period after the Executive's receipt
of such notice, for the Executive, together with his counsel, to be heard before
the Board, and (D) a Notice of Termination (as defined below) stating that, in
the good faith opinion of not less than a majority of the entire membership of
the Board, the Executive was guilty of the conduct set forth in clauses (I),
(II) or (III) of the preceding sentence. For purposes of this Agreement, a
"Notice of Termination" means a written notice which (x) indicates the specific
termination provision of this Agreement relied upon, (y) sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated and
(z) specifies the termination date (which date shall be not less than 15 days
after the giving of such notice). On the termination date specified in a Notice
of Termination duly delivered pursuant to this paragraph, the Executive's
compensation and other benefits set forth in this Agreement (other than Section
4(a) and other than any compensation or benefit that shall have accrued but not
been paid as of such date) shall terminate.n any compensation or benefit that
shall have accrued but not been paid as of such date) shall terminate.
(iv) Other. If the Executive's employment is terminated by the Company for
any reason other than as set forth in paragraphs (i), (ii) or (iii) of this
Section 6(a), then the Company shall (I) pay to the Executive, on the date of
such termination, an amount equal to his aggregate annual base salary (as
adjusted pursuant to Section 4(a) through the date of such termination) through
December 31, 2000, (II) pay to the Executive, on the date of such termination,
an amount equal to .75% of EBITDA for the twelve (12) calendar months preceding
the date of termination multiplied by the number of years (including partial
years) remaining through December 31, 2000; provided, however, that such payment
shall in no event exceed 150% of the annual base salary in effect on the date of
termination multiplied by the number of years (including partial years)
remaining through December 31, 2000, and (III) continue to make available to the
Executive health and other welfare benefits set forth in this Agreement (but
only to the extent that the Executive is not receiving substantially the same
benefits from another employer) until December 31, 2000 unless the Executive
shall theretofore deliver a written notice to the Company to the effect that he
elects not to accept such other benefits. By way of example, if the Executive's
employment is terminated by the Company without Cause on June 30, 1999, and if
the Company's EBITDA for the period from July 1, 1998 through June 30, 1999 was
$100,000,000, then the payment to the Executive pursuant to clause (II) above
shall be $750,000 multiplied by 1.5 which equals $1,125,000.
(b) If the Executive voluntarily resigns his employment under this
Agreement (other than due to a breach of this Agreement by the Company), the
Executive's compensation and other benefits (other than those under Section 4(e)
and other than any compensation or benefit that shall have accrued but not been
paid as of the date of such resignation) set forth in this Agreement shall
thereupon terminate.
(c) Notwithstanding anything in this Agreement to the contrary (including,
but not limited to, Section 6(b) above), in the event that a Change-of-Control
Transaction occurs and within one year of such event the Executive's employment
with the Company or a Successor, as the case may be, is termi nated pursuant to
clause (i), (ii), (iii) or (iv) of Section 6(a) above, the Remaining Options
shall be cancel led, at the election of the Executive, in exchange for a payment
by the Company (or such Successor) to the Executive of a cash lump sum amount
immediately payable to the Executive, equal to the Option Value of the Remaining
Options. The Option Value of the Remaining Options shall be determined by an
independent compensation consultant or investment banker, selected by the
Executive and reasonably acceptable to the Company. For purposes of this Section
6(c), the Option Value of the Remaining Options shall appropriately reflect the
remaining term of the Remaining Options, the volatility of the Stock, current
interest rates, the value of the stock relative to the exercise price of the
Remaining Options and such other factors as the independent compensation
consultant or investment banker deems relevant.
7. Other Covenants by the Executive. (a) During the Restricted Period (as
defined in Section 7(c)), neither the Executive nor any "Controlled Affiliate"
will, without the prior written consent of the Board, solicit for employment,
employ in any capacity or advise or recommend to any other person that it employ
or solicit for employment any person who is on the date hereof or who hereafter
becomes, prior to the termination of the Executive's employment with the
Company, an officer or executive or professional employee of the Company or any
of its subsidiaries or affiliates and who was employed by the Company within 12
months before the time of such solicitation, employment, advice or recommenda
tion (any such officer, executive or professional employee being a "Company
Professional"). During the Restricted Period, the Executive shall not initiate
or facilitate the employment of any Company Professional by any other person, it
being understood that this means that the Executive shall have no contact
regarding such employment with any Company Professional so employed prior to
such employment and that the Executive shall not suggest or otherwise indicate
to any other person that such person should approach or otherwise contact such
Company Professional. As used in this Agreement, "Controlled Affiliate" means
any company, partnership, firm or other entity as to which the Executive
possesses, directly or indirectly, the power to direct or cause the direction of
the management and policies of such entity, whether through the ownership of
voting securities, by contract or otherwise.
(b) The Executive acknowledges that, through his status as Chairman of the
Board and but not limited to, knowledge of marketing and operating strategies,
franchise agreements, financial results and projections, future plans, the
provisions of important contracts entered into by the Company and possible
acquisitions. The Executive agrees that such knowledge and information
constitute a vital part of the business of the Company and are by their nature
trade secrets and confidential information (collectively, "Confidential
Information"). The Executive agrees that he shall not, so long as the Company
remains in existence, divulge, communicate, furnish or make accessible (whether
orally or in writing or in books, articles or any other medium) to any
individual, firm, partnership or corporation any knowledge and information with
respect to Confidential Information directly or indirectly useful in any aspect
of the business of the Compa ny. As used in the preceding sentence,
"Confidential Information" shall not include any knowledge or information which
(i) is or becomes available to others, other than as a result of breach by the
Executive of this Section 7(b), (ii) was available to the Executive on a
nonconfidential basis prior to its disclosure to the Executive through his
status as an officer of the Company or (iii) becomes available to the Executive
on a nonconfidential basis from a third party (other than the Company or its
representatives) who is not bound by any confidentiality obligation to the
Company.
(c) During the Restricted Period, neither the Executive nor any of his
Controlled Affiliates will render any services, directly or indirectly, as an
employee, officer, consultant or in any other capacity, to any individual, firm,
corporation or partnership engaged in the franchising of hotels or motels or
similar activities competitive with any activities in which the Company or its
subsidiaries or affiliates are engaged at the time of such termination (such
businesses being herein called the "Company Business"). During the Restricted
Period, the Executive shall not, without the prior written consent of the
Company, hold an equity interest in any firm, partnership or corporation which
competes with the Company Business, except that beneficial ownership by the
Executive (together with any one or more members of his immediate family and
together with any entity under his direct or indirect control) of less than 1%
of the outstanding shares of capital stock of any corporation which may be
engaged in any of the same lines of business as the Company Business which stock
is listed on a national securities exchange or publicly traded in the
over-the-counter market shall not constitute a breach of the covenants in this
Section 7(c). As used in this Agreement, "Restricted Period" shall mean (i) if
the Executive's employment with the Company shall be terminated for Cause or by
the Executive's voluntary resignation (except any such resignation arising from
a breach of this Agreement by the Company), the period beginning on the date of
such termination and ending on the second anniversary thereof and (ii) if the
Executive's employment with the Company shall be terminated under any
circumstances other than those to which clause (i) above applies, the period
beginning on the date of such termination and ending on the earliest of (x) the
date that the Company shall cease to pay or make available to the Executive the
compensation (unless such obligation shall have been satisfied by way of lump
sum payment pursuant to Section 6(a)(iv), in which case the time period
specified in clause (i) above shall apply) and other benefits set forth in
Section 4, (y) the date that the Executive shall deliver a written notice to the
Company to the effect that he elects not to accept such compensation and other
benefits and, accordingly, shall cease to be subject to Section 7(c) and (z) the
second anniversary of the date of such termination.y, shall cease to be subject
to Section 7(c) and (z) the second anniversary of the date of such termination.
(d) The Executive agrees that the provisions of Sections 7(a), (b) and (c)
may not be adequately enforced by an action for damages and that, in the event
of a breach thereof by the Executive or any such other entity, the Company shall
be entitled to apply for and obtain injunctive relief in any court of competent
jurisdiction to restrain the breach or threatened breach of such violation or
otherwise to enforce specifically such provisions against such violation.
8. 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 the business and/or assets of the
Company, by agreement in form and substance satisfactory to the Executive,
expressly to 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.
(b) This Agreement and all rights of the Executive hereunder shall inure to
the benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, suc cessors, heirs, distributees,
devisees and legatees.
9. Notice. For the purposes of this Agreement, notices, demands and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or (unless otherwise
specified) mailed by United States certified or registered mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Executive:
Henry R. Silverman
4 East 72nd Street
New York, New York 10021
If to the Company:
HFS Incorporated
339 Jefferson Road
P.O. Box 278
Parsippany, New Jersey 07054
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
10. Miscellaneous. (a) No provisions of this Agreement may be amended,
supplemented, modified, cancelled or discharged unless such amendment,
supplement, modification, cancellation or discharge is agreed to in writing
signed by the Executive and a duly authorized officer of the Company (other than
the Executive); and no provisions hereof may be waived except in writing so
signed by or on behalf of the party granting such waiver. 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. This Agreement (other
than Section 4(e)) shall be governed by and interpreted in accordance with the
laws of the State of New York applicable to agreements made and to be performed
entirely within such State. The obligations of the Company, the Successor and
the Executive under this Agreement, which by their nature may require either
partial or total performance after the expiration of this Agreement or the
termination of the Executive's employment (including, without limitation, under
Sections 4 and 6 hereof) shall survive such expiration and termination.ing,
without limitation, under Sections 4 and 6 hereof) shall survive such expiration
and termination.
(b) The Company represents and warrants to the Executive that (i) the
Company has all necessary power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby; (ii) the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized and
approved by the Company and no other corporate proceedings on the part of the
Company are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby; and (iii) this Agreement has been duly and
validly executed and delivered by the Company and constitutes a valid and
binding agreement of the Company, enforceable in accordance with its terms.
11. Validity. The invalidity or unenforceability of any provision or
provisions 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.
12. Arbitration. Any dispute or controversy arising under or in connection
with this Agreement shall be settled conclusively by arbitration, conducted
before a panel of three arbitrators in New York, New York, in accordance with
the rules of the American Arbitration Association then in effect. Judgment may
be entered on the arbitrators' award in any court having jurisdiction; provided,
however, that the Company shall be entitled to seek a restraining order or
injunction in any court of competent jurisdiction to prevent any continuation of
any violation of the provisions of Section 7 and the Executive hereby consents
that such restraining order or injunction may be granted without the necessity
of the Company's posting any bond. The expense of such arbitration shall be
borne by the Company.
13. Entire Agreement. (a) This Agreement sets forth the entire agreement of
the parties hereto in respect of the subject matter contained herein and
supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written by any
officer, employee or representative of any party hereto, and any prior agreement
of the parties hereto in respect of the subject matter contained herein,
including the Prior Agreement.
(b) The Executive agrees to accept the payments to be made, and other
benefits to be accorded, to him under this Agreement as full and complete
compensation in lieu of severance, vacation, bonuses, other compensation or
other payments or benefits to which the Executive might otherwise be enti tled
from the Company or any of its subsidiaries or affiliates, unless otherwise
subsequently agreed to in writing.
14. Loan Guaranty. The Company shall guarantee a loan or loans which the
Executive receives from a financial institution reasonably acceptable to the
Company with an aggregate principal amount equal to the lesser of (i)
$100,000,000 and (ii) 25% of the excess of the aggregate Fair Market Value of
the Stock (determined as of the date of such loan or loans) subject to the
Executive's then outstanding options (whether or not then vested and
exercisable) granted under any stock option or other plan of the Company over
the aggregate exercise price of all such options (such excess being hereinafter
referred to as the "Value"). The Executive hereby agrees that if at any time the
outstanding principal amount of such loans exceeds 50% of the Value, the
Executive shall immediately repay an amount of such loans so that the
outstanding principal amount of such loans does not exceed 50% of the Value.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
and year first above written.
HFS Incorporated
by /s/ John D. Snodgrass
John D. Snodgrass
President and COO
/s/ Henry R. Silverman
Henry R. Silverman