Exhibit 10(12)
PROMUS HOTEL CORPORATION
___________, 1995
_____________________
Promus Hotel Corporation
6800 Poplar Avenue, Suite 200
Memphis, Tennessee 38138
Re: Severance Agreement
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Dear _________________:
Promus Hotel Corporation (the "Company") considers it essential to the
best interest of its stockholders to foster the continuous employment of
key management personnel. In this connection, the Board of Directors of
the Company (the "Board") recognizes that, as is the case with many
publicly held corporations, the possibility of a change in control may
exist and that such possibility, 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.
The Board 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 yourself, to their assigned duties
without distraction in the face of potentially disturbing circumstances
arising from the possibility of a change in control of the Company,
although no such change is now contemplated.
In order to induce you to remain in the employ of the Company and in
consideration of your agreements set forth in Subsection 2(b) hereof, the
Company agrees that you shall receive the severance benefits set forth in
this letter agreement ("this Agreement") in the event your employment with
the Company terminates subsequent to a "Change in Control of the Company"
(as defined in Section 2 hereof) under the circumstances described below.
1. Term of Agreement. This Agreement shall commence on ,
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1995 and shall continue in effect through December 31, 19 ; provided,
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however, that commencing on January 1, 19 and each January 1 thereafter,
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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; provided, further, if a Change in Control of the Company shall
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have occurred during the original or extended term of this Agreement, this
Agreement shall automatically
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, 1995
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continue in effect for a period of twenty-four months beyond the month in
which such Change in Control occurred.
2. Change in Control.
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(a) No benefit shall be payable to you hereunder unless there shall
have been a Change in Control of the Company, as set forth below. For
purposes of this Agreement, a "Change in Control of the Company" shall be
deemed to have occurred, subject to subparagraph (iv) hereof, if any of the
events in subparagraphs (i), (ii) or (iii) occur:
(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, is or becomes the "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 Change
in Control; or
(ii) During any period of two consecutive years (not including
any period prior to the execution of this Agreement), individuals who
at the beginning of such period constitute the Board and any 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 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, cease for any reason to constitute a majority thereof; or
(iii) The holders of securities of the Company entitled to
vote thereon approve 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 80% of the Company's then outstanding voting
securities carrying the right to vote in elections of persons to
the Board, or
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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.
(iv) Notwithstanding the definition of a "Change in Control" of
the Company as set forth in this Section 2(a), the Human Resources
Committee of the Board (the "Committee") shall have full and final
authority, which shall be exercised in its discretion, to determine
conclusively whether a Change in Control of the Company has occurred,
and the date of the occurrence of such Change in Control 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 Committee in its sole discretion which
determination shall be final and conclusive) being held by a
corporation at least 80% 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
Committee may exercise such discretionary authority without regard to
whether one or more of the transactions in such series of transactions
would otherwise constitute a Change in Control of the Company under
the definition set forth in this Section 2(a).
(b) For purposes of this Agreement, a "Potential Change in Control of
the Company" shall be deemed to have occurred if the following occur:
(i) The Company enters into an agreement or letter of intent,
the consummation of which would result in the occurrence of a Change
in Control of the Company;
(ii) Any person (including the Company) publicly announces an
intention to take or to consider taking actions which if consummated
would constitute a Change in Control of the Company;
(iii) Any person, 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, who is or becomes the beneficial
owner, directly or indirectly, of securities of the Company
representing 9.5% or more of the Company's then outstanding voting
securities carrying the right to vote in elections of persons to the
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Board increases his beneficial ownership of such securities by 5% or
more over the percentage so owned by such person on the date hereof;
or
(iv) The Board adopts a resolution to the effect that, for
purposes of this Agreement, a Potential Change in Control of the
Company has occurred.
You agree that, subject to the terms and conditions of this Agreement,
in the event of a Potential Change in Control of the Company, you will
remain in the employ of the Company (or the subsidiary thereof by which you
are employed at the date such Potential Change in Control occurs) until the
earliest of (x) a date which is six months from the occurrence of such
Potential Change in Control of the Company, (y) the termination by you of
your employment by reasons of Disability or Retirement (at your normal
retirement age), as defined in Subsection 3(i), or (z) the occurrence of a
Change in Control of the Company.
(c) Good Reason. For purposes of this Agreement, "Good Reason" shall
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mean, without your express written consent, the occurrence after a Change
in Control of the Company of any of the following circumstances unless, in
the case of paragraphs (i), (v), (vi), (vii) or (viii), such circumstances
are fully corrected prior to the Date of Termination specified in the
Notice of Termination, as defined in Subsections 3(e) and 3(d),
respectively, given in respect thereof:
(i) The assignment to you of any duties inconsistent with your
status as an executive officer of the Company or a substantial adverse
alteration in the nature or status of your responsibilities from those
in effect immediately prior to the Change in Control of the Company;
(ii) A reduction by the Company in your annual base salary as in
effect on the date hereof or as the same may be increased from time to
time except for across-the-board salary reductions similarly affecting
all executives of the Company and all executives of any person in
control of the Company;
(iii) The relocation of the Company's principal executive
offices where you are working immediately prior to the Change in
Control of the Company to a location more than 50 miles from the
location of such offices immediately prior to the Change in Control of
the Company or the Company's requiring you to be based anywhere other
than the location of the Company's principal executive offices where
you were working immediately prior to the Change in Control of the
Company except for required travel on the Company's business to an
extent substantially consistent with your present business travel
obligations;
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(iv) The failure by the Company, without your consent, to pay to
you any portion of your current compensation except pursuant to an
across-the-board compensation deferral similarly affecting all
executives of the Company and all executives of any person in control
of the Company, or to pay to you any portion of an installment of
deferred compensation under any deferred compensation program of the
Company, within thirty days of the date such compensation is due;
(v) The failure by the Company to continue in effect any
compensation plan in which you are participating immediately prior to
the Change in Control of the Company which is material to your total
compensation, including but not limited to, the Company's Bonus Plan,
Executive Deferred Compensation Plan, Restricted Stock Plan, or any
substitute plans adopted prior to the Change in Control, 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 your 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 your participation relative to other participants, as existed
immediately prior to the Change in Control of the Company;
(vi) The failure by the Company to continue to provide you with
benefits substantially similar to those enjoyed by you under any of
the Company's pension, savings and retirement plan, life insurance,
medical, health and accident, or disability plans in which you were
participating at the time of the Change in Control of the Company, the
taking of any action by the Company which would directly or indirectly
materially reduce any of such benefits or deprive you of any material
fringe benefit enjoyed by you at the time of the Change in Control of
the Company, or the failure by the Company to provide you with the
number of paid vacation days to which you are 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 Change in Control
of the Company;
(vii) 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 5 hereof; or
(viii) Any purported termination of your employment by the
Company which is not effected pursuant to a Notice of Termination
satisfying the requirements of Subsection 3(d) hereof and the
requirements of Subsection 3(b) above; for purposes of this Agreement,
no such purported termination shall be effective.
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, 1995
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Your right to terminate your employment pursuant to this Agreement for
Good Reason shall not be affected by your incapacity due to physical or
mental illness. Your continued employment shall not constitute consent to,
or a waiver of rights with respect to, any circumstance constituting Good
Reason hereunder.
3. Termination Following Change in Control. If any of the events
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described in Subsection 2(a) hereof constituting a Change in Control of the
Company shall have occurred, you shall be entitled to the benefits provided
in Subsection 4(c) hereof upon the subsequent termination of your
employment if such termination is (y) by the Company other than for Cause,
Retirement or Disability, or (z) by you for Good Reason.
(a) Disability; Retirement. If, as a result of your incapacity due
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to physical or mental illness, you shall have been absent from the
full-time performance of your duties with the Company for six consecutive
months, and within thirty days after written notice of termination is given
you shall not have returned to the full-time performance of your duties,
your employment may be terminated for "Disability". Termination by the
Company or you of your employment based on "Retirement" shall mean
termination at age 65 (or later) with ten years of service or retirement in
accordance with any retirement contract between the Company and you.
(b) Cause. Termination by the Company of your employment for "Cause"
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shall mean termination upon your engaging in willful and continued
misconduct, or your willful and continued failure to substantially perform
your duties with the Company (other than due to physical or mental
illness), if such failure or misconduct is materially damaging or
materially detrimental to the business and operations of the Company,
provided that you shall have received written notice of such failure or
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misconduct and shall have continued to engage in such failure or misconduct
after 30 days following receipt of such notice from the Board, which notice
specifically identifies the manner in which the Board believes that you
have engaged in such failure or misconduct. For purposes of this
Subsection, no act, or failure to act, on your part shall be deemed
"willful" unless done, or omitted to be done, by you not in good faith and
without reasonable belief that your action or omission was in the best
interest of the Company. Notwithstanding the foregoing, you shall not be
deemed to have been terminated for Cause unless and until there shall have
been delivered to you a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters of the entire membership
of the Board at a meeting of the Board called and held for such purpose
(after reasonable notice to you and an opportunity for you, together with
your counsel, to be heard before the Board), finding that in the good faith
opinion of the Board you were guilty of failure to substantially perform
your duties or of misconduct in accordance with the first sentence of this
Subsection, and of continuing such failure to substantially perform your
duties or misconduct as aforesaid after notice from the Board, and
specifying the particulars thereof in detail.
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, 1995
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(c) Voluntary Resignation. After a Change in Control of the Company
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and for purposes of receiving the benefits provided in Subsection 4(c)
hereof, you shall be entitled to terminate your employment by voluntary
resignation given at any time during the two years following the occurrence
of a Change in Control of the Company hereunder, provided such resignation
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is by you for Good Reason. Such resignation shall not be deemed a breach
of any employment contract between you and the Company.
(d) Notice of Termination. Any purported termination of your
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employment by the Company or by you shall be communicated by written Notice
of Termination to the other party hereto in accordance with Section 6
hereof. For purposes of this Agreement, a "Notice of Termination" shall
mean a notice which shall indicate the specific termination provision in
this Agreement relied upon and shall set forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of your
employment under the provision so indicated.
(e) Date of Termination, Etc. "Date of Termination" shall mean:
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(i) If your employment is terminated for Disability, thirty days
after Notice of Termination is given (provided that you shall not have
returned to the full-time performance of your duties during such
thirty day period), and
(ii) If your employment is terminated pursuant to Subsection (b)
or (c) above or for any other reason (other than Disability), the date
specified in the Notice of Termination (which, in the case of a
termination pursuant to Subsection (b) above shall not be less than
thirty days, and in the case of a termination pursuant to Subsection
(c) above shall not be less than fifteen nor more than sixty days,
respectively, from the date such Notice of Termination is given);
provided that if within fifteen days after any Notice of Termination is
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given, or, if later, prior to the Date of Termination (as determined
without regard to this provision), the party receiving such Notice of
Termination notifies the other party that a dispute exists concerning the
termination, the Date of Termination shall be the date on which the dispute
is finally determined, either by mutual written agreement of the parties,
by a binding arbitration award, or by a final judgment, order or decree of
a court of competent jurisdiction (which is not appealable or with respect
to which the time for appeal therefrom has expired and no appeal has been
perfected); provided further that the Date of Termination shall be extended
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by a notice of dispute only if such notice is given in good faith and the
party giving such notice pursues the resolution of such dispute with
reasonable diligence. Notwithstanding the pendency of any such dispute,
the Company will continue to pay you your full compensation in effect when
the notice giving rise to the dispute was given (including, but not limited
to, base salary) and continue you as a participant in all
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compensation, bonus, benefit and insurance plans in which you were
participating when the notice giving rise to the dispute was given, until
the dispute is finally resolved in accordance with this Subsection.
Amounts paid under this Subsection are in addition to all other amounts due
under this Agreement and shall not be offset against or reduce any other
amounts due under this Agreement.
4. Compensation Upon Termination or During Disability Following a
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Change of Control. Following a Change in Control of the Company, as
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defined in Subsection 2(a), upon termination of your employment or during a
period of Disability, you shall be entitled to the following benefits:
(a) During any period that you fail to perform your full-time duties
with the Company as a result of incapacity due to physical or mental
illness, you shall continue to receive your base salary at the rate in
effect at the commencement of any such period, together with all
compensation payable to you under the Company's Bonus Plan, Restricted
Stock Plan, and other incentive compensation plans during such period,
until this Agreement is terminated pursuant to Section 3(a) hereof.
Thereafter, or in the event your employment shall be terminated for
Retirement, or by reason of your death, your benefits shall be determined
under the Company's retirement, insurance and other compensation programs
then in effect in accordance with the terms of such programs, subject to
Subsection 4(e) hereof.
(b) If your employment shall be terminated by the Company for Cause,
the Company shall pay you your full base salary through the Date of
Termination at the rate in effect at the time Notice of Termination is
given, plus all other amounts to which you are entitled under any
compensation plan of the Company at the time such payments are due, and the
Company shall have no further obligations to you under this Agreement.
(c) If your employment by the Company shall be terminated (y) by the
Company other than for Cause, Retirement or Disability or (z) by you for
Good Reason, then you shall be entitled to the benefits provided below:
(i) The Company shall pay you your full base salary through the
Date of Termination at the rate in effect at the time Notice of
Termination is given, plus all other amounts to which you are entitled
under any compensation or benefit plan of the Company, at the time
such payments are due;
(ii) In lieu of any further salary payments to you for periods
subsequent to the Date of Termination, the Company shall pay as
severance pay to you a lump sum severance payment (the "Severance
Payment") equal to 2.99 times the average of the Annual Compensation
(as defined below) which was payable to you by the
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Company (including for periods prior to the commencement date of your
employment with the Company, The Promus Companies Incorporated or its
affiliates, and, for periods prior to February 7, 1990, provided that
your employment with The Promus Companies Incorporated or its affiliates
commenced on or about February 7, 1990 and you were employed by Holiday
Corporation or its affiliates immediately prior to your commencement of
employment with The Promus Companies Incorporated or its affiliates,
Holiday Corporation or its affiliates) or any corporation affiliated with
the Company within the meaning of Section 1504 of the Internal Revenue
Code of 1986, as amended (the "Code"), for the five calendar years
preceding the calendar year in which the Change in Control occurred.
Such average shall be determined in accordance with proposed,
temporary or final regulations promulgated under Section 280G(d) of
the Code, or, in the absence of such regulations, if you were not
employed by the Company or its affiliates (including as the "Company"
for this purpose The Promus Companies Incorporated or its affiliates
for periods prior to the commencement date of your employment with the
Company, and, provided that your employment with The Promus Companies
Incorporated or its affiliates commenced on or about February 7, 1990
and you were employed by Holiday Corporation or its affiliates
immediately prior to your commencement of employment with The Promus
Companies Incorporated or its affiliates, Holiday Corporation or its
affiliates for periods prior to February 7, 1990) during the entire
five calendar years preceding the calendar year in which the Change in
Control occurred, then such average shall be an average of your Annual
Compensation for the complete calendar years (if any) and partial
calendar year (if any) during which you were so employed provided that
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the amount for any such partial calendar year shall be an annualized
amount based on the amount of Annual Compensation paid to you during
the partial calendar year. If you were not employed by the Company or
its affiliates, The Promus Companies Incorporated or its affiliates or
Holiday Corporation or its affiliates during such preceding calendar
year, then such average shall be an annualized amount based on the
amount of Annual Compensation paid to you during the calendar year in
which the Change of Control occurred. Annual Compensation is your
base salary and your annual bonus under the Annual Management Bonus
Plan of the Company that was payable to you by the Company or any of
its affiliates (including for this purpose base salary and bonus
payable to you by The Promus Companies Incorporated or its affiliates
for periods prior to the commencement date of your employment with the
Company, and, provided that your employment with The Promus Companies
Incorporated or its affiliates commenced on or about February 7, 1990
and you were employed by Holiday Corporation or its affiliates
immediately prior to your commencement of employment with The Promus
Companies Incorporated or its affiliates, Holiday Corporation or its
affiliates for periods prior to February 7, 1990) that was payable to
you during a calendar year determined without any reduction for any
deferrals of such salary or such bonus
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, 1995
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under any deferred compensation plan (qualified or unqualified) and
without any reduction for any salary reductions used for making
contributions to any group insurance plan of the Company or its
affiliates (including as the "Company" for this purpose The Promus
Companies Incorporated or its affiliates for periods prior to the
commencement date of your employment with the Company, and, provided
that your employment with The Promus Companies Incorporated or its
affiliates commenced on or about February 7, 1990 and you were
employed by Holiday Corporation or its affiliates immediately prior to
your commencement of employment with The Promus Companies Incorporated
or its affiliates, Holiday Corporation or its affiliates for periods
prior to February 7, 1990).
(iii) The Company shall also pay to you the amounts of any
compensation or awards payable to you or due to you in respect of any
period preceding the Date of Termination under any incentive
compensation plan of the Company (including, without limitation, the
Company's Restricted Stock Plan and Stock Option Plan (the "Option
Plan") and under any agreements with you in connection therewith, and
shall make any other payments and take any other actions provided for
in such plans and agreements.
(iv) In lieu of shares of common stock of the Company ("Company
Shares") issuable upon exercise of outstanding options, if any
("Options") granted to you under the Option Plan (which Options shall
be cancelled upon the making of the payment referred to below), you
shall receive an amount in cash equal to the product of (y) the excess
of, the higher of the closing price of Company Shares as reported on
the New York Stock Exchange on or nearest the Date of Termination (or,
if not listed on such exchange, on a nationally recognized exchange or
quotation system on which trading volume in Company Shares is highest)
or the highest per share price for Company Shares actually paid in
connection with any change in control of the Company, over the per
share exercise price of each Option held by you (whether or not then
fully exercisable), times (z) the number of Company Shares covered by
each such option.
(v) The Company shall also pay to you all legal fees and
expenses incurred by you as a result of such termination (including
all such fees and expenses, if any, incurred in contesting or
disputing any such termination or in seeking to obtain or enforce any
right or benefit provided by this Agreement or in connection with any
tax audit or proceeding to the extent attributable to the application
of Section 4999 of the Code to any payment or benefit provided
hereunder).
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(vi) In the event that you become entitled to the payments (the
"Severance Payments") provided under paragraphs (ii), (iii), and (iv),
above (and Subsections (d) and (e), below), and if any of the
Severance Payments will be subject to the tax (the "Excise Tax")
imposed by Section 4999 of the Code, the Company shall pay to you at
the time specified in paragraph (vii), below, an additional amount
(the "Gross-Up Payment") such that the net amount retained by you,
after deduction of any Excise Tax on the Severance Payments and any
federal (and state and local) income tax and Excise Tax upon the
payment provided for by this paragraph, shall be equal to the amount
of the Severance Payments less any Excise Tax attributable to
Severance Payments in respect of those shares of restricted stock
granted to you in 1990 in connection with the merger of Holiday
Corporation with and into a subsidiary of Bass plc and which were
issued in substitution of shares of Holiday Corporation restricted
stock granted to you on or after November 11, 1986 in connection with
the 1987 recapitalization of Holiday Corporation (the "Excluded
Severance Payments"). For purposes of determining whether any of the
Severance Payments will be subject to the Excise Tax and the amount of
such Excise Tax the following will apply:
(A) Any other payments or benefits received or to be
received by you in connection with a Change in Control of the
Company or your 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
Change in Control 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 you 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;
(B) The amount of the Severance Payments which shall be
treated as subject to the Excise Tax shall be equal to the lesser
of (y) the total amount of the Severance Payments or (z) the
amount of excess parachute payments within the meaning of Section
280G(b)(1) (after applying clause (A), above); and
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(C) 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, you
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 your 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 Severance
Payments other than the Excluded Severance Payment is
subsequently determined to be less than the amount taken into
account hereunder at the time of termination of your employment,
you 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
and Federal (and state and local) income tax imposed on the
Gross-Up Payment being repaid by you 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 Severance
Payments other than the Excluded Severance Payment is determined
to exceed the amount taken into account hereunder at the time of
the termination of your 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.
(vii) The payments provided for in paragraphs (ii), (iii),
(iv) and (vi) above, shall be made not later than the fifth day
following the Date of Termination, provided, however, that if the
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amounts of such payments cannot be finally determined on or before
such day, the Company shall pay to you on such day an estimate, as
determined in good faith by the Company, of the minimum amount of such
payments and shall pay the remainder of such payments (together with
interest at the rate provided in Section 1274(b)(2)(B) of the Code) as
soon as the amount thereof can be determined but in no event later
than the thirtieth day after the Date of Termination. In the event
that the amount of the estimated payments exceeds the
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amount subsequently determined to have been due, such excess shall
constitute a loan by the Company to you payable on the fifth day after
demand by the Company (together with interest at the rate provided in
Section 1274(b)(2)(B) of the Code).
(d) If your employment shall be terminated (y) by the Company other
than for Cause, Retirement or Disability or (z) by you voluntarily for Good
Reason, then for a twenty-four month period after such termination, the
Company shall arrange to provide you with life, disability, accident and
health insurance benefits substantially similar to those which you are
receiving immediately prior to the Notice of Termination. Benefits
otherwise receivable by you pursuant to this Subsection 4(d) shall be
reduced to the extent comparable benefits are actually received by you
during the twenty-four month period following your termination, and any
such benefits actually received by you shall be reported to the Company.
(e) In the event a Change in Control of the Company occurs after you
and the Company have entered into any retirement agreement including an
agreement providing for early retirement, then the present value, computed
using a discount rate of 8% per annum, of the total amount of all unpaid
deferred payments as payable to you in accordance with the payment schedule
that you elected when the deferral was agreed to and using the plan
interest rate applicable to your situation, or other payments payable or to
become payable to you or your estate or beneficiary under such retirement
agreement (other than payments payable pursuant to a plan qualified under
Section 401(a) of the Internal Revenue Code) including, without limitation,
any unpaid deferred payments under the Company's Executive Deferred
Compensation Plan and the Company's other deferred compensation plans shall
be paid to you (or your estate or beneficiary if applicable) in cash within
five business days after the occurrence of the Change in Control of the
Company. If you and the Company or its affiliates have executed a
retirement agreement and if the Change in Control of the Company occurs
before the effective date of your retirement, then you shall receive the
Severance Payment payable under Subsection 4(c)(ii) herein in addition to
the present value of your unpaid deferred retirement payments and other
payments under the retirement agreement as aforesaid. All other benefits
to which you or your estate or any beneficiary are entitled under such
retirement agreement shall continue in effect notwithstanding the Change in
Control of the Company. This Subsection 4(e) shall survive your
retirement.
(f) Notwithstanding that a Change in Control shall not have yet
occurred, if you so elect, by written notice to the Company given at any
time after the date hereof and prior to the time such amounts are otherwise
payable to you:
(i) The Company shall deposit with an escrow agent, pursuant to
an escrow agreement between the Company and such escrow agent, a sum
of money, or other property permitted by such escrow agreement,
sufficient in the opinion of the
[Name of Executive]
, 1995
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Page 14
Company's management to fund payment of the following amounts to you,
as such amounts become payable:
(A) Amounts payable, or to become payable, to you or to
your beneficiaries or your estate under the Company's Executive
Deferred Compensation Plan and under any agreements related
thereto in existence at the time of your election to make the
deposit into escrow.
(B) Amounts payable, or to become payable, to you or to
your beneficiaries or your estate by reason of your deferral of
payments payable to you prior to the date of your election to
make the deposit into escrow under any other deferred
compensation agreements between you and the Company in existence
at the time of your election to make the deposit into escrow,
including but not limited to deferred compensation agreements
relating to the deferral of salary or bonuses.
(C) Amounts payable, or to become payable, to you or to
your beneficiaries or your estate under any agreement relating to
your retirement from the Company (including payments described
under Subsection 4(e) above) which agreement is in existence at
the time of your election to make the deposit into escrow, other
than amounts payable by a plan qualified under Section 401(a) of
the Code.
(D) Subject to the approval of the Committee, amounts then
due and payable to you, but not yet paid, under any other benefit
plan or incentive compensation plan of the Company (whether such
amounts are stock or cash) other than amounts payable to you
under a plan qualified under Section 401(a) of the Code.
(ii) Upon the occurrence of a Potential Change of Control, the
Company shall deposit with an escrow agent (which shall be the same
escrow agent, if one exists, acting pursuant to clause (i) of this
Subsection 4(f)), pursuant to an escrow agreement between the Company
and such escrow agent, a sum of money, or other property permitted by
such escrow agreement, sufficient in the opinion of Company management
to fund the payment to you of the amounts specified in Subsection 4(c)
of this Agreement.
(iii) It is intended that any amounts deposited in escrow
pursuant to the provisions of clause (i) or (ii) of this Subsection
4(f), be subject to the claims of the Company's creditors, as set
forth in the form of such escrow agreement.
[Name of Executive]
, 1995
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Page 15
(g) You shall not be required to mitigate the amount of any payment
provided for in this Section 4 by seeking other employment or otherwise,
nor shall the amount of any payment or benefit provided for in this
Section 4 be reduced by any compensation earned by you as the result of
employment by another employer, by retirement benefits, by offset against
any amount claimed to be owed by you to the Company, or otherwise (except
as specifically provided in this Section 4).
(h) In addition to all other amounts payable to you under this
Section 4, you shall be entitled to receive all benefits payable to you
under any benefit plan of the Company in which you participate to the
extent such benefits are not paid under this Agreement.
5. Successors; Binding Agreement.
-----------------------------
(a) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if no such
succession had taken place. Failure of the Company to obtain such
assumption and agreement prior to the effectiveness of any such succession
shall be a breach of this Agreement and shall entitle you to compensation
from the Company in the same amount and on the same terms as you would be
entitled to hereunder if you terminate your employment voluntarily for Good
Reason following a Change in Control 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 hereinbefore
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 your personal or legal representatives, executors, administrators,
successors, heirs, distributees, devises and legatees. If you should die
while any amount would still be payable to you hereunder if you had
continued to live, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to your
devisee, legatee or other designee or, if there is no such designee, to
your estate.
6. Notice. For the purpose of this Agreement, notices 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 mailed by United States
registered or certified mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth on the first page of this
Agreement, provided that all notices to the Company shall be directed to
the
[Name of Executive]
, 1995
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Page 16
Secretary of the Company, or to such other address as either party may have
furnished to the other in writing in accordance herewith, except that
notice of change of address shall be effective only upon receipt.
7. 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 you and such officer 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. All references to sections of the Exchange
Act or the Code shall be deemed also to refer to any successor provisions
to such sections. Any payments provided for hereunder shall be paid net of
any applicable withholding required under federal, state or local law. The
obligations of the Company under Section 4 shall survive the expiration of
the term of this Agreement.
8. Validity. 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.
9. 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.
10. Arbitration. Any dispute or controversy arising under or in
-----------
connection with this Agreement shall be settled exclusively by arbitration
in Memphis, Tennessee 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; provided, however,
that you shall be entitled to seek specific performance of your right to be
paid until the Date of Termination during the pendency of any dispute or
controversy arising under or in connection with this Agreement.
11. Similar Provisions in Other Agreement. The Severance Payment
-------------------------------------
under this Agreement supersedes and replaces any other severance payment to
which you may be entitled under any previous agreement between you and the
Company (including for this purpose The Promus Companies Incorporated or
its affiliates) or its affiliates.
[Name of Executive]
, 1995
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Page 17
If this letter sets forth our agreement on the subject matter hereof,
kindly sign and return to the Company the enclosed copy of this letter
which will then constitute our binding agreement on this subject.
Very truly yours,
PROMUS HOTEL CORPORATION
BY:_________________________
Name:
Title:
Agreed to as of this _____ day
of , 1995.
-------------------------
____________________________
[Name of Executive]