Exhibit 10(21)
PROMUS HOTEL CORPORATION
June 30, 1995
[Name of Executive]
Promus Hotel Corporation
6800 Poplar Avenue, Suite 200
Memphis, TN 38138
Re: Severance Agreement
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 June 30, 1995 and
shall continue in effect through December 31, 1995; provided, however, that
commencing on January 1, 1996 and each January 1 thereafter, the term of this
Agreement shall automatically be extended for one additional year unless, not
later than September 30 of the preceding year, the Company shall have given
notice that it does not wish to extend this Agreement; provided, further, if a
Change in Control of the Company shall have occurred during the original or
extended term of this Agreement, this Agreement shall automatically continue in
effect for a period of twenty-four months beyond the month in which such Change
in Control occurred.
[Name of Executive]
June 30, 1995
Page 2
2. Change in Control.
(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
[Name of Executive]
June 30, 1995
Page 3
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
[Name of Executive]
June 30, 1995
Page 4
securities carrying the right to vote in elections of persons to the 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.
3. Termination Following Change in Control. If any of the events
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
(whether or not such termination is voluntary) during the term of this Agreement
unless such termination is (y) because of your death, Disability or Retirement,
or (z) by the Company for Cause.
(a) Disability; Retirement. If, as a result of your incapacity due 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"
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 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
[Name of Executive]
June 30, 1995
Page 5
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.
(c) Voluntary Resignation. After a Change in Control of the Company 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. 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 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:
(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
[Name of Executive]
June 30, 1995
Page 6
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 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 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 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 Change
of Control. Following a Change in Control of the Company, as 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
[Name of Executive]
June 30, 1995
Page 7
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 by
voluntary resignation, 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 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,
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 (including for this
purpose The Promus Companies Incorporated or its affiliates for periods
prior to the commencement date of your employment with the Company and
Holiday Corporation or its affiliates for the period prior to February 7,
1990) or its affiliates during the entire five calendar years preceding the
calendar year in which the Change in Control occurred, then such average
shall be the 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 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, or, for periods prior to the commencement date
of your employment with the Company, The Promus Companies Incorporated or
its affiliates, or, for periods prior to February 7, 1990, 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
[Name of Executive]
June 30, 1995
Page 8
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 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 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 (including
for this purpose The Promus Companies Incorporated or its affiliates for
periods prior to the commencement date of your employment with the Company
and Holiday Corporation or its affiliates for periods prior to February 7,
1990) or its affiliates.
(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
[Name of Executive]
June 30, 1995
Page 9
tax audit or proceeding to the extent attributable to the application of
section 4999 of the Code to any payment or benefit provided hereunder).
(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
[Name of Executive]
June 30, 1995
Page 10
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
(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 Payments 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 Payments 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 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
[Name of Executive]
June 30, 1995
Page 11
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 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, 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.
[Name of Executive]
June 30, 1995
Page 12
(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 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
[Name of Executive]
June 30, 1995
Page 13
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.
(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
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
[Name of Executive]
June 30, 1995
Page 14
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
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
[Name of Executive]
June 30, 1995
Page 15
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]
June 30, 1995
Page 16
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:______________________
Agreed:
___________________________________
Raymond E. Schultz