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EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT (this "Agreement"), dated as of May 18, 1993, between Paul
Hower ("Executive") and Prime Hospitality Corp., a Delaware corporation
("Employer").
In consideration of the premises and the mutual covenants hereinafter
set forth and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
1. EMPLOYMENT OF EXECUTIVE
Employer hereby agrees to employ Executive, and Executive hereby
agrees to be and remain in the employ of Employer, upon the terms and
conditions hereinafter set forth.
2. EMPLOYMENT PERIOD
Subject to earlier termination as provided in section 5, the term of
Executive's employment under this Agreement (the "Employment Period") shall
commence on June 23, 1993 (the "Effective Date") and shall continue until June
30, 1994 (the "Expiration Date"). Either party may terminate this Agreement on
the Expiration Date or this Agreement may be renewed on a day to day basis
pending the negotiation of a new agreement.
3. DUTIES AND RESPONSIBILITIES
3.1 General. During the Employment Period, Executive (i) shall have
the title of Executive Vice President - Operations of Employer and (ii) shall
devote substantially all of his business time and expend his best efforts,
energies and skills to the business of Employer.
Executive shall perform such duties, consistent with his status as
Executive Vice President - Operations of Employer, as he may be assigned from
time to time by Employer's Chief Executive Officer. Executive shall have such
authority, discretion, power and responsibility, and shall be entitled to
office, secretarial, administrative (one secretary or administrative assistant
of his selection) and other facilities and conditions of employment, as are
customary or appropriate to his position as Executive Vice President -
Operations.
Without limiting the generality of the foregoing, Executive shall have
the power, subject to the direction of the Chief Executive Officer of the
Employer, to: manage, supervise and direct the operations of all company
owned, leased and managed hotels (the "Hotels"). Executive shall be
responsible for
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attaining corporate objectives with respect to hotel operations profits,
quality of product and quality of guest services. Executive shall also be
responsible for implementing corporate policies and procedures which pertain to
the operation of the Hotels and the associates serving within the Hotels.
Executive shall, subject to the direction of the Chief Executive Officer of the
Employer, supervise the Regional Vice Presidents of Operations, Vice President
of Food and Beverage, and Vice President of Sales and Marketing.
4. COMPENSATION AND RELATED MATTERS
4.1 Base Salary. For the twelve-month period of the Employment
Period ("Employment Year"), Employer shall pay to Executive a base salary (the
"Base Salary") equal to $180,000.
4.2 Annual Bonus. For the calendar year 1993 ("Bonus Year"),
Executive shall receive (i) a cash bonus payable on January 7, 1994 in the
amount of $10,000 and (ii) at the discretion of the Board of Directors,
Executive may receive a cash bonus ("Bonus") based upon attainment of annual
performance objectives to be reasonably established by the Chief Executive
Officer and approved by the Board of Directors for the Employment Period in
consultation with Executive, such performance objectives to be established as
soon as possible following the date of employment. Notwithstanding anything
contained herein to the contrary, the parties agree that the sum of the Bonus
and Base Salary during the term of this Agreement shall not exceed $270,000.
Bonus earned for the Employment Period shall be payable promptly following the
determination thereof, on the earlier of fifteen (15) days after the members of
the Board of Directors have received the audited financial statements for the
Employment Period or the next meeting of the Board of Directors.
4.3 Life Insurance. Employer shall maintain in effect at all
times during the Employment Period, at Employer's expense, a policy of term
insurance on the life of Executive in the amount equal to two times Executive's
Base Salary naming such person as Executive shall designate from time to time
as the owner and beneficiary thereof. Executive agrees that Employer shall
have the right to obtain other life insurance on Executive's life, at
Employer's sole expense and with Employer or an affiliate thereof as the sole
beneficiary thereof. Executive shall (i) cooperate fully with Employer in
obtaining all such insurance, (ii) sign any necessary consents, applications
and other related forms or documents, and (iii) take any required medical
examinations.
4.4 Automobile; Moving Expense. Within 30 days following the date
of this Agreement Employer shall provide for Executive's use, at Employer's
expense, an automobile selected by Executive which
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will not cost more than $25,000 (which may be leased by the Employer).
Employer shall also be responsible for all expenses of use, maintenance and
operation thereof, except if Executive's operation of the vehicle causes
penalty insurance rates in which case Executive will bear such costs.
Employer shall reimburse Executive for Executive's relocation
expenses to New Jersey upon submission of invoices, which must be approved by
Employer's Chief Executive Officer, up to a maximum amount of $40,000.
Relocation expenses shall include travel costs, moving company costs, taxes,
title insurance and real estate transaction costs. To the extent that any
relocation payments made by Employer to or on behalf of Executive are subject
to federal, state or local income taxes, Employer shall pay to Executive, not
later than 45 days after the end of the calendar year for which such payments
are includible in Executive's gross income, the amount of such additional
taxes, calculated by assuming application of the Executive's applicable tax
rate.
4.5 Other Benefits. During the Employment Period, subject to, and
to the extent Executive is eligible under their respective terms, Executive
shall be entitled to receive such fringe benefits as are, or are from time to
time hereafter generally provided by Employer to Employer's senior management
employees or other employees (other than those provided under or pursuant to
separately negotiated individual employment agreements or arrangements) under
any pension or retirement plan, disability plan or insurance, group life
insurance, medical and dental insurance, travel accident insurance, phantom
stock or other similar plan or program of Employer. Executive's Base Salary
shall (where applicable) constitute the compensation on the basis of which the
amount of Executive's benefits under any such plan or program shall be fixed
and determined.
4.6 Expense Reimbursement. Employer shall reimburse Executive for
all business expenses reasonably incurred by him in the performance of his
duties under this Agreement upon his presentation of signed, itemized accounts
of such expenditures, all in accordance with Employer's procedures and policies
as adopted and in effect from time to time and applicable to its senior
management employees.
4.7 Vacations. Executive shall be entitled to 10 days vacation
during the first twelve (12) months of employment, 15 days from the second
twelve (12) months, and twenty (20) days for each year thereafter with
reasonable one year carry-over allowances, which vacations shall be taken at
such time or times as shall not unreasonably interfere with Executive's
performance of his duties under this Agreement.
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4.8 Stock Options. On the Effective Date, Employer shall grant to
Executive a non-qualified stock option to purchase 20,000 shares of Common
Stock pursuant to the provisions of Employer's 1992 Stock Option Plan, which
option ("Stock Option") shall vest upon the Expiration Date (provided that the
Executive is employed by the Employer on that date) at an exercise price per
share equal to the closing price of the common stock as of the Effective Date
on the New York Stock Exchange and in form and substance as set forth in the
form of option agreement annexed hereto as Exhibit A. In the event of the
termination of Executive for any reason (except for termination for cause), the
options will vest on the date of termination.
5. TERMINATION OF EMPLOYMENT PERIOD
5.1 Termination Without Cause. Employer may, by notice to Executive
at any time during the Employment Period, terminate the Employment Period
without cause. The effective date of termination from the Employer to the
Executive shall be the date on which such notice is given.
5.2 By Employer for Cause. Employer may, at any time during the
Employment Period by notice to Executive (but only after compliance with the
procedure hereinafter set forth in this Section 5.2 in the event of the cause
specified in clause (ii) below), terminate the Employment Period "for cause"
effective immediately. Such notice shall specify the conduct which is the
basis for termination for cause in reasonable detail. For the purposes hereof,
"for cause" means:
(i) the conviction of Executive in a court of competent
jurisdiction of a crime constituting a felony in such
jurisdiction involving money or other property of the
Company or any of its affiliates or any other felony
(whether or not involving money or other property of
the Company) involving moral turpitude; or
(ii) the willful engaging in misconduct that is materially
injurious to Employer, monetarily or otherwise. For
the purposes hereof, no act, or failure to act, on
Executive's part shall be considered "willful" unless
done, or omitted to be done, by Executive not in good
faith and without reasonable belief that such action
or omission was in or not opposed to the best
interests of Employer.
Termination "for cause" pursuant to clause (ii) of the
preceding sentence shall be effected only if (i) Employer has
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delivered to Executive a copy of a notice of termination that complies with the
foregoing paragraph and that gives Executive, on at least ten business days'
prior notice, the opportunity, together with Executive's counsel, to be heard
before Employer's Board of Directors, and (ii) the Board of Directors (after
such notice and opportunity to be heard), adopts a resolution that in the good
faith opinion of the Board of Directors, Executive was guilty of conduct set
forth in clause (ii) of the preceding sentence, and specifying the particulars
thereof in reasonable detail.
5.3 By Executive for Good Reason. Executive may, at any time
during the Employment Period by notice to Employer, terminate the Employment
Period under this Agreement "for good reason" effective immediately. For the
purposes hereof, "good reason" means any material breach by Employer of any
provision of this Agreement. Without limiting the generality of the foregoing,
each of the following shall be deemed to be a material breach of this Agreement
by Employer: (i) a failure by the Employer to comply with any provision of this
Agreement which has not been cured within ten (10) days after notice of such
noncompliance has been given by Executive to the Employer, (ii) the assignment
to Executive by Employer of duties inconsistent with Executive's position,
responsibilities or status with Employer as in effect on the date of this
Agreement including, but not limited to, any reduction whatsoever in such
position, duties, responsibilities or status, any change in Executive's titles,
offices or perquisites, as then in effect, or any removal of Executive from, or
any failure to re-elect Executive to, any of such positions, except in
connection with the termination of his employment on account of his death,
disability, or for cause, (iii) any failure to pay (or any reduction in)
compensation (including benefits) paid or payable to Executive pursuant to the
provisions of Section 4 hereof, or (iv) any purported termination of
Executive's employment for cause which is not effected in accordance with the
requirements of Section 5.2 hereof (and for purposes of this Agreement no such
purported termination shall be effective).
5.4 Disability. During the Employment Period, if, as a result of
physical or mental incapacity or infirmity, Executive shall be unable to
perform his duties under this Agreement for (i) a continuous period of at least
180 days, or (ii) periods aggregating at least 270 days during any period of 12
consecutive months (each a "Disability Period"), and at the end of the
Disability Period there is no reasonable probability that Executive can
promptly resume his duties hereunder, Executive shall be deemed disabled (the
"Disability") and Employer, by notice to Executive, shall have the right to
terminate the Employment Period for Disability at, as of or after the end of
the Disability Period. The existence of the Disability shall be determined by
a reputable, licensed physician mutually selected by Employer, whose
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determination shall be final and binding on the parties. Executive shall
cooperate in all reasonable respects to enable an examination to be made by
such physician. Notwithstanding the foregoing, Employer may conclusively
determine Executive to be disabled at any time after the end of the Disability
Period if Executive has then commenced receiving benefits under the long-term
disability insurance policy obtained pursuant to Section 4.5 hereof.
5.5 Death. The Employment Period shall end on the date of
Executive's death.
6. TERMINATION COMPENSATION
6.1 Termination Without Cause by Employer or for Good Reason by
Executive. If the Employment Period (or the day to day basis after the
Employment Period) is terminated by Employer pursuant to the provisions of
Section 5.1 hereof or by Executive pursuant to the provisions of Section 5.3
hereof, Employer will pay to Executive within 30 days following the date of
termination an amount equal to the greater of (i) Base Salary for the balance
of the Employment Period (assuming no termination), or (ii) six months of Base
Salary. All other benefits provided for in Sections 4.3, 4.4, 4.5 and Section
4.8, and any Bonus for the Employment Period (subject to Executive's right to
receive a pro rata adjustment of any Bonus) shall terminate; provided however,
that Executive shall be entitled to any COBRA rights provided to Employer's
employees.
6.2 Certain Other Terminations. If the Employment Period is
terminated by Employer pursuant to the provisions of Section 5.2, by Executive
pursuant to Section 5.1, or by death, pursuant to the provisions of Section
5.5, Employer shall pay to Executive, within thirty (30) days of the date of
termination, Executive's Base Salary through the date of termination. Employer
shall have no obligation to continue any other benefits provided for in Section
4 past the date of termination, including stock options which shall not vest.
6.3 Termination for Disability. If the Employment Period is
terminated by Employer pursuant to the provisions of Section 5.4, Employer
shall make all payments and continue all benefits for the period specified in
Section 6.1; provided, however, that such payment shall be reduced by any
amounts actually paid to Executive pursuant to any disability insurance or
other such similar program maintained by Employer, including amounts paid
pursuant to any long-term disability policy purchased pursuant to Section 4.5
hereof.
6.4 No Other Termination Compensation. Executive shall not,
except as set forth in this Section 6, be entitled to any compensation
following termination of the Employment Period.
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6.5 Mitigation. Executive shall not be required to mitigate the
amount of any payments or benefits provided for hereunder upon termination of
the Employment Period by seeking employment with any other person, or
otherwise, nor shall the amount of any such payments or benefits be reduced by
any compensation, benefit or other amount earned by, accrued for or paid to
Executive as the result of Executive's employment by or consultancy or other
association with any other person or entity, provided, that any medical, dental
or hospitalization insurance or benefits provided to Executive in connection
with his employment by or consultancy with any person or entity unaffiliated
with the Employer during such period shall be primary to the benefits to be
provided to Executive pursuant to this Agreement for the purposes of
coordination of benefits. Notwithstanding the foregoing, if Executive elects
to be covered by the insurance or benefits provided by an entity or person
unaffiliated with the Employer, Executive agrees that Employer may terminate
any insurance or benefits provided to the Executive.
7. INDEMNIFICATION
Employer shall indemnify and hold Executive harmless from and against
any expenses (including reasonable attorneys' fees of the attorneys selected by
Executive to represent him, which shall be advanced as incurred), judgments,
fines and amounts paid in settlement incurred by him by reason of his being
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 any act or omission to act by Executive during
the Employment Period or otherwise by reason of the fact that he is an employee
or officer of Employer, or of any subsidiary or affiliate included as a part of
the Company, to the fullest extent and in the manner set forth and permitted by
the General Corporation Law of the State of Delaware and any other applicable
law as from time to time in effect. If any action, suit or proceeding is
brought or threatened against Executive in respect of which indemnity may be
sought against Employer, its subsidiaries, affiliates or predecessors pursuant
to the foregoing, Executive shall notify Employer in writing of the institution
of such action, suit or proceeding. In any such action, suit or proceeding
Executive shall have the right to designate separate counsel acceptable to
Executive in his sole discretion.
8. CONFIDENTIALITY
Unless otherwise required by law or judicial process, Executive shall
retain in confidence after termination of Executive's employment with Employer
pursuant to this Agreement all
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confidential information known to the Executive concerning the Company and its
businesses for the shorter of one (1) year following such termination or until
such information is publicly disclosed by the Company or otherwise becomes
publicly disclosed other than through Executive's actions.
9. SUCCESSORS; BINDING AGREEMENT
(a) This Agreement shall be binding upon and inure to the benefit of
Employer and any successor of Employer, including, without limitation, any
corporation or corporations acquiring directly or indirectly all or a
substantial portion of the stock, business or assets of Employer, whether by
merger, restructuring, reorganization, consolidation, division, sale or
otherwise (and purposes of this Agreement).
(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, successors, heirs, distributees,
devisees and legatees. If Executive should die while any amounts would still
be payable to him hereunder if he had continued to live, all such amounts,
unless otherwise provided herein, shall be paid in accordance with the terms of
this Agreement to Executive's devisee, legatee, or other beneficiary or, if
there be no such beneficiary, to Executive's estate.
10. SURVIVORSHIP
The respective rights and obligations of the parties hereunder shall
survive any termination of this Agreement to the extent necessary to the
intended preservation of such rights and obligations.
11. MISCELLANEOUS
11.1 Notices. Any notice, consent or authorization required or
permitted to be given pursuant to this Agreement shall be in writing and sent
to the party for or to whom intended, at the address of such party set forth
below, by registered or certified mail, postage paid (deemed given five days
after deposit in the U.S. mails) or personally or by facsimile transmission
(deemed given upon receipt), or at such other address as either party shall
designate by notice given to the other in the manner provided herein.
If to Employer: Prime Hospitality Corp.
700 Route 46 East
P.O. Box 2700
Fairfield, NJ 07007-2700
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Attn.: President
If to Executive: Mr. Paul Hower
Prime Hospitality Corp.
700 Route 46 East
P.O. Box 2700
Fairfield, NJ 07007-2700
11.2 Legal Fees. Employer shall promptly reimburse the Executive
for the reasonable legal fees and expenses incurred by Executive in connection
with enforcement of Executive's rights hereunder, provided that Executive shall
not be reimbursed for legal fees and expenses in the event Executive has not
acted in good faith.
11.3 Taxes. Employer is authorized to withhold (from any
compensation or benefits payable hereunder to Executive) such amounts for
income tax, social security, unemployment compensation and other taxes as shall
be necessary or appropriate in the reasonable judgment of Employer to comply
with applicable laws and regulations.
11.4 Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New Jersey
applicable to agreements made and to be performed therein.
11.5 Arbitration. Any dispute or controversy arising under or
in connection with this Agreement shall be settled exclusively by arbitration
in Fairfield, New Jersey in accordance with the rules of the American
Arbitration Association then in effect. Judgment may be entered on the
arbitration award in any court having jurisdiction; provided, however, that
Executive shall be entitled to seek specific performance of his right to be
paid until expiration of the Employment Period during the pendency of any
arbitration.
11.6 Headings. All descriptive headings in this Agreement are
inserted for convenience only and shall be disregarded in construing or
applying any provision of this Agreement.
11.7 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but all of which together
shall constitute one and the same instrument.
11.8 Severability. If any provision of this Agreement, or any part
thereof, is held to be unenforceable, the remainder of such provision and this
Agreement, as the case may be, shall nevertheless remain in full force and
effect.
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11.9 Entire Agreement and Representation. This Agreement contains
the entire agreement and understanding between Employer and Executive with
respect to the subject matter hereof. No representations or warranties of any
kind or nature relating to Employer or its several businesses, or relating to
Employer's assets, liabilities, operations, future plans or prospects have been
made by or on behalf of Employer to Executive. This Agreement supersedes any
prior agreement between the parties relating to the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
PRIME HOSPITALITY CORP.
By:
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Paul Hower