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EXHIBIT 10.13
FELCOR LODGING TRUST INCORPORATED
October 20, 1998
Mr. ___________________________
FelCor Lodging Trust Incorporated
545 E. John Carpenter Frwy.
Suite 1300
Irving, Texas 75062
Re: Change in Control and Severance Agreement
Dear Mr. ________:
FelCor Lodging Trust Incorporated, a Maryland corporation ("FelCor"),
together with FelCor Lodging Limited Partnership, a Delaware limited partnership
("FelCor LP"), and their respective subsidiaries (collectively, the "Company")
consider it essential and in the best interests of FelCor's shareholders and the
partners of FelCor LP to foster the continued employment of key management
personnel. In this connection, the Board of Directors of the FelCor ("Board")
recognizes that, as is the case with many publicly held corporations, the
possibility of a change of 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 shareholders and/or partners.
The Board has determined that it is appropriate and in the best
interests of the shareholders of FelCor and the partners in FelCor LP that steps
be taken to encourage the continued attention and dedication of members of the
Company's senior 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 currently anticipated or contemplated.
In order to induce you to remain in the employ of the Company and in
consideration of your agreements set forth in Section 3 hereof, the Company
agrees that you shall receive the benefits specified in this letter agreement
("Agreement") upon a "Change in Control of the Company" (as defined in Section 2
hereof) and in the event of the termination of your employment with the Company,
under certain circumstances, subsequent to such a Change in Control of the
Company.
1. Term of Agreement. This Agreement shall become effective as of
January 1, 1998 ("Commencement Date") and shall continue in effect through
December 31, 1999; provided, however, that commencing on January 1, 2000 and on
each January 1 thereafter, the term of this Agreement shall be automatically
extended for one additional year unless, not later than September 30 of the
preceding year, the Company shall have given you written notice that it will not
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extend this Agreement beyond the end of the calendar year during which such
notice is given; further provided, however, that if a Change in Control of the
Company shall occur during the original or any extended term of this Agreement,
this Agreement shall automatically be extended (regardless of any notice to the
contrary from the Company) for a period of twenty-four (24) months beyond the
month in which such Change in Control of the Company shall occur.
2. Definitions. You shall not be entitled to any benefit under or by
virtue of this Agreement (except as expressly provided in Section 8 hereof)
unless a Change in Control of the Company (as defined below) shall occur during
the original or any extended term of this Agreement.
(a) Change in Control of the Company. For all purposes of this
Agreement, a "Change in Control of the Company" shall be deemed to have
occurred upon the occurrence of any of the events described in
subparagraphs (i), (ii), (iii) or (iv) below:
(i) Any "person" or "group" (as such terms are used
in Section 13(d) and 14(d) of the Securities Exchange Act of
1934, as amended ("Exchange Act")), other than an employee
benefit plan of the Company or a trustee 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 35% or more of the
Company's outstanding securities then having the right to vote
in elections of persons to the Board, regardless of the
comparative voting power of any such securities and regardless
of whether or not the Board shall have approved the
acquisition or ownership of any such securities by such
person; or
(ii) A majority of the Board shall be comprised of
persons (A) designated by any person(s) who shall have entered
into an agreement with the Company to effect a transaction of
the type described in subparagraphs (i) or (iii) hereof or (B)
other than those persons constituting the Board on the
Commencement Date and those other persons whose election by
the Board, or nomination for election by the shareholders of
the Company to the Board, was approved by a vote of at least
two-thirds of the directors constituting the Board on the
Commencement Date or whose election by or nomination for
election to the Board was previously so approved; or
(iii) The holders of securities of the Company
entitled to vote thereon shall approve either:
(A) A merger or consolidation of the Company
with any other corporation, regardless of which
entity is the surviving or resulting entity, other
than a merger or consolidation which:
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(I) would result in those securities
of the Company outstanding immediately prior
to such merger or consolidation and then
having the right to vote in elections of
persons to the Board continuing immediately
after such merger or consolidation to
represent (either by remaining outstanding
or by being changed or converted into
securities of the surviving or resulting
entity) at least 65% of the surviving or
resulting entity's outstanding securities
then having the right to vote in elections
of persons to the Board; or
(II) in purpose and effect is the
functional equivalent of an asset
acquisition by the Company and in which the
senior executive officers of the Company
(specifically including, without limitation,
the President and each Senior Vice President
and each person designated as the Chief
Executive Officer, Chief Operating Officer
or Chief Financial Officer) immediately
prior to such merger or consolidation will
continue, upon the effectiveness thereof, to
serve in the same capacities with the
surviving or resulting entity, without
change in their respective positions,
responsibilities, powers, compensation and
benefits; or
(B) A plan or agreement under which all or
substantially all of the Company's assets would be
liquidated, distributed, sold or otherwise disposed
of (otherwise than by leases entered into in the
ordinary and normal course of business); or
(iv) The Compensation Committee of the Board shall
adopt a resolution to the effect that, in the judgment of such
committee, as a consequence of any one or more transactions or
events or series of transactions or events, that a change in
control of the Company has effectively occurred. The
Compensation Committee of the Board shall be entitled to
exercise its sole and absolute discretion in exercising its
judgment and in the adoption of such resolution, whether or
not any such transaction(s) or event(s) might be deemed,
individually or collectively, to satisfy any of the criteria
set forth in subparagraphs (i) through (iii) above.
(b) Potential Change in Control of the Company. For all
purposes of this Agreement, a "Potential Change in Control of the
Company" shall be deemed to have occurred upon the occurrence of any of
the events described in subparagraphs (i), (ii), (iii) or (iv) below:
(i) The Company enters into an agreement or letter of
intent with respect to any transaction which, if consummated,
would result in the occurrence of a Change in Control of the
Company; or
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(ii) Any person (including the Company) publicly
announces that it intends to take, or is considering taking,
any action which, if consummated, would result in the
occurrence of a Change in Control of the Company; or
(iii) Any person or group, other than an employee
benefit plan of the Company or a trustee holding securities
under an employee benefit plan of the Company, that is or
becomes the beneficial owner, directly or indirectly, of 9.9%
or more of the Company's outstanding securities then having
the right to vote in elections of persons to the Board
increases its beneficial ownership of such securities by 5% or
more over the percentage so owned by such person or group on
the Commencement Date; or
(iv) The Compensation Committee of the Board shall
adopt a resolution to the effect that, for purposes of this
Agreement, a potential change in control of the Company has
effectively occurred. The Compensation Committee of the Board
shall be entitled to exercise its sole and absolute discretion
in the adoption of such resolution, whether or not any
transaction(s) or event(s) have occurred that might be deemed,
individually or collectively, to satisfy any of the criteria
set forth in subparagraphs (i) through (iii) above.
(c) Good Reason. For purposes of this Agreement, "Good Reason"
shall mean the occurrence, following a Change in Control of the
Company, of any of the following circumstances, unless (A) you have
expressly consented thereto in writing or (B) in the case of
subparagraphs (i), (v), (vi) or (vii) below, all such circumstances
shall have been fully corrected prior to the "Date of Termination"
specified in the "Notice of Termination" (as defined in Subsections
5(e) and 5(d), respectively) given in connection with such
circumstances:
(i) The assignment to you of any duties inconsistent
with your status as a senior executive officer of the Company
or any substantial reduction in or restriction upon the
nature, status or extent of your responsibilities or
authority, as compared to the nature, status and extent of
your responsibilities and authority in effect immediately
prior to such Change in Control of the Company;
(ii) A reduction by the Company in your annual base
salary, as in effect immediately prior to such Change in
Control of the Company, except for across-the-board salary
reductions similarly affecting all executives of the Company
and all executives of any person(s) then in control of the
Company;
(iii) The relocation of the Company's principal
executive offices, or the office where you are required to
perform your duties, to a location more than 25 miles from the
location of such offices immediately prior to such Change in
Control of the Company, or the imposition upon you of other
travel requirements inconsistent with your normal business
travel practices immediately prior to such Change in Control
of the Company;
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(iv) The failure of the Company, without your prior
written consent, to pay to you any portion of your then
current compensation, or any portion or installment of
deferred compensation under any deferred compensation program
of the Company, in each case within five days of the date such
payment is due;
(v) The failure of the Company to continue in effect
any compensation or benefit plan (including but not limited to
any stock option, stock grant, bonus, income deferral,
insurance, paid vacation plan or policy or other fringe
benefit or benefit plan) in which you were a participant
immediately prior to the Change in Control of the Company,
unless an equitable arrangement (embodied in an ongoing
substitute or alternative plan) has been made with respect to
such plan, or the failure of the Company to continue your
participation in any such plan (or in any such substitute or
alternative plan) on a basis no less favorable to you, both in
terms of the actual amount of benefits provided to you and in
your level of participation therein relative to other
participants, than in effect immediately prior to such Change
in Control of the Company;
(vi) The failure of the Company to obtain a
satisfactory agreement from any successor entity to assume and
agree to pay and perform all of the obligations of the Company
under this Agreement, as contemplated by Section 8 hereof; or
(vii) Any purported termination of your employment by
the Company which is not for "Cause" (as defined in Subsection
5(b) hereof) or which is not effected pursuant to a Notice of
Termination satisfying the requirements of Subsection 5(d)
hereof; for purposes of this Agreement, no such purported
termination shall be effective.
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 be deemed or construed to
constitute your consent to, or waiver of rights with respect to, any
circumstance constituting Good Reason hereunder.
3. Agreement to Continue Employment. You agree that, in the absence of
Good Reason and subject to the terms and conditions of this Agreement, in the
event of a Potential Change in Control of the Company, you agree to remain in
the employ of the Company (or of the subsidiary thereof by which you are
employed at the date such Potential Change in Control of the Company occurs) at
least until the earliest to occur of (a) the first anniversary of the Potential
Change in Control of the Company, (b) the date which is six months following a
Change in Control of the Company and (c) the termination by you of your
employment for reasons of "Disability" or "Retirement" (at your normal
retirement age), each as defined in Section 5 hereof.
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4. Acceleration of Vesting Upon a Change in Control. Upon the
occurrence of a Change in Control of the Company:
(a) All outstanding shares of common stock of the Company
("Company Shares") theretofore issued to you, under any one or more of
the restricted stock and/or stock option plans at any time maintained
by the Company ("Option Plans"), as restricted stock (or otherwise
subject to forfeiture upon certain conditions) shall become fully and
irrevocably vested, and all possibility of forfeiture thereof shall
terminate, and the certificates evidencing all of such Company Shares
shall be delivered to you on the day next following a Change in Control
of the Company;
(b) All outstanding options or other rights to purchase
Company Shares theretofore issued to you under any one or more of the
Option Plans, whether or not then currently vested or exercisable,
shall become fully and irrevocably vested and exercisable, and may
thereafter be exercised in accordance with the Option Plans under which
they were issued and any and all agreements with you in connection
therewith;
(c) All other compensation and benefits to which you are then
entitled, subject to the satisfaction of certain vesting or similar
requirements, under any other employee benefit, deferred compensation
or other similar plan shall become fully and irrevocably vested under
the terms of such plans and all possibility of forfeiture thereof shall
terminate.
5. Termination Following Change in Control. If any Change in Control of
the Company shall have occurred, you shall thereafter be entitled to the
Benefits provided in Subsection 6(c) hereof upon the termination of your
employment by the Company during the term of this Agreement, provided that such
termination is (i) effected by the Company otherwise than for Cause or by reason
of Retirement or Disability, or (ii) effected by you for Good Reason.
(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, your employment may be terminated for "Disability."
Termination of your employment, whether by the Company or you, shall be
deemed to be "Retirement" if the same occurs after you have reached the
age of sixty-five and have completed at least five years of service
with the Company, or is otherwise in accordance with any other written
agreement between the Company and you regarding your retirement.
(b) Cause. The Company shall be entitled to terminate your
employment for "Cause" if you engage in willful and continued
misconduct or in the willful and continued failure to substantially
perform your duties with the Company (other than due to physical or
mental illness); provided, however, that prior to any such termination
you shall have been given written notice by the Company setting forth
in reasonable detail the nature of such misconduct or failure and you
shall have continued to engage in such misconduct or failure
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for at least thirty days following the giving of such notice by the
Company. For purposes of this Subsection, no act, omission, or failure
to act, on your part shall be deemed "willful" unless done, omitted, or
refused to be done, by you not in good faith and without reasonable
belief that your action, omission or refusal to act, was in the best
interest of the Company.
(c) Voluntary Resignation. After a Change in Control of the
Company, upon the occurrence of any circumstance constituting Good
Reason, you shall be entitled to terminate your employment by voluntary
resignation given at any time during the two years immediately
following the occurrence of such Change in Control of the Company
hereunder, in which event you shall be entitled to all of the Benefits
provided in Subsection 6(c) hereof from and after the Date of
Termination. No such resignation shall be deemed or construed to
constitute a breach of any contract or agreement of employment 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 a written
Notice of Termination from the party seeking termination to the other
party hereto given in accordance with Section 9 hereof. For purposes of
this Agreement, a "Notice of Termination" shall mean a notice which
shall indicate (i) the specific termination provision(s) of this
Agreement being relied upon in respect of such termination, (ii) shall
set forth, in reasonable detail, the facts and circumstances claimed to
provide a basis for termination of your employment under the
termination provision(s) so indicated and (iii) shall set forth the
Date of Termination in accordance with Subsection (e) below.
(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 substantially
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 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 following the
date such Notice of Termination is given and, in the case of a
termination pursuant to Subsection (c) above, shall not be
less than fifteen nor more than sixty days following the date
such Notice of Termination is given);
provided, however, that if within fifteen days after any Notice of
Termination is given, or (if later) prior to the Date of Termination
set forth in such Notice of Termination, 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 resolved, either by mutual written
agreement of the parties, by a binding arbitration award,
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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);
further provided, however, that the Date of Termination shall be
extended by a notice of dispute hereunder only if such notice is given
in good faith and the party giving such notice pursues the resolution
of such dispute in good faith and 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 of
Termination giving rise to such dispute was given (including, but not
limited to, your base salary) and will continue you as a participant in
all other compensation, bonus, benefit and insurance plans in which you
were participating when the Notice of Termination 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 amount or benefit due under this Agreement.
6. Compensation Upon Termination or During Disability Following a
Change in Control of the Company. Following a Change in Control of the Company,
as defined in Subsection 2(a) hereof, 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 all bonus plans, restricted stock
and/or stock option plans, and other incentive and/or deferred
compensation plans during such period, until this Agreement is
terminated pursuant to Subsection 5(a) hereof. Thereafter, or in the
event your employment shall be terminated by reason of your Retirement
or 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 6(f)
hereof.
(b) If your employment shall be rightfully 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 in which you are
then irrevocably vested and to which you are then entitled under any
compensation plan of the Company, at the time such payments are due,
and the Company shall have no other or 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 all of 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
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other amounts to which you are then irrevocably vested and to
which you are then entitled under any compensation plan of the
Company, at the time such payments are due;
(ii) In lieu of any other or further salary payments
to you for periods subsequent to the Date of Termination, the
Company shall pay to you, as severance pay, a lump sum
severance payment (the "Severance Payment") equal to ____
times the average of the Annual Compensation (as defined
below) which was payable to you by the Company 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 three calendar years immediately
preceding the calendar year in which the Change in Control of
the Company 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 during the entire three calendar
years preceding the calendar year in which the Change in
Control of the Company 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 by the Company or any of its affiliates;
provided, however, that the amount for any such partial
calendar year shall be an annualized amount based on the
amount of Annual Compensation paid or payable to you during
such partial calendar year. If you were not employed by the
Company or any of its affiliates during such period, then such
average shall be an annualized amount based on the amount of
Annual Compensation paid or payable to you during the calendar
year in which the Change in Control of the Company occurred.
"Annual Compensation" shall mean and refer to your base salary
and any bonus that was paid or payable to you by the Company
or any of its affiliates during a calendar year determined
without any reduction for any deferrals of such salary or such
bonus under any deferred compensation plan (whether qualified
or unqualified) and without any reduction for any salary
reductions used to make contributions to any 401(k) plan or
other group plan maintained by the Company or any of its
affiliates;
(iii) The Company shall also pay to you all amounts
of compensation or other awards payable 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, any and all Option Plans) at any time
maintained by the Company and under any and all 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) 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 under this
Agreement or in connection
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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); and
(v) The payments provided for in paragraphs (ii),
(iii) and (iv) above shall be made not later than the fifth
business day following the Date of Termination, provided,
however, that if the amounts of such payments cannot be
finally determined on or before such date, the Company shall
pay to you on such date the estimated amount, determined in
good faith by the Company, of such payments and shall pay the
remainder of such payments, without interest, 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
repaid by you to the Company, without interest, on the fifth
business day after the actual amount of such payments is
determined by the Company;
(d) If your employment shall be terminated (y) by the Company
other than for Cause or (z) by you for Good Reason, then the Company
shall, for a period of twenty-four months following the Date of
Termination, continue to provide life, disability, accident and health
insurance benefits substantially identical to those you (and your
dependents) were receiving immediately prior to the giving of the
Notice of Termination. Benefits otherwise receivable by you pursuant to
this Subsection 6(d) shall be reduced to the extent of comparable
benefits actually received by you from another employer, and you shall
promptly report any such comparable benefits so received by you from
another employer;
(e) You shall not be required to mitigate the amount of any
payment or benefit provided for in this Section 6 by seeking or
accepting other employment, or otherwise, nor shall the amount of any
payment or benefit provided for in this Section 6 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 expressly
otherwise provided in this Section 6); and
(f) In addition to all other amounts payable to you under this
Section 6, you shall be entitled to receive (concurrently with such
other amounts payable hereunder) all amounts theretofore credited to
your account (whether or not then fully vested or payable under the
terms of such plan or agreement) under any deferred compensation or
similar plan or agreement with the Company (other than the Company's
401(k) Plan);
(g) In addition to all other amounts payable to you under this
Section 6, you shall be entitled to receive all benefits payable to you
or credited to your account (whether or not then fully vested) under
and in accordance with the terms of any other benefit plan or
compensation plan of the Company in which you are or have been a
participant, to the extent such benefits are not paid or expressly
provided for under this Agreement.
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If a Potential Change in Control of the Company shall have occurred,
within five business days following your written request that the Company do so,
the Company shall deposit with an escrow agent acceptable to you, pursuant to an
escrow agreement between the Company and such escrow agent in form and substance
acceptable to you, a sum of money or other property permitted by such escrow
agreement sufficient, in the reasonable good faith estimate of the Company, to
fund the payment to you of the amounts specified in Subsection 6(c) and Section
7 of this Agreement. It is intended that any amounts so deposited in escrow
pursuant to the preceding sentence be subject to the claims of the Company's
creditors, as set forth in the form of such escrow agreement.
7. Excise Tax; Gross-Up Payments In the event that you become entitled
to any of the payments or benefits (collectively, the "Benefits") provided for
under Sections 4 and 6 above, and if any of the Benefits will be subject to the
tax (the "Excise Tax") imposed by Section 4999 of the Code, the Company shall
pay to you, an additional amount (the "Gross-Up Payment") such that the net
amount retained by you, after deduction of any Excise Tax upon such Benefits,
shall be equal to the amount of the Benefits before the deduction or payment of
any Excise Tax attributable thereto. Such Gross-Up Payment shall be payable
concurrently with the Benefits to which it relates (or, if the amount of such
Gross-Up Payment cannot be finally determined on or before such date, the
Company shall pay to you on such date the estimated amount, determined in good
faith by the Company, of such Gross-Up Payment and shall pay the remainder
thereof, without interest, as soon as the amount thereof can be determined, but
in no event later than the thirtieth day after the date upon which the payment
of such Benefits are due). For purposes of determining whether any of the
Benefits will be subject to the Excise Tax, and the amount of such Excise Tax,
the following shall 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 the
termination of your 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 any 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) of the Code shall be treated as subject
to the Excise Tax, unless in the written 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 Benefits which shall be treated as
subject to the Excise Tax shall be equal to the lesser of (y) the total
amount of the Benefits and (z) the amount of "excess parachute
payments" within the meaning of Section 280G(b)(1) of the Code (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 any 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 taxation applicable to individuals 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 would be obtained
from deduction of such state and local taxes. In the event that the
amount of Excise Tax attributable to Benefits 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, without interest, within thirty days following the date that
the amount of such reduction in Excise Tax is finally determined, that
portion of the Gross-Up Payment attributable to such reduction
(including appropriate adjustments to reflect the net effect on
Federal, state and local income taxes applicable to the repayment of
such portion of the Gross-Up Payment). In the event that the Excise Tax
attributable to Benefits 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
was not 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 or penalty payable by you in respect thereof) at the
time that the amount of such excess is finally determined;
8. Successors; Binding Agreement.
(a) The Company will require that 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 constitute a breach of this
Agreement, which breach shall entitle you to receive compensation from
the Company in the same amount and on the same terms as you would be
entitled to hereunder if you terminated your employment 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 hereinabove defined
and any successor to all or substantially all of its business and/or
assets which assumes and agrees to perform this Agreement in writing,
by operation of law, or otherwise.
(b) This Agreement shall inure to the benefit of and be
enforceable by you, your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.
If you should die while any amount would still be payable to you
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hereunder if you had continued to live, all such amounts, unless
otherwise expressly provided herein, shall be paid in accordance with
the terms of this Agreement to your devisees, legatees or other
designees or, if there is no such devisee, legatee or designee, to your
estate.
9. 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 signature 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 shall have
designated to the other in writing in accordance herewith, except that any such
notice of change of address shall be effective only upon receipt.
10. Miscellaneous. No provision of this Agreement may be amended,
modified, waived or discharged unless such amendment, modification, waiver or
discharge is agreed to in writing and signed by you and a duly authorized
officer of the Company, other than yourself. No waiver by either party hereto at
any time of any breach of, or noncompliance with, any particular provision of
this Agreement by the other party hereto, or the existence of any particular
condition or the occurrence of any particular event hereunder, shall be deemed
or construed as a waiver of any other or further breach, noncompliance,
condition or occurrence, whether similar or dissimilar and whether occurring or
existing at the same or 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 substantive laws of the
State of Texas, without regard for any provision of such law which might require
the application of the laws of any other jurisdiction. All references herein to
sections of the Exchange Act or the Code shall be deemed also to refer to any
successor provisions to such sections. Except as otherwise expressly provided
herein, any payments provided for hereunder shall be paid net of applicable
withholding taxes required under Federal, state or local law. The accrued
obligations of the Company under Section 4 hereof, if any, shall survive your
subsequent death, Disability or Retirement and shall survive the expiration of
the term of this Agreement.
11. 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, all of which shall remain in full force and effect.
12. Execution in Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed to be an original and all of
which together shall constitute one and the same instrument.
13. Arbitration. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
Dallas, Texas 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 of competent jurisdiction; provided, however, that you shall be
entitled to seek
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specific performance, in any court of competent jurisdiction, of your right to
be paid your full base salary hereunder for all periods prior to the Date of
Termination, and during the pendency of any dispute or controversy arising under
or in connection with this Agreement.
14. Similar Provisions in Other Agreements. The Benefits provided for
under this Agreement shall supercede and replace any other benefits to which you
may be entitled under any previous agreement between you and the Company or its
affiliates.
If this letter sets forth fully and accurately our agreement with
respect to the subject matter hereof, please sign and date the enclosed copy of
this letter and return the same to the Secretary of the Company, whereupon this
letter shall constitute our mutually binding agreement with respect to the
subject matter hereof.
[Signatures on following page.]
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Very truly yours,
Company Address:
545 E. John Carpenter Frwy. FELCOR LODGING TRUST INCORPORATED,
Suite 1300 acting individually and as the sole
Irving, Texas 75062 general partner of FelCor Lodging
Attention: Corporate Secretary Limited Partnership
By:
--------------------------------
Name: Thomas J. Corcoran, Jr.
-----------------------------
Title: President
-----------------------------
Accepted and Agreed to this __ day of
_______________, 1998:
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Address:
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