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EXHIBIT 10.24
SHORT-TERM RETENTION AGREEMENT
THIS SHORT-TERM RETENTION AGREEMENT (this "Agreement") is made as of
this 5th day of March , 1999, between PROMUS HOTEL CORPORATION (the "Company")
and Thomas W. Storey (the "Executive").
RECITALS
WHEREAS, on September 15, 1997, Doubletree Corporation entered into a
Severance Agreement (the "Severance Agreement") with the Executive intended to
provide certain payments and benefits to the Executive in the event of a
Reorganization Event (as defined in the Severance Agreement) followed by the
Executive's Covered Termination (as defined in the Severance Agreement); and
WHEREAS, the Company assumed the rights and obligations of Doubletree
Corporation under the Severance Agreement, effective as of December 18, 1997;
and
WHEREAS, the Company desires to provide incentives under this Agreement
for the retention of the Executive and, in exchange therefor, the Executive is
willing to amend the Severance Agreement to exclude the Doubletree/Promus Merger
(as defined herein) from the definition of Reorganization Event for purposes of
the Severance Agreement;
NOW, THEREFORE, in consideration of the mutual promises set forth
below, and for other good and valuable consideration, the sufficiency of which
is acknowledged, the Company and the Executive hereby agree as follows:
AGREEMENT
1. DEFINITIONS
Capitalized terms used herein shall have the following meanings:
(a) "Board" shall mean the Board of Directors of the Company.
(b) "CAPE Plan" shall mean the Promus Hotel Corporation
Capital Accumulation Plan for Executives, as amended from time to time, or any
successor deferred compensation plan for executives of the Company that is
substantially similar to such plan.
(c) "Cause" for termination of the Executive's employment
shall mean:
(A) the Executive's engaging in willful gross neglect of
his duties with the Company, or the Executive's fraud or dishonesty in
connection with his
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performance of duties to the Company, in either case which has a materially
detrimental effect on the business or operations of the Company; or
(B) the Executive's conviction by a court of competent
jurisdiction of any crime (or upon entering a plea of guilty or nolo contendere
to a charge of any crime) constituting a felony.
(d) "Code" shall mean the Internal Revenue Code of 1986, as
amended.
(e) "Company" shall mean Promus Hotel Corporation, or any
successor corporation that assumes this Agreement under Section 6 hereof or
otherwise becomes bound by this Agreement.
(f) "Doubletree/Promus Merger" shall mean that series of
transactions pursuant to which (i) Promus Operating Company, Inc. (then known as
Promus Hotel Corporation) and Doubletree Corporation merged with and became
wholly owned subsidiaries of a new corporation named "Parent Holding Corp.",
(ii) Promus Operating Company, Inc. (then known as Promus Hotel Corporation) was
renamed "Promus Operating Company, Inc.", and (iii) Parent Holding Corp. was
renamed "Promus Hotel Corporation" (the "Company"), all of which ultimately
became effective as of December 19,1997.
(g) "Effective Date" shall mean the date this Agreement is
executed by the Company and the Executive, as first noted at the top of this
Agreement.
(h) "Good Reason" for the Executive's voluntary termination of
employment shall mean the occurrence of any of the following events without the
Executive's prior written consent:
(A) any reduction in the Executive's annual base salary as
in effect on the Effective Date of this Agreement; or
(B) any reduction in the Executive's target or maximum
bonus percentage under the Company's annual bonus plan from the percentage in
effect at the Effective Date of this Agreement; or
(C) a relocation by more than 50 miles from the
Executive's principal place of business as of the Effective Date of this
Agreement, or the Company's requiring the Executive to locate anywhere that is
more than 50 miles from the Executive's principal place of business as of the
Effective Date of this Agreement.
The Executive shall provide the Company with 30-day advance written
notice of a termination for Good Reason setting forth in reasonable detail the
facts and circumstances claimed to provide a basis for the termination. Such
notice may be given at any time following the occurrence of the events that
provide the basis for the termination; provided, however, that (a) where a
termination for Good Reason is on account of relocation, as provided in item
(C) above, such notice shall be provided within
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one (1) year of the effective date of such relocation. If within the thirty (30)
day notice period, the Company takes actions reasonably satisfactory to the
Executive to remedy the basis for the Good Reason termination, such notice of
termination shall be considered null and void; provided, however that the
Company shall not have the right to remedy a Good Reason termination occurring
on the basis of a relocation as described in item (C) above. The date of
termination for a termination for Good Reason shall be the expiration of the
30-day notice period provided for above.
2. AMENDMENT TO SEVERANCE AGREEMENT
(a) Amendment. The Severance Agreement is hereby amended by
deleting the last sentence in the definition of the term "Reorganization Event"
in Section 1 thereof and substituting therefor the following sentence:
"It is hereby understood and agreed that the consummation of
the business combination contemplated by the Agreement and Plan of Merger dated
as of September 1, 1997, as amended, among Doubletree Corporation, the Company
and Parent Holding Corp. shall not constitute a Reorganization Event for
purposes of this Agreement."
As hereby amended, the Severance Agreement shall remain in
full force and effect with respect to any Reorganization Event (i.e., excluding
the Doubletree/Promus Merger).
(b) Purpose of Amendment. The parties acknowledge that the
intent and purpose of the above amendment to the Severance Agreement is to
eliminate the Executive's right to receive any payment or benefit under the
Severance Agreement that in any way results from or arises out of the occurrence
of the Doubletree/Promus Merger, and that the benefits payable to the Executive
under this Agreement are intended to wholly supercede any compensation
potentially payable to the Executive under the Severance Agreement as a result
of the Doubletree/Promus Merger. The Executive accepts the benefits provided for
herein without regard to whether they are equal to, less than, or exceed any
potential benefits payable to the Executive under the Severance Agreement.
3. CREDIT TO CAPE PLAN
(a) Credit to CAPE Plan. In consideration for the amendment to
the Severance Agreement as set forth above, and provided that the Executive is
then employed by the Company or its affiliates, the Company agrees to credit to
the account of the Executive under the CAPE Plan, effective as of June 30, 1999,
the aggregate amount of $525,000 dollars (U.S.$ $525,000) plus interest on such
amount as if credited on January 1, 1999 (the "CAPE Credit Amount"). Upon credit
to the Executive's CAPE account, the CAPE Credit Amount shall thereafter be
governed exclusively by the terms and conditions of the CAPE Plan.
(b) Early Crediting. In the event that the Executive's
employment with the Company is terminated by the Company without Cause or by the
Executive for Good Reason prior to June 30, 1999, then the amount described in
Section 3(a) above
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shall be credited to the Executive's account under the CAPE Plan as of the date
immediately prior to such termination of employment.
(c) Forfeiture of Right to Credits. If the Executive's
employment terminates prior to June 30, 1999, for any reason other than as
described in 3(b) above, then the Executive shall lose all rights to that
portion of the Retention Payment (if any) under this Agreement that has not yet
been credited to Executive's CAPE Plan Account as of the date of such
termination. The Executive shall not receive partial or pro-rata credit for the
year in which the termination occurred.
4. EXCISE TAX REIMBURSEMENT
(a) Gross-Up Payment. In the event it shall be determined
that any payment, benefit or distribution by the Company or any other person or
entity to or for the Executive's benefit, whether paid or payable or distributed
or distributable pursuant to the terms of this Agreement or otherwise, or
whether prior to or following the Effective Date, in connection with, or arising
out of, the Executive's employment with the Company, the Doubletree/Promus
Merger, or a Reorganization Event of the Company (a "Payment") will be subject
to the tax (the "Excise Tax") imposed by Section 4999 of the Code, the Company
shall pay to the Executive at the time specified in Section 4(c) below, an
additional amount (the "Gross-Up Payment") such that the net amount retained by
the Executive, after deduction of any Excise Tax on the payments and any federal
(and state and local) income tax, employment tax, and Excise Tax upon the
payment provided for by this paragraph, shall be equal to the amount of the
Payments.
(b) Calculation of Gross-Up Payment. For purposes of
determining whether any of the Payments will be subject to the Excise Tax and
the amount of such Excise Tax the following will apply:
(i) any payments or benefits received or to be received
by the Executive in connection with this Agreement, the Doubletree/Promus Merger
or a Reorganization Event 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 the Executive 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;
and
(ii) 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
28OG(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, the Executive shall
be deemed to pay federal income taxes at the highest
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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 the Executive's residence
on the date the Payments were made, 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 Payments is
subsequently determined to be less than the amount taken into account hereunder
at the time of termination of the Executive's employment, he 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,
employment tax and federal (and state and local) income tax imposed on the
Gross-Up Payment being repaid by the Executive 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 Payments is determined to exceed the amount taken into account
hereunder at the time of the termination of the Executive's 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.
(c) Method of Payment. The Gross-Up Payment shall be made in a
cash lump-sum payment, net of any required tax withholding, upon the fifth (5th)
business day following the date of termination of the Executive's employment;
provided, however, that if the amounts of the Gross-Up Payment cannot be finally
determined on or before such day, the Company shall pay on such day an estimate,
as determined in good faith by the Company, of the minimum amount of such
payment. Any portion of the Gross-Up Payment that is not made in a timely manner
shall bear interest at a rate equal to one-hundred twenty (120) percent of the
monthly compounded applicable federal rate, as in effect under Section 1274(d)
of the Code for the month in which the payment is required to be made. In the
event that the amount of the estimated Gross-Up Payment exceeds the amount
subsequently determined to have been due, such excess shall constitute a loan by
the Company payable on the fifth day after demand by the Company with interest
at the rate provided under Section 1274(d) of the Code until paid.
5. NO MITIGATION OR OFFSET
The amount of any payment or benefit to which the Executive becomes
entitled herein shall not be reduced by any compensation earned by the Executive
as the result of retirement benefits, nor by offset against any amount claimed
to be owed to the Company by reason of a claimed breach by the Executive of his
obligations to the Company.
6. 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
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Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place.
(b) This Agreement shall inure to the benefit of and be
enforceable by the Executive's personal or legal representatives, executors,
administrators, successors, heirs, distributees, devises and legatees.
7. NOTICE
Any notice required or permitted to be given by this Agreement shall be
effective only if in writing, delivered personally against receipt therefor or
mailed by certified or registered mail, return receipt requested, to the parties
at the addresses hereinafter set forth, or at such other places that either
party may designate by notice to the other.
Notice to the Company shall be addressed to:
Promus Hotel Corporation
755 Crossover Lane
Memphis, Tennessee 38117
Attention: General Counsel
Notice to the Executive shall be addressed to him at the business
address of the Company where the Executive is employed, with a copy to him at
his home address as follows:
3936 N. Galloway Drive
Memphis, TN 38111
All such notices shall be deemed effectively given five (5) days after
the same has been deposited in a post box under the exclusive control of the
United States Postal Service.
8. 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 the Executive and such officer of the Company 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. 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.
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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
accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator's award in any court having
jurisdiction.
11. PAYMENT OF LEGAL FEES
Each party shall pay its own legal fees and expenses incurred in
connection with any arbitration (or other proceeding whether or not instituted
by the Company or the Executive), relating to the interpretation or enforcement
of any provision of this Agreement (including any action seeking to obtain or
enforce any right or benefit provided by this Agreement) or in connection with
any tax audit or proceeding relating to the application of Section 4999 of the
Code to any payment or benefit provided by the Company.
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12. NO RESTRICTIONS ON EMPLOYMENT RIGHTS
This contract is in relation to certain benefits and compensation only
and is not to be construed as an employment contract for a definite term.
Nothing in this Agreement shall confer on the Executive any right to continue in
the employ of the Company or shall interfere with or restrict the rights of the
Company, which are expressly reserved, to discharge the Executive at any time
for any reason whatsoever. Nothing in this Agreement shall restrict the right of
the Executive to terminate his employment with the Company at any time for any
reason whatsoever.
IN WITNESS WHEREOF, the parties have executed these presents as of the
day and year first above written.
PROMUS HOTEL CORPORATION
/s/ Kelly Jenkins
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Name:
Title:
Date: 3/5/99
THE EXECUTIVE
/s/ Thomas W. Storey
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Name:
Date: 3/4/99
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