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EXHIBIT 10(p)
CHANGE IN CONTROL AGREEMENT
This Agreement, dated this 25th day of October, 1999, is between Prime
Hospitality Corp., a Delaware corporation (the "Company"), and Xxxxxxx Xxxxxxx
("Employee").
R E C I T A L S:
A Employee is a key officer and employee of the Company.
B. The Board of Directors of the Company (the "Board") recognizes
that Employee is one of several key officer/employees whose high quality of job
performance is essential to promoting and protecting the best interests of the
Company and its shareholders.
C. The Board further recognizes (i) that it is possible that a
Change in Control of the Company could occur at some time in the future, (ii)
that the uncertainty associated with such a possibility could result in the
distraction of Employee from Employee's assigned duties and responsibilities,
(iii) that it is in the best interests of the Company and its shareholders to
assure the continued attention by Employee to such duties and responsibilities
without such distraction and (iv) that Employee must be able to participate in
the assessment and evaluation of any proposal which could effect a Change in
Control of the Company without Employee's judgment being influenced by
uncertainties regarding Employee's future financial security.
D. The Company wishes to provide Employee with certain benefits
in the event of a Change in Control of the Company as set forth herein.
TERMS AND CONDITIONS
For valuable consideration, the receipt of which is hereby
acknowledged, the parties agree as follows:
1. Definitions.
(a) For purposes of this Agreement, the Company shall
have "Cause" to terminate Employee's employment hereunder upon (A) the willful
engaging by Employee in misconduct
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which results in demonstrable and material economic injury to the Company, or
(B) the conviction of Employee of a felony involving moral turpitude. For
purposes of this paragraph, no act, or failure to act, on Employee's part shall
be considered "willful" unless done, or omitted to be done, by him not in good
faith and without reasonable belief that his action or omission was in or not
opposed to the best interests of the Company. Employee shall not be deemed to
have been terminated for Cause unless the Company shall have given or delivered
to Employee (i) reasonable notice setting forth the reasons for the Company's
intention to terminate for Cause, (ii) an opportunity for Employee to cure any
such breach within thirty (30) days after receipt of such notice, (iii) an
opportunity for Employee, together with his counsel, to be heard before the
Board, and (iv) a written notice of termination stating that, in the good faith
opinion of not less than a majority of the entire membership of the Board,
Employee was guilty of conduct set forth above in clauses (A) or (B) of the
second preceding sentence, and specifying the particulars thereof in detail.
Notwithstanding the foregoing, in the case of any Employee who has in effect an
employment agreement with the Company ("Employment Agreement"), no termination
following a Change in Control shall be treated as for Cause (x) for purposes of
this Agreement unless it would also be treated as for Cause under such
Employment Agreement, or (y) for purposes of such Employment Agreement unless
it would also be treated as for Cause under this Agreement.
(b) A "Change in Control" of the Company shall be
considered to occur if and when:
(i) more than 30% of the Company's
outstanding securities entitled to vote in elections
of directors (the "Voting Securities") are acquired
by any person, entity or group (as such terms are
used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934) (other than the Company, any
corporation, partnership, trust or other entity
controlled by the Company (a "Subsidiary") or any
trustee, fiduciary or other person or entity holding
securities under any employee benefit plan or trust
of the Company or any of its Subsidiaries) (such
person, entity or group, a "Person"); provided,
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however that, notwithstanding the prior clause of
this Section 1(b)(i), unless the Board, within thirty
(30) days of such event, determines otherwise, a
Change in Control shall be considered to occur if and
when more than 20% of the Voting Securities are
acquired by any Person; or
(ii) during any period of two consecutive
years, the individuals who, at the beginning of such
period, constitute the Board (the "Incumbent Board")
cease for any reason to constitute at least a
majority thereof, provided, however, that a director
who is not otherwise a member of the Incumbent Board
shall be deemed to be a member of the Incumbent Board
if such director was elected by, on the
recommendation of, or with the approval of, at least
two-thirds of the Incumbent Board (taking into
account the proviso in this Section 1(b)(ii);
(iii) the sale, lease, exchange or other
disposition in one transaction or in a series of
related transactions of all or substantially all of
the assets of the Company, other than a sale, lease,
exchange or other disposition to an entity, following
which (A) more than 50%, respectively, of the then
outstanding shares of common stock or other
securities, (measured by value) of such entity and
the combined voting power of the then outstanding
voting securities of such entity entitled to vote
generally in the election of directors (collectively,
"Equity Securities") is then beneficially owned,
directly or indirectly, by individuals and entities
who were the beneficial owners of the outstanding
Voting Securities immediately prior to such sale,
lease, exchange or other disposition, in
substantially the same proportions among such
beneficial owners, (B) no Person (excluding any
Person beneficially owning, immediately prior to such
sale, lease, exchange or other disposition, directly
or indirectly, 30% or more of the outstanding Voting
Securities), beneficially owns, directly or
indirectly, 30% or more, respectively, of the then
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outstanding Equity Securities, and (C) at least a
majority of the members of the board of directors of
the entity were members of the Incumbent Board at the
time of the execution of the initial agreement or
action of the Board providing for such sale, lease,
exchange or other disposition of assets of the
Company;
(iv) approval by the Company's
shareholders of a reorganization, merger or
consolidation of the Company, unless, following such
reorganization, merger or consolidation, (A) more
than 50%, respectively, of the then outstanding
Equity Securities of the entity resulting from such
reorganization, merger or consolidation is then
beneficially owned, directly or indirectly, by
individuals and entities who were the beneficial
owners, respectively, of the outstanding Voting
Securities immediately prior to such reorganization,
merger or consolidation, in substantially the same
proportions among such beneficial owners, (B) no
Person (excluding any Person beneficially owning,
immediately prior to such reorganization, merger or
consolidation, directly or indirectly, 30% or more of
the outstanding Voting Securities), beneficially
owns, directly or indirectly, 30% or more of the
outstanding Voting Securities), beneficially owns,
directly or indirectly, 30% or more, respectively, of
the then outstanding Equity Securities of the entity
resulting from such reorganization, merger or
consolidation, and (C) at least a majority of the
members of the board of directors of the entity
resulting from such reorganization, merger or
consolidation were members of the Incumbent Board at
the time of the execution of the initial agreement
providing for such reorganization, merger or
consolidation;
(v) approval by the Company's
shareholders of a complete liquidation or dissolution
of the Company; or
(vi) such other events as the Board may
designate.
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(c) "Good Reason" shall mean the occurrence of any of the
following, without Employee's consent, after a Change in Control:
(i) a material reduction or adverse alteration in
the titles, duties, authorities or responsibilities
of Employee's position;
(ii) a reduction in Employee's annual base salary,
bonus or other compensation arrangements provided by
the Company;
(iii) the relocation of Employee's place of
employment by more than twenty miles; or
(iv) a material reduction in or the discontinuance
of the perquisites or benefits provided by the
Company to Employee.
In addition, and without limiting the foregoing, in the case
of an Employee with an Employment Agreement "Good Reason"
shall include any act or failure to act which would constitute
"good reason" as such term is defined in the Employee's
Employment Agreement.
(d) The term "Cash Compensation" shall mean,
during any fiscal year of the Company, Employee's aggregate
cash compensation earned as an Employee of the Company during
the immediately preceding fiscal year (including any bonus
earned but not paid by fiscal year-end and without regard to
any election deferring the receipt of compensation so earned).
If Employee was employed by the Company for only a portion of
the preceding fiscal year, "Cash Compensation" for such year
shall be determined based on the aggregate cash compensation
earned during the portion of such year that Employee was
employed.
2. Change in Control.
(a) Options. In the event of a Change in Control of the
Company, all stock options granted to Employee by the Company
under any compensatory plan or arrangement shall become
immediately vested and exercisable, notwithstanding any
vesting schedule previously applicable to such stock options.
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(b) Cash Payment. If, within twenty-four (24) months
following a Change in Control of the Company, the Company
terminates Employee's employment without Cause, or Employee
terminates his or her employment with the Company for Good
Reason, then the Company shall, within ten (10) days of such
termination of employment, pay to Employee, in one lump sum,
in immediately available funds by wire transfer in accordance
with Employee's instructions, an amount equal to two and
one-half (2-1/2) times Employee's "Cash Compensation" as
defined above.
3. Excise Tax Gross-Up.
(a) Anything in this Agreement to the contrary
notwithstanding, if it shall be determined that any payment or
distribution by the Company to or for Employee's benefit
(whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or pursuant to an
Employment Agreement or any other compensatory Company plan or
arrangement, without taking into account the Gross-Up Payment,
as hereinafter defined) (a "Payment") would be subject to the
excise tax imposed by Section 4999 of the Internal Revenue
Code of 1986, as amended (the "Code"), or any interest or
penalties are incurred by Employee with respect to such excise
tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the
"Excise Tax"), then Employee shall be entitled to receive an
additional payment (a "Gross-Up Payment") in an amount such
that after payment by Employee of all Federal, state and local
taxes (including any interest or penalties imposed with
respect to such taxes), including, without limitation, any
income taxes, withholding taxes and payroll taxes (and any
interest and penalties imposed with respect thereto) and
Excise Tax imposed upon the Gross-Up Payment, Employee retains
an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments.
All determinations required to be made under this
Section 11, including whether and when a Gross-Up Payment is
required and the amount of such Gross-Up
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Payment and the assumptions to be utilized in arriving at such
determination, shall be made by a nationally recognized
accounting firm as may be designated by Employee (the
"Accounting Firm") which shall provide detailed supporting
calculations both to the Company and Employee within fifteen
(15) business days of the receipt of notice from Employee that
there has been a Payment, or such earlier time as is requested
by the Company. In the event that the Accounting Firm is
serving as accountant or auditor for the individual, entity or
group effecting the Change in Control, Employee shall appoint
another nationally recognized accounting firm to make the
determinations required hereunder (which accounting firm shall
then be referred to as the Accounting Firm hereunder). All
fees and expenses of the Accounting Firm shall be borne by the
Company. Any Gross-Up Payment, as determined pursuant to this
Section 11, shall be paid by the Company to Employee within
five days of the receipt of the Accounting Firm's
determination. Any determination by the Accounting Firm shall
be binding upon the Company and Employee. As a result of the
uncertainty in the application of Section 4999 of the Code at
the time of the initial determination by the Accounting Firm
hereunder, it is possible that Gross-Up Payments which will
not have been made by the Company should have been made
("Underpayment"), consistent with the calculations required to
be made hereunder. In the event that the Company exhausts its
remedies pursuant to Section 3(b) and Employee thereafter is
required to make a payment of any Excise Tax, the Accounting
Firm shall determine the amount of the Underpayment that has
occurred and any such Underpayment shall be promptly paid by
the Company to or for Employee's benefit.
(b) Employee shall notify the Company in writing
of any claim by the Internal Revenue Service that, if
successful, would require the payment by the Company of the
Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than fifteen business days after
Employee is informed in
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writing of such claim and shall apprise the Company of the
nature of such claim and the date on which such claim is
requested to be paid. Employee shall not pay such claim prior
to the expiration of the 30-day period following the date on
which it gives such notice to the Company (or such shorter
period ending on the date that any payment of taxes with
respect to such claim is due). If the Company notifies
Employee in writing prior to the expiration of such period
that it desires to contest such claim, Employee shall:
(i) give the Company any information reasonably
requested by the Company to such claim,
(ii) take such action in connection with
contesting such claim as the Company shall reasonably
request in writing from time to time, including,
without limitation, accepting legal representation
with respect to such claim by an attorney reasonably
selected by the Company,
(iii) cooperate with the Company in good faith in
order effectively to contest such claim, and
(iv) permit the Company to participate in any
proceeding relating to such claim,
provided, however, that the Company shall bear and pay
directly all costs and expenses (including additional interest
and penalties) incurred in connection with such contest and
shall indemnify and hold Employee harmless, on an after-tax
basis, from any Excise Tax or income tax (including interest
and penalties with respect thereto) imposed as a result of
such representation and payment of costs and expense. Without
limitation on the foregoing provisions of this Section 3, the
Company shall control all proceedings taken in connection with
such contest and, at its sole option, may pursue or forego any
and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim
and may, at its sole option, either direct Employee to pay the
tax claimed and xxx for a refund or contest
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the claim in any permissible manner, and Employee agrees to
prosecute such contest to a determination before any
administrative tribunal, in a court of initial jurisdiction
and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs
Employee to pay such claim and xxx for a refund, the Company
shall advance the amount of such payment to Employee, on an
interest-free basis, and shall indemnify and hold Employee
harmless, on an after-tax basis, from any Excise Tax or income
tax (including interest or penalties with respect thereto)
imposed with respect to such advance or with respect to any
imputed income with respect to such advance; and further
provided that any extension of the statute of limitations
relating to payment of taxes for Employee's taxable year with
respect to which such contested amount is claimed to be due is
limited solely to such contested amount. Furthermore, the
Company's control of the contest shall be limited to issues
with respect to which a Gross-Up Payment would be payable
hereunder and Employee shall be entitled to settle or contest,
as the case may be, any other issue raised by the Internal
Revenue Service or any other taxing authority.
(c) If, after Employee's receipt of an amount
advanced by the Company pursuant to Section 3(b), Employee
becomes entitled to receive any refund with respect to such
claim, Employee shall (subject to the Company's complying with
the requirements of this Section 3(b)) promptly pay to the
Company the amount of such refund (together with any interest
paid or credited thereon after taxes applicable thereto). If,
after Employee's receipt of an amount advanced by the Company
pursuant to Section 3(b), a determination is made that
Employee shall not be entitled to any refund with respect to
such claim and the Company does not notify Employee in writing
of its intent to contest such denial of refund prior to the
expiration of 30 days after such determination, then such
advance shall be forgiven and shall not be required to be
repaid and the amount of such advance shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be
paid.
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4. Waiver of Invalidity. Inasmuch as the injury caused to
Employee in the event Employee's employment is terminated within
twenty-four (24) months of a Change in Control is difficult or
incapable of accurate estimation at the date of this Agreement, the
amounts to be paid pursuant to Sections 2 and 3 are intended to be
liquidated damages and not a penalty, and therefore constitute a good
faith forecast of the harm which might be expected to be caused to
Employee. Accordingly, the Company waives any right to assert against
Employee the invalidity of any payment provided in Sections 2 and 3 by
reason of Employee's failure to seek other employment or otherwise,
nor shall the amount of any payment provided in Sections 2 and 3 be
reduced by reason of any compensation earned or not earned by Employee
as a result of employment by another employer after the date of
termination or otherwise.
5. Arbitration of Disputes. All disputes governing the
interpretation or enforcement of this Agreement shall be resolved
exclusively by arbitration in the manner set forth in this Section 5.
Employee or the Company may submit to arbitration any claim under this
Agreement as follows: At any time following the termination of
Employee's employment with the Company, the claim may be filed in
writing with an arbitrator of Employee's choice or, if the claim is
filed by the Company, reasonably acceptable to Employee, and
thereafter the Company, or Employee, as applicable, shall be notified
in writing of the claim and furnished with a true copy as so filed.
The arbitrator must be a member of the National Academy of Arbitrators
or one who currently appears on arbitration panels issued by the
American Arbitration Association. To the extent not inconsistent with
the rules set forth in this Section 5, the arbitration proceeding
shall insofar as practicable be conducted in accordance with the
National Rules of the American Arbitration Association for the
Resolution of Employment Disputes effective June 1, 1996. The
arbitration hearing shall be held within ten (10) business days after
the receipt of notice of the claim by the Company. No continuance of
the hearing shall be allowed without the mutual consent of Employee
and the Company. Absence from or non-participation at the hearing by
either party shall not
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prevent the issuance of an award. Hearing procedures which will
expedite the hearing may be ordered at the arbitrator's discretion.
The arbitrator's award shall be rendered as expeditiously as possible.
In the event the arbitrator finds that the Company has breached this
Agreement, the arbitrator shall order the Company to pay to Employee,
within twenty-four hours after the decision is rendered, the amount
due hereunder. The award of the arbitrator shall be final and binding
upon the parties. Judgment may be entered on the arbitrator's award in
any appropriate court as soon as possible after its rendition without
further notice to the Company. The Company shall promptly reimburse
Employee for the reasonable legal fees and expenses incurred by
Employee in connection with enforcement of Employee's rights hereunder
or the determination of Employee's rights in any arbitration
proceeding.
6. Miscellaneous.
(a) Waiver. The failure of any party to exercise any
rights hereunder or to enforce any of the terms or conditions
of this Agreement on any occasion shall not constitute or be
deemed a waiver of that party's rights thereafter to exercise
any rights hereunder or to enforce each and every term and
condition of this Agreement.
(b) Binding Effect; Successors.
(i) The Company will require any successor
(whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the
business or assets of the Company, by agreement, in form and
substance satisfactory to Employee, expressly to assume and
agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform 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 will entitle Employee to
compensation from the Company in the same amount and on the
same terms as Employee would be entitled to under Section 2(b)
hereunder had the Company terminated Employee without Cause on
the succession date (assuming a Change in Control of the
Company had occurred prior to such succession date). As used
in this
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Agreement, "the Company" means Employer as defined in the
preamble to this Agreement and any successor to its business
or assets which executes and delivers the agreement provided
for in this Section 6(b) or which otherwise becomes bound by
all the terms and provisions of this Agreement by operation of
law or otherwise.
(ii) This Agreement and all rights of the Employee
hereunder shall inure to the benefit of and be enforceable by
Employee and Employee's personal or legal representatives,
executors, administrators, successors, heirs, distributees,
devisees and legatees. If Employee 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 Employee's devisee, legatee, or other beneficiary
or, if there be no such beneficiary, to Employee's estate.
(c) Governing Law. This Agreement shall be construed and
enforced in accordance with the laws of the State of Delaware.
(d) Authorization and Modification. This Agreement is
executed for and on behalf of the Company by an officer
thereof duly authorized to do so by resolution of the Board of
Directors approving this Agreement and authorizing such
execution. This Agreement shall not be varied, altered,
modified, changed or in any way amended except by an
instruction in writing executed by the parties hereto.
(e) Assignment by Employee. Except as otherwise
expressly provided for in this Agreement, no right, benefit or
interest of Employee arising hereunder shall be subject to
anticipation, alienation, sale, assignment, encumbrance,
charge, pledge, hypothecation or set-off in respect of any
claim, debt or obligation or to execution, attachment, levy or
similar process, or assignment by operation of law. Any
attempt, voluntary or involuntary, to effect any action
specified in the immediately preceding sentence shall, to the
full extent permitted by law, be null, void and of no effect.
(f) Notice. For the purposes of this Agreement, notices,
demands and all
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other communications provided for in the Agreement shall be in
writing and shall be deemed to have been given when hand
delivered or (unless otherwise specified) mailed by United
States registered mail, return receipt requested, postage
prepaid, addressed as follows:
If to the Employee: Xxxxxxx Xxxxxxx
------------------ 00 Xxxxxxxx Xxxx
Xxxx Xxxxxxxx, Xxxxxxxxxxx 00000
If to the Company: Prime Hospitality Corp.
----------------- 000 Xxxxx 00 Xxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Attention: General Counsel
or to such other address as any party may have furnished to
the others in writing in accordance herewith, except that
notices of change of address shall be effective only upon
receipt.
(g) Validity. The invalidity or unenforceability
of any provision or provisions of this Agreement shall not
affect the validity or enforceability of any other provisions
of this Agreement, which shall remain in full force and
effect.
(h) Taxes. The Company shall deduct from all amounts
payable under this Agreement all federal, state, local and
other taxes required by law to be withheld with respect to
such payments.
7. Other Arrangements. The rights of Employee under this
Agreement are in addition to Employee's rights under any Employment
Agreement or any successor agreement to an Employment Agreement
covering Employee. Nothing contained in this Agreement shall adversely
affect any of Employee's rights under an Employment Agreement or as a
participant or beneficiary under the Company's pension and welfare
benefit plans, incentive compensation arrangements and perquisite
programs, or Employee's obligations arising under any confidentiality,
non-competition or no solicitation agreement with the Company. This
Agreement supersedes any and all prior Change in Control Agreements
entered into
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between Employee and the Company.
PRIME HOSPITALITY CORP.
By: /s/ X. X. XXXXXXXXXX
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X. X. Xxxxxxxxxx, President
EMPLOYEE:
/s/ XXXXXXX XXXXXXX
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Xxxxxxx Xxxxxxx
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