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Exhibit 10(o)
CHANGE IN CONTROL AGREEMENT
This Agreement, dated this ____ day of ________, 1998, is between
Prime Hospitality Corp., a Delaware corporation (the "Company"), and X.X
Xxxxxxxxxx ("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
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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 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,
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on Employee's part shall be considered "willful" unless done, or
omitted to be done, by him not in goo 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) in
the case of conduct described in clause (A) above, 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, no termination following a
Change in Contro shall be treated as for Cause (x) for purposes of
this Agreement unless it
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would also be treated as for Cause under Employee's employment
agreement with the Company, dated September 14, 1998 (the
"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 a person, entity or group, a "Person");
provided, however that, notwithstanding the prior clause of
this Section
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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 (2) 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,
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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 equity 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
outstanding Equity Securities, and (C) at least a majority of
the members of the board of directors
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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
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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.
(c) "Good Reason" shall mean the occurrence of any of the
following, without Employee's consent, after a Change in Control:
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(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 (20) miles; or
(iv) a material reduction in or the discontinuance of
any perquisites or benefits provided by the Company to
Employee.
In addition, and without limiting the foregoing, "Good Reason" shall
include any act or failure to act which would constitute "good
reason" as such term is defined in the 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
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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"
shall mean his annualized aggregate cash compensation for such year,
which 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.
(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
employment with the Company for Good Reason, then the Company shall,
within ten (10) days of such termination of employment, pay to
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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, or any
acceleration of vesting and exercisability of Company stock options
(whether paid or payable or distributed or distributable or
otherwise occurring pursuant to the terms of this Agreement or
pursuant to the 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
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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 or the Company on
Employee's behalf of all Federal, state and local taxes imposed upon
the Gross-Up Payment, including, without limitation, any income
taxes, withholding taxes, payroll taxes and the Excise Tax (and any
interest and penalties imposed with respect thereto), 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 3, including whether and when a Gross-Up Payment is required
and the amount of such Gross-Up 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
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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 3, shall be paid by the Company
to Employee, or to the applicable tax authorities on Employee's
behalf (with notice to Employee of the name of each such tax
authority and the amount and date of payment), within five (5) 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
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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
Accountin 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 (15) business days after Employee is informed in 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 suc claim prior to the expiration of the thirty
(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
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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
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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 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)
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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 paid or
advanced by the Company to or on Employee's behalf pursuant to
Section 3(a) or 3(b), Employee becomes entitled to receive any
refund with respect to any taxes, interest or penalties to which the
payments or advances related, Employee shall (subject to the
Company's complying with the requirements of this Section 3(c))
promptly pay to the Company the amount of such refund (together with
any interest paid or credited thereon after taxes
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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 thirty (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.
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
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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 wit the
National Rules of the American Arbitration Association for the Resolution of
Employment Disputes effective
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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 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 (24) 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.
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(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
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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 Agreement,
"the Company" means the 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 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
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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 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
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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 th 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 other communications provided for in the Agreement
shall be in writing and shall be deemed to have been duly given when
hand delivered or (unless otherwise specified) mailed by United
States registered mail, return receipt requested, postage prepaid,
addressed as follows:
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If to Employee: At his then current permanent
home address as shown on the
Company's records
If to the Company: Prime Hospitality Corp.
000 Xxxxx 00 Xxxx
Xxxxxxxxx, XX 00000-0000
Attn: 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 the Employment Agreement or any
successor agreement to the Employment
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Agreement covering Employee. Nothing contained in this Agreement shall adversely
affect any of Employee's rights under the 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
nonsolicitation agreement with the Company. This Agreement supersedes any and
all prior Change in Control agreements entered into between Employee and the
Company.
PRIME HOSPITALITY CORP.
By____________________________
Name:
Title:
X.X. XXXXXXXXXX
______________________________
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