Exhibit 10.35
EXECUTIVE EMPLOYMENT AGREEMENT
This EXECUTIVE EMPLOYMENT AGREEMENT is entered into by and between Xxxxxx X.
Xxxxxxx, ("Executive") and Lodgian, Inc. ("Company") as of the 12 day of July,
2005 ("Agreement").
NOW THEREFORE, in exchange of mutual consideration set forth herein and for
other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto hereby agree as follows:
1. TERM OF EMPLOYMENT. Executive's employment under this Agreement shall
commence on July 15, 2005 and shall end on December 31, 2008 ("Expiration
Date"), or such earlier date on which Executive's employment is terminated under
Section 5 of this Agreement ("Employment Term").
2. NATURE OF DUTIES. Executive shall be the Company's President reporting
jointly to the Company's CEO and the Company's Board of Directors ("Board").
Prior to, but no later than July 1, 2006 Executive shall become the Company's
Chief Executive Officer, reporting solely to the Board. Except as noted herein,
Executive shall work exclusively for the Company and shall have all of the
customary powers and duties associated with these positions. Executive shall
devote Executive's full business time and effort to the performance of
Executive's duties for the Company, which Executive shall perform faithfully and
to the best of Executive's ability. Executive shall be subject to the Company's
policies, procedures, and approval practices, as generally in effect from
time-to-time and applied to its senior executives.
Notwithstanding the foregoing, Executive shall be able to serve on up to two
boards of directors of other for-profit entities. With Board approval, which
shall not be unreasonably withheld, Executive shall be permitted to exceed this
limit of two. Nothing herein shall be construed as limiting Executive's ability
to serve on the board of non-profit entities or otherwise engage in activities
for charities. However, nothing in this Section 2 shall permit Executive to
serve on the board of directors of any entity to the extent that doing so would
(a) interfere with Executive's duties to the Company, and/or (b) conflict with
the interests of the Company.
3. PLACE OF PERFORMANCE. Executive's primary office location shall be at 0000
Xxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx, except for required travel on the
Company's business.
4. COMPENSATION AND RELATED MATTERS.
(a) BASE SALARY. The Company shall pay Executive base salary at an annual
rate of $550,000, which rate shall be increased by the Company on each
anniversary of the commencement of this Agreement by at least 5% of the then
current base salary rate. Executive's base salary shall be paid in conformity
with the Company's salary payment practices generally applicable to other
similarly situated Company senior executives, but no less often than once
monthly.
(b) SIGNING BONUS - STOCK.
(i) The Company shall pay Executive a signing bonus in the form of:
75,000 restricted shares of the Company's common stock ("Common Stock") to be
granted to Executive on July 15, 2005.
(ii) The restricted stock shares in this Section 4(b) shall be
subject to the terms of the restricted stock plan and agreement under which they
were issued. The restricted stock shares are intended to qualify as "qualified
performance based compensation" for purposes of Section 162(m) of the Internal
Revenue Code of 1986, as amended ("Code").
(iii) If Executive remains employed by the Company through the
vesting date as set forth below, subject to Section 5, one-half of the
restricted stock shares granted in this Section 4(b) shall vest on July 15,
2006. The remaining one-half of the restricted stock shares granted shall vest
on July 15, 2007. However, subject to Section 5, vesting shall be postponed
during any health-related leave of absence until Executive returns to work,
unless such postponement is prohibited by law.
(c) SIGNING BONUS - CASH PAYMENT. The Company shall pay Executive a
signing bonus of $594,000 in one payment on July 15, 2005.
(d) ANNUAL PERFORMANCE BONUS.
(i) Subject to Section 5, Executive shall be eligible to receive an
annual performance bonus in the amount shown in the applicable row on the table
attached hereto and incorporated herein for all purposes as Exhibit A for each
of the calendar years 2005-2008 as indicated, if Executive remains employed
through December 31 of each such calendar year ("Vesting Date"). Prior to
payment of the annual performance bonus, the Board shall review the actual
operating EBITDA performance, and determine the percentage of Target EBITDA (as
defined herein) that the Company achieved for the applicable calendar year. The
Board shall not unreasonably withhold approval of the payment of annual
performance bonus upon its determination of the Company's actual EBITDA and the
corresponding bonus due for that level of performance. The Company shall pay the
performance bonus for a given year on (and not earlier or later than) May 1 of
the following year.
(ii) For calendar year 2005, Executive's partial year of employment
is reflected by the bonus amount in Exhibit A, but the minimum bonus amount for
year 2005 shall be no less than $110,000.00, regardless of the Company's EBITDA.
(iii) Subject to section (iv) below, the Company's "Target EBITDA"
as used herein for calendar years 2005, 2006, 2007, and 2008 is, respectively,
$60.0 million, $72.0 million, $79.0 million, and $87.0 million.
(iv) EBITDA is as defined in Exhibit A; provided, however, that, for
purposes of this Section 4, the Board has the final and sole discretion to
determine the calculation of EBITDA, provided that such calculation is
consistent with generally accepted accounting principles. If changes to the
Company's portfolio are made, the Company shall adjust the applicable Target
EBITDA as follows:
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(1) If a property is sold or otherwise transferred to a third
party, the Target EBITDA for the Year in which the sale occurs shall be reduced
by the sold property's EBITDA for the trailing 12 full months through the date
of the sale, and actual EBITDA for the Year shall exclude the sold property's
EBITDA. For each subsequent Year, Target EBITDA shall be reduced by the sum of
the reduction for the Year of sale plus 10 percent of that reduction for each
Year since the Year of sale.
(2) If a property is acquired, the Target EBITDA for the Year
in which the purchase occurs shall be increased by the acquired property's
EBITDA for the trailing 12 full months through the date of purchase, and actual
EBITDA for the Year of purchase shall include the acquired property's EBITDA as
if it had been acquired on the first day of the Year. For each subsequent Year,
Target EBITDA shall be increased by the sum of the increase for the Year of
purchase plus 10 percent of that increase for each Year since the Year of
purchase.
(3) For purposes of clauses (1) and (2), above, "Year" shall
be deemed to be the annual performance bonus calendar year in question or, with
respect to Section 4(e), the long-term compensation fiscal year in question.
(v) The Company shall pay each performance bonus in cash on (and not
earlier or later than) May 1st of the year immediately following the year to
which the performance bonus relates.
(e) LONG-TERM COMPENSATION.
(i) Subject to Section 5, if Executive remains employed through
December 31 of a calendar year during the Employment Term, the Company shall
grant Executive 20,000 restricted shares of Common Stock for each such calendar
year if (x) 100% of Target EBITDA is achieved for such calendar year, or (y) the
average closing price of the Company's Common Stock for the last thirty (30)
calendar days of such calendar year is at least at the Stock Price Threshold for
such calendar year as described in Exhibit A. Such grant, if any, will occur on
(and not earlier or later than) May 1 of the year immediately following the
calendar year during which the event described in the preceding sub-clause (x)
or (y), whichever applicable, occurs.
(ii) Subject to Section 5, if Executive remains employed through
December 31 of a calendar year during the Employment Term, in addition to
Section 4(e)(i) above, the Company shall also grant Executive 10,000, 20,000,
30,000 and 40,000 restricted shares of Common Stock for 2005, 2006, 2007 and
2008 respectively: (x) upon achievement of 110% of Target EBITDA for such
calendar year, or (y) if substantially all of the assets of the Company are sold
or a merger is consummated for at least a 20% premium over the respective Stock
Price Threshold (determined as of the day before the sale or merger is approved
by the Board) for such calendar year. Such grant, if any, will occur on (and not
earlier or later than) May 1 of the year immediately following the calendar year
during which the event described in the preceding sub-clause (x) or (y),
whichever applicable, occurs.
Subject to Section 4(e)(iii) and 5, the restricted share grants in
this Section 4(e) shall vest in three (3) equal annual installments beginning on
March 15 of the year immediately following the year of each grant as described
in Section 4(e)(i) and 4(e)(ii) above.
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(iii) The restricted stock granted under this Section 4(e) shall be
subject to the terms of the stock plan and agreement under which they are
issued. Notwithstanding Section 4(e)(ii) but subject to Section 5, vesting shall
be postponed during any health-related leave of absence until Executive returns
to work, unless such postponement is prohibited by law.
(f) STANDARD BENEFITS. During Executive's employment, Executive shall be
eligible to participate in all employee benefit plans and programs, including
but not limited to paid vacations, medical/health/prescription and short and
long term disability income protection coverage, to the same extent generally
available to other similarly situated Company senior executives, in accordance
with the terms of those plans and programs. During any waiting period (not to
exceed one-hundred twenty (120) days) applicable to such employee medical plans
and programs occurring during 2005, the Company will reimburse (within sixty
(60) days of such reimbursement request, but in no event later than March 15,
2006) Executive and Executive's eligible dependents' COBRA premium to continue
coverage under the health plan(s) in effect for Executive and Executive's
eligible dependents immediately prior to the commencement of Executive's
employment with the Company, if any.
(g) INTEGRATION WITH DISABILITY BENEFITS. If Executive is absent due to a
health-related disability, the Company compensation otherwise payable to
Executive for that period shall be reduced by payments for that period from
Company-provided short or long term disability coverage and Workers'
Compensation wage replacement benefits.
(h) INDEMNIFICATION. The Company shall indemnify Executive to the fullest
extent permitted by applicable law with regard to Executive's action or inaction
on behalf of the Company, which indemnification shall include the advancement of
legal fees and other expenses on a current basis to the fullest extent permitted
by law, which shall survive termination of Executive's employment. In addition,
the Company shall extend to Executive the same indemnification arrangements as
are generally provided to other similarly situated Company senior executives,
which shall survive termination of Executive's employment. Moreover, the Company
shall provide a Director's and Officer's Liability insurance policy covering
Executive's duties hereunder during the Employment Term, which shall survive the
termination of Executive's employment.
(i) EXPENSES. Executive shall be entitled to receive prompt reimbursement
(within sixty (60) days after submission of the expense) for all reasonable and
customary travel and business expenses Executive incurs in connection with
Executive's employment, provided that Executive accounts for those expenses in
accordance with the policies and procedures established by the Company and as
applied to senior executives.
(j) XXXXXXXX-XXXXX ACT LOAN PROHIBITION. Notwithstanding this Agreement or
any other Company policy or program, the Company shall not make a loan to
Executive that would violate the Xxxxxxxx-Xxxxx Act, and this Agreement does not
contemplate any such loans.
(k) OTHER BENEFITS. Executive shall be entitled to the following benefits:
(1) reimbursement and/or payment of up to a total of $100,000 for expenses
incurred by Executive and/or paid directly by the Company in connection with
Executive's and Executive's family's
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relocation to the Atlanta, Georgia area, which expenses shall include: (i) the
costs of packing and moving Executive's and his family's household goods and
personal effects to Atlanta, Georgia, provided that the Company will select the
moving company to be used by Executive, and all moving costs will be billed
directly to the Company, (ii) commissions that Executive is required to pay to a
real estate broker in connection with the sale of Executive's primary residence
in the Dallas, Texas area (the "Dallas Residence"), (iii) real estate closing
costs associated with Executive's sale of the Dallas Residence, (iv) payment of
the monthly mortgage interest, homeowners' insurance, and property taxes for:
(x) the Dallas Residence, or (y) the residence Executive purchases in the
Atlanta, Georgia area, whichever is lesser, provided that the Company will make
such payments under this sub-clause (iv) until the earlier of: (w) the sale of
the Dallas Residence, or (z) January 15, 2006, and (v) real estate closing costs
and other ancillary costs (including, but not limited to, house hunting trips
for Executive and Executive's family) associated with Executive's purchase of a
primary residence in the Atlanta, Georgia area; and (2) reimbursement of up to
$10,000 for reasonable fees and expenses for legal and tax advice arising in
connection with the negotiation and documentation of this Agreement. Provided
that Executive provides documentation of such expenses in accordance with the
policies and procedures of the Company, the Company will reimburse Executive for
approved expenses under this Section 4(k), but only to the extent that the
expense has been incurred by the Executive during 2005 or while employed by the
Company. For purposes of the preceding sentence, an expense shall be considered
to have been incurred by the Executive at the time that the expense was
authorized by, or at the time that the services associated with such expense
were requested by, the Executive. Approved expenses under this Section 4(k)
shall be reimbursed or paid by the Company within sixty (60) days after
submission of the expense.
(l) CODE SECTION 409A. Payments made pursuant to this Agreement are
intended to, and the parties agree to amend this Agreement as necessary to,
comply with Code Section 409A.
5. TERMINATION.
(a) RIGHTS AND DUTIES. If Executive's employment is terminated, Executive
shall be entitled to the payment of the amounts and/or benefits set forth below,
subject to the balance of this Section 5. The Company and Executive shall have
no further obligations to each other, except the Company's ongoing
indemnification obligation under Section 4 and Executive's post-termination
obligations under Sections 6 and 17, or as set forth in any written agreement
Executive subsequently enters into with the Company.
(i) DISCHARGE FOR CAUSE OR RESIGNATION WITHOUT GOOD REASON If the
Company terminates Executive's employment for Cause or Executive resigns without
Good Reason, then Executive shall receive payment of (1) any unpaid base salary,
reimbursement of expenses incurred, and unused vacation days accrued prior to
the date of termination, to be paid within thirty (30) days after the date of
termination, and (2) other unpaid vested amounts or benefits under Company
compensation, incentive, and benefit plans, in accordance with the terms and
provisions of such compensation, incentive, and benefit plans.
(ii) DISABILITY If Executive's employment terminates as a result of
Executive's Disability, then Executive shall receive payment of (a) any unpaid
base salary,
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reimbursement of expenses incurred, and unused vacation days accrued prior to
the date of termination, to be paid within thirty (30) days after the date of
termination, and (b) other unpaid vested amounts or benefits under Company
compensation, incentive, and benefit plans, in accordance with the terms and
provisions of such compensation, incentive, and benefit plans. In addition, (1)
the Company shall pay COBRA premiums for Executive and Executive's eligible
dependents under the Company's major medical group health plan on a monthly
basis, beginning as of the date on which the first such COBRA premiums would be
required of the Executive and continuing until the earlier of (x) the Expiration
Date, or (y) the date that is eighteen (18) months from the date of termination
under this Section 5(a)(ii), (2) the Company shall pay a prorated annual
performance bonus under Section 4(d), calculated by multiplying the applicable
bonus by a percentage equal to the total number of days that Executive was
employed for the bonus year in question, divided by 365, which prorated bonus is
to be paid on (and not earlier or later than) May 1 of the year following the
year in which the termination occurs, (3) all restricted stock shares previously
granted pursuant to Sections 4(b) and 4(e) shall immediately become fully vested
as of the date of termination, (4) if Executive's termination occurs on or prior
to May 1 of a calendar year, the Company shall grant to Executive, without
restrictions, the number of shares of Common Stock to which Executive is
entitled under Section 4(e) for the immediately preceding calendar year, but
only if and to the extent the Target EBITDA or the Stock Price Thresholds under
Sections 4(e)(i) or (ii) are met for such immediately preceding year (such grant
to be made on (and not earlier or later than) May 1 of the year in which the
termination occurs), (5) the Company shall grant to Executive, without
restrictions, the number of shares of Common Stock to which Executive would be
entitled under Section 4(e) for the calendar year in which the termination
occurs, but only if and to the extent the Target EBITDA or the Stock Price
Thresholds under Sections 4(e)(i) or (ii) are met for the year in which the
termination occurs (such grant to be made on (and not earlier or later than) May
1 of the year immediately following the year in which the termination occurs),
and (6) the Company shall pay a lump sum amount equal to the difference, if any,
between Executive's monthly base salary and Executive's monthly Company-provided
short term disability benefits (to the extent Executive elects to participate in
such short-term disability benefit plan and is eligible to receive such
benefits) or, if applicable, Workers' Compensation wage replacement benefits for
up to 6 months, or the date that Executive's Company-provided long-term
disability benefits commence (to the extent Executive elects to participate in
such long-term disability benefit plan and is eligible to receive such
benefits), whichever is shorter, which lump sum payment shall be paid within
thirty (30) days after the date of termination. Executive shall be eligible to
receive the benefits and/or payments in clauses (1) through (6) only if
Executive is terminated by the Company due to Disability, but not if Executive
resigns.
(iii) DISCHARGE WITHOUT CAUSE OR RESIGNATION FOR GOOD REASON If the
Company terminates Executive's employment without Cause or Executive's resigns
for Good Reason, then Executive shall receive payment of (a) any unpaid base
salary, reimbursement of expenses incurred, and unused vacation days accrued
prior to the date of termination, to be paid within thirty (30) days after the
date of termination, and (b) other unpaid vested amounts or benefits under
Company compensation, incentive, and benefit plans, in accordance with the terms
and provisions of such compensation, incentive, and benefit plans. In addition,
in exchange for Executive's execution of a release in accordance with Section
5(d), (1) Executive shall receive continuation of Executive's base salary in
section 4(a) through the Expiration Date or two (2) years, whichever is shorter,
which payment shall be made over the
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applicable time period in accordance with the Company's normal payroll
practices, (2) Executive shall receive payment of COBRA premiums for Executive
and Executive's eligible dependents under the Company's major medical group
health plan on a monthly basis, beginning as of the date on which the first such
COBRA premiums would be required of the Executive and continuing until the
earlier of (x) the Expiration Date, or (y) the date that is eighteen (18) months
from the date of termination under this Section 5(a)(iii), (3) Executive shall
continue to be eligible to receive the annual performance bonus in section 4(d)
through the Expiration Date or two (2) years after the date of termination,
whichever is shorter, which bonus payments shall be made on (and not earlier or
later than) May 1 of the year immediately following the calendar year to which
the bonus relates, (4) if Executive's termination occurs on or prior to May 1 of
a calendar year, the Company shall grant to Executive, without restrictions, the
number of shares of Common Stock to which Executive is entitled under Section
4(e) for the immediately preceding calendar year, but only if and to the extent
the Target EBITDA or the Stock Price Thresholds under Sections 4(e)(i) or (ii)
are met for such immediately preceding year (such grant to be made on (and not
earlier or later than) May 1 of the year in which the termination occurs), (5)
all restricted stock shares previously granted pursuant to Sections 4(b) and
4(e) shall immediately become fully vested as of the date of termination, and
(6) the Company shall grant to Executive, without restrictions, the number of
shares of Common Stock to which Executive would be entitled under Section 4(e)
for the calendar year in which the termination occurs, but only if and to the
extent the Target EBITDA or the Stock Price Thresholds under Sections 4(e)(i) or
(ii) are met for the year in which the termination occurs (such grant to be made
on (and not earlier or later than) May 1 of the year immediately following the
year in which the termination occurs). The annual performance bonus (if any) set
forth in sub-clause (3) of the preceding sentence shall be determined and paid
as set forth in Section 4(d) as if Executive's employment had continued through
the Expiration Date, or for two (2) years after the date of termination,
whichever is shorter, and such bonus payments shall be pro-rated for any partial
calendar year during which Executive continues to be eligible to receive such
bonus under this Section 5(a)(iii).
(iv) DEATH If Executive's employment terminates as a result of
Executive's death, Executive's estate shall receive payment of (a) any unpaid
base salary, reimbursement of expenses incurred, and unused vacation days
accrued prior to the date of death, to be paid within thirty (30) days after the
date of Executive's death, and (b) other unpaid vested amounts or benefits under
Company compensation, incentive, and benefit plans, in accordance with the terms
and provisions of such compensation, incentive, and benefit plans. In addition,
(1) the Company shall make payment of COBRA premiums for Executive's eligible
dependents under the Company's major medical group health plan on a monthly
basis, beginning as of the date on which the first such COBRA premiums would be
required and continuing until the earlier of (x) the Expiration Date, or (y) the
date that is eighteen (18) months from the date of death, (2) all restricted
stock shares previously granted pursuant to Sections 4(b) and 4(e) shall
immediately become fully vested as of the date of death, (3) if Executive's
death occurs on or prior to May 1 of a calendar year, the Company shall grant to
Executive's estate, without restrictions, the number of shares of Common Stock
to which Executive is entitled under Section 4(e) for the immediately preceding
calendar year, but only if and to the extent the Target EBITDA or the Stock
Price Thresholds under Sections 4(e)(i) or (ii) are met for such immediately
preceding year (such grant to be made on (and not earlier or later than) May 1
of the year in which death occurs), (4) the Company shall pay to Executive's
estate a prorated annual performance bonus
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under Section 4(d), calculated by multiplying the applicable bonus by a
percentage equal to the total number of days that Executive was employed for the
year in which death occurs, divided by 365, which prorated bonus is to be paid
on (and not earlier or later than) May 1 of the year following the year in which
death occurs, and (5) the Company shall grant to Executive's estate, without
restrictions, the number of shares of Common Stock to which Executive would be
entitled under Section 4(e) for the calendar year in which death occurs, but
only if and to the extent the Target EBITDA or the Stock Price Thresholds under
Sections 4(e)(i) or (ii) are met for the year in which death occurs (such grant
to be made on (and not earlier or later than) May 1 of the year immediately
following the year in which death occurs).
(v) TERMINATION OF EMPLOYMENT AT EXPIRATION DATE If Executive's
employment terminates upon the Expiration Date, then (1) Executive shall receive
payment of any unpaid base salary, reimbursement of expenses incurred, and
unused vacation days accrued prior to the date of termination, to be paid within
thirty (30) days after the date of termination, (2) Executive shall receive
payment of other unpaid vested amounts or benefits under Company compensation,
incentive, and benefit plans, in accordance with the terms and provisions of
such compensation, incentive, and benefit plans, and (3) all restricted stock
shares previously granted pursuant to Sections 4(b) and 4(e) shall immediately
become fully vested, (4) the Company shall grant to Executive, without
restrictions, the number of shares of Common Stock to which Executive would be
entitled under Section 4(e) for 2008, but only if and to the extent the Target
EBITDA or the Stock Price Thresholds under Sections 4(e)(i) or (ii) are met for
2008 (such grant to be made on (and not earlier or later than) May 1, 2009), and
(5) Executive shall be deemed to have remained employed through December 31,
2008 for purposes of eligibility for the annual performance bonus under Section
4(d) for 2008.
(b) DISCHARGE FOR CAUSE. The Company may terminate Executive's employment
at any time if it believes in good faith that it has Cause to terminate
Executive. However, Executive's termination shall not be deemed for Cause unless
the Company sends Executive a written notice detailing the reasons it believes
it has Cause to terminate Executive on or before the date it intends to do so.
"Cause" shall mean:
(i) Executive's willful refusal to follow the Board's lawful
directions or Executive's material failure to perform Executive's duties (other
than by reason of physical or mental illness, injury, or condition), in either
case, only after Executive has been given written notice by the Board detailing
the directives Executive has refused to follow or the duties Executive has
failed to perform and granting Executive at least 30 days to cure;
(ii) Executive's material and willful failure to comply with Company
policies as applied to senior executives, only after Executive has been given
written notice by the Board detailing the policies with which Executive has
failed to comply and granting Executive at least 30 days to cure;
(iii) Executive's:
(1) engaging in an act of fraud or dishonesty that materially
xxxxx the Company or its affiliates;
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(2) conviction of a felony or conviction for any violation of
any federal or state securities law;
(3) gross negligence in connection with any property or
activity of the Company or its subsidiaries or affiliates ("Group");
(4) repeated and intemperate use of alcohol or illegal drugs
after written notice from the Board;
(5) material breach of any of Executive's obligations under
this Agreement (other than by reason of physical or mental illness, injury, or
condition), but only after Executive has been given written notice by the Board
of the breach and granting Executive at least 30 days to cure; or
(6) becoming barred or prohibited by the SEC from holding
Executive's position with the Company.
In the event Executive has tendered Executive's resignation, the Company may not
then or thereafter terminate Executive for Cause.
(c) TERMINATION FOR DISABILITY. Except as prohibited by applicable law,
the Company may terminate this Agreement on account of Executive's Disability,
or may transfer Executive to inactive employment status, which shall have the
same effect under this Agreement as a termination for Disability.
"Disability" means a physical or mental illness, injury, or condition that
prevents Executive from performing substantially all of Executive's material
duties under this Agreement for at least 90 consecutive calendar days or for at
least 120 calendar days, whether or not consecutive, in any 365 calendar day
period.
(d) DISCHARGE WITHOUT CAUSE. The Board may terminate Executive's
employment at any time without Cause for any reason by providing Executive with
30 days advance written notice (the "Notice Period'); provided, however, that
that the Board may elect to terminate Executive's employment prior to the
expiration of such Notice Period, in which event the Company will pay Executive
his then-current base salary through the expiration of the Notice Period (the
"Notice Period Payment"). The Company's obligation to pay Executive the Notice
Period Payment shall be in addition to any payments owed to Executive under
Section 5(a)(iii) above. If Executive is terminated by the Company without
Cause, Executive shall only receive the special benefits provided under the
applicable provisions of Section 5(a)(iii) if: (x) Executive complies with the
restrictive covenants (Section 6) and all post-termination obligations to which
Executive is subject, including, but not limited, the obligations contained in
this Agreement, and (y) Executive signs a release form, subject to negotiation
as provided below, within the time prescribed by the Company which shall be no
later than 45 days after Executive receives the release from the Company and
before asserting any claims covered by the release against the Company other
than claims pertaining to (i) Executive's right to severance benefits, (ii) the
Company's continuing indemnification obligations to Executive under Section 4,
and (iii) claims for defamation, slander and/or libel (the conditions set forth
in the preceding sub-clauses (x) and (y) to be referred to as the "Separation
Conditions"). The Company shall furnish the release to
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Executive at Executive's termination. Subject to the exceptions in clauses (i)
through (iii) of the second preceding sentence, the parties shall in good faith
negotiate the final form of such release, but it shall include provisions
customary in formal settlement agreements and general releases, including, but
not limited to, such things as Executive's release of the Company and all
related persons or entities ("affiliates") from all known and unknown claims,
Executive's covenant never in the future to pursue any released claim,
Executive's promise never seek employment with the Company or any affiliate in
the future, but not including any provision that expands Executive's obligations
to the Company as set forth in Section 5(i) below. The Company and Executive
acknowledge that the severance benefits for which the release is required are
intended to effect Executive's peaceful transition from the Company. If
Executive chooses not to sign the release, Executive shall have the right to
pursue any claims Executive may have, but Executive shall not be eligible to
receive the severance benefits set forth in sub-clauses (1) through (6) of
Section 5(a)(iii). Executive also acknowledges that the Company's obligation to
provide any severance benefits under Section 5(a)(iii) shall terminate
immediately upon any breach by Executive of any post-termination obligations to
which he is subject; provided that the Company has provided prior written notice
to Executive setting forth the post-termination obligations Executive is alleged
to have breached and granting Executive 30 days to cure.
(e) RESIGNATION FOR GOOD REASON. Executive may resign from employment for
GOOD REASON, which shall mean the occurrence of any of the following without
Executive's express written consent:
(i) Relocation of Executive's primary office location more than 50
miles from the current location, as set forth in Section 3;
(ii) Any change in or the Company's refusal to comply with the
provisions of Section 2;
(iii) Any diminution in Executive's title, or material diminution in
his compensation or duties;
(iv) Material failure by the Company to keep any promise or make any
payment provided herein;
(v) Change in Control as defined in Section 7 below;
(vi) Any transfer to any subsidiary or affiliate or other change
that removes Executive from the position of Chief Executive and President of the
Company;
(vii) Failure by the Company to continue, or continue Executive's
participation in, any compensation plan in which Executive participates or is
entitled to participate such that Executive's total compensation is reduced by
more than five percent (5%); or
(viii) Failure by the Company to continue, or continue Executive's
participation in, any benefit plan in which Executive participates unless an
equivalent substitute is adopted or made available on a basis not less favorable
to Executive and Executive's spouse.
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However, an event that is or would constitute Good Reason shall
cease to be Good Reason if: (i) Executive does not provide the Company with
written notice of Executive's intent to terminate Executive's employment due to
an event that would constitute Good Reason within the earlier of 30 days after
the occurrence of such event or 30 days after Executive is officially notified
or it is officially announced that the Company will take any actions that would
constitute Good Reason to resign, (ii) the Company reverses the action or cures
the default that constitutes Good Reason within 30 days after receiving such
written notice, (iii) Executive does not terminate employment within 60 days
after the event occurs, (iv) Executive is a primary instigator of the Good
Reason event other than a Change in Control and the circumstances make it
inappropriate for Executive to receive benefits under this Agreement (e.g.,
Executive initiates a relocation of the Company's headquarters); or (v) the
Company in good faith temporarily suspends Executive for no more than 30 days
(with full pay) to investigate any suspected wrongdoing that, if substantiated,
would give the Company reason to terminate Executive for Cause.
If Executive resigns from employment for Good Reason as defined in
this Section 5(e), Executive shall only receive the severance benefits set forth
in sub-clauses (1) through (6) of Section 5(a)(iii) if Executive satisfies the
Separation Conditions and any other obligations set forth in Section 5(d) above.
(f) RESIGNATION WITHOUT GOOD REASON. Executive may terminate Executive's
employment hereunder at any time without Good Reason upon providing the Company
with 30 days written notice of Executive's intention to do so; provided,
however, that (i) the Company shall be entitled to accept Executive's
resignation as of any earlier date, and (ii) the Board may elect to terminate
Executive's employment prior to the expiration of the 30-day notice period, in
which event the Company will pay Executive his then-current base salary through
the expiration of such notice period. Executive's termination under this Section
5(f) shall only entitle him to be eligible to receive the benefits in Section
5(a)(i).
Notwithstanding anything to the contrary in this Agreement or any other
document, restricted stock shares and all other performance or incentive
compensation shall cease vesting when Executive gives notice of resignation
under this Section 5(f).
(g) DEATH. If Executive dies while employed under this Agreement, the
payments required by Section 5(a)(iv) in the event of Executive's death shall be
made.
(h) AMOUNTS OWED TO THE COMPANY. Any amounts payable to Executive under
this Section shall first be applied to repay any liquidated amounts Executive
owes the Company (i.e., personal expenses on Executive's credit card).
(i) NO FURTHER OBLIGATIONS. Upon termination of employment for any reason,
the Company and Executive shall have no further obligations to each other,
except the Company's ongoing indemnification obligation under Section 4, and
Executive's post-termination obligations under Sections 6 and 17, or as set
forth in any written agreement Executive subsequently enters into with the
Company.
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(j) DELAY IN PAYMENTS TO COMPLY WITH CODE Section 409A. Notwithstanding
any provision of this Section 5 to the contrary, if Executive is a "specified
employee" within the meaning of Code Section 409A(a)(2)(B)(i), then any payment
that is required to be made under the foregoing provisions of this Section 5
within the first six (6) months following Executive's "separation from service"
(within the meaning of Code Section 409A(a)(2)(A)(i)) with the Company shall not
be paid prior to the date that is six (6) months after the date of the
Executive's "separation from service" and shall be paid in a single lump sum
payment after such six (6) month period has elapsed.
6. RESTRICTIVE COVENANTS. Executive acknowledges that: (i) his position is a
position of trust and responsibility with access to Confidential Information,
Trade Secrets, and information concerning employees and customers of the
Company, (ii) the Trade Secrets and Confidential Information, and the
relationship between the Company and each of its employees and customers are
valuable assets of the Company and may not be used for any purpose other than
the Company's Business, (iii) the Company will invest its time and money in the
development of Executive's skills in the Business, and (iv) the restrictions
contained in this Section 6 are reasonable and necessary to protect the
legitimate business interests of the Company, and will not impair or infringe
upon Executive's right to work or earn a living after Executive's employment
with the Company ends.
(a) PROMISE NOT TO DISCLOSE. Executive agrees that he will not: (i) use,
disclose, or reverse engineer the Trade Secrets or the Confidential Information
for any purpose other than the Company's Business, except as authorized in
writing by the Company; (ii) during Executive's employment with the Company,
use, disclose, or reverse engineer (a) any confidential information or trade
secrets of any former employer or third party, or (b) any works of authorship
developed in whole or in part by Executive during any former employment or for
any other party, unless authorized in writing by the former employer or third
party; or (iii) upon Executive's resignation or termination for any reason (a)
retain Trade Secrets or Confidential Information, including any copies existing
in any form (including electronic form), which are in Executive's possession or
control, or (b) destroy, delete, or alter the Trade Secrets or Confidential
Information without the Company's prior written consent. The obligations under
this Section 6(a) shall: (i) with regard to the Trade Secrets, remain in effect
as long as the information constitutes a trade secret under applicable law, and
(ii) with regard to the Confidential Information, remain in effect during
Executive's employment with the Company and for a period of two (2) years after
Executive's employment with the Company ends for any reason. The
confidentiality, property, and proprietary rights protections available in this
Agreement are in addition to, and not exclusive of, any and all other rights to
which the Company is entitled under federal and state law, including, but not
limited to, rights provided under copyright laws, trade secret and confidential
information laws, and laws concerning fiduciary duties.
(b) PROMISE NOT TO SOLICIT. During Executive's employment and for a period
of six (6) months after Executive's employment with the Company ends for any
reason, Executive will not, directly or indirectly, solicit, recruit or induce
any Employee to (a) terminate his or her employment relationship with the
Company or (b) work for any other person or entity engaged in the Business.
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(c) PROMISE NOT TO ENGAGE IN CERTAIN EMPLOYMENT. During Executive's
employment and for a period of six (6) months after Executive's employment with
the Company ends for any reason, Executive will not, on his own behalf or on
behalf of any person or entity engaged in the Business, engage in or perform
within the Territory any of the activities which Executive performed, or which
are substantially similar to those which Executive performed, as President
and/or Chief Executive Officer of the Company. Nothing in this Agreement shall
be construed to prohibit Executive from performing activities which he did not
perform for the Company. Executive and the Company acknowledge and agree that
the covenant set forth in this Section 6(c) shall not apply if Executive's
employment terminates as a result of the expiration and non-extension of the
Employment Term as set forth in Section 5(a)(v) above.
(d) The capitalized terms set forth in sub-sections 6(a), (b), and (c)
above shall be defined as follows:
(i) "Business" shall mean the business of owning and operating
hotels including, but not limited to, full-service hotels which have food and
beverage operations and meeting spaces.
(ii) "Confidential Information" means (a) information of the
Company, to the extent not considered a Trade Secret under applicable law, that
(i) relates to the business of the Company, (ii) possesses an element of value
to the Company, (iii) is not generally known to the Company's competitors, and
(iv) would damage the Company if disclosed, and (b) information of any third
party (the "Third Party") provided to the Company which the Company is obligated
to treat as confidential, including, but not limited to, information provided to
the Company by its licensors, suppliers, or customers. Confidential Information
includes, but is not limited to, (i) future business plans, (ii) the
composition, description, schematic or design of products, future products or
equipment of the Company, (iii) communication systems, audio systems, system
designs and related documentation, (iv) advertising or marketing plans, (v)
information regarding any Third Party, independent contractors, employees,
clients, customers, licensors, and/or suppliers of the Company, and (vi)
information concerning the Company's or any Third Party's financial structure
and methods and procedures of operation. Confidential Information shall not
include any information that (i) is or becomes generally available to the public
other than as a result of an unauthorized disclosure, (ii) has been
independently developed and disclosed by others without violating this Agreement
or the legal rights of any party, or (iii) otherwise enters the public domain
through lawful means. For purposes of this definition of "Confidential
Information" only, the term "Company" shall include the Company's parents,
subsidiaries, affiliates, and all related companies; provided, however that the
definition of "Confidential Information" shall only apply to information which
Executive acquired or used by virtue of Executive's employment with the Company.
(iii) "Employee" means any person who (i) is employed by the Company
at the time Executive's employment with the Company ends, (ii) was employed by
the Company during the last year of Executive's employment with the Company (or
during Executive's employment if employed less than a year), or (iii) is
employed by the Company during the six (6) month period following the
termination of Executive's employment.
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(iv) "Territory" means the fifteen (15) mile radius surrounding the
Company's corporate office at 0000 Xxxxxxxxx Xx., Xxxxx 000, Xxxxxxx, Xxxxxxx
00000.
(v) "Trade Secrets" means information of the Company, and its
licensors, suppliers, clients and customers, without regard to form, including,
but not limited to, technical or nontechnical data, a formula, a pattern, a
compilation, a program, a device, a method, a technique, a drawing, a process,
financial data, financial plans, product plans, or a list of actual or potential
customers, clients, licensors, or suppliers which is not commonly known by or
available to the public and which information (i) derives economic value, actual
or potential, from not being generally known to, and not being readily
ascertainable by proper means by, other persons who can obtain economic value
from its disclosure or use, and (ii) is the subject of efforts that are
reasonable under the circumstances to maintain its secrecy. For purposes of this
definition of "Trade Secrets" only, the term "Company" shall include the
Company's parents, subsidiaries, affiliates, and all related companies;
provided, however that the definition of "Trade Secrets" shall only apply to
information which Executive acquired or used by virtue of Executive's employment
with the Company.
(e) INJUNCTIVE RELIEF. Executive agrees that if he breaches Section 6(a),
(b), and/or (c) of this Agreement: (i) the Company would suffer irreparable
harm; (ii) it would be difficult to determine damages, and (iii) money damages
alone would be an inadequate remedy for the injuries suffered by the Company.
The alleged breach of such Sections shall be enforceable in a court of equity
and appropriate injunctive relief may be applied for and granted in connection
therewith. Nothing contained in this Agreement shall limit the Company's right
to any other remedies at law or in equity.
(f) RETURN OF INFORMATION. When Executive's employment with the Company
ends, Executive shall promptly deliver to the Company, or, at its written
instruction, destroy, all documents, data, drawings, manuals, letters, notes,
reports, electronic mail, recordings, and copies thereof, of or pertaining to it
or any Group member in Executive's possession or control. In addition, during
Executive's employment with the Company, Executive shall meet with Company
personnel and, based on knowledge or insights Executive gained during
Executive's employment with the Company, answer any question they may have
related to the Company or the Group. The Company shall pay Executive for
attending such meetings at a rate not less than the hourly equivalent of
Executive's base salary, plus reimbursement of reasonable expenses in accordance
with the Company's reimbursement policy for senior executives.
(g) PROMISE TO DISCUSS PROPOSED ACTIONS IN ADVANCE. Executive promises
that before he discloses or uses Confidential Information, and before he
commences employment, solicitations, or any other activity that could violate
the promises he has previously made, Executive shall discuss his proposed
actions with the Chairman of the Board, who shall advise Executive in writing
whether he believes that Executive's proposed actions would violate this
Agreement.
(h) INTELLECTUAL PROPERTY. Intellectual property (including such things as
all inventions, plans, developments, software, data, configurations, materials
(whether written or machine-readable), designs, drawings, illustrations, and
photographs, that may be protectable, in
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whole or in part, under any patent, copyright, trademark, trade secret, or other
intellectual property law), developed, created, conceived, made, or reduced to
practice during Executive's employment hereunder (except intellectual property
that has no relation to the Group or any Group customers that Executive
developed, purely on Executive's own time and at Executive's own expense), shall
be the sole and exclusive property of the Company, and Executive hereby assigns
all Executive's rights, title, and interest in any such intellectual property to
the Company.
7. CHANGE IN CONTROL.
(a) EVENTS TRIGGERING CHANGE IN CONTROL. Change in Control shall mean the
first of the following to occur after the date of this Agreement:
(i) Acquisition of Controlling Interest. Any Person becomes the
Beneficial Owner, directly or indirectly, of securities of the Company
representing 51 percent or more of the combined voting power of the Company's
then outstanding securities, except that a voting agreement or other voting
activity shall not make the Person a Beneficial Owner unless the voting activity
in question is intended to accomplish a Change in Control under Sections
7(a)(ii), (iii), or (iv). In applying the preceding sentence, securities
acquired directly from the Company or its affiliates by or for the Person shall
not be taken into account.
(ii) Change in Board Control. During a consecutive 2-year period
commencing after the date of this Agreement, individuals who constituted the
Board at the beginning of the period cease for any reason to constitute a
majority of the Board. In determining whether such a change in Board membership
has occurred, any Approved Replacement Director shall be treated as if he/she
had been a director at the beginning of the two-year period. For purposes of
this Section, "Approved Replacement Director" shall mean a director whose
election (or nomination for election) was approved by a vote of at least
two-thirds of the directors then still in office who either were directors at
the beginning of the two-year period or were themselves Approved Replacement
Directors.
(iii) Merger Approved. The shareholders of the Company approve a
merger or consolidation of the Company with any other corporation unless: (a)
the voting securities of the Company outstanding immediately before the merger
or consolidation would continue to represent (either by remaining outstanding or
by being converted into voting securities of the surviving entity) at least 51
percent of the combined voting power of the voting securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation.
(iv) Sale of Assets. The shareholders of the Company approve an
agreement for the sale or disposition by the Company of all or substantially all
of the Company's assets in a transaction or series of transactions to an entity
that is not owned, directly or indirectly, by the Company's Common Stock
shareholders in substantially the same proportions as the owners of the
Company's Common Stock before such transaction or series of transactions.
Notwithstanding the foregoing, a Change in Control shall not be deemed to have
occurred by virtue of the consummation of any transaction or series of
integrated transactions immediately following which the record holders of Common
Stock immediately prior to such transaction or series of transactions continue
to have substantially the same proportionate ownership in an
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entity which owns all or substantially all of the assets of the Company
immediately following such transaction or series of transactions.
(b) CERTAIN DEFINITIONS.
(i) "Beneficial Owner" has the meaning set forth in Rule 13d-3 under
the Securities Exchange Act of 1934, as amended."
(ii) Management Action" means any event, circumstance, or
transaction that results from the action of the Management Group.
(iii) "Management Group" means any entity or group that includes, is
affiliated with, or is wholly or partly controlled by one or more executive
officers of the Company.
(iv) "Person" has the meaning given in Section 3(a)(9) of the
Securities Exchange Act of 1934, as amended, and as modified and used in Section
13(d) of that Act, and shall include a "group," as defined in Rule 13d-5
promulgated thereunder. However, a Person shall not include: (i) the Company or
any of its subsidiaries, (ii) a trustee or other fiduciary holding securities
under an employee benefit plan of the Company or any of its subsidiaries, (iii)
an underwriter temporarily holding securities pursuant to an offering of such
securities, (iv) Oaktree Capital Management, LLC, (v) the Blackstone Group, or
(vi) a corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of stock of the
Company.
8. NOTICE.
(a) TO THE COMPANY. Executive shall send all communications required by
this Agreement to the Company in writing by hand delivery or overnight, both
requiring signature acknowledging receipt, addressed as follows:
If Mailed to Company:
Lodgian Inc.
Attention: Xxxxxx Xxxxx, Senior Vice President and General Counsel, 0000
Xxxxxxxxx Xxxx XX, Xxxxx 000 Xxxxxxx, Xxxxxxx 00000
With a copy to Lodgian Inc.
Attention: Chairman of the Board, 0000 Xxxxxxxxx Xxxx XX, Xxxxx 000 Xxxxxxx,
Xxxxxxx 00000
(b) TO EXECUTIVE. Company shall send all communications required by this
Agreement to Executive in writing by hand delivery or overnight, both requiring
Executive's signature acknowledging receipt, addressed as follows: Xxxxxx X.
Xxxxxxx, 0000 Xxxxxx Xxxxx, Xxxxxx, Xxxxx 00000.
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(c) TIME NOTICE DEEMED GIVEN. Written notice as required by this Agreement
shall be deemed to have been given to either party when signed by such party or
its representative acknowledging receipt.
9. GOLDEN PARACHUTE LIMITATION. Executive's payments and benefits under this
Agreement and all other contracts, arrangements, or programs shall not, in the
aggregate, exceed the maximum amount that may be paid to Executive without
triggering golden parachute penalties under Section 280G and related provisions
of the Internal Revenue Code, as determined in good faith by an independent
auditor mutually satisfactory to the Company and Executive. If any benefits must
be cut back to avoid triggering such penalties, Executive's benefits shall be
cut back in the priority order designated by the Company but in no event may the
payment in Section 4(a) be reduced. The Company and Executive shall cooperate
with each other in connection with any administrative or judicial proceedings
concerning the existence or amount of golden parachute penalties with respect to
payments or benefits Executive receives.
10. AMENDMENT. No provisions of this Agreement may be modified, waived, or
discharged except by a written document signed by the Chairman of the Board and
Executive. Thus, for example, promotions, commendations, and/or bonuses shall
not, by themselves, modify, amend, or extend this Agreement. A waiver of any
conditions or provisions of this Agreement in a given instance shall not be
deemed a waiver of such conditions or provisions at any other time.
11. INTERPRETATION; EXCLUSIVE FORUM. The validity, interpretation, construction,
and performance of this Agreement shall be governed by the laws of the state of
Georgia (excluding any that mandate the use of another jurisdiction's laws). Any
litigation or similar proceeding with respect to such matters only may be
brought within that state, and all parties to this Agreement consent to that
state's jurisdiction and agree that venue anywhere in that state would be
proper.
12. SUCCESSORS. This Agreement shall be binding upon, and shall inure to the
benefit of, Executive and Executive's estate, but Executive may not assign or
pledge this Agreement or any rights arising under it, except to the extent
permitted under the terms of the benefit plans in which Executive participates.
Without Executive's consent, the Company may not assign this Agreement to a
successor that agrees in writing to be bound by this Agreement, after which any
reference to the "Company" in this Agreement shall be deemed to be a reference
to the successor. Thereafter, the Company shall have no further primary,
secondary or other responsibilities or liabilities under this Agreement of any
kind.
13. TAXES. The Company shall withhold taxes from payments it makes pursuant to
this Agreement as required by applicable law.
14. 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, which shall remain in full force and effect.
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15. COUNTERPARTS. This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original but all of which together shall
constitute the same instrument.
16. ENTIRE AGREEMENT. All oral or written agreements or representations, express
or implied, with respect to the subject matter of this Agreement are set forth
in this Agreement. However, this Agreement does not override other subsequent
written agreements Executive may executed relating to specific aspects of
Executive's employment, such as conflicts of interest.
17. FORMER EMPLOYERS. Except for the non-compete agreement with Pittsburgh
Greentree Radisson Hotel, as previously disclosed by Executive, Executive is not
subject to any employment, confidentiality, or other agreement or restriction
that would prevent Executive from fully satisfying Executive's duties under this
Agreement or that would be violated if Executive did so. Without the Company's
prior written approval, Executive shall not disclose proprietary information
belonging to a former employer or other entity without its written permission.
Executive shall indemnify and hold the Company harmless from any liabilities,
including defense costs, it may incur because Executive is alleged to have
violated the provisions of this Section 17 or improperly revealed or used
proprietary information of a former employer without its permission, or if a
former employer challenges Executive's entering into this Agreement or rendering
services pursuant to it.
18. INDEPENDENT ENFORCEMENT. The covenants set forth in Section 6 of this
Agreement shall be construed as agreements independent of any other agreements
or any other provision in this Agreement, and the existence of any claim or
cause of action by Executive against the Company, whether predicated on this
Agreement or otherwise, regardless of who was at fault and regardless of any
claims that either Executive or the Company may have against the other, shall
not constitute a defense to the enforcement by the Company of the covenants set
forth in Section 6 of this Agreement. The Company shall not be barred from
enforcing the restrictive covenants set forth in Section 6 of this Agreement by
reason of any breach of any other part of this Agreement or any other agreement
with Executive.
Executive acknowledges that all understandings and agreements between the
Company and Executive relating to the subjects covered in this Agreement are
contained in it and that Executive has entered into this Agreement voluntarily
and not in reliance on any promises or representations by the Company other than
those contained in this Agreement itself.
Executive further acknowledges that he has carefully read this Agreement, that
he understands all of it, and that he has been given the opportunity to discuss
this Agreement with his personal legal counsel and has availed himself of that
opportunity to the extent he wished to do so.
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LODGIAN, INC.
By: s/ Xxxxx Xxxxx
------------------------------------
Name: Xxxxx Xxxxx
Title: Chief Financial Officer
Date: 7-12-05
XXXXXX X. XXXXXXX
By: s/ Xxxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxxx
Date: 7-12-05
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Exhibit A
IF THE COMPANY'S EBITDA ACHIEVES THE PERCENTAGE OF TARGET EBITDA FOR THE
CALENDAR YEAR IN QUESTION, COMPANY SHALL PAY EXECUTIVE THE ANNUAL PERFORMANCE
BONUS OF
% of Target EBITDA Achieved Cash Award
--------------------------- ----------
Less than 90% of Target EBITDA 2005: $110,000
2006 - 2008: $220,000
00 - 00.00% xx Xxxxxx XXXXXX 0000: $200,000
2006 - 2008: $400,000
100 - 107.49% of Target EBITDA 2005: $250,000
2006 - 2008: $500,000
107.5 - 114.99% of Target EBITDA 2005: $316,250
2006 - 2008: $632,500
115 - 124.99% of Target EBITDA 2005: $343,750
2006 - 2008: $687,500
125 - 134.99% of Target EBITDA 2005: $371,250
2006 - 2008: $742,500
135 - 144.99% of Target EBITDA 2005: $426,250
2006 - 2008: $852,500
Greater than 145% of Target EBITDA 2005: $481,250
2006 - 2008: $962,500
EBITDA
For all purposes herein, EBITDA shall be defined as the Company's reported
Adjusted EBITDA. Adjusted EBITDA is defined as EBITDA for the Company's
Continuing Operations Hotels, excluding the effects of certain charges such as
pre-emergence reorganization expenses, post-emergence Chapter 11 expenses
included in corporate and other on the Company's consolidated statement of
operations, impairment losses and casualty losses for damage caused to the
Company's properties by the hurricanes that struck the southeastern United
States in the 2004 third quarter. Furthermore, for 2005, EBITDA (and Adjusted
EBITDA) shall not include the results of operations of the Crowne Plaza Hotel in
West Palm Beach, Florida, and the Holiday Inn in Melbourne, Florida, both of
which are currently closed. Nor shall EBITDA (and Adjusted EBITDA) include
business interruption proceeds received by the Company related to these two (2)
hotels. For all purposes, the Company's Continuing Operations Hotels include all
hotels that the Company operates which are (i) not classified as "held for
sale," and/or (ii) otherwise excluded under this paragraph.
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TARGET EBITDA
Target EBITDA is defined in Section 4 (d) (iii) of the Agreement.
STOCK PRICE THRESHOLD
Stock Price Threshold shall mean:
2005: $12.00 per share
2006: $15.00 per share
2007: $18.00 per share
2008: $21.00 per share
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