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Exhibit 10.7
SEVERANCE AGREEMENT
THIS SEVERANCE AGREEMENT (the "Agreement") is entered into this 28th
day of February, 1999, by and between LODGIAN, INC. and the LODGIAN, INC. 401K
PLAN (collectively, the "Company") and XXXXXX X. XXXXXX ("Xxxxxx").
WHEREAS, Knight is employed by the Company and serves as Vice
President of Finance and Chief Financial Officer of the Company and Trustee of
the Company's 401K Plan; and
WHEREAS, Knight and the Company desire to terminate Knight's
employment by the Company and to set forth their agreement with respect to such
termination and certain other matters.
NOW, THEREFORE, in consideration of the agreements and covenants
hereinafter set forth, the parties agree as follows:
1. TERMINATION OF EMPLOYMENT.
Effective as of March 5, 1999 (the "Severance Date"), the employment
of Knight by the Company will terminate and Knight shall not have any further
rights, whether to employment, compensation or benefits except as provided in
this Agreement.
2. COMPENSATION.
(a) NORMAL COMPENSATION. The Company will continue to
pay Knight his salary at an annual rate of $215,000 until the
Severance Date.
(b) BONUS FOR 1998. In compensation for services
rendered during 1998, the Company will pay Knight a $60,000 bonus, one
half of which will be paid upon execution of this Agreement, and the
remainder will be paid upon the earlier of May 1, 1999 or the date on
which other employees of the Company receive their 1998 bonuses.
(c) SEVERANCE PAY. The Company shall pay to Knight an
aggregate severance pay equal to $350,000 payable in two equal
installments, one upon execution of this Agreement, the other on or
before May 1, 1999 ("Severance Pay"); provided, however, that the
second installment of Knight's Severance Pay will be paid only upon
Knight's reasonable compliance with Section 4(a) of this Agreement to
the reasonable satisfaction of the undersigned.
(d) EARNED BUT NOT USED VACATION DAYS. The Company shall
pay Knight for any earned but not used vacation days, up to a maximum
payment of $32,250. This payment will be based on a daily rate of pay
computed on an annual compensation rate of $215,000 and will be paid
upon execution of this Agreement.
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(e) HEALTH INSURANCE BENEFITS. For a period of one year
after the Severance Date, Knight shall be entitled to continue to
participate, at the Company's expense, in the Company's health
insurance program. Such benefit will be in full satisfaction of any
rights which Knight may have to health insurance continuation under
the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
("COBRA") for this initial one year period. Benefits otherwise
receivable by Knight pursuant to this Subparagraph (e) shall be
reduced to the extent comparable benefits are actually received by
Knight from a subsequent employer during the period during which the
Company is required to provide such benefits, and Knight shall report
any such benefits actually received by him to the Company.
(f) OTHER BENEFITS. Provided that there are no adverse
tax consequences, the Company shall continue coverage for Knight, on
the same terms and conditions as would be applicable if Knight were an
active employee, under the Company's life insurance, group disability
benefits and similar welfare benefit plans for a period of one year.
Benefits otherwise receivable by Knight pursuant to this Subparagraph
(f) shall be reduced to the extent comparable benefits are actually
received by Knight from a subsequent employer during the period during
which the Company is required to provide such benefits, and Knight
shall report any such benefits actually received by him to the
Company. In the event that adverse tax consequences would result from
the continuation of benefits under this Subparagraph (f), the Company
may pay to Knight an amount equal to the annual cost to the Company
(based on premium rates) of providing such coverage; provided,
however, that such amount shall be reduced to the extent comparable
benefits are actually received by Knight from a subsequent employer
during the period during which the Company is required to provide such
benefits, and Knight shall report any such benefits actually received
by him to the Company, and provided further that such payments
provided for in this Subparagraph (f) shall be made not later than the
30th day following the Severance Date. At the time that payments are
made under this Subparagraph (f), the Company shall provide Knight
with a written statement setting forth the manner in which such
payments were calculated and the basis for such calculations.
3. STOCK OPTIONS AND STOCK APPRECIATION RIGHTS.
Knight acknowledges that he holds currently exercisable stock
options to purchase 173,500 shares of the Company's Common Stock which were
granted to him pursuant to the Company's Stock Option Plan and 12,500 stock
appreciation rights. To the extent any stock options or stock appreciation
rights are not currently vested, they will vest upon the Severance Date
(therefore all of Knight's stock options and stock appreciation rights will be
fully vested on the Severance Date) and be exercisable through the expiration
date of the exercise period, notwithstanding the termination of Knight's
employment, in accordance with this Severance Agreement. A schedule of such
options and stock appreciation rights are included on Schedule A.
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4. COVENANTS.
(a) COOPERATION WITH THE COMPANY. In consideration for
Knight's agreement to fully cooperate with respect to any reasonable
request from the Company on an ongoing basis, the Company shall
provide to Knight the rights and benefits set forth in this Agreement.
Such cooperation shall include assisting the Company in the
preparation of its 1998 annual report on Form 10-K and its 1999 proxy
statement as reasonably requested by the Company.
(b) CONFIDENTIALITY. Knight agrees not to directly or
indirectly disclose to any person or entity, or cause or authorize,
directly or indirectly, any person or entity, to use any proprietary
or confidential business information of the Company, except as
required by law. This paragraph shall not apply, however, to any
information that is already in the public domain or becomes available
to the public through any act or failure to take action by Knight.
(c) NON-DISPARAGEMENT AND FUTURE CONDUCT. Knight agrees
that he will not knowingly engage in any activity which is inimical,
contrary or harmful to the interests of the Company and shall not make
any statements about or relating to the Company, its officers,
directors, shareholders, agents, independent contractors, or counsel
which are disparaging or likely to cause embarrassment except as may
be required by lawful process.
5. GENERAL RELEASES.
(a) Knight hereby releases, discharges and acquits the
Company and its subsidiaries, affiliates, representatives, agents,
employees, officers, directors, shareholders, counsel, assigns and
successors (collectively referred to as "Releasees"), of and from all
claims, demands, sums of money, actions, rights, causes of action,
obligations and liabilities which Knight has against the Releasees
relating to or arising out of Knight's employment by the Company,
including, but not limited to, wrongful discharge, breach of contract,
tort, the Civil Rights Act, Age Discrimination in Employment Act,
Employee Retirement Income Security Act or any other federal, state or
local legislation or common law relating to employment or
discrimination in employment or otherwise; provided, however, that
nothing contained herein shall release the Company from its obligation
to Knight pursuant to this Agreement, including any right he may have
to corporate indemnification.
(b) The Company hereby releases, discharges, and acquits
Knight of and from all claims, demands, sums of money, actions,
rights, causes of action, obligations and liabilities which the
Company has or which the Company or any successor or assign of the
Company may have against Knight relating to, arising out of or
concerning Knight's negligent conduct, if any, in connection with or
concerning his employment with the Company; provided, however, that
nothing herein shall release, discharge or acquit Knight from any such
claims, demands, sums of money, actions, rights, causes of action,
obligations or liabilities relating to, arising out of or
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concerning Knight's conduct which rises to a level more culpable than
negligence, including, but not limited to, intentional misconduct or
gross negligence. There are no instances where the Company is aware of
such matters.
6. INDEMNITY OBLIGATION. The indemnity obligation of
the Company to Knight, as an officer of the Company and Trustee of the
Company's 401K Plan, shall continue in accordance with the terms and conditions
of Article IX of the Company's Articles of Incorporation and Article VII of the
Company's Bylaws with respect to actions taken or allegedly taken including,
but not limited to, alleged acts, whether intentional or negligent, and whether
active, passive or vicarious in nature, on or prior to the Severance Date
notwithstanding the termination of Knight's employment to the extent permitted
by law and the Company will take no action to diminish or reduce Knight's right
to indemnification thereunder.
7. ADVICE OF COUNSEL. Knight represents and warrants
that he has independently consulted with legal counsel and financial or other
advisors of his choice with respect to this Agreement, that he has entered into
this Agreement of his own free will, that he and such counsel have reviewed
this Agreement, and that Knight has been informed by such counsel that the
terms and provisions of this Agreement and the restrictive covenants contained
herein are reasonable, enforceable and proper in duration, scope and effect.
8. MISCELLANEOUS.
(a) Each party will bear its own costs and expenses in
connection with the preparation, negotiation and execution of this
Agreement; provided, however, that the Company will reimburse Knight
for the attorney's fees actually and reasonably incurred by him in
connection therewith up to a maximum of $5,000.
(b) This Agreement contains the entire understanding and
agreement of the parties relating to the subject matter hereof and
supersedes all prior communications, commitments and understandings,
and this Severance Agreement may not be amended or modified except in
a writing signed by both parties hereto.
(c) This Agreement shall be governed by the laws of the
State of Florida without regard to the conflicts of laws principles
thereunder.
(d) This Agreement may be executed in counterparts, each
of which shall be considered an original but which shall constitute
one and the same agreement.
(e) This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors,
assigns, heirs, beneficiaries, estates, executors, personal
representatives and legatees.
(f) Any notice herein required or permitted to be given
to be effective shall be given in writing and may be personally
delivered (including delivery by private courier services) or by
telex, facsimile or telecopy, charges prepaid, to the party
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entitled thereto addressed as set forth below (or to such other
address as may be specified by a party in accordance with this
subsection), and shall be deemed to be duly given or made when
delivered by hand, unless such day is not a business day in which case
such delivery shall be deemed to be made or given as of the next
succeeding business day or, in the case of telex, facsimile or
telecopy, when sent, so long as it was received during normal business
hours on a business day and otherwise such delivery shall be deemed to
be made or given as of the next succeeding business day:
To: Xxxxxx X. Xxxxxx
0000 Xxxxxxxxx Xxx
Xxxxx Xxxxxxx, XX 00000
with a copy to:
Xxxx Xxxxxx & Xxxxxxxx, P.A.
0000 Xxxx Xxx Xxxx Xxxx. XX-0
Xxxx Xxxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxx, Xx.
To: Lodgian, Inc.
0000 Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attention: President
with a copy to:
Cadwalader, Xxxxxxxxxx & Xxxx
000 Xxxxxx Xxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Block, Esq.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written,
LODGIAN, INC.
/s/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx, Chairman
/s/ Xxxxxx X. Xxxxxx
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XXXXXX X. XXXXXX
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SCHEDULE A
Xxxxxx X. Xxxxxx
Lodgian, Inc. Stock Options and Stock Appreciation Rights
OPTIONS
GRANTED TO
PURCHASE THE EXERCISE PERIOD
DATE FOLLOWING ---------------------
OF NUMBER OF EXERCISE EXERCISE UNEXERCISED COMMENCE- EXPIRATION
GRANT SHARES PRICE OPTIONS OPTIONS MENT DATE DATE
----- ------------ -------- -------- ----------- --------- ----------
Stock Options
8/5/92 62,500 $4.00 0 62,500 8/5/93 8/5/02
5/14/93 30,000 4.00 0 30,000 4/30/94 5/14/03
5/26/95 5,000 6.125 0 5,000 5/26/96 5/26/05
1/12/96 13,500 6.125 0 13,500 1/12/97 1/12/06
8/27/97 62,500 6.125 0 62,500 8/27/97 8/27/07
Stock Appreciation Rights
8/27/97 12,500 6.125 0 12,500 8/27/97 8/27/07
