EXHIBIT 10.1
EMPLOYMENT AGREEMENT
AGREEMENT (this "Agreement"), by and between Lodgian, Inc., a
Delaware corporation (the "Company"), and Xxxxx Xxxxxxxxx (the "Executive"),
dated as of November 1, 2001. Capitalized terms used in this Agreement that are
not defined in the operative provisions of this Agreement shall have the
meanings ascribed to them on Exhibit B hereto.
1. EMPLOYMENT PERIOD. The Company agrees to employ the Executive and
the Executive agrees to be employed by the Company for the Employment Period,
subject to the terms and conditions of this Agreement. The term "Employment
Period" means the period commencing on the date hereof and ending on the third
anniversary of such date.
2. POSITION AND DUTIES.
(a) Commencing on the date hereof and for the remainder of the
Employment Period, the Executive shall serve as the President and Chief
Executive Officer of the Company. The Executive shall report directly to the
Board of Directors of the Company (the "Board") and shall have such duties and
authority, consistent with his position as the President and Chief Executive
Officer of the Company, as shall be reasonably assigned to him from time to time
by the Board.
(b) During the Employment Period, and excluding any periods of vacation
and sick leave to which the Executive is entitled, the Executive agrees to
devote his entire working time, attention and energies to the business and
affairs of the Company and to use his best efforts to perform faithfully and
efficiently such responsibilities. The Executive shall be entitled to not less
than four (4) weeks of paid vacation during each calendar year of the Employment
Period.
3. PLACE OF PERFORMANCE. The Executive shall perform his duties and
conduct his business at the principal executive offices of the Company, except
for required travel on the Company's business.
4. COMPENSATION. As full and complete compensation for all services
performed by the Executive and subject to the performance of the Executive's
obligations in this Agreement the Executive shall be entitled to the
compensation set forth in this Section 4:
(a) Signing Bonus. Within thirty (30) days after the date hereof, the
Company shall pay to the Executive a signing bonus in the amount of $150,000.
(b) Base Salary. During the Employment Period, the Company shall pay
the Executive a minimum annual base salary of $400,000 ("Base Salary"). Base
Salary shall be payable in accordance with the usual payment practices of the
Company with respect to the payment of regular compensation to its other
executive officers. The Board shall review Executive's Base Salary annually, and
in its sole discretion, may increase Executive's Base Salary from year to year.
(c) Annual Bonus. The Executive shall be eligible, for each fiscal year
ending during the Employment Period, to receive an annual cash bonus of up to
100% of Base Salary; provided, however, that the Executive shall only be
eligible for a cash bonus of up to 50% of Base Salary for any fiscal year in
which the Executive is paid a Reorganization Bonus pursuant to Section 4(e). The
annual bonus for each year of the Employment Period will be determined based on
the Company's achievement of performance objectives that are mutually agreed to
by the Board or a committee thereof and the Executive. The annual bonus shall be
paid in a lump sum payment following the end of the calendar year with respect
to which such bonus is payable (such payment to be made at or within the same
time or times that performance bonuses are paid to the other executive officers
of the Company).
(d) Equity Incentives. As further inducement for the Executive to enter
into this Agreement and to continue in the employ of the Company, the Company
will grant to the Executive options to acquire 1,000,000 shares of the Company's
common stock. Unless the Company shall have theretofore commenced a proceeding
(whether voluntary or involuntary) under the U.S. Bankruptcy Code, 333,334 of
such options shall vest upon the first anniversary of the date hereof, 333,333
of such options shall vest upon the second anniversary of the date hereof, and
333,333 of such options shall vest upon the third anniversary of the date
hereof. The exercise price per share of the options will equal the fair market
value of the Company's Common Stock on the date of this Agreement. The options
described in this Section 4(d) shall be evidenced by a stock option agreement to
be entered between the Company and the Executive substantially in the form the
Company uses for similar option grants. All such options will terminate
automatically upon the Company's commencement of a bankruptcy proceeding
(whether voluntary or involuntary) under the U.S. Bankruptcy Code.
(e) Reorganization Bonus. If, during the Employment Period and for a
period of 180 days following the Date of Termination, the Company consummates a
Successful Restructuring, the Company shall pay Executive a cash bonus as
provided in this Section 4(e). For purposes of this Agreement, a "Successful
Restructuring" shall mean a restructuring or refinancing of substantially all of
the Company's funded debt and other debt obligations reflected as liabilities on
the Company's balance sheet in a bankruptcy proceeding or out of court
proceeding, in either case in which a majority of the members of the Company's
Board of Directors approve such refinancing or restructuring and (A) which has
the effect of reducing the outstanding principal balance of such debt and debt
obligations or reducing the Company's cash debt service requirements in respect
of such debt and debt obligations and (B) in which all of the holders of the
Company's outstanding equity immediately prior to such restructuring or
refinancing receive (i) an aggregate equity interest, or other debt or equity
security or other right that is convertible or exchangeable into an aggregate
equity interest, in the Company following such restructuring or refinancing or
(ii) cash or non-convertible debt securities with a value equivalent to such
equity interest (the "Post Restructuring Equity Percentage"). The Reorganization
Bonus will be (i) $900,000 if the Post Restructuring Equity Percentage is
greater than 1% but less than 10% on a fully diluted basis and (ii) $1,200,000
if the Post Restructuring Equity Percentage is 10% or more on a fully diluted
basis.
(f) Benefits. Except as modified by this Agreement, throughout the
Employment Period, the Executive shall be entitled (i) to participate in Plans,
(ii) to receive all benefits, perquisites and emoluments for which other
executive officers of the Company are
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eligible under any Plan now or hereafter established and maintained by the
Company to the fullest extent permissible under the general terms or provisions
of such Plans and in accordance with the provisions thereof and (iii) to use of
the leased automobile used by the Company's former chief executive officer or
other comparable vehicle (including automobile insurance). Nothing in this
Agreement shall preclude the Company from terminating or amending, from time to
time, any Plan.
(g) Expenses. During the Employment Period, the Company shall reimburse
the Executive in accordance with the Company's policy for all reasonable
expenses and other disbursements incurred by the Executive for or on behalf of
the Company in connection with the performance of the Executive's duties
hereunder upon presentation of appropriate receipts or other documentation
therefore.
(h) Temporary Housing; Relocation Expenses. The Company shall pay or
reimburse the Executive for temporary housing and living expenses for a period
of six (6) months from the date of this Agreement. During the Employment Period,
in the event the Executive relocates his residence to Atlanta, Georgia or the
surrounding areas, the Company shall pay or reimburse the Executive for all
costs and expenses incurred in connection with such relocation.
(i) No Other Compensation or Benefits. The Executive agrees that,
except for the payments and benefits outlined in Sections 4, 5, 6 and 10, the
Executive is not entitled to any other payments or benefits.
5. TERMINATION OF EMPLOYMENT.
(a) Termination for Death, Disability or Retirement. The Executive's
employment shall terminate upon his death, Disability or Retirement during the
Employment Period. In the event of such termination:
(i) the Company shall make a lump sum cash payment to the Executive
(or, in the event that termination results from the death of the Executive,
to his estate) within thirty (30) days after the Date of Termination in an
amount equal to the sum of:
(A) the Executive's Base Salary payable through the Date of
Termination to the extent not already paid;
(B) the Executive's actual earned annual bonus for any completed
fiscal year or period not theretofore paid;
(C) reimbursement for any expenses for which the Executive shall
not have theretofore been reimbursed, as provided in Section 4; and
(D) the unpaid portion of any amounts earned by the Executive
prior to the date of such termination pursuant to any benefit program
in which the executive participated during the Employment Period,
including without limitation any accrued vacation pay to the extent
not theretofore paid;
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(ii) the Executive shall retain options which shall have been vested
as of the Date of Termination and shall forfeit options which have not been
vested; and
(iii) the Executive (and his spouse and dependent children) will be
entitled to continuation of health, life and disability benefits under the
Plans for a period of one year from the Date of Termination on terms and
conditions no less favorable than those in effect on the Date of
Termination; provided, that the obligations of the Company under this
clause (iii) shall be terminated if, at any time after the Date of
Termination, the Executive is employed by or is otherwise affiliated with a
party that offers comparable health, life and disability benefits to the
Executive.
(b) Resignation by the Executive. If the Executive shall resign his
employment with the Company, the Executive shall provide the Company with a
written notice of termination at least sixty (60) days prior to the Date of
Termination. In the event of such resignation:
(i) the Company shall make a lump sum cash payment to the Executive
within thirty (30) days after the Date of Termination in an amount equal to
the sum of:
(A) the Executive's Base Salary payable through the Date of
Termination to the extent not already paid;
(B) the Executive's actual earned annual bonus for any completed
fiscal year or period not theretofore paid;
(C) reimbursement for any expenses for which the Executive shall
not have theretofore been reimbursed, as provided in Section 4; and
(D) the unpaid portion of any amounts earned by the Executive
prior to the date of such termination pursuant to any benefit program
in which the executive participated during the Employment Period,
including without limitation any accrued vacation pay to the extent
not theretofore paid;
(ii) upon providing the Company with a Notice of Termination and until
the Date of Termination, the Executive shall cooperate fully with the
Company in achieving a smooth transition of the Executive's duties and
responsibilities to such person(s) as may be designated by the Company; and
(iii) the Executive shall retain only the options which shall have
already vested as of the Date of Termination and shall forfeit the options
which have not been vested.
(c) Termination by the Company for Cause. If the Executive's employment
shall be terminated for Cause during the Employment Period, the Employment
Period shall terminate without further obligations to the Executive other than
the obligation to pay him all payments and benefits due, in accordance with the
Company's Plans through the Date of Termination. Upon a termination for Cause,
the Executive shall retain all vested options and shall forfeit all unvested
options.
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6. OBLIGATIONS OF THE COMPANY RELATING TO A CHANGE OF CONTROL. Upon
consummation of a Change of Control, then, notwithstanding anything to the
contrary in this Agreement:
(a) All unvested options held by the Executive shall vest upon
consummation of a Change of Control unless the Company shall have theretofore
commenced a proceeding (whether voluntary or involuntary) under the U.S.
Bankruptcy Code in which case all such options shall have terminated.
(b) In the event the Company (i) terminates the Executive's employment
or (ii) there is a material diminution of the position, duties, benefits and
other terms of Executive's employment with the Company, as in effect immediately
prior to a Change of Control, within one year of a Change of Control (other than
a termination by the Company for Cause), the Company shall make a lump sum cash
payment to the Executive in the amount equal to the sum of:
(A) the greater of (x) one and one-half times the Base Salary in
effect upon consummation of the Change of Control and (y) the Base
Salary in effect upon consummation of the Change of Control multiplied
by the number of years remaining in the Employment Period (plus, if
the remaining Employment Period includes a period of less than a full
year, a pro rated amount of the Base Salary for the number of full
months remaining in the Employment Period);
(B) the Executive's Base Salary payable through the Date of
Termination to the extent not already paid;
(C) the Executive's actual earned annual bonus for any completed
fiscal year or period not theretofore paid;
(D) reimbursement for any expenses for which the Executive shall
not have theretofore been reimbursed, as provided in Section 4; and
(E) the unpaid portion of any amounts earned by the Executive
prior to the date of such termination pursuant to any benefit program
in which the executive participated during the Employment Period,
including without limitation any accrued vacation pay to the extent
not theretofore paid;
(c) The Executive, his spouse and dependent children will be entitled
to continuation of the health, life and disability benefits set forth in Section
5(a)(iii) for one year following consummation of a Change of Control on terms
and conditions no less favorable than those in effect on the date of the Change
of Control.
7. OFFSET. The Company shall have the right to offset the amounts
required to be paid to the Executive under this Agreement against any amounts
owed by the Executive to the Company, and nothing in this Agreement shall
prevent the Company from pursuing any other available remedies against the
Executive.
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8. NONEXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any Plan for which
the Executive may qualify. Amounts that are vested benefits or that the
Executive is otherwise entitled to receive under any Plan, contract or agreement
with the Company at or subsequent to the Date of Termination shall be payable in
accordance with such Plan, or contract or agreement except as explicitly
modified by this Agreement.
9. FULL SETTLEMENT; LEGAL FEES.
(a) Release. The Executive agrees that, as a condition to receiving the
payments and benefits provided under Sections 5, 6 and 10 the Executive will
execute, deliver and not revoke (within the time period permitted by applicable
law) a Separation and Release Agreement substantially in the form of Exhibit A
hereto.
(b) Resignation. Upon the Date of Termination, Executive shall
automatically be deemed to have resigned as an officer and director of the
Company, any subsidiary and any affiliate and as a fiduciary of any benefit plan
of any of the foregoing. The Executive shall execute any further documentation
of such resignation as is reasonably requested by the Company.
10. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY. Anything in this
Agreement to the contrary notwithstanding, in the event that any actual or
constructive benefit payment or distribution by the Company to or for the
benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement) (a "Payment') would be
subject to the excise tax imposed by Section 4999 of the Code or any successor
provision of the Code or any interest or penalties are incurred by Executive
with respect to such excise tax (such excise tax, together with any such
interest and penalties, are hereinafter collectively referred to as the "Excise
Tax"), then the Company shall make the payments described on Exhibit C hereto.
11. RESTRICTIONS AND OBLIGATIONS OF THE EXECUTIVE.
(a) Consideration for Restrictions and Covenants. The parties hereto
acknowledge and agree that the principal consideration for the agreement to make
the payments provided in Sections 4, 5, 6 and 10 hereof from the Company to the
Executive and the grant to the Executive of the options of the Company as set
forth herein is the Executive's compliance with the undertakings set forth in
this Section 11. Specifically, the Executive agrees to comply with the
provisions of this Section 11 irrespective of whether the Executive is entitled
to receive any payments under Sections 4, 5, 6 or 10 of this Agreement.
(b) Confidentiality. All Confidential Information and Trade Secrets (as
defined below) and all physical embodiments thereof received or developed by the
Executive while employed by the Company are confidential to and are and will
remain the sole and exclusive property of the Company. Except to the extent
necessary to perform the duties assigned to him by the Company, or as otherwise
required by law, the Executive will hold such Confidential Information and Trade
Secrets in trust and strictest confidence, and will not use, reproduce,
distribute, disclose or otherwise disseminate the Confidential Information and
Trade
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Secrets or any physical embodiments thereof nor take any action causing or fail
to take the action necessary in order to prevent, any Confidential Information
and Trade Secrets disclosed to or developed by the Executive to lose its
character or cease to qualify as Confidential Information or Trade Secrets. As
used herein, "Confidential Information" means data and information relating to
the business of the Company (which does not rise to the status of a Trade
Secret) which is or has been disclosed to the Executive or of which the
Executive became aware as a consequence of or through its relationship to the
Company and which has value to the Company and is not generally known to its
competitors. Confidential Information shall not include any data or information
that has been voluntarily disclosed to the public by the Company (except where
public disclosure has been made by the Executive without authorization) or that
has been independently developed and disclosed by others, or that otherwise
enters the public domain through lawful means. The provisions in this Agreement
restricting the use of Confidential Information shall survive for a period of
two (2) years following termination of this Agreement. As used herein, "Trade
Secrets" means information including, but not limited to, technical or
nontechnical data, formulas, patterns, compilations, programs, devices, methods,
techniques, drawings, processes, financial data, financial plans, product plans
or lists of actual or potential customers or suppliers which (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. The
provisions of this Agreement restricting the use of Trade Secrets shall survive
termination of this Agreement for so long as is permitted by the Georgia Trade
Secrets Act of 1990, O.C.G.A. Sections 10-1-760-10-1-767.
(c) Return of Property. Upon request by the Company, and in any event
upon termination of the employment of the Executive with the Company for any
reason, the Executive will promptly deliver to the Company all property
belonging to the Company, including, without limitation, all Confidential
Information and Trade Secrets (and all embodiments thereof) then in the
Executive's custody, control or possession.
(d) Non-Solicitation.
(i) During the Employment Period and for a two-year period following
the Date of Termination, the Executive shall not, directly or indirectly
solicit, encourage, cause or induce any officer of the Company or any of
its subsidiaries to terminate such officer's employment with the Company or
such subsidiary for the employment of another company without the prior
written consent of the Board.
(ii) The Executive acknowledges that the provisions of this Agreement
are reasonable and necessary for the protection of the businesses of the
Company and that part of the compensation paid under this Agreement and the
agreement to pay severance in certain instances is in consideration for the
agreements in this Section 11(d).
(e) Litigation Assistance. At the request and expense of the Company,
the Executive agrees to cooperate with the Company and its counsel in regard to
any litigation presently pending or subsequently initiated involving matters of
which the Executive has particular knowledge as a result of employment with the
Company. Such cooperation shall consist of the Executive making himself
available at reasonable times for consultation with
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officers of the Company and its counsel and for depositions or other similar
activity should the occasion arise; provided, however, Executive shall cooperate
only to the extent that the Executive can do so without materially affecting the
Executive's other business obligations to his employers or other third parties.
Payment, based on the Executive's last per diem earnings, for the Executive's
time involved, reasonable travel costs and out-of-pocket expenses in connection
with such cooperation shall be reimbursed by the Company.
(f) Equitable Relief; Severability; Survival. Without limiting the
right of the Company to pursue all other legal and equitable remedies available
for violation by the Executive of the covenants contained in this Section 11, it
is expressly agreed by the Executive and the Company that such other remedies
cannot fully compensate the Company for any such violation and that the Company
shall be entitled to injunctive relief, without the necessity of proving actual
monetary loss, to prevent any such violation or any continuing violation
thereof. Each party intends and agrees that if in any action before any court or
agency legally empowered to enforce the covenants contained in this Section 11,
any term, restriction, covenant or promise contained herein is found to be
unreasonable and accordingly unenforceable, then such term, restriction,
covenant or promise shall be deemed modified to the extent necessary to make it
enforceable by such court or agency. The covenants contained in Section 4,
Section 5, Section 6 and Section 11 shall survive the conclusion of the
Executive's employment by the Company to the extent specified herein.
12. SUCCESSORS.
(a) This Agreement is personal to the Executive and without the prior
written consent of the Company shall not be assignable by the Executive
otherwise than by will or the laws of descent and distribution.
(b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.
(c) The Company will require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company to assume expressly and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
As used in this Agreement, "Company" shall mean the Company as hereinafter
defined and any successor to its business and/or assets which assumes and agrees
to perform this Agreement by operation of law or otherwise.
13. MISCELLANEOUS.
(a) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Georgia, without reference to
principles of conflict of laws.
(b) Captions. The captions of this Agreement are not part of the
provisions hereof and shall have no force or effect.
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(c) Amendment. This Agreement may not be amended or modified otherwise
than by a written agreement executed by the parties hereto or their respective
successors and legal representatives.
(d) Notices. All notices and other communications hereunder shall be in
writing and shall be given by hand delivery to the other party or by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
(i) If to the Executive, to the address on file with the Company; and
(ii) If to the Company, to it at Lodgian, Inc., 0000 Xxxxxxxxx Xxxx,
X.X., Xxxxx 000, Xxxxxxx, Xxxxxxx, 00000, Attention: General Counsel;
or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.
(e) Severability of Provisions. Each of the sections contained in this
Agreement shall be enforceable independently of every other section in this
Agreement, and the invalidity or nonenforceability of any section shall not
invalidate or render unenforceable any other section contained in this
Agreement. The Executive acknowledges that the restrictive covenants contained
in Section 11 are a condition of this Agreement and are reasonable and valid in
geographical and temporal scope and in all other respects. If any court or
arbitrator determines that any of the covenants in Section 11, or any part of
any of them, is invalid or unenforceable, the remainder of such covenants and
parts thereof shall not thereby be affected and shall be given full effect,
without regard to the invalid portion. If any court or arbitrator determines
that any of such covenants, or any part thereof, is invalid or unenforceable
because of the geographic or temporal scope of such provision, such court or
arbitrator shall reduce such scope to the minimum extent necessary to make such
covenants valid and enforceable.
(f) Withholding. All payments made by the Company under this Agreement
shall be reduced by any tax or other amounts required to be withheld by the
Company under applicable law.
(g) Waiver. The Executive's or the Company's failure to insist upon
strict compliance with any provision hereof or any other provision of this
Agreement or the failure to assert any right the Executive or the Company may
have hereunder shall not be deemed to be a waiver of such provision or right or
any other provision or right of this Agreement.
(h) Dispute Resolution.
(i) In the event of disputes between the parties with respect to the
terms and conditions of this Agreement, such disputes shall be resolved by
and through an arbitration proceeding to be conducted under the auspices of
the American Arbitration Association ("AAA") (or any like organization
successor thereto) in Atlanta, Georgia. Such arbitration proceeding shall
be conducted pursuant to the commercial arbitration rules (formal or
informal) of the AAA in as expedited a manner as is then permitted by such
rules (the "Arbitration"). Both the foregoing agreement of the parties to
arbitrate
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any and all such claims, and the results, determination, finding, judgment
and/or award rendered through such Arbitration, shall be final and binding
on the parties hereto and may be specifically enforced by legal
proceedings.
(ii) Such Arbitration may be initiated by written notice from either
party to the other which shall be a compulsory and binding proceeding on
each party. The Arbitration shall be conducted by an arbitrator selected in
accordance with the procedures of the AAA. Time is of the essence of this
arbitration procedure, and the arbitrator shall be instructed and required
to render his or her decision within thirty (30) days following completion
of the Arbitration.
(iii) The costs of any such Arbitration, whether initiated by the
Company or the Executive, shall be borne by the Company unless otherwise
ordered by the Arbitrator.
(iv) Any action to compel arbitration hereunder shall be brought in
the State Court of Georgia.
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IN WITNESS WHEREOF, the Executive has hereunto set the Executive's hand
and the Company has caused these presents to be executed in its name on its
behalf, all as of the day and year first above written.
LODGIAN, INC.
By:
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Name:
Title:
XXXXX XXXXXXXXX
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EXHIBIT A
SEPARATION AND RELEASE AGREEMENT
This Separation and Release Agreement ("Agreement") is entered into as
of this __ day of ___________________________, 20___, between LODGIAN, INC., a
Delaware corporation, and any successor thereto (collectively, the "Company")
and Xxxxx Xxxxxxxxx (the "Executive").
The Executive and the Company agree as follows:
1. The employment relationship between the Executive and the Company
terminated on __________________________________ (the "Termination Date").
2. In accordance with the Executive's Employment Agreement (the
"Employment Agreement"), the Company has agreed to pay the Executive certain
payments and to make certain benefits available after the Date of Termination.
3. In consideration of the above, the sufficiency of which the
Executive hereby acknowledges, the Executive, on behalf of the Executive and the
Executive's heirs, executors and assigns, hereby releases and forever discharges
the Company and its stockholders, parents, affiliates, subsidiaries, divisions,
any and all current and former directors, officers, employees, agents, and
contractors and their heirs and assigns, from all claims, charges, or demands,
in law or in equity, whether known or unknown, which may have existed or which
may now exist from the beginning of time to the date of this agreement arising
from or relating to the Executive's employment or termination from employment
with the Company, including a release of any rights or claims the Executive may
have under Title VII of the Civil Rights Act of 1964, as amended, and the Civil
Rights Act of 1991 (which prohibit discrimination in employment based upon race,
color, sex, religion, and national origin); the Americans with Disabilities Act
of 1990, as amended, and the Rehabilitation Act of 1973 (which prohibit
discrimination based upon disability); the Family and Medical Leave Act of 1993
(which prohibits discrimination based on requesting or taking a family or
medical leave); Section 1981 of the Civil Rights Act of 1866 (which prohibits
discrimination based upon race); Section 1985(3) of the Civil Rights Act of 1871
(which prohibits conspiracies to discriminate); any other federal, state or
local laws against discrimination; or any other federal, state, or local
statute, or common law relating to employment, wages, hours, or any other terms
and conditions of employment. This includes a release by the Executive of any
claims for wrongful discharge, breach of contract, torts or any other claims in
any way related to the Executive's employment with or resignation or termination
from the Company. This release also includes a release of any claims for age
discrimination under the Age Discrimination in Employment Act, as amended
("ADEA"). The ADEA requires that the Executive be advised to consult with an
attorney before the Executive waives any claim under ADEA. In addition, the ADEA
provides the Executive with at least twenty-one (21) days to decide whether to
waive claims under ADEA and seven days after the Executive signs the Agreement
to revoke that waiver.
4. This Agreement is not an admission by either the Executive or the
Company of any wrongdoing or liability.
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5. The Executive waives any right to reinstatement or future employment
with the Company following the Executive's separation from the Company on the
Date of Termination.
6. This Agreement shall not release any claim or right the Executive,
his spouse, dependent children, executor or assigns have or has to (i)
compensation or benefits under the Employment Agreement, (ii) any other rights
the Executive may have under the terms of the Employment Agreement, (iii) any
claims under any employee pension benefit plan, or any employee welfare benefit
plan, as those terms are defined in Section 3 of the Employee Retirement Income
Security Act of 1974, as amended, (iv) retirement, welfare or fringe benefits
following termination of employment, (v) any claims the Executive may have for
workers' compensation benefits, (vi) any claims that Executive may have for
personal injury (other than for defamation) caused by the negligent or willful
act of or on behalf of the Company or any other released party, and (vii)
indemnification and/or contribution from the Company.
7. The Executive agrees not to engage in any act after execution of
this Separation and Release Agreement that is intended to harm the reputation of
the Company, its officers, directors, stockholders or employees. The Executive
will take no action which would reasonably be expected to lead to unwanted or
unfavorable publicity to the Company.
8. The Executive shall continue to be bound by Section 11 of the
Executive's Employment Agreement.
9. The Executive shall promptly return all the Company property in the
Executive's possession, including, but not limited to, the Company keys, credit
cards, cellular phones, computer equipment, software and peripherals and
originals or copies of books, records, or other information pertaining to the
Company business. The Executive shall return any leased or Company automobile.
10. This Agreement shall be governed by and construed in accordance
with the laws of the State of Georgia, without reference to the principles of
conflict of laws. Exclusive jurisdiction with respect to any legal proceeding
brought concerning any subject matter contained in this Agreement shall be
settled by arbitration as provided in the Executive's Employment Agreement.
11. This Agreement represents the complete agreement between the
Executive and the Company concerning the subject matter in this Agreement and
supersedes all prior agreements or understandings, written or oral. This
Agreement may not be amended or modified otherwise than by a written agreement
executed by the parties hereto or their respective successors and legal
representatives.
12. Each of the sections contained in this Agreement shall be
enforceable independently of every other section in this Agreement, and the
invalidity or nonenforceability of any section shall not invalidate or render
unenforceable any other section contained in this Agreement.
13. It is further understood that for a period of seven (7) days
following the execution of this Agreement in duplicate originals, the Executive
may revoke this Agreement,
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and this Agreement shall not become effective or enforceable until the
revocation period has expired. No revocation of this Agreement by the Executive
shall be effective unless the Company has received within the seven (7) day
revocation period, written notice of any revocation, all monies received by the
Executive under this Agreement and all originals and copies of this Agreement.
14. This Agreement has been entered into voluntarily and not as a
result of coercion, duress, or undue influence. The Executive acknowledges that
the Executive has read and fully understands the terms of this Agreement and has
been advised to consult with an attorney before executing this Agreement.
Additionally, the Executive acknowledges that the Executive has been afforded
the opportunity of at least twenty-one (21) days to consider this Agreement.
The parties to this Agreement have executed this Agreement as of the
day and year first written above.
LODGIAN, INC.
By:
------------------------------------
Name:
Title:
XXXXX XXXXXXXXX
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EXHIBIT B
Capitalized terms used in the Agreement that are not elsewhere defined
in the Agreement have the definitions set forth below:
"Cause" means (i) the Executive's willful misconduct with respect to
the business and affairs of the Company; (ii) a failure to comply with a written
lawful and reasonable order of the Board; (iii) the Executive being convicted of
a felony or the entering by the Executive of a plea of nolo contendere with
respect to a charged felony; (iv) a material breach of Employee's duties and
obligations under this Agreement and if such breach is capable of being cured,
the Executive's failure to cure such breach within thirty (30) days of receipt
thereof from the Company; or (iv) the Executive's commission of an act of fraud
or financial dishonesty with regard to the Company.
"Change of Control" means, after the date hereof:
(a) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) (a "Person") of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of 30% or more of
either (i) the then outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (ii) the combined voting power of the
then outstanding voting securities of the Company entitled to vote generally in
the election of directors (the "Outstanding Company Voting Securities");
provided, however, that for purposes of this subsection (a), the following
acquisitions shall not constitute a Change of Control: (i) any acquisition by
the Company or any of its subsidiaries, (ii) any acquisition by any employee
benefit plan (or related trust) sponsored or maintained by the Company or any
subsidiary of the Company, (iii) any acquisition by any Person pursuant to a
transaction that complies with clauses (i), (ii), (iii) and (iv) of subsection
(c) below, or (iv) any acquisition by any entity in which the Executive has a
material direct or indirect equity interest;
(b) The cessation of the "Incumbent Board" for any reason to constitute
at least a majority of the Board. "Incumbent Board" means the members of the
Board on the date hereof and any member of the Board subsequent to the date
hereof whose election, or nomination for election by the Company's stockholders,
was approved by a vote of at least a majority of the directors then comprising
the Incumbent Board, except that the Incumbent Board shall not include any
member of the Board whose initial assumption of office occurs as a result of an
actual or threatened election contest with respect to the election or removal of
directors or other actual or threatened solicitation of proxies or consents by
or on behalf of a Person other than the Board; or
(c) The consummation of a merger or consolidation or sale or other
disposition of all or substantially all of the assets of the Company (a
"Business Combination"), in each case, unless immediately following such
Business Combination each of the following would be correct:
(i) all or substantially all of the individuals and entities who were
the beneficial owners, respectively, of the Outstanding Company Common
Stock and
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Outstanding Company Voting Securities immediately prior to such Business
Combination beneficially own, directly or indirectly, more than 50% of,
respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the Person
resulting from such Business Combination (including, without limitation, a
Person which as a result of such transaction owns the Company or all or
substantially all of the Company's assets either directly or through one or
more subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination of the
Outstanding Company Common Stock and Outstanding Company Voting Securities,
as the case may be, and
(ii) no Person (excluding (A) any employee benefit plan (or related
trust) sponsored or maintained by the Company or any subsidiary of the
Company, or such corporation resulting from such Business Combination or
any Affiliate of such corporation, or (B) any entity in which the Executive
has a material equity interest, or any "Affiliate" (as defined in Rule 405
under the Securities Act of 1933, as amended) of such entity) beneficially
owns, directly or indirectly, 25% or more of, respectively, the then
outstanding shares of common stock of the corporation resulting from such
Business Combination, or the combined voting power of the then outstanding
voting securities of such corporation except to the extent that such
ownership existed prior to the Business Combination,
(iii) at least a majority of the members of the board of directors of
the corporation resulting from such Business Combination were members of
the Incumbent Board at the time of the execution of the initial agreement,
or of the action of the Board, providing for such Business Combination; and
(iv) Executive is the President and Chief Executive Officer of the
corporation resulting from such Business Combination. Executive has duties
and authorities, and compensation and benefits commensurate with the
position of President and Chief Executive Officer of a corporation
comparable to that resulting from the Business Combination, but no less
favorable than those in effect immediately before such Business
Combination, and the corporation resulting from such Business Combination
is a publicly traded corporation; or
(d) Approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company.
"Date of Termination" means (i) if the Executive's employment is
terminated by the Company for Cause, the date of receipt of the Notice of
Termination or any later date specified therein, (ii) if the Executive's
employment is terminated by reason of death or Disability, retirement, the Date
of Termination shall be the date of death or retirement of the Executive or the
effective date of the Disability, as the case may be, (iii) if the Executive's
Employment is terminated because Executive resigns, the Date of Termination
shall be the last day on which the Executive is employed by the Company as a
regular employee, or (iv) the last day of the Employment Period.
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"Disability" means (i) the inability of the Executive to perform his
duties under this Agreement for (x) a period of one hundred twenty (120)
calendar days within any three hundred sixty-five (365) calendar day period, or
(y) ninety (90) consecutive calendar days, and if within thirty (30) calendar
days after a notice of termination is provided to the Executive, he shall not
have returned to the performance of the Executive's duties hereunder, or (ii) a
disability of the Executive within the meaning of Section 72(m)(7) of the
Internal Revenue Code, that is, the Executive is unable to engage in any
substantial gainful activity with the Company or any other employer, by reason
of any medically determinable physical or mental impairment which can be
expected to result in death or to be of long, continued and indefinite duration,
or (iii) the Executive becomes entitled to disability retirement benefits under
the Federal Social Security Act or receive benefits under any long-term
disability plan or policy maintained by the Company.
"Notice of Termination" means a written notice that (i) indicates that
this Agreement is terminated and (ii) if the Date of Termination is other than
the date of such notice, specifies the termination date.
"Plans" means all employee compensation, benefit and welfare plans,
policies and programs of the Company, including, without limitation, incentive,
savings, retirement, stock option, restricted stock, supplemental executive
retirement, pension, medical, prescription, dental, disability, salary
continuance, employee life, group life, accidental death and travel accident
insurance plans, vacation practices, fringe benefit practices and policies
relating to the reimbursement of business expenses.
"Retirement" shall have the meaning ascribed to that term in the Plan
under which benefits are being sought by the Executive or, if such meaning is
inapplicable, the term shall mean a termination of employment with the Company
or a subsidiary on a voluntary basis after to the age of sixty. The term
"Retirement" shall also include "early" retirement prior to the age of sixty
provided that the Committee, in its sole discretion, consents in writing to
accept such early retirement.
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XXXXXXX X
XXX XXXXX-XX
(a) If required by Section 10 of the Agreement, the Company shall pay
to the Executive an additional amount (the "Gross-up") such that the portion of
the Gross-up retained by the Executive, after deduction of any Excise Tax on the
Gross-up and any Federal, state and local income taxes on the Gross-up, is
sufficient to pay the Excise Tax imposed with respect to the Payments. In
addition, the Company shall indemnify and hold the Executive harmless on an
after-tax basis from any Excise Tax imposed on or with respect to any such
Payment (including, without limitation, any interest, penalties and additions to
tax payable in connection with any such Excise Tax). For purposes of determining
the amount of any Gross-up or the amount required to make an indemnity payment
on an after-tax basis, it shall be assumed that the Executive is subject to
Federal, state and local income tax at the highest marginal statutory rates in
effect for the relevant period after taking into account any deduction available
in respect of any such tax (e.g., if state and local taxes are deductible for
Federal income tax purposes in the relevant period, it shall be assumed that
such taxes offset income that would otherwise be subject to Federal income tax
at the highest marginal statutory rate in effect for such period) provided that
the extent of any such deduction shall take into account, as determined by the
accounting firm described in (b) below, any applicable limitation on itemized
deductions imposed by federal law, calculated on the assumption that any such
limitation applies proportionately to all itemized deductions on the Executive's
federal tax return for the year in question.
(b) Subject to the provisions of paragraph (c) of this Exhibit C, the
determination of (i) whether a Gross-up is required and the amount of such
Gross-up and (ii) the amount necessary to make any payment on an after-tax
basis, shall be made in accordance with the assumptions set forth in paragraph
(a) of this Exhibit C by a mutually agreed upon accounting firm, or, absent
agreement, by whichever of Ernst & Young LLP or PricewaterhouseCoopers LLP is
independent of the Company, in each case, at the Company's expense.
(c) The Executive shall notify the Company as soon as practicable in
writing of any claim by the Internal Revenue Service that, if successful, would
require any additional Gross-up or indemnity payment beyond that initially
calculated under (b) above. The Executive shall not pay such claim prior to the
expiration of the 30-day period following the date on which it gives such notice
to the Company. If the Company notifies the Executive in writing prior to the
expiration of such period that it desires to contest such claim, the Executive
shall take all actions necessary to permit the Company to control all
proceedings taken in connection with such contest. In that connection, the
Company may, at its sole option, pursue or forgo any and all administrative
appeals, proceedings, hearings and conferences in respect of such claim and may,
at its sole option, either direct the Executive to pay the tax claimed and xxx
for a refund or contest the claim in any permissible manner; provided, however,
that the Company shall pay and indemnify the Executive from and against all
costs and expenses incurred in connection with such contest; provided further,
however, that if the Company directs the Executive to pay such claim and xxx for
a refund, the Company shall advance the amount of such payment to the Executive
on an interest-free basis and at no net after-tax cost to the Executive. If the
Executive
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becomes entitled to receive any refund or credit with respect to such claim (or
would be entitled to a refund or credit but for a counterclaim for taxes not
indemnified hereunder), the Executive shall promptly pay to the Company the
amount of such refund (together with any interest paid or credited thereon) plus
the amount of any tax benefit available to the Executive as a result of making
such payment (any such benefit calculated based on the assumption that any
deduction available to the Executive offsets income that would otherwise be
taxed at the highest marginal statutory rates of Federal, state and local income
tax for the relevant periods) provided that the extent of any such deduction
shall take into account, as determined by the accounting firm described in (b)
above, any applicable limitation on itemized deductions imposed by federal law,
calculated on the assumption that any such limitation applies proportionately to
all itemized deductions on the Executive's federal tax return for the year in
question.
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