EXHIBIT 10.39
EMPLOYMENT AGREEMENT
AMONG EQUITY INNS SERVICES, INC ., EQUITY INNS, INC.
AND XXXXXX X. XXXXXXX
THIS EMPLOYMENT AGREEMENT (this "Agreement"), effective as of July 20,
1998, is by and among EQUITY INNS SERVICES, INC., a Tennessee corporation (the
"Company"), EQUITY INNS, INC., a Tennessee corporation (the "Parent") and XXXXXX
X. XXXXXXX (the "Executive").
R E C I T A L S :
The Company is a Tennessee corporation which provides management
services to the Parent pursuant to a management services agreement dated as of
December 30, 1994.
The Parent is a Tennessee corporation which is organized as a
self-advised equity real estate investment trust.
Each of the Parent and the Company desire to employ the Executive to
serve as the Executive Vice President, Secretary, Treasurer and Chief Financial
Officer of each of the Parent and the Company.
The Executive desires to be so employed on the terms and subject to the
conditions hereinafter stated.
NOW, THEREFORE, in consideration of the premises and mutual obligations
hereinafter set forth the parties agree as follows:
1. Employment. Each of the Parent and the Company shall employ the
Executive, and the Executive agrees to be so employed in the capacity of
Executive Vice President, Secretary, Treasurer and Chief Financial Officer of
each of the Parent and the Company, to serve for the Term, as defined
hereinbelow, subject to earlier termination as hereinafter provided.
2. Term. The term of the Executive's employment hereunder (the "Term")
shall be for a period commencing on the date of this Agreement and continuing
for a period of two (2) years until July 20, 2000, unless terminated earlier as
provided herein.
3. Services. The Executive shall devote such amount of his time and
attention to the Parent's and the Company's affairs as are necessary to perform
his duties hereunder. Specifically, the Executive shall have complete senior
management authority and responsibility with respect to
the day-to-day operations of each of the Parent's and the Company's financial
staff and personnel, as well as implementation of the financial strategy of each
of the Parent and the Company, consistent with directions from the respective
Board of Directors. He shall have full authority and responsibility, subject to
the general direction, approval and control of each of the Parent's and the
Company's Board of Directors for formulating policies and administering the
Parent and its financial policies and strategies in all respects and to
negotiate for and cause the Parent and the Company to undertake other
activities, agreements and programs at the direction of the respective Board of
Directors.
4. Compensation. (a) During the Term, the Company shall pay the
Executive for his services an annual base salary ("Base Salary") of Two Hundred
Seventy Thousand Dollars ($270,000.00), to be paid in equal payments bi-weekly,
subject to any increases in base compensation as may be approved by the joint
Compensation Committee of the Parent's and the Company's Board of Directors (the
"Compensation Committee").
(b) In addition to the annual base salary described in Section (a)
above, the Executive (i) will be eligible for a guaranteed bonus in the amount
of at least Fifty Thousand Dollars ($50,000) for the Company's fiscal year ended
December 31, 1998, subject to approval of the bonus program under consideration
as of the date of this Agreement by the Board of Directors, at the rate of 25%
if the minimum performance goals are attained, 50% if the targeted performance
goals are attained, and 100% if the maximum performance goals are attained, and
(ii) may be eligible for annual bonuses for all subsequent fiscal years in
accordance with such policies, rules and criteria as may be established by the
Compensation Committee, in its sole discretion.
(c) The Executive shall receive, as a condition of his employment,
(i) 20,000 restricted shares of the Company's common stock, $.01 par value (the"
Common Stock"), with a date of grant of July 20, 1998 (the "Date of Grant") and
with such restricted shares vesting at the rate of 4,000 shares per year, with
the first increment being immediately vested as of the Date of Grant and each
subsequent increment becoming vested on the first through fourth anniversaries
of the Date of Grant; and (ii) stock options for an aggregate of 100,000 shares
of Common Stock, at an exercise price of $13 9/16 per share, and with such
options becoming exercisable at the rate of 20,000 shares per year, with the
first increment being immediately exercisable as of the Date of Grant and each
subsequent increment becoming exercisable on the first through fourth
anniversaries of the Date of Grant.
(d) The Executive shall also be eligible to participate in the
Company's Executive Deferred Compensation Plan, under which the Executive
shall be entitled to defer up to twenty-five percent (25%) of his base salary,
bonus or both and the Company shall credit a matching contribution equal to ten
percent (10%) of the Executive's base salary to the Executive's account.
(e) The Executive shall be eligible to receive, subject to the
oversight and approval of the Compensation Committee, annual stock options for
shares of Common Stock, up to an aggregate of 200,000 shares for attainment
of the maximum performance goals then applicable, for the Company's 1998
fiscal year to be paid in early 1999, which may be paid in the alternative on
the attainment of such maximum performance goals as an aggregate of 40,000
restricted shares of Common Stock.
(f) In addition, the Company's Board of Directors or the Compensation
Committee may from time to time authorize the payment to the Executive of other
incentive compensation, in accordance with rules and criteria established by the
Compensation Committee, in its sole discretion.
5. Medical and 401(k) Plans; Eligibility for Other Benefits. The
Executive shall be eligible for participation in the Company's (a) medical plan
commensurate with the benefits offered to all other executives and employees of
the Company and (b) the Company's 401(k) Plan. Additionally, this Agreement
shall not be in lieu of any rights, benefits and privileges to which the
Executive may be entitled as a management level employee of the Company,
including but not limited to any other retirement, pension, profit-sharing,
insurance, dental, hospital or other plans which may now be in effect or which
may hereafter be adopted by the Company. The Executive shall have the same
rights and privileges to participate in such plans and benefits offered by the
Company as any other management level employee during the Term.
6. Vacation Benefits; Expenses. The Executive shall be entitled to full
vacation benefits as of the date of this Agreement. Further, the Company
recognizes that the Executive will have to incur certain out-of-pocket expenses,
including but not limited to travel expenses, related to his services and the
Company's business and the Company agrees to reimburse the Executive for all
reasonable expenses necessarily incurred by him in the performance of his duties
upon presentation of a voucher or documentation indicating the amount and
business purposes of any such expenses.
7. Change of Control. In the event of the Executive's termination
resulting from a change of control of the Parent, for a term of three (3) years,
the Executive shall be entitled to receive, in addition to any compensation
earned but not paid through the date of the Executive's termination resulting
from such a change of control, a change-of-control payment in an amount and on
terms and conditions to be subsequently approved by the Parent's and the
Company's Boards of Directors after the date of this Agreement.
8. Termination in Case of Death or Disability. In case of the
Executive's death or permanent disability (defined to mean the Executive's
inability, by reason of physical or mental disability of the Executive,
confirmed by a licensed physician, to perform the services described in Section
3 above, which inability continues for a period of one hundred twenty (120)
consecutive days within any one (1) year period), the Company may terminate this
Agreement, subject to the terms of Section 9.
9. Definitions. For purposes of this Agreement, the
following terms shall have the following definitions:
(a) "Voluntary Termination" means the Executive's voluntary
termination of his employment hereunder, which may be effected by the Executive
giving the Company's and the Parent's Boards of Directors 30 days written notice
of the Executive's desire to terminate his employment or the Executive's failure
to provide substantially all the services described in Section 3 hereof for a
period greater than four (4) consecutive weeks by reason of the Executive's
voluntary refusal to perform such services. Notwithstanding the foregoing, if
the Executive gives notice of Voluntary Termination and, prior to the expiration
of the 30-day notice period, the Executive voluntarily refuses or fails to
provide substantially all the services described in Section 3 hereof for a
period of eight or more business days, the Voluntary Termination shall be deemed
to be effective as of the date on which the Executive so ceases to carry out his
duties. For purposes of this Section 9, voluntary refusal to perform services
shall not include the Executive's failure to perform services on account of his
illness (except as described in Section 8 hereof), or the illness of a member of
his immediate family, provided such illness is adequately substantiated at the
reasonable request of the Company and the Parent, authorized vacation or any
other absence from service with the written consent of the Company's and the
Parent's Boards of Directors. For purposes of this Section 9(a), immediate
family shall constitute the Executive's spouse and children, if applicable.
(b) "Termination Without Cause" means the termination of the
Executive's employment by the Company for any reason other than Voluntary
Termination or Termination With Cause.
(c) "Termination With Cause" means the termination of the
Executive's employment by act of the Company's or the Parent's Board of
Directors for any of the following reasons:
(i) the Executive's conviction of a crime involving
some act of dishonesty or moral turpitude
(specifically excepting simple misdemeanors not
involving acts of dishonesty and all traffic
violations);
(ii) the Executive's theft, embezzlement,
misappropriation of or intentional and malicious
infliction of damage to the Company's or the Parent's
property or a business opportunity;
(iii) the Executive's continuous neglect of his
duties with the Company or the Parent or his
continuous failure or refusal to follow any
reasonable, unambiguous duly adopted written
direction of the respective Board of Directors or any
duly constituted committee thereof; and
(iv) the Executive's abuse of alcohol, drugs or other
substances, or his engaging in other personal
activities in a manner that, in the reasonable
judgment of the respective Board of Directors,
adversely affects the reputation, goodwill or
business position of the Company or the Parent.
(d) "Involuntary Termination" means conduct on the part of the
Company or the Parent that constitutes continuous and material interference by
the Company or the Parent with the Executive's performance of his duties as set
forth in Section 3 hereof or the intentional or material breach by the Company
or the Parent of this Agreement.
10. Voluntary Termination; Termination With Cause. If the Executive
shall cease being an employee of the Company or the Parent on account of a
Voluntary Termination or shall suffer a Termination With Cause, then the
Executive shall not be entitled to any compensation after the effective date of
such Voluntary Termination or Termination With Cause (except compensation
accrued but unpaid on the date of such event).
11. Death or Disability; Termination Without Cause; or Involuntary
Termination. If the Executive shall suffer a death, disability, Involuntary
Termination or a Termination Without Cause, then (a) the Company shall pay the
Executive his Base Salary (prorated for the remainder of the Term), all bonuses
to which the Employee would otherwise be entitled, medical insurance and other
benefits for the remainder for the Term, and (b) all stock options and shares of
restricted stock previously granted to the Employee shall neither be terminated
or canceled nor shall their vesting periods be altered due to such death,
disability, Involuntary Termination or Termination Without Cause.
12. Notices. All notices or deliveries authorized or required pursuant
to this Agreement shall be deemed to have been given when in writing and
personally delivered or when deposited in the U.S. mail, certified, return
receipt requested, postage prepaid, addressed to the parties at the following
addresses or to such other addresses as either may designate in writing to the
other party:
To the Company: Equity Inns Services, Inc.
0000 Xxxx Xxxxx Xxxxxxxxx
Xxxxxxxxxx, Xxxxxxxxx 00000
Attn: Board of Directors
To the Parent: Equity Inns, Inc.
0000 Xxxx Xxxxx Xxxxxxxxx
Xxxxxxxxxx, Xxxxxxxxx 00000
To the Executive: Xxxxxx X. Xxxxxxx
c/o Equity Inns, Inc.
0000 Xxxx Xxxxx Xxxxxxxxx
Xxxxxxxxxx, Xxxxxxxxx 00000
13. Entire Agreement. This Agreement contains the entire understanding
between the parties hereto with respect to the subject matter hereof and shall
not be modified in any manner except by instrument in writing signed, by or on
behalf of, the parties hereto. This Agreement shall be binding upon and inure to
the benefit of the heirs, successors and assigns of the parties hereto.
14. Applicable Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Tennessee. Should any provision of this
Agreement be declared or determined by any court to be illegal or invalid, the
validity of the remaining parts, terms or provisions shall not be affected
thereby and said illegal or invalid part, term or provision shall be deemed not
to be a part of this Agreement.
15. Assignment. The Executive acknowledges that his services are unique
and personal. Accordingly, the Executive may not assign his rights or delegate
his duties or obligations under this Agreement. Either the Company or the Parent
may assign its rights and obligations under this Agreement in connection with a
merger or sale of substantially all of either such corporation's assets. The
Executive's rights and obligations under this Agreement shall inure to the
benefit of and shall be binding upon the Executive, and the Company's and the
Parent's rights and obligations under this Agreement shall inure to the benefit
of and shall be binding upon the Company's and the Parent's corporate
successors, assigns, and legal representatives. As used herein, the Company or
the Parent shall include any assignee, successor in interest or legal
representative of the Company or the Parent.
16. Headings. Headings in this Agreement are provided for the sake of
convenience only and shall not be used to interpret or construe its provisions.
IN WITNESS WHEREOF, the parties have executed this Agreement effective
as of the above-written date.
EQUITY INNS SERVICES, INC.
By: /s/ Xxxxxxx X. XxXxxxx
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Name: Xxxxxxx X. XxXxxxx, Xx.
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Title: CEO
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EQUITY INNS, INC.
By: /s/ Xxxxxxx X. XxXxxxx
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Name: Xxxxxxx X. XxXxxxx, Xx.
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Title: CEO
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EXECUTIVE:
/s/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx
