Exhibit 10.7
EMPLOYMENT AGREEMENT
THIS AGREEMENT IS MADE AS OF 8th day of May, 1997 (the "Effective Date"),
between Buckhead America Corporation, a Delaware corporation (the "Company"),
and Xxxxxx X. Xxxxxx (the "Executive").
WITNESSETH:
WHEREAS, the Executive will be employed by the Company as an executive
officer effective May 8, 1997, and;
WHEREAS, the Company desires to continue the employment of the Executive as
an executive officer of the Company and the Executive desires to continue such
employment on the terms and conditions set forth in this Agreement:
NOW, THEREFORE, in consideration of the above and the employment of the
Executive by the Company, and the mutual agreements hereinafter set forth, the
parties agree as follows:
SECTION 1
DEFINITIONS
(a) "Affiliate" means (1) any corporation which is a member of the same
controlled group of corporations (within the meaning of Section 414(b) of the
Internal Revenue Code) as is an entity, and (2) any other trade or business
(whether or not incorporated) controlling, controlled by, or under common
control (within the meaning of section 414(c) of the Internal Revenue Code) with
an entity.
(b) "Associate" means (1) any corporation, partnership, or other
organization of which such specified person is an officer or general partner,
(2) any trust or other estate in which such specified person has a substantial
beneficial interest or as to which such specified person serves as director or
in a similar fiduciary capacity, (3) any relative or spouse of such specified
person, or any relative of such spouse who has the same home as such specified
person, or who is a director or officer of the Company or any of its parents or
subsidiaries, and (4) any person who is a director, officer, or partner of such
specified person or of any corporation (other than the Company or an Affiliate),
partnership, or other entity which is an Affiliate of such specified person.
(c) "Board of Directors" means the Board of Directors of the Company.
(d) "Business of the Company" means the business of owning, operating,
managing, marketing and franchising hotels, motels, lodges and restaurants;
mortgage servicing; and such other business as the Company may hereafter
conduct.
(e) "Change of Control" means a change in control of the Company, which
shall be deemed to have occurred upon any sale of shares of capital stock,
(other than a sale of shares for cash in a public offering), merger or
consolidation, or sale of all or substantially all of the assets of the Company
in any transaction or series of transactions, if after such transaction or
series of transactions the current shareholders of the Company or their
Associates and Affiliates no longer own, directly or indirectly 51% of the
outstanding shares of voting stock of, or all or substantially all the capital
stock of, the Company, or a change in the majority of the Company's Board of
Directors other than by election of the current Board's members.
(f) "Competing Business" means any business which is the same as or
essentially the same as the Business of the Company.
(g) "Disability" means a disability of the Executive such that the
Executive is entitled to disability retirement benefits under the federal Social
Security Act or such that the Executive is unable to perform his duties
hereunder. The determination of whether disability exists shall be made by the
Board of Directors and shall be substantiated by competent medical evidence.
(h) "Discharge for Cause" means a termination of the employment
relationship between the Employee and the Company, and its Affiliates by the
Company or any Affiliate, for any of the following reasons, as determined in
good faith by the Board of Directors of the Company: (1) continued failure to
substantially perform his duties with the Company or an Affiliate, (other than
any such failure resulting from his incapacity during physical or mental
illness); (2) willful conduct which is demonstrably and materially injurious to
the Company or its Affiliates, monetarily or otherwise; (3) personal dishonesty;
(4) incompetence; (5) breach of fiduciary duty involving personal profit; (6)
willful violation of any law, rule, or regulation (other than traffic violations
or similar offenses); (7) engaging in the activities prohibited by Sections
6,7,8, or 9 hereof; or (8) expiration of this Agreement.
(i) "Discharge without Cause" means a termination of the employment
relationship between the Employee and the Company and its Affiliates due to a
discharge of the Employee by the Company or an Affiliate, other than a Discharge
for Cause.
(j) "Proprietary Information" means information of a secret, special and
unique value to the Company concerning the Company's business and method of
operation, which information is not in the public domain. Proprietary
Information shall include, without limitation, any technical or nontechnical
data, formulas, patterns, compilations, programs, devices, methods, techniques,
drawings, processes, financial data or plans, product plans, and lists of actual
or potential customers, franchisees, or suppliers. Proprietary information also
includes information which as been disclosed to the Company or its Affiliates by
a third party and which the Company or its Affiliates are obligated to treat as
confidential.
(k) "Restricted Period" means the period of time that begins on the date
hereof and extends for the period of the employment of the Executive by the
Company hereunder and for a period of thirty-six (36) months following the
termination of such employment for any reason whatsoever.
SECTION 2
EMPLOYMENT, DUTIES
(a) The Company hereby employs the Executive, and the Executive hereby
accepts employment by the Company to perform the duties and responsibilities of
President of The Lodge Keeper Group and Senior Vice President of Buckhead
America Corporation as described on Exhibit A attached hereto and such other
duties as may be assigned to the Executive by the Board of Directors and/or the
President of Buckhead America Corporation. The Executive shall perform and
discharge well and faithfully the duties which may be assigned to Executive from
time to time in connection with the conduct of the Business of the Company.
(b) In addition to the duties and responsibilities specifically assigned to
the Executive pursuant to Section 2(a) hereof, the Executive shall: (1)
diligently follow and implement all management policies and decisions
communicated to the Executive by the Board of Directors and/or the President;
(2) timely prepare and forward to the Board of Directors and/or the President of
the Company or the designee all reports and accounts as my be requested of the
Executive; and (3) devote all of the Executive's time, energy and skill during
regular business hour to the performance of the duties of the Executive's
employment (reasonable vacations and reasonable absences due to illness
excepted), and faithfully and industriously perform such duties.
(c) The Executive shall not during the term of this Agreement be engaged
(whether or not during normal business hours) in any other business activity,
whether or not such activity is pursued for gain, profit or other pecuniary
advantage; but this shall not be construed as preventing the Executive from (1)
investing his personal assets in any business which is not a Competing Business,
and will not require any services on the part of the Executive in its operation
or affairs and in which his participation is solely that of an investor, (2)
serving on the board of directors of any business which is not a Competing
Business, (3) purchasing securities in any corporation whose securities are
regularly traded on a public securities exchange provided that such purchase
shall not result in the Executive collectively owning beneficially at any time
five percent (5%) or more of the equity securities of any Competing Business, or
(4) participating in conferences, preparing or publishing papers or books or
teaching. Prior to commencing any activity described in clause (4) above, the
Executive shall inform the Board of Directors and/or the President of the
Company or the designee of any such activity. The company waives two provisions
concerning the Executive's activities with Xxxxxx'x Coffee, Concepts in Lodging
and Xxxxxxx Xxxxx.
(d) The Executive shall not have the right to make contracts binding the
Company, except to the extent consistent with standard written policies or
programs of the Company and except as authorized by the Company through the
Board of Directors of the Company or the designee.
(e) All funds and property received by the Executive on behalf of the
Company shall be received and held by the Executive in trust for the Company,
and the Executive shall account for and remit all such funds to the Company, as
applicable.
SECTION 3
COMPENSATION, BENEFITS
(a) The Company shall pay to the Executive as compensation for the
Executive's services hereunder, a base salary at a rate equal to One Hundred
Five Thousand ($105,000) per annum (the "Base Salary"). Base Salary shall be
payable in accordance with the Company's standard payroll procedures. The Board
of Directors shall review the Executive's Base Salary on an annual basis
commencing each anniversary of this contract and may increase the Executive's
Base Salary by an amount the Board of Directors deems approprate in its sole
discretion.
(b) During the term of the Executive's employment, the Executive shall be
entitled to particpate in any employee benefit plan and program of the Company
and to receive vacation time to the extent that the Executive's position,
tenure, salary, age, health and other qualifications make the Executive eligible
to particpate in such plans and programs and to receive such vacation time,
subject to the rules and regulations applicable thereto. Such additional
benefits shall include, without limitation, subject to the approval of the Board
of Directors, life, health, dental and disability insurance benefits and cash
bonuses.
(c) The Excecutive shall be entitled to be reimbursed in accordance with
the policies of the company, as adopted and amended from time to time, for all
reaonsable and necessary expenses incurred by the Executive in connection with
the performance of the Executive's duties of employment hereunder; provided that
the Executive shall, as a condition of such reimbursement, submit verification
of the nature and amount of such expenses in accordance with the reimbursement
policies from time to time adopted by the Company.
(d) The Executive shall receive no compensation in addition to that set
forth in this Agreement for any services rendered by him in any capacity t the
Company; provided that to the extent that the Executive becomes eligible to
participate in any stock option or bonus plan of the Company, the terms and
conditions of any options or bonuses granted to the Executive shall be governed
by the terms and conditions of such plan and any related stock option agreement
or bonus plan entered into between the Executive and the Company. If the
Executive is elected or appointed a director or officer of any Affiliate of the
company during the term of this Agreement, the Executive will serve in such
capacity without further compensation.
(e) The Company may deduct from each payment of compensation hereunder all
amounts required to be deducted and withheld in accordance with applicable
federal and state income, FICA and other withholding requirements.
(f) In addition to the Base Salary in item 3(a), the Executive will be
included in the company-wide bonus system and is entitled to earn a maximum of
forty percent (40%) of the $105,000 Base Salary. The company-wide bonus is paid
similarly to all home office employees at the end of each fiscal year. The bonus
plan can be amended from time to time by the Board of Directors of the company.
SECTION 4
TERM
(a) The term of the employment of the Executive by the Company hereunder
shall commence on the date hereof and expire on the third anniversary of the
date hereof, unless sooner terminated as provided herein as follows:
(1) By the Company by way of Discharge for Cause effective immediately
upon written notice of termination specifying the cause given to the
Executive;
(2) By the Company upon the death or disability of the Executive; or
(3) By either party, at any time upon thirty (30) days prior written
notice of termination given to the other party.
(b) Upon the termination of the Executive's employment hereunder, the
Company shall have no further obligation to the Executive, or his or her
personal representative, with respect to this Agreement (notwithstanding
anything to the contrary set forth in this Agreement, including Section 3
hereof), except as follows:
(1) The Company shall pay to the Executive the Base Salary accrued up
to the date of termination hereunder and unpaid at such date of
termination. Such payment of the unpaid Base Salary shall be due and
payable within ten (10) days of the date of termination.
(2) If the Company terminates this Agreement pursuant to Section 4(a)
(3) within twelve (12) months after a Change of Control, then in addition
to the amount payable pursuant to Section 4(b)(1), the Company shall pay to
the Executive severance pay in an amount equal to the greater of the Base
Salary the Executive would have earned from the date of termination through
the remaining balance of the term of employment pursuant to Section 4(a) if
he had remained in the employ of the Company for the remaining balance of
such term, or one-half of the Executive's Base Salary for the year in which
the termination occurs, but reduced by the amount, if any, which in the
opinion of legal counsel acceptable to the Company, would, if paid,
constitute an "excess parachute payment", within the meaning of Section
28OG of the Internal Revenue Code of 1986, as amended, regardless of the
source of such payment. Such severance payment shall be payable on the date
ten (10) days from the date of termination.
(3) If the Company terminates this Agreement pursuant to Section
4(a)(3) without Cause (other than due to the Executive's death or
disability), then in addition to the amount payable pursuant to Section
4(b)(1), the Company shall pay to the Executive severance pay in an amount
equal to the Base Salary the Executive would have earned from the date of
termination to the first anniversary of the date of termination. Such
severance payment shall be payable on the date ten (10) days from the date
of termination.
(4) If the Executive terminates this Agreement for any reason between
90 and 120 days following a Change of Control, then in addition to the
amount payable pursuant to Section 4(b)(1), the Company shall pay to the
Executive severance pay in an amount equal to the lesser of (I) the Base
Salary the Executive would have earned from the date of termination through
the remaining balance of such term, or (ii) one-half of the Executive's
annual Base Salary for the year in which the termination occurs. Such
severance payment shall be payable on the date ten (10) days from the date
of termination.
(c) As a condition precedent to the obligation of the Company to make the
severance payments described in Sections 4(b)(2), 4(b)(3) and 4(b) (4), the
Executive (1) shall execute and deliver to the Company a termination agreement
in form and substance satisfactory to the Company releasing all claims the
Executive may have arising out of this Agreement against the Company, and the
officers, directors and agents of the Company, and reaffirming the continuing
obligations of the Executive under this Agreement, and (2) shall not have
violated any of the covenants of the Executive in Sections 6 and 7 prior to the
time any installment of such severance is due. Notwithstanding any other
provision hereof, in the event the Executive violates any of the covenants of
the Executive in Sections 6 and &, the Company shall have no obligation to pay
to the Executive any unpaid portion of any severance payment determined pursuant
to Section 4(b)(2), 4(b)(3) or 4(b)(4), as applicable.
(d) The covenants of the Executive in sections 6 and 7 shall survive the
termination of this Agreement and the Executive's employment hereunder and shall
not be extinguished thereby.
SECTION 5
LOCATION
The location of the Executive's work will be in the Prospect, Ohio area.
SECTION 6
OWNERSHIP, NONDISCLOSURE AND NONUSE OF PROPRIETARY INFORMATION
(a) The Executive acknowledges and agrees that all Proprietary Information,
and all physical embodiments thereof, are confidential to and shall be and
remain the sole and exclusive property of the Company. Upon request by the
Company and in any event upon termination of the Executive's employment with the
Company, for any reason, the Executive shall promptly deliver to the Company all
property belonging to the Company, including, with limitation, all Proprietary
Information (and all embodiments thereof) then in the Executive's custody,
control or possession.
(b) The Executive agrees that all Proprietary Information received or
developed by the Executive as a result of the Executive's employment with the
Company pursuant to this Agreement and prior to the effective date of this
Agreement will be held in trust and in strictest confidence by the Executive.
The Executive will protect such Proprietary Information from disclosure, and
without the prior written consent of the Company, will make absolutely no use of
the Proprietary Information except in connection with and as a part of the
Executive's employment with the Company. The Executive shall maintain and
observe the obligations of confidentiality contained in this Agreement with
respect to the Proprietary Information during the term of his or her employment
with the Company and at all times following the termination of such employment
for any reason whatsoever.
SECTION 7
AGREEMENT NOT TO SOLICIT EMPLOYEES
The Executive agrees that during the Restricted Period, the Executive will
not, either directly or indirectly, on the Executive's own behalf or in the
service or on behalf of others, solicit, divert or hire, or attempt to solicit,
divert or hire, any person employed by the Company or its Affiliates with whom
the Executive has had material contact, whether or not such employee is a
full-time or a temporary employee of the Company and whether or not such
employment is pursuant to a written agreement, for a determined period, or at
will.
SECTION 8
SEVERABILITY
The Executive agrees that the covenants and agreements contained in
Sections & and 7 of this Agreement, are of the essence of this Agreement; that
each of such covenants if reasonable and necessary to protect and preserve the
interests and properties of the Company and the Business of the Company; that
the Company is engaged in and throughout the Restricted Area in the Business of
the Company; that irreparable loss and damage will be suffered by the Company
should the Executive breach any of such covenants and agreements; that each of
such covenants and agreements is separate, distinct and severable not only from
the other of such covenants and agreements, but also from the other and
remaining provisions of this Agreement; that the unenforceability of any
covenant or agreement contained in Sections 6 and 7 shall not affect the
validity or enforceability of any other such covenants or agreements or any
other provision or provisions of this Agreement; that, in addition to other
remedies available to it, the Company shall be entitled to both temporary and
permanent injunctions to prevent a breach or contemplated breach by Executive of
any of the covenants or agreements contained in Sections 6 and 7; and that the
Executive hereby waives any requirements for the posting of a bond or any other
security by the Company in connection therewith.
SECTION 9
GOVERNING LAW AND JURISDICTION
This Agreement shall be governed and construed as to both substantive and
procedural matters in accordance with the laws of the State of Ohio. The parties
agree that if a dispute or claim between the parties arises related to this
Agreement, any legal action or proceeding shall be initiated in the state or
federal courts of the State of Georgia, and by execution and delivery of this
Agreement the parties hereto submit to and accept with regard to any such legal
action or proceeding, for themselves and with respect to their property, the
jurisdiction of such courts and agree to be bound by any and all judgments and
orders rendered by such courts.
SECTION 11
MISCELLANEOUS
(a) This Agreement may be assigned by the Company and shall inure to the
benefit of any such assignee. This Agreement and the right of the Executive to
receive compensation, or other payments hereunder is personal to the Executive.
The Executive may not sell, assign, transfer, convey, pledge, encumber or
hypothecate in any way, any rights, duties and obligations under this Agreement
without the prior written consent of the Company. This Agreement may be amended
only by a writing signed by the parties hereto (but without the consent of any
other person). The waiver by the Company of any breach of this Agreement by the
Executive shall not be effective unless in writing, and no such waiver shall
operate or be construed as the waiver of the same or another breach on a
subsequent occasion. This Agreement and any stock option agreement between the
Executive and the Company embody the entire agreement of the parties hereto
relating to the employment by the Company of the Executive in the capacity
herein stated and, except as specifically proved herein, no provisions of any
employee manual, personnel policies, Company directives or other agreement or
document shall be deemed to modify the terms of this Agreement between the
Executive and the Company. All other prior understandings and agreements
relating to the employment of the Executive by the Company in whatever capacity,
are hereby expressly terminated.
(b) Any notice required or permitted to be given to the parties pursuant to
this Agreement shall be in writing, and deemed given to a party and effective
when personally delivered, or when deposited in the United States mails, by
certified mail, return receipt requested, at the address set forth below such
party's signature on this Agreement or at such other address as such party shall
designate by written notice given in accordance with this Section 12(b).
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first shown above.
THE EXECUTIVE: BUCKHEAD AMERICA CORPORATION
By: /s/ Xxxxxx X. Xxxxxx By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------- ------------------------
Xxxxxx X. Xxxxxx Title: President
Address: Address:
000 Xxxx Xxxxxx 0000 Xxxxxxxx Xxxx Xxxxx
Xxxxxx, Xxxx 00000 Xxxxxxxx, XX 00000
EXHIBIT A
DUTIES AND RESPONSIBILITIES OF THE EXECUTIVE
The Executive will be employed as President of The Lodge Keeper Group, Inc.
and Senior Vice President of Development and Administration of Buckhead America
Corporation. He will be responsible for the overall operations of the Prospect
Ohio headquarters of The Lodge Keeper Group including, but not limited to,
development of new Country Hearth Inns, renovations of properties for conversion
to Country Hearth Inns, administration of the Prospect headquarters and any
other services necessary to assist in the operations of The Lodge Keeper Group
and Buckhead America Corporation. The Executive will report directly to the CEO
of Buckhead America Corporation.