Exhibit 10(ii)(e)
to Buckhead America Corporation
December 31, 1996 Form 10-KSB
EMPLOYMENT AGREEMENT
THIS AGREEMENT IS MADE AS OF 29th day of April, 1996 (the "Effective
Date"), between Buckhead America Corporation, a Delaware corporation (the
"Company"), and Xxxxxxx Xxxxx (the "Executive").
WITNESSETH:
WHEREAS, the Executive will be employed by the Company as an executive
officer effective May 20, 1996, 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:
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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 or 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 then 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 election of the current Board's members.
(f) "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:
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(1) continued failure to substantially perform his duties with the Company or
all 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 Area" 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 and Chief Operating Officer, BAC Franchising, Inc., dba "Country
Hearth Inns", 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
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 shalt: (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
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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.
(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
Sixty Thousand ($160,000) per annum (the "Base Salary"), $25,000 of which will
be an advance on the bonus plans, which will not be reimburseable to the
Company. 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 January 1, 1997, and may increase the
Executive's Base Salary by an amount the Board of Directors deems appropriate in
its sole discretion.
(b) During the term of the Executive's employment, the Executive shall be
entitled to participate 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 participate in such plans and programs and to receive such vacation
time, subject to the rules and regulations applicable thereto. Such additional
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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 Executive shall be entitled to be reimbursed in accordance with
the policies of the company, as adopted and amended from time to time, for all
reasonable 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 to 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 earn a
bonus of $1,500 per each property added to the Country Hearth Inn System either
through company purchase or franchise sale. Also, the Executive will be included
in the company-wide bonus system and is entitled to earn a maximum of forty
percent (40%) of the $135,000 Base Salary. The per property bonus is paid on a
quarterly basis ten (10) days at the end of the calendar quarter with the draw
applied on a pro rata basis. The company-wide bonus is paid similar to all home
office employees at the end of each fiscal year.
The per property bonus will remain at the same level through calendar
years 1996 and 1997 and will be reviewed again on an appropriate level
thereafter. The company-wide bonuses are reviewed each calendar year 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
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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 thirty (30)
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 280G 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)(l), 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.
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(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 7, 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 he in the Atlanta, Georgia 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.
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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 6 and 7 of this Agreement, are of the essence of this Agreement; that
each of such covenants is 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 arnd 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 Georgia. 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.
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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 11(b).
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first shown above.
THE EXECUTIVE: BUCKHEAD AMERICA CORPORATION:
/s/ Xxxxxxx X. Xxxxx By: /s/ Xxxxxxx X. Xxxxxxx
--------------------- --------------------------
Xxxxxxx X. Xxxxx Title: CEO
--------------------
Address: Address:
000 Xxxxxxx Xxxxx Xxxxx 0000 Xxxxxxxx Xxxx Xxxxx
Xx Xxxxx, XX 00000 Xxxxxxxx, XX 00000
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EXHIBIT A
DUTIES AND RESPONSIBILITIES OF THE EXECUTIVE
The Executive will be employed as President and Chief Operating Officer of
Buckhead America Corporations's franchise business doing business as Country
Hearth Inns and will be responsible for the overall operations of the Country
Hearth franchising system including, but not limited to, franchise sales,
franchise services, quality assurance, new property openings, reservations,
franchise relations, advertising and any other services necessary to operate a
lodging system. The Executive will report directly to the CEO and Chairman of
BAC Franchising, Inc.
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