EXHIBIT 10.5
EXECUTIVE EMPLOYMENT AGREEMENT
BETWEEN
LODGIAN, INC.
AND
XXXXXX X. XXXXXX
MAY 10, 2004
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") by and between Lodgian,
Inc. (the "Company"), and Xxxxxx X. Xxxxxx ("You" or "Your")(collectively, the
"Parties"), is entered into and effective as of the 10th day of May, 2004 (the
"Effective Date").1
WHEREAS, You are currently employed as Executive Vice President and
Chief Financial Officer of the Company;
WHEREAS, the Company desires that You continue to serve as Executive
Vice President and Chief Financial Officer of the Company, and You desire to
continue said employment;
WHEREAS, Your position is a position of trust and responsibility with
access to Confidential Information, Trade Secrets, and information concerning
employees and customers of the Company;
WHEREAS, the Trade Secrets and Confidential Information, and the
relationship between the Company and each of its employees and customers are
valuable assets of the Company and may not be used for any purpose other than
the Company's Business;
WHEREAS, the Company has agreed to continue to employ You in exchange
for Your compliance with the terms of this Agreement;
WHEREAS, the Company and You desire to express the terms and conditions
of Your continued employment in this Agreement.
NOW, THEREFORE, the Parties agree:
1. Employment and Duties
A. Position. The Company shall employ You as Executive
Vice President and Chief Financial Officer.
B. Duties. You agree to perform all duties that are
consistent with Your position and that may otherwise be assigned to You by the
Company from time to time. The Company may increase or decrease Your duties in
its discretion.
C. Reporting. You shall report directly to the President
and Chief Executive Officer of the Company or any other executive designated by
the Chief Executive Officer from time to time.
D. Devotion of Time. You agree to (i) devote all
necessary working time required of Your position, (ii) devote Your best efforts,
skill, and energies to promote and
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(1) Unless otherwise indicated, all capitalized terms used in this Agreement are
defined in the "Definitions" section attached as Exhibit A. Exhibit A is
incorporated by reference and is included in the Definition of "Agreement."
advance the business and/or interests of the Company, and (iii) fully perform
Your obligations under this Agreement. During Your employment, You shall not
render services to any other entity, regardless of whether You receive
compensation, if such services shall impede Your ability to perform Your duties
for the Company. You may, however, (A) engage in community, charitable, and
educational activities, (B) manage Your personal investments, and (C) with the
prior written consent of the Company, serve on corporate boards or committees,
provided that such activities do not conflict or interfere with the performance
of Your obligations under this Agreement or conflict with the interests of the
Company.
E. Company Policies. You agree to comply with the
policies and procedures of the Company as may be adopted and changed from time
to time, including those described in the Company's employee handbook. If this
Agreement conflicts with such policies or procedures, this Agreement will
control.
2. Term. The term of this Agreement shall be for a period of two
(2) years, beginning on the Effective Date and ending on May 10, 2006 (the
"Employment Period"). Upon expiration of the Employment Period, this Agreement
will automatically renew for a one-year period (each a "Renewal Period"), unless
either Party notifies the other Party in writing at least one hundred eighty
(180) days prior to the end of the Employment Period or the Renewal Period that
the Agreement will not be renewed (the "180-Day Notice Period"). If this
Agreement is renewed in accordance with this Section, each Renewal Period shall
be included in the definition of "Employment Period" for purposes of this
Agreement. If this Agreement is not renewed in accordance with this Section,
then (i) Your employment will terminate upon expiration of the Employment
Period, and (ii) this Agreement will no longer be in effect; provided, however,
that the restrictive covenants and all post-termination obligations contained in
this Agreement shall survive termination of this Agreement.
3. Compensation.
A. Base Salary. During the Employment Period, the
Company will pay You an annual minimum base salary ("Base Salary") of
$218,874.24, minus applicable withholdings, in accordance with the Company's
normal payroll practices. Your Base Salary may be increased at the Company's
discretion based upon Your performance and the Company's performance. Your Base
Salary will be reviewed on an annual basis.
B. Bonus. During the Employment Period, You will be
eligible to receive an annual bonus if Your performance and the Company's
performance meets certain criteria established from year to year by the
Company's Compensation Committee (the "Bonus"). The Bonus will be subject to all
applicable withholdings and will be paid within 90 days after the end of the
calendar year. Upon termination of Your employment, Your entitlement to any
Bonus payment will be governed by Section 5 below.
C. Benefits Plans. During the Employment Period, You
will be eligible to participate in all benefit plans in effect for executives
and employees of the Company, subject to the terms and conditions of such plans.
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D. Vacation. During the Employment Period, You are
entitled to four (4) weeks paid vacation each year. In addition, You shall be
entitled to personal and/or sick days in accordance with the Company policies.
4. Termination. This Agreement may be terminated by any of the
following events:
A. The Company's non-renewal of the Employment Period;
B. Mutual written agreement between You and the Company
at any time;
C. Your death;
D. Your disability which renders You unable to perform
the essential functions of Your job even with reasonable accommodation, as
determined by the Company in its sole discretion;
E. For Cause. For Cause shall mean a termination by the
Company because of any one of the following events:
1. Your willful refusal to follow the lawful
direction of the CEO and/or the person to
whom You report or Your material failure to
perform Your duties (other than by reason of
disability, as defined in Section 4D above),
in either case, only after You have been
given written notice by the CEO and/or the
person to whom You report detailing the
directives You have refused to follow or the
duties You have failed to perform and at
least 30 days to cure;
2. Your material and willful failure to comply
with Company policies as applied to Company
employees, only after You have been given
written notice by the CEO and/or the person
to whom You report detailing the policies
with which You have failed to comply and at
least 30 days to cure;
3. Your engaging in any of the following
conduct:
(i) an act of fraud or dishonesty that
materially xxxxx the Company or its
affiliates,
(ii) a felony or any violation of any
federal or state securities law or
Your being enjoined from violating
any federal or state securities law
or being determined to have
violated any such law;
(iii) willful or reckless misconduct or
gross negligence in connection with
any property or activity of the
Company and its subsidiaries and
affiliates, and successors;
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(iv) repeated and intemperate use of
alcohol or illegal drugs after
written notice from the CEO and/or
the person to whom You report;
(v) material breach of any of Your
obligations under this Agreement
(other than by reason of physical
or mental illness, injury, or
condition), but only after You have
been given written notice of the
breach by the CEO and/or the person
to whom You report and at least
thirty (30) days to cure;
(vi) becoming barred or prohibited by
the SEC from holding Your position
with the Company;
4. Your resignation for other than Good Reason;
or
5. Your non-renewal of the Employment Period.
F. Your resignation for Good Reason; or
G. Without Cause. Without Cause shall mean any
termination of Your employment by the Company which is not defined in
sub-sections A-F above.
5. Company's Post-Termination Obligations
A. If this Agreement terminates for the reasons set
forth in Sections 4B or E above, then the Company will pay You all accrued but
unpaid wages, based on Your then current Base Salary, through the termination
date. The Company shall have no other obligations to You, including under this
Agreement, any Company policy, or otherwise; however, You shall continue to be
bound by Sections 7D and all other post-termination obligations to which You are
subject, including, but not limited to, the obligations contained in this
Agreement. You shall also not be entitled to any accelerated vesting of any
stock based compensation granted pursuant to the 2002 Lodgian, Inc. Stock
Incentive Plan or any other similar plan.
B. If this Agreement terminates for any reason set forth
in Sections 4C, D, F, or G above, and Section 6 below does not apply, then the
Company shall (i) pay You (or Your estate if applicable) a lump sum payment
equal to the greater of: (a) Your then current Base Salary for the remainder of
the initial Employment Period or Renewal Period during which Your employment
terminates, whichever is applicable, or (b) Your then current Base Salary for a
period of twelve (12) months (the time period in the immediately preceding
sub-clause (a) or (b) to be referred to as the "Separation Pay Period"); (ii)
reimburse Your COBRA premiums under the Company's major medical group health
plan on a monthly basis for a period equal to the Separation Pay Period; (iii)
pay You a pro-rata portion of any Bonus to which You may be entitled under
Section 3B above based upon the number of days You are employed during the
calendar year in which Your employment terminates and based upon the criteria
set forth in Section 3B; and (iv) notwithstanding anything to the contrary in
any applicable stock option documents, accelerate the vesting of any stock
option(s) granted to You by the Company (the "Option(s)") so that the Option(s)
shall be immediately exercisable in full in accordance with the
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terms and conditions of all applicable stock option documents (collectively, the
payments and benefits set forth in the preceding sub-clauses (i) - (iv) to be
referred to as the "Separation Benefits"). The Company shall have no other
obligations to You, including under this Agreement, any Company policy, or
otherwise. The Separation Benefits shall constitute full satisfaction of the
Company's obligations under this Agreement. The Company's obligation to provide
the Separation Benefits shall be conditioned upon Your satisfaction of the
following conditions (the "Separation Benefits Conditions"):
(i) Execution and non-revocation of a Separation
& Release Agreement in a form prepared by
the Company by which You release the Company
from any and all liability and claims of any
kind; and
(ii) Compliance with the restrictive covenants
(Section 7D) and all post-termination
obligations, including, but not limited, the
obligations contained in this Agreement.
If You do not execute an effective Separation & Release
Agreement as set forth above, the Company will not provide any Separation
Benefits to You under this Section 5B. The Company's obligation to provide the
Separation Benefits set forth in this Section 5B shall terminate immediately
upon any breach by You of any post-termination obligations to which You are
subject.
C. If this Agreement terminates for the reason set forth
in Section 4A above and Section 6 below does not apply, then, upon expiration of
the Employment Period or Renewal Period, as applicable, the Company shall
provide to You the Separation Benefits set forth in Section 5B above; provided,
however, that (i) the Separation Pay Period shall equal six (6) months, and (ii)
Your right to receive the Separation Benefits under this Section 5C shall be
subject to the Separation Benefits Conditions set forth in Section 5B above. The
Separation Benefits to be provided under this Section 5C shall constitute full
satisfaction of the Company's obligations under this Agreement, any Company
policy, or otherwise.
6. Change of Control. If, within one hundred eighty (180) days
after a Change of Control, the Company or the successor entity to the Company
notifies You pursuant to Section 2 of this Agreement that the Agreement will not
be renewed, then, at the expiration of the Employment Period or Renewal Period,
as applicable, You shall receive the Separation Benefits set forth in Section 5B
above; provided, however, that Your right to receive the Separation Benefits
shall be subject to the Separation Benefits Conditions set forth in Section 5B
above. The Separation Benefits to be provided under this Section 6 shall
constitute full satisfaction of the Company's obligations under this Agreement,
any Company policy, or otherwise.
7. Your Post-Termination Obligations.
A. Return of Materials. Upon the termination of Your
employment for any reason or upon the Company's request at any time, You will
return to the Company all of the Company's property, including, but not limited
to, keys, passcards, credit cards, customer lists, rolodexes, tapes, laptop
computer, software, computer files, marketing and sales materials, and
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any other property, record, document or piece of equipment belonging to the
Company. You will not (i) retain any copies of the Company's property, including
any copies existing in electronic form, which are in Your possession or control,
or (ii) destroy, delete, or alter any Company property, including, but not
limited to, any laptop computer, without the Company's consent.
B. Set-Off. If You have any outstanding obligations to
the Company upon the termination of Your employment for any reason, You hereby
authorize the Company to deduct any amounts owed to the Company from Your final
paycheck and/or any amounts that would otherwise be due to You, including, but
not limited to, under Section 5B or 6 above.
C. Non-Disparagement. During Your employment and upon
the termination of Your employment with the Company for any reason, You will not
make any disparaging or defamatory statements, whether written or oral,
regarding the Company.
D. Restrictive Covenants. You acknowledge that the
restrictions contained in this Section 7D are reasonable and necessary to
protect the legitimate business interests of the Company, and will not impair or
infringe upon Your right to work or earn a living after Your employment with the
Company ends.
1. Trade Secrets and Confidential Information.
You represent and warrant that: (i) You are not subject to any legal or
contractual duty or agreement that would prevent or prohibit You from performing
the duties contemplated by this Agreement or otherwise complying with this
Agreement, and (ii) You are not in breach of any legal or contractual duty or
agreement, including any agreement concerning trade secrets or confidential
information owned by any other party.
You agree that You will not: (i) use, disclose, or
reverse engineer the Trade Secrets or the Confidential Information for any
purpose other than the Company's Business, except as authorized in writing by
the Company; (ii) during Your employment with the Company, use, disclose, or
reverse engineer (a) any confidential information or trade secrets of any former
employer or third party, or (b) any works of authorship developed in whole or in
part by You during any former employment or for any other party, unless
authorized in writing by the former employer or third party; or (iii) upon Your
resignation or termination (a) retain Trade Secrets or Confidential Information,
including any copies existing in any form (including electronic form), which are
in Your possession or control, or (b) destroy, delete, or alter the Trade
Secrets or Confidential Information without the Company's written consent.
The obligations under this Section 7D(1) shall: (i)
with regard to the Trade Secrets, remain in effect as long as the information
constitutes a trade secret under applicable law, and (ii) with regard to the
Confidential Information, remain in effect during the Restricted Period. The
confidentiality, property, and proprietary rights protections available in this
Agreement are in addition to, and not exclusive of, any and all other rights to
which the Company is entitled under federal and state law, including, but not
limited to, rights provided under copyright laws, trade secret and confidential
information laws, and laws concerning fiduciary duties.
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2. Non-Solicitation of Customers. During the
Restricted Period, You will not, directly or indirectly, solicit any Customer of
the Company for the purpose of providing any goods or services competitive with
the Business. The restrictions set forth in this Section 7D(2) apply only to the
Customers with whom You had Contact.
3. Non-Recruit of Employees. During the
Restricted Period, You will not, directly or indirectly, solicit, recruit or
induce any Employee to (a) terminate his or her employment relationship with the
Company or (b) work for any other person or entity engaged in the Business.
4. Non-Competition. During the Non-Competition
Restricted Period, You will not, on Your own behalf or on behalf of any person
or entity engaged in the Business, engage in or perform within the Territory any
of the activities which You performed, or which are substantially similar to
those which You performed, as Executive Vice President and Chief Financial
Officer of the Company. Nothing in this Agreement shall be construed to prohibit
You from performing activities which You did not perform for the Company. The
Parties acknowledge and agree that the covenant set forth in this Section 7D(4)
shall not apply if Your employment terminates for the reason set forth in
Section 4A above.
E. Post-Employment Disclosure. During the Restricted
Period, You shall provide a copy of this Agreement to persons and/or entities
for whom You work or consult as an owner, partner, joint venturer, employee or
independent contractor.
8. Injunctive Relief. You agree that if You breach Section 7 of
this Agreement: (i) the Company would suffer irreparable harm; (ii) it would be
difficult to determine damages, and money damages alone would be an inadequate
remedy for the injuries suffered by the Company, and (iii) if the Company seeks
injunctive relief to enforce this Agreement, You will waive and will not (a)
assert any defense that the Company has an adequate remedy at law with respect
to the breach, (b) require that the Company submit proof of the economic value
of any Trade Secret or Confidential Information, or (c) require the Company to
post a bond or any other security. Nothing contained in this Agreement shall
limit the Company's right to any other remedies at law or in equity.
9. Severability. The provisions of this Agreement are severable.
If any provision is determined to be invalid, illegal, or unenforceable, in
whole or in part, the remaining provisions and any partially enforceable
provisions shall remain in full force and effect.
10. Attorneys' Fees. In the event of litigation relating to this
Agreement, the prevailing party shall be entitled to recover attorneys' fees and
costs of litigation in addition to all other remedies available at law or in
equity.
11. Waiver. The Company's failure to enforce any provision of this
Agreement shall not act as a waiver of that or any other provision. The
Company's waiver of any breach of this Agreement shall not act as a waiver of
any other breach.
12. Entire Agreement. This Agreement, including Exhibit A which is
incorporated by reference, constitutes the entire agreement between the Parties
concerning the subject matter of this Agreement. This Agreement supersedes any
prior communications, agreements or
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understandings, whether oral or written, between the Parties relating to the
subject matter of this Agreement. Other than terms of this Agreement, no other
representation, promise or agreement has been made with You to cause You to sign
this Agreement.
13. Amendments. This Agreement may not be amended or modified
except in writing signed by both Parties.
14. Successors and Assigns. This Agreement shall be assignable to,
and shall inure to the benefit of, the Company's successors and assigns,
including, without limitation, successors through merger, name change,
consolidation, or sale of a majority of the Company's stock or assets, and shall
be binding upon You. You shall not have the right to assign Your rights or
obligations under this Agreement. The covenants contained in Section 7D of this
Agreement shall survive cessation of Your employment with the Company,
regardless of who causes the cessation or the reason for cessation.
15. Governing Law. Except as set forth in Section 20 below, the
laws of the State of Georgia shall govern this Agreement. If Georgia's conflict
of law rules would apply another state's laws, the Parties agree that Georgia
law shall still govern.
16. No Strict Construction. If there is a dispute about the
language of this Agreement, the fact that one Party drafted the Agreement shall
not be used in its interpretation.
17. Notice. Whenever any notice is required, it shall be given in
writing addressed as follows:
To Company: Lodgian, Inc.
0000 Xxxxxxxxx Xx., Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: General Counsel
To Executive: Xxxxxx X. Xxxxxx
000 Xxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Notice shall be deemed given and effective three (3) days after the
deposit in the U.S. mail of a writing addressed as above and sent first class
mail, certified, return receipt requested, or when actually received. Either
Party may change the address to which notices shall be delivered or mailed by
notifying the other party of such change in accordance with this Section.
18. Consent to Jurisdiction and Venue. Except as set forth in
Section 20 below, You agree that any claim arising out of or relating to this
Agreement shall be (i) brought in the Superior Court of Xxxxxx County, Georgia,
or (ii) brought in or removed to the United States District Court for the
Northern District of Georgia, Atlanta Division. You consent to the personal
jurisdiction of the courts identified above. You waive (i) any objection to
jurisdiction or venue, or (ii) any defense claiming lack of jurisdiction or
improper venue, in any action brought in such courts.
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19. Arbitration. Except as provided below in this Section 20, all
disputes arising out of Your employment or the cessation of Your employment,
including, but not limited to, claims arising under or relating to this
Agreement, claims for breach of contract, tort, employment discrimination,
retaliation, or harassment, as well as any other statutory or common law claims,
at law or in equity, recognized under any federal, state, or local law shall be
exclusively resolved by final and binding arbitration under the Federal
Arbitration Act, 9 U.S.C. ss. 1. Such claims shall be settled by final and
binding arbitration administered by the American Arbitration Association in
accordance with its National Rules for the Resolution of Employment Disputes,
and judgment on the award rendered by the arbitrator may be entered in any court
having jurisdiction thereof. The Company will pay all filing fees and arbitrator
costs associated with such arbitration.
This arbitration provision shall not apply to any disputes or
claims relating to or arising out of unemployment, workers compensation, and/or
the restrictive covenants set forth in Section 7D of this Agreement, including,
but not limited to, any claims for equitable relief relating to such restrictive
covenants. Any claims relating to or arising out of Section 7D of this Agreement
shall be governed by the laws of the State of Georgia and shall be brought in a
state or federal court of competent jurisdiction in Georgia. You consent to the
personal jurisdiction of the state and/or federal courts located in Georgia. You
waive (i) any objection to jurisdiction or venue, or (ii) any defense claiming
lack of jurisdiction or improper venue, in any action brought in such courts.
20. AFFIRMATION. YOU ACKNOWLEDGE THAT YOU HAVE CAREFULLY READ THIS
AGREEMENT, YOU KNOW AND UNDERSTAND ITS TERMS AND CONDITIONS, AND YOU HAVE HAD
THE OPPORTUNITY TO ASK THE COMPANY ANY QUESTIONS YOU MAY HAVE HAD PRIOR TO
SIGNING THIS AGREEMENT.
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the day and year first above written.
LODGIAN, INC.
By: /s/ W. Xxxxxx Xxxxxxxxxx
-----------------------------------
President & Chief Executive Officer
Date: May 10, 2004
XXXXXX X. XXXXXX
/s/ Xxxxxx X. Xxxxxx
--------------------
Date: May 10, 2004
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EXHIBIT A
DEFINITIONS
A. "Business" shall mean the business of owning and operating hotels
including, but not limited to, full-service hotels which have food and
beverage operations and meeting spaces.
B. "Change of Control" means (i) the sale, transfer, or other disposition
of eighty percent (80%) or more of the Company's assets, or (ii) a sale
of fifty percent (50%) or more of the then outstanding voting stock of
the Company in a single transaction or a series of related
transactions.
C. "Confidential Information" means (a) information of the Company, to the
extent not considered a Trade Secret under applicable law, that (i)
relates to the business of the Company, (ii) possesses an element of
value to the Company, (iii) is not generally known to the Company's
competitors, and (iv) would damage the Company if disclosed, and (b)
information of any third party provided to the Company which the
Company is obligated to treat as confidential. Confidential Information
includes, but is not limited to, (i) future business plans, (ii) the
composition, description, schematic or design of products, future
products or equipment of the Company, (iii) communication systems,
audio systems, system designs and related documentation, (iv)
advertising or marketing plans, (v) information regarding independent
contractors, employees, clients and customers of the Company, and (vi)
information concerning the Company's financial structure and methods
and procedures of operation. Confidential Information shall not include
any information that (i) is or becomes generally available to the
public other than as a result of an unauthorized disclosure, (ii) has
been independently developed and disclosed by others without violating
this Agreement or the legal rights of any party, or (iii) otherwise
enters the public domain through lawful means.
D. "Contact" means any interaction between You and a Customer which (i)
takes place in an effort to establish, maintain, and/or further a
business relationship on behalf of the Company and (ii) occurs during
the last year of Your employment with the Company (or during Your
employment if employed less than a year).
E. "Customer" means any person or entity to whom the Company has sold its
products or services, or solicited to sell its products or services.
F. "Employee" means any person who (i) is employed by the Company at the
time Your employment with the Company ends, or (ii) is employed by the
Company during the Restricted Period.
G. "Good Reason" shall exist if (i) the Company, without Your written
consent, (A) takes any action which results in the material reduction
of Your then current duties or responsibilities, (B) reduces the
benefits to which You are entitled on the Effective Date, unless a
similar reduction is made for other executive employees, (C) commits a
material breach of this Agreement, or (D) requires You to relocate more
than fifty (50) miles from the location of the Company's offices on the
Effective Date; (ii) You provide written
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notice to the Company of such action and provide the Company with
thirty (30) days to remedy such action (the "Cure Period"), (iii) the
Company fails to remedy such action within the Cure Period, and (iv)
You resign within ten (10) days of the expiration of the Cure Period.
Good Reason shall not include any isolated, insubstantial or
inadvertent action that (i) is not taken in bad faith, and (ii) is
remedied by the Company within the Cure Period.
H. "Non-Competition Restricted Period" means the time period during Your
employment with the Company, and for six (6) months after Your
employment with the Company ends.
I. "Restricted Period" means the time period during Your employment with
the Company, and for two (2) years after Your employment with the
Company ends.
J. "Territory" means the fifteen (15) mile radius surrounding the
Company's corporate office at 0000 Xxxxxxxxx Xx., Xxxxx 000, Xxxxxxx,
Xxxxxxx 00000.
K. "Trade Secrets" means information of the Company, and its licensors,
suppliers, clients and customers, without regard to form, including,
but not limited to, technical or nontechnical data, a formula, a
pattern, a compilation, a program, a device, a method, a technique, a
drawing, a process, financial data, financial plans, product plans, or
a list of actual or potential customers or suppliers which is not
commonly known by or available to the public and which information (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.
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