Exhibit (d)(7)
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this"Agreement") is made and entered into as
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of this 29/th/ day of November, 2001, by and between Xxxxxxx Inns, Inc., a real
estate investment trust incorporated under the laws of the State of Georgia (the
"Company"), and Xxxxxx X. Xxxxxx, an individual resident of the State of Georgia
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(the "Executive").
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BACKGROUND
Executive and Company are parties to that certain Employment Agreement,
dated July 27, 2000 (the "Prior Agreement"), pursuant to which Executive agreed
to serve as Vice President-Legal, Secretary and General Counsel of the Company.
Company recognizes Executive's past and potential contributions to the growth
and success of the Company. Company desires to provide for the continued
employment of Executive and to make certain changes in the Prior Agreement which
Company has determined will reinforce and encourage the continued dedication of
Executive to Company and will promote the best interests of Company and its
stockholders. Executive is willing to continue to serve Company on the terms and
conditions herein provided, and to replace the Prior Agreement with this
Agreement.
NOW THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements set forth herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Effective Date. The effective date of this Agreement (the
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"Effective Date") shall be December 1, 2001.
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2. Employment. Company shall continue to employ Executive and
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Executive hereby accepts such continued employment subject to the terms and
conditions set forth herein for the Employment Period, and both parties agree to
rescind the Prior Agreement and replace it with this Agreement.
3. Employment Period. This Agreement will begin on the Effective
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Date and, unless earlier terminated in accordance with Section 6 hereof, will be
for a term of one year, which term shall be extended automatically (without
further action of Executive or Company) for an additional one year period from
and after the then scheduled expiration date unless at least 12 months prior to
the then applicable expiration date Company notifies Executive in writing of its
intent to terminate or change the Agreement. The period ending at the then
scheduled expiration date of this Agreement is referred to herein as the
"Employment Period."
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4. Duties and Responsibilities; Authority; Devotion of Time to
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Company.
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(a) Executive will continue to serve in his capacity as Vice
President-Legal, Secretary and General Counsel. Subject to clause (c)
below, Executive shall faithfully and diligently perform the services and
functions relating to such positions or otherwise incident thereto, as
may be reasonably designated by the Board and/or Chief Executive Officer
from time to time; provided, however, that all such services shall be
within Executive's area of competence and expertise.
(b) Executive shall enjoy the authority consistent with the
positions described above and shall report directly and solely to the
Chief Executive Officer.
(c) During the Employment Period, excluding any period of vacation
or sick leave to which Executive is entitled, Executive agrees to devote
reasonable attention and time during normal business hours to the
business and affairs of Company and, to the extent necessary to discharge
the responsibilities assigned to Executive hereunder, to use Executive's
reasonable best efforts to perform faithfully and diligently such
responsibilities. During the Employment Period, Executive shall be
entitled to (i) serve on corporate, civic or charitable boards or
committees other than those of Company and (ii) manage personal
investments, provided that such activities do not materially interfere
with the performance of Executive's responsibilities under this
Agreement.
5. Compensation and Benefits.
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(a) Base Salary. During the Employment Period, Company will pay to
Executive a base salary ("Base Salary"), less normal withholdings,
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payable in equal monthly or more frequent installments as are customary
under Company's payroll practices from time to time. Executive's Base
Salary for the first 12 months of the Employment Period shall be
$104,000.00; provided, however, that the amount actually paid to
Executive each year as Base Salary shall be (i) the Base Salary
multiplied by (ii) the percentage (as reasonably determined by Executive)
that the time of Executive devoted to the business and affairs of Company
bears to the total of Executive's time devoted to the business and
affairs of (A) Company, (B) the various Xxxxxxx and Signature Inns owned
by Company (the "Inns"), (C) the operating company that manages the Inns
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and (D) the development company or companies that develop new Inns.
(b) Incentive, Profit Sharing, Savings and Retirement Plans. During
the Employment Period, Executive will be entitled to participate in all
executive incentive compensation and bonus programs (including, without
limitation, stock option, performance share and restricted stock grants
as may from time to time be authorized by the Board), profit sharing,
savings and retirement plans, practices, policies and programs applicable
generally to actively employed senior executive officers of Company
("Peer Executives"), on terms and conditions no less favorable than those
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applicable to Peer Executives.
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(c) Welfare Benefit Plans. During the Employment Period, Executive
and/or Executive's family, as the case may be, will be eligible for
participation in and will receive all benefits under welfare benefit
plans, practices, policies and programs provided by Company (including,
without limitation, medical, prescription, dental, disability, employee
life, group life, accidental death and travel accident insurance plans
and programs) (collectively, the "Company Welfare Plans") to the extent
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applicable generally to Peer Executives. Withoutlimiting the foregoing,
Company shall:
(i) obtain and maintain a term life policy on Executive
with a face value of three times his Base Salary, payable to
Executive's spouse or designated beneficiary;
(ii) in the event that Executive is unable to substantially
perform his duties due to any physical or mental infirmity, pay 100%
of Executive's Base Salary until the Disability Effective Date (as
defined in Section 6(b));
(iii) obtain and maintain a long-term disability insurance
policy which shall pay to Executive, upon his Disability, not less
than $6,000 per month from the Disability Effective Date until the
date that Executive reaches age 65 or is no longer subject to such
Disability; and
(iv) obtain and maintain a "your own occupation" disability
insurance policy which shall pay not less than $6,000 per month,
payable to Executive's spouse or designated beneficiary.
(d) Expenses. During the Employment Period, Company will promptly
reimburse Executive for all reasonable expenses incurred by Executive and
related to Executive's duties (including, without limitation, travel,
seminar and continuing education expenses), in accordance with the
policies, practices and procedures of Company to the extent applicable
generally to Peer Executives.
(e) Fringe Benefits. During the Employment Period, Executive will
be entitled to fringe benefits in accordance with the plans, practices,
programs and policies of Company in effect for Peer Executives. Without
limiting the foregoing, Company shall reimburse Executive's reasonable
expenses for dues and capital assessments for the Ravinia Club
memberships currently held by Executive. With respect to such memberships
not currently held by Executive, Company shall in addition pay the
initiation fees for such memberships if approved in advance by the Board
of Directors.
(f) Vacation. During the Employment Period, Executive will be
entitled to not less than four weeks of paid annual vacation in
accordance with the plans, policies, programs and practices of Company as
in effect generally with respect to Peer Executives.
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(g) Past Service Credit. Executive shall be given full credit for
Executive's prior years of service with Company for all purposes under
the plans, programs, policies, agreements and practices covering
Executive pursuant to this Section.
6. Termination of Employment.
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(a) Death. Executive's employment will terminate automatically upon
Executive's death during the Employment Period.
(b) Disability. If the Disability of Executive has occurred during
the Employment Period, Company may give to Executive written notice in
accordance with Section 16(d) of this Agreement of its intention to
terminate Executive's employment. In such event, Executive's employment
will terminate effective on the 30th day after receipt by Executive of
such written notice (the "Disability Effective Date"), provided that,
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within the 30 days after such receipt, Executive shall not have returned
to full-time performance of Executive's duties. For purposes of this
Agreement, "Disability" means a physical or mental infirmity that impairs
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Executive's ability to substantially perform his duties with Company for
a period of 180 consecutive days, as determined by Company in good faith
subject to review by a three-physician panel.
(c) Termination for Cause. Company may terminate Executive's
employment during the Employment Period for Cause. For purposes of this
Agreement, "Cause" means:
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(i) the failure of Executive to substantially perform
Executive's duties with Company (other than any such failure
resulting from incapacity due to physical or mental infirmity), which
failure continues for a period of 30 days after a written demand for
substantial performance is delivered to Executive by the Board that
specifically identifies the manner in which the Board believes that
Executive has not substantially performed Executive's duties;
(ii) the engaging by Executive in illegal conduct that is
materially and demonstrably injurious to Company;
(iii) breach of fiduciary duty to Company that results in
material personal profit to Executive at the expense of Company; or
(iv) the failure by Executive to honor all the terms and
provisions of this Agreement, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and which
is remedied by Executive promptly after receipt of notice given by
Company.
The cessation of employment of Executive shall not be deemed to be
for Cause unless and until there shall have been delivered to Executive,
as part of the Notice of Termination, a
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copy of a resolution duly adopted by the affirmative vote of not less
than a two-thirds majority of the independent, non-employee Directors
then serving at a meeting of the Board called and held for the
purpose of considering such termination (after reasonable notice is
provided to Executive and Executive is given an opportunity, together
with counsel, to be heard before the Board) reasonably finding that,
in the good faith opinion of such Directors, Executive is guilty of
the conduct described in clause (i), (ii), (iii) or (iv) above, and
specifying the particulars thereof in detail.
(d) Termination for Good Reason. Executive's employment may be
terminated by Executive for Good Reason. For purposes of this
Agreement, "Good Reason" means the occurrence during the Employment
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Period of any of the following events:
(i) the assignment to Executive, without his written
consent, of any duties inconsistent in any material respect
with Executive's position, authority, duties or
responsibilities on the Effective Date or any other action by
Company that results in a diminution in any material respect in
such position, authority, duties or responsibilities, excluding
for this purpose an isolated and inadvertent action not taken
in bad faith that is remedied by Company promptly after receipt
of notice thereof given by Executive;
(ii) a reduction by Company in Executive's annual Base
Salary at the rate in effect on the Effective Date or as the
same may be increased from time to time;
(iii) the failure by Company (A) to continue in effect any
compensation plan in which Executive participates during the
Employment Period that is material to Executive's total
compensation, unless an equitable arrangement (embodied in an
ongoing substitute or alternative plan) has been made with
respect to such plan or (B) to continue Executive's
participation therein (or in such substitute or alternative
plan) on a basis not materially less favorable, both in terms
of the amount of benefits provided and the level of Executive's
participation relative to Peer Executives;
(iv) the failure by Company to continue to provide
Executive with benefits substantially similar to those enjoyed
by Executive under any of Company's pension, life insurance,
medical, health and accident, disability or other welfare plans
in which Executive was participating during the Employment
Period;
(v) the failure by Company to pay to Executive any
deferred compensation when due under any deferred compensation
plan or agreement applicable to Executive;
(vi) a permanent transfer or relocation of Executive which
results from a required move of the location of the office of
the Company to which Executive is to
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report on a permanent basis to a location outside the greater Atlanta,
Georgia metropolitan area;
(vii) there is a change in the control of the Company, which
shall mean and include any one or more of the following:
A. any individual, corporation, partnership,
group, association or other entity or "person", as such term is
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defined in Section 14(d) of the Securities Exchange Act of
1934 (the "Exchange Act"), other than Xxxxxx X. Xxxxxxx or any
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person or persons related to or associated with him, is or becomes
the "beneficial owner" (as defined in Rule 13d-3 of the General
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Rules and Regulations under the Exchange Act), directly or
indirectly, of 50% or more of the outstanding securities of the
Company having the right to vote at elections of directors;
B. the Board of Directors of the Company is changed
as a result of a contested election so that the nominees for
Directors in such election designated by the current management
group of the Company fail to be elected or constitute a majority
of persons constituting the Board of Directors of the Company
immediately following such election;
C. a merger, liquidation, dissolution,
consolidation or reorganization of the Company as a result of
which less than 50% of the total voting power of the outstanding
securities of the surviving or resulting entity entitled to vote
for members of the Board of Directors is represented by the
securities held by the persons who held all of such outstanding
voting securities of the Company immediately prior to the
consummation of such transaction or development; or
D. the lease, sale, exchange, transfer or other
disposition of all or substantially all of the assets of the
Company or the successor thereof;
(viii) the Company notifies Executive in writing of its intent
to terminate or change the Agreement in any material respect; or
(ix) the failure by Company to honor all the terms and
provisions of this Agreement, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and which
is remedied by Company promptly after receipt of notice thereof given
by Executive.
(e) Notice of Termination. Any termination of Executive's employment
by Company other than by reason of death or Disability, or by Executive for
Good Reason, shall be communicated by Notice of Termination to the other party
hereto given in accordance
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with Section 16(d) of this Agreement. For purposes of this Agreement, a
"Notice of Termination" means a written notice that (i) indicates the
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specific termination provision in this Agreement relied upon, (ii) to
the extent applicable, sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Executive's
employment under the provision so indicated and (iii) specifies the
termination date (which date shall be not less than 60 days after the
giving of such notice). If a dispute exists concerning the provisions
of this Agreement that apply to Executive's termination of employment,
the parties shall pursue the resolution of such dispute with reasonable
diligence. Within ten business days of such a resolution, any party
owing any payments pursuant to the provisions of this Agreement shall
make all such payments together with interest accrued thereon at the
rate provided in Section 1274(b)(2)(B) of the Internal Revenue Code of
1986, as amended (the "Code"). Termination of Executive's employment
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shall occur on the specified Date of Termination even if there is a
dispute between the parties relating to the provisions of this
Agreement that apply to such termination. The failure by Executive or
Company to set forth in the Notice of Termination any fact or
circumstance that contributes to a showing of Good Reason or Cause will
not waive any right of Executive or Company, respectively, hereunder or
preclude Executive or Company, respectively, from asserting such fact
or circumstance in enforcing Executive's or Company's rights hereunder.
(f) Date of Termination. For purposes of this Agreement, "Date
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of Termination" means (i) if Executive's employment is terminated by
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Company other than by reason of death or Disability, or by Executive
for Good Reason, the date specified in the Notice of Termination, (ii)
if Executive's employment is terminated by reason of death or
Disability, the Date of Termination will be the date of death or the
Disability Effective Date, as the case may be or (iii) if Executive's
employment is terminated by Executive other than for Good Reason (i.e.,
if Executive voluntarily resigns from his employment with Company), the
date Executive announces his voluntary resignation.
7. Obligations of Company upon Termination.
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(a) Good Reason; Other than for Cause. If Executive's
employment is terminated by Company without Cause or by Executive for
Good Reason (and in either case, other than by reason of Executive's
death or Disability), then in consideration of Executive's services
rendered prior to such termination:
(i) Severance Payment. The Company shall continue to
pay to Executive on a monthly basis for the twelve month period
commencing on the Date of Termination an amount equal to one-
twelfth of Executive's Base Salary at the rate in effect
immediately prior to the Date of Termination (not taking into
account any reduction in Base Salary that would constitute Good
Reason), plus an amount equal to one-twelfth of the Executive's
Average Bonus (the "Continuation Payment"), such amount to be
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paid on the first day of each month following the Date of
Termination. If the Date of Termination is not the last day of
the month, the Company shall pay to
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Executive within two business days after the Date of Termination a pro
rata amount of the Continuation Payment for the remaining portion of
the month in which the Date of Termination occurs. In lieu of making
Continuation Payments to Executive for periods subsequent to the Date
of Termination, Company may elect to pay to Executive a lump sum
severance payment, in cash, without discount, equal to one times the
sum of (A) Executive's annual Base Salary at the rate in effect
immediately prior to the Date of Termination (not taking into account
any reduction in Base Salary that would constitute Good Reason) and
(B) Executive's Average Bonus. For purposes of this Agreement, (a)
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Executive's "Average Bonus" means the average of Executive's annual
bonuses paid prior to the Effective Date and/or hereunder for the two
fiscal years during which Executive has been employed by Company
immediately preceding the fiscal year in which the Date of Termination
occurs, and (b) the portion of the then applicable Base Salary to be
used to determine the payments due to Executive upon the termination
of his employment hereunder shall be that percentage of the stated
Base Salary paid by Company pursuant to the proviso in the second
sentence of Section 5(a) hereof for the twelve full months preceding
the date of the notice of termination;
(ii) Vesting of Options. Any and all options to purchase
Company common stock then held by Executive will, to the extent not
already vested, become vested and exercisable in full as of the Date
of Termination, and any provision contained in the agreement(s) under
which such options were granted that is inconsistent with such
acceleration is hereby modified to the extent necessary to provide for
such acceleration;
(iii) Vesting of Restricted Stock. Any and all restrictions
applicable to awards of restricted stock of Company then held by
Executive shall lapse upon the Date of Termination, and any provision
contained in the agreement(s) under which such restricted stock awards
were granted that is inconsistent with such acceleration is hereby
modified to the extent necessary to provide for such acceleration of
vesting;
(iv) Continued Benefits. For a period of one year from the
Date of Termination (the "Benefits Period"), Company shall provide
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Executive with group term life insurance, health insurance, accident
and long-term disability insurance benefits (collectively, "Welfare
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Benefits") substantially similar in all respects to those that
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Executive was receiving immediately prior to the Date of Termination
(not taking into account any reduction in such Welfare Benefits that
would constitute Good Reason). During the Benefits Period, Executive
will be entitled to elect to change his level of coverage and/or his
choice of coverage options (such as Executive only or family medical
coverage) with respect to the Welfare Benefits to be provided by
Company to Executive to the same extent that actively employed senior
executives of Company are permitted to make such changes; provided,
however, that in the event of any such changes Executive shall pay the
amount of any cost increase
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that would actually be paid by an actively employed senior executive
of Company by reason of making the same changes in his level of
coverage or coverage options; and
(v) ther Benefits. To the extent not theretofore paid or
provided, Company shall timely pay or provide to Executive any other
amounts or benefits required to be paid or provided or that Executive
is eligible to receive under any plan, program, policy or practice or
contract or agreement of Company (including, without limitation,
payment or provision of amounts and benefits pursuant to the terms of
the Incentive Plan and/or Retirement Plan) (such other amounts and
benefits, collectively, the "Other Benefits"). --------------
(b) Voluntary Resignation other than for Good Reason. If Executive's
employment is terminated by Executive other than for Good Reason, then in
consideration of Executive's services rendered prior to such termination,
Company shall pay to Executive in cash, without discount, an amount equal
to Executive's Base Salary to the Date of Termination;
(c) Death. If Executive's employment is terminated by reason of
Executive's death during the Employment Period, this Agreement will
terminate without further obligations to Executive's legal
representatives under this Agreement, other than for payment of Accrued
Compensation, the vesting of stock options and restricted stock and the
timely payment or provision of Other Benefits, including without
limitation any death benefits to which Executive is then entitled. For
purposes of this Agreement, "Accrued Compensation" means all amounts of
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compensation for services rendered by Executive to Company or any
affiliate that have been earned or accrued through the Date of
Termination but that have not been paid as of the Date of Termination,
including (i) Base Salary, (ii) reimbursement (in accordance with
Company's expense reimbursement policy) for reasonable and necessary
business expenses incurred by Executive on behalf of Company during the
period ending on the Date of Termination, (iii) vacation pay and (iv)
bonuses and incentive compensation. Accrued Compensation shall be paid to
Executive in a lump sum in cash within 30 days of the Date of Termination
or in accordance with any deferral election theretofore elected by
Executive.
(d) Disability. If Executive's employment is terminated by reason of
Executive's Disability during the Employment Period, this Agreement will
terminate without further obligations to Executive, other than for
payment of the sum of Accrued Compensation, the vesting of stock options
and restricted stock and the timely payment or provision of Welfare
Benefits (during the Benefits Period) and Other Benefits (including
without limitation any disability benefits to which Executive is then
entitled). Accrued Compensation shall be paid to Executive in a lump sum
in cash within 30 days of the Date of Termination or in accordance with
any deferral election theretofore elected by Executive.
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(e) Cause. If Executive's employment is terminated for Cause
during the Employment Period, this Agreement will terminate without
further obligations to Executive, other than for payment of Accrued
Compensation and the timely payment or provision of Other Benefits. In
such case, all Accrued Compensation shall be paid to Executive in a
lump sum in cash within 30 days of the Date of Termination or in
accordance with any deferral election theretofore elected by Executive.
Company's obligations under this Section shall survive the termination
of this Agreement.
8. Certain Additional Payments by Company. The parties intend that the
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severance payments and other compensation provided for herein are reasonable
compensation for Executive's services to Company and shall not constitute
"excess parachute payments" within the meaning of Section 280G(b)(1) of the
Code. In the event that the severance benefits or any other benefits or payments
to which Executive is entitled pursuant to this Agreement or otherwise
(collectively, the "Total Benefits"), will be subject to the excise tax imposed
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pursuant to Section 4999 of the Code ("Excise Tax"), Company shall pay to
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Executive an additional amount (the "Gross-Up Payment") such that the net amount
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retained by Executive, after deduction of any Excise Tax on the Total Benefits
and any federal, state and local income taxes, Excise Tax, and FICA and Medicare
withholding taxes upon the payment provided for by this Section, will be equal
to the Total Benefits.
For purposes of this Section, Executive will be deemed to pay federal
income taxes at the highest marginal rate of federal income taxation in the
calendar year in which the Excise Tax is (or would be) payable and state and
local income taxes at the highest marginal rate of taxation in the state and
locality of Executive's residence on the Date of Termination, net of the
reduction in federal income taxes that could be obtained from deduction of such
state and local taxes (calculated by assuming that any reduction under Section
68 of the Internal Revenue Code in the amount of itemized deductions allowable
to Executive applies first to reduce the amount of such state and local income
taxes that would otherwise be deductible by Executive).
In the event that the Excise Tax is subsequently determined to be less
than the amount taken into account hereunder at the time of termination of
Executive's employment, Executive shall repay to Company, at the time the amount
of such reduction in Excise Tax is fully determined, the portion of the Gross-Up
Payment attributable to such reduction (plus that portion of the Gross-Up
Payment attributable to the Excise Tax, federal, state and local income taxes
and FICA and Medicare withholding taxes imposed on the Gross-Up Payment being
repaid by Executive to the extent that such repayment results in a reduction in
Excise Tax, FICA and Medicare withholding taxes and/or a federal, state or local
income tax deduction) plus interest on the amount of such repayment at the rate
provided in Section 1274(b)(2)(B) of the Code. In the event that the Excise Tax
is determined to exceed the amount taken into account hereunder at the time of
the termination of Executive's employment (including by reason of any payment
the existence or amount of which cannot be determined at the time of the
Gross-Up Payment), Company shall make an additional Gross-Up Payment to
Executive in respect of such excess (plus any interest, penalties or additions
payable by
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Executive with respect to such excess) at the time that the amount of such
excess is finally determined.
The parties' obligations under this Section shall survive termination of
this Agreement.
9. Non-exclusivity of Rights. Nothing in this Agreement shall
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prevent or limit Executive's continuing or future participation in any plan,
program, policy or practice provided by Company and for which Executive may
qualify, nor, subject to Section 16(j), shall anything herein limit or otherwise
affect such rights as Executive may have under any contract or agreement with
Company. Amounts that are vested benefits or that Executive is otherwise
entitled to receive under any plan, policy, practice or program of or any
contract or agreement with Company at or subsequent to the Date of Termination
will be payable in accordance with such plan, policy, practice or program or
contract or agreement except as explicitly modified by this Agreement.
10. Full Settlement; Certain Legal Expenses.
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(a) In no event shall Executive be obligated to seek other employment
or take any other action by way of mitigation of the amounts payable to
Executive under any of the provisions of this Agreement and such amounts
shall not be reduced whether or not Executive obtains other employment.
(b) Company shall pay to Executive all reasonable legal fees and
expenses incurred by Executive as a result of a termination that entitles
Executive to any payments under this Agreement, including all such fees
and expenses, if any, incurred in successfully contesting or disputing any
Notice of Termination given hereunder or in successfully seeking to obtain
or enforce any right or benefit provided by this Agreement or in
connection with any tax audit or proceeding to the extent attributable to
the application of Section 4999 of the Code to any payment or benefit
provided hereunder. Such payments shall be made within 10 business days
after delivery of Executive's respective written requests for payment
accompanied with such evidence of fees and expenses incurred as Company
reasonably may require.
11. Assignment and Successors.
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(a) Executive. This Agreement is personal to Executive and without
the prior written consent of Company shall not be assignable by Executive
otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by Executive's
legal representatives.
(b) Company. This Agreement shall inure to the benefit of and be
binding upon Company and its successors and assigns.
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(c) Assumption by Successors. Company will require any
successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business
and/or assets of Company to assume expressly and agree to perform this
Agreement in the same manner and to the same extent that Company would
be required to perform it if no such succession had taken place. As
used in this Agreement, "Company" means Company as herein before
defined and any successor to its business and/or assets as aforesaid
which assumes and agrees to perform this Agreement by operation of law
or otherwise.
12. Indemnification of Executive. Company shall indemnify
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Executive in the event that Executive was or is a party or is threatened to be
made a party to any threatened, pending, or completed Proceeding:
(a) other than an action by or in the right of Company,
arising out of the performance of Executive's duties with Company or by
reason of the fact that he is or was an officer, director, employee or
agent of Company, or is or was serving at the request of Company as a
manager, director, trustee, officer, employee, or agent of any other
company, nonprofit or for-profit corporation, partnership, joint
venture, trust, or other enterprise, against expenses, including
attorney's fees, judgments, fines, and amounts paid in settlement,
actually and reasonably incurred by Executive in connection with such
Proceeding if he acted in good faith and in a manner he reasonably
believed to be in, or not opposed to, the best interests of Company
and, with respect to any criminal Proceeding, had no reasonable cause
to believe his conduct was unlawful. The termination of any Proceeding
by judgment, order, or settlement, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that
Executive did not act in good faith and in a manner he reasonably
believed to be in, or not opposed to, the best interests of Company
and, with respect to any criminal Proceeding, he had reasonable cause
to believe that his conduct was unlawful.
(b) by or in the right of Company to procure a judgment in
its favor, arising out of the performance of Executive's duties with
Company or by reason of the fact that he is or was an officer,
director, employee, or agent of Company, or is or was serving at the
request of Company as a manager, director, trustee, officer, employee,
or agent of any other company, nonprofit or for-profit corporation,
partnership, joint venture, trust, or other enterprise, against
expenses, including attorney's fees, actually and reasonably incurred
by Executive in connection with the defense or settlement of such
Proceeding if he acted in good faith and in a manner he reasonably
believed to be in, or not opposed to, the best interests of Company,
except that no indemnification shall be made in respect of any claim,
issue, or matter as to which Executive is adjudged to have engaged in
conduct which would otherwise allow Company to terminate Executive for
Cause, unless and only to the extent that the court in which such
Proceeding was brought determines upon application that, despite the
adjudication of such conduct, but in view of all the circumstances of
the case, Executive is fairly and reasonably entitled to indemnity for
such expenses as such court shall deem proper.
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(c) Without limiting the generality of the foregoing, to the
extent that Executive has been successful on the merits or otherwise in
defense of any Proceeding referred to in clause (a) or clause (b) of
this Section, or in defense of any claim, issue or matter therein,
Company shall indemnify him against expenses, including, without
limitation, attorneys' fees actually and reasonably incurred by him in
connection with the Proceeding.
(d) Indemnifiable expenses incurred by Executive shall be paid
by Company in advance of the final disposition of the Proceeding upon
receipt of an undertaking by or on behalf of Executive to repay such
amount if it shall ultimately be determined that he is not entitled to
be indemnified by Company as authorized in this Section 12.
For purposes of this Agreement, "Proceeding" means any judicial or
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administrative trial, hearing, or other activity, civil, criminal or
investigative, the result of which may be that a court, arbitrator, or
governmental agency may enter a judgment, order, decree, or other determination
which, if not appealed and reversed, would be binding upon Company, its officers
or directors or other person subject to the jurisdiction of such court,
arbitrator, or governmental agency.
13. Confidentiality. During the Employment Period and for a period of
---------------
one year after the Termination Date, Executive will not divulge or appropriate
for his own use or the use of others any Confidential Information. Executive
acknowledges that the provisions of the prior sentence are expressly for the
benefit of Company, that Company would be irrevocably injured by a violation
thereof and that Company would have no adequate remedy at law in the event of
such violation. Therefore, Executive acknowledges and agrees that injunctive
relief, specific performance or any other appropriate equitable remedy are
appropriate remedies to enforce compliance with such provisions. Executive's
obligations under this Section shall survive the termination of this Agreement
for a period of one year after the Termination Date.
For purposes of this Agreement, "Confidential Information" means any
------------------------
valuable, non-public, competitively sensitive information concerning Company's
financial position and results of operations, annual and long-range business
plans, product or service plans, marketing plans and methods, training,
educational and administrative manuals, supplier information and purchase
histories and employee lists obtained by Executive during his employment with
Company; provided, however, that Confidential Information shall not include
information to the extent that it (i) is or becomes publicly known or generally
utilized by others engaged in the same business or activities in which Company
utilized, developed, or otherwise acquired such information; (ii) is known to
Executive prior to employment, having been lawfully received from parties other
than Company; or (iii) is furnished to others by Company with no restriction on
disclosure.
14. Non-Solicitation Agreement. Executive covenants and agrees that for
--------------------------
a period of one year after the Termination Date, neither Executive nor any
corporation, firm, partnership, joint venture or other entity of which he is an
officer, employee, consultant or holder of ten percent or more of the issued and
outstanding Voting Securities or equity interests (any such entity, an
"Affiliated Entity") will not solicit, directly or indirectly, or cause any
other person, firm or business
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to solicit, any employee of the Company to leave the employment of the Company
for any reason, or solicit any customer, guest, direct xxxx account, vendor or
supplier to cease doing business with the Company. Executive's obligations under
this Section shall survive the termination of this Agreement for a period of one
year after the Termination Date.
15. Arbitration. Any controversy or claim arising from, out of or
-----------
relating to this Agreement (other than controversies or claims arising from, out
of or relating to the provisions in Sections 13 and 14, with respect to which
either party may upon 24 hours notice to the other seek injunctive and/or other
equitable relief in a court of competent jurisdiction) which would give rise to
a claim under federal, state or local law (including but not limited to claims
based in tort or contract, claims for discrimination under state or federal law,
and/or claims for violation of any federal, state or local law, statute or
regulation) (each a "Claim", which shall also include any dispute as to whether
-----
a matter constitutes a Claim), which cannot be resolved within 30 days by
amicable negotiation between the parties, shall be resolved by final and binding
arbitration in Atlanta, Georgia in accordance with the Model Employment Dispute
Resolution Rules (("Rules") of the American Arbitration Association (the
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"Association"), by an experienced employment arbitrator licensed to practice law
-----------
in the State of Georgia.
A demand for arbitration shall be made within a reasonable time after
the Claim has arisen. In no event shall the demand for arbitration be made after
the date when institution of legal and/or equitable proceedings based on such
Claim would be barred by the applicable statute of limitations. Each party to
the arbitration will be entitled to be represented by counsel and will have the
opportunity to take one deposition of an opposing party or witness before the
arbitration hearing. By mutual agreement of the parties, additional depositions
may be taken. The arbitrator shall have the authority to hear and grant a motion
to dismiss and/or for summary judgment, applying the standards governing such
motions under the Federal Rules of Civil procedure. Each party shall have the
right to subpoena witnesses and documents for the arbitration hearing. A court
reporter shall record all arbitration proceedings.
With respect to any Claim brought to arbitration hereunder, either
party may be entitled to recover whatever damages would otherwise be available
to that party in any legal proceeding based upon the federal and/or state law
applicable to the matter. The decision of the arbitrator may be entered and
enforced in any court of competent jurisdiction by either party. Each party
shall pay the fees of their respective attorneys (except as otherwise awarded by
the arbitrator), the expenses of their witnesses and any other expenses
connected with presenting their Claim or defense. Other costs of the
arbitration, including the fees of the arbitrator, the cost of any record or
transcript of the arbitration, administrative fees, and other fees and costs,
shall be borne equally by the parties, one-half by Executive and one-half by the
Company. Should Executive or Company pursue any dispute or matter covered by
this Section by any method other than said arbitration, the responding party
shall be entitled to recover from the other party all damages, costs, expenses,
and reasonable attorneys' fees incurred as a result of such action. The
provisions contained in this Section shall survive the termination of this
Agreement.
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The parties indicate their acceptance of the foregoing arbitration
requirement by initialing below:
_______________________
For the Company Executive
16. Miscellaneous.
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(a) Governing Law. Except to the extent preempted by federal
law and without reference to principles of conflict of laws, the laws
of the State of Georgia will govern this Agreement in all respects,
whether as to its validity, construction, capacity, performance or
otherwise.
(b) Captions. The captions in this Agreement are not part
of the provisions hereof and shall have no force or effect.
(c) Amendments and Modifications. This Agreement may not be
amended or modified otherwise than by a written agreement executed by
the parties hereto or their respective successors and legal
representatives, which writing makes specific reference to this
Agreement.
(d) Notices. All notices and other communications hereunder
shall be in writing and shall be given by hand delivery to the other
party or by registered or certified mail, return receipt requested,
postage prepaid, addressed as follows:
If to Company: Xxxxxxx Inns, Inc.
0 Xxxxxxxxx Xxxxxx Xxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: General Counsel
If to Executive: Xxxxxx X. Xxxxxx
000 Xxxxxx Xxxxxx Xxxxxxx
Xxxxxxx, XX 00000
or to such other address as either party shall have furnished to the
other in writing in accordance herewith. Notice and communications will
be effective when actually received by the addressee.
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(e) Other Agents. Nothing in this Agreement is to be
interpreted as limiting Company from employing other personnel on such
terms and conditions as may be satisfactory to it.
(f) Severability. If any provision or covenant, or any part
thereof, of this Agreement should be held by any court to be invalid,
illegal or unenforceable, either in whole or in part, such invalidity,
illegality or unenforceability shall not affect the validity, legality
or enforceability of the remaining provisions or covenants, or any part
thereof, of this Agreement, all of which will remain in full force and
effect.
(g) Withholding. Company may withhold from any amounts
payable under this Agreement such Federal, state, local or foreign
taxes as shall be required to be withheld pursuant to any applicable
law or regulation.
(h) Waiver. Failure of either party to insist, in one or
more instances, on performance by the other in strict accordance with
the terms and conditions of this Agreement shall not be deemed a waiver
or relinquishment of any right granted in this Agreement or of the
future performance of any such term or condition or of any other term
or condition of this Agreement, unless such waiver is contained in a
writing signed by the party making the waiver.
(i) Reduction of Benefits By Legally Required Benefits.
Notwithstanding any other provision of this Agreement to the contrary,
if Company is obligated by law to pay severance pay, a termination
indemnity, notice pay, or the like, or if Company is obligated by law
to provide advance notice of separation ("Notice Period"), then any
-------------
severance benefits hereunder shall be reduced by the amount of any such
severance pay, termination indemnity, notice pay or the like, as
applicable, and by the amount of any pay received with respect to any
Notice Period.
(j) Timing of Payments.
(i) Except as otherwise provided for Continuation
Payments, the payments provided for in Sections 7 and 8 shall
be made within 30 days after the Date of Termination,
provided, however, that if the amounts of such payments cannot
be finally determined on or before such date, Company shall
pay to Executive on such day an estimate, as determined in
good faith by Company, of the minimum amount of such payments
and shall pay the remainder of such payments (together with
interest at the rate provided in Section 1274(b)(2)(B) of the
Code from the Date of Termination to the payment of such
remainder) as soon as the amount thereof can be determined but
in no event later than the 45th day after the Date of
Termination. In the event that the amount of the estimated
payments exceeds the amount subsequently determined to have
been due, such excess shall constitute a loan by Company to
Executive, payable on the tenth business day after demand by
Company
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(together with interest at the rate provided in Section
1274(b)(2)(B) of the Code from the Date of Termination to the
repayment of such excess).
(ii) If any payment to Executive (other than those
described in the preceding subclause) is not made within 30
days of the date such payment is required to be made,
Executive shall be entitled to receive interest on such
payment from the due date until paid in full at an annual rate
which is the greater of (A) the"prime rate" (which for
purposes of this Agreement shall mean the interest rate
published in the Wall Street Journal, Eastern Edition for the
day the payment is due, identified therein as the "Prime Rate"
and currently described as "the base rate on corporate loans
posted by at least 75% of the nation's 30 largest banks") plus
three percent or (B) the legal rate of interest on judgments
in the State of Georgia.
(k) Entire Agreement; Termination of Prior Agreement. Except
as provided herein, this Agreement contains the entire agreement
between Company and Executive with respect to the subject matter hereof
and it supersedes and invalidates any previous employment or severance
agreements or contracts between them, including, without limitation,
the Prior Agreement. No representations, inducements, promises or
agreements, oral or otherwise, that are not embodied herein shall be of
any force or effect. In the event that this Agreement does not take
effect, the Prior Agreement shall continue in full force and effect.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Employment Agreement as of the date first above written.
XXXXXXX INNS, INC.
By:
Xxxxxx X. Xxxxxxx, Chief Executive Officer
EXECUTIVE:
Xxxxxx X. Xxxxxx
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