EXHIBIT (d)(5)
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as of
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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 Xxxxx X. Xxxxxxx, 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 President and Chief Financial Officer 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 "Effective
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Date") shall be December 1, 2001.
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2. Employment. Company shall continue to employ Executive and Executive
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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 Date
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and, unless earlier terminated in accordance with Section 6 hereof, will be for
a term of eighteen months, which term shall be extended automatically (without
further action of Executive or Company) for an additional eighteen month 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 Company.
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(a) Executive will continue to serve in his capacity as President and
Chief Financial Officer of the Company. Subject to clause (c) below,
Executive shall faithfully and
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diligently perform the services and functions relating to such positions or
otherwise incident thereto, as may be reasonably designated by the Board or
Chief Executive Officer of the Company 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 of the Company.
(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, payable
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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 $140,400.00;
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
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company that manages the Inns 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
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Executives"), on terms and conditions no less favorable than those
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applicable to Peer Executives.
(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
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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")
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to the extent applicable generally to Peer Executives Without limiting 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:
(i) provide to Executive an automobile owned or leased by
Company of a make and model appropriate to Executive's status (in the
reasonable opinion of Executive) or, at Executive's request, shall
provide Executive with a monthly allowance of not less than $550.00 to
cover the cost of the business use of an automobile owned or leased by
Executive; and
(ii) reimburse Executive's reasonable expenses for dues and
capital assessments for Concourse Athletic Club and Atlanta Athletic
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.
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(f) Vacation. During the Employment Period, Executive will be e
ntitled 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.
(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 15(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, within the
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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 Executive's
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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
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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 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 Period of any of
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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;
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(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 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 defined
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in Section 14(d) of the Securities Exchange Act of 1934 (the
"Exchange Act"), other than Xxxxxx X. Xxxxxxx or any person or
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persons related to or associated with him, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 of the General Rules
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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.
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(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 with Section 15(d) of this Agreement. For purposes of this
Agreement, a "Notice of Termination" means a written notice that (i) indicates
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the 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 shall occur on
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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 of
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Termination" means (i) if Executive's employment is terminated by Company other
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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 eighteen 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
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to one-twelfth of the Executive's Average Bonus (the
"Continuation Payment"), such amount to be paid on the first
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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 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 and
one-half 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) Executive's
"Average Bonus" means the average of Executive's annual
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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 eighteen
months from the Date of Termination (the "Benefits Period"),
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Company shall provide Executive with group term life
insurance, health insurance, accident and long-term disability
insurance benefits (collectively, "Welfare Benefits")
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substantially similar in all respects to those that 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
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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
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) Other 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").
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(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 15(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 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. 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 Section 13, 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
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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
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the American Arbitration Association (the "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.
The parties indicate their acceptance of the foregoing arbitration
requirement by initialing below:
______________________
For the Company Executive
15. 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
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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: Xxxxx X. Xxxxxxx
0000 XxxxxxXxxxx Xxxxx
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.
(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.
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(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 (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.
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(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:
Xxxxx X. Xxxxxxx
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