AMENDED AND RESTATED SEPARATION
PAY AGREEMENT
This Amended and
Restated Separation Pay Agreement (the “Agreement”) by
and between Lodgian, Inc. (“Company”), and James
McGrath (“You” or “Your”) (collectively,
the “Parties”), is entered into and effective as of the
29th of March, 2007 (the “Effective Date”).1
WHEREAS, You will
continue to be employed by the Company;
WHEREAS, the
Company and You agreed to certain post-termination payment
obligations following a Change In Control pursuant to the
Separation Pay Agreement between You and the Company dated
September 9, 2006 (the “Prior Agreement”);
and
WHEREAS, the
Company and You have agreed to modify the terms and conditions of
such payment obligations as set forth below.
NOW, THEREFORE, in
consideration of Company’s agreement to continue to employ
You and in further consideration of the mutual agreements set forth
herein, it is agreed:
1.
Termination of Prior Agreement . The Parties hereby
terminate the Prior Agreement effective on the Effective Date. The
Parties acknowledge and agree that the termination of the Prior
Agreement does not and shall not result in the vesting,
acceleration, or triggering of any employment benefit in Your
favor, including, but not limited to, any post-termination payment
obligation or any separation payment or benefit, or any other right
which You may have as a shareholder, officer, or employee, or under
any agreement or understanding between You and the Company,
including, but not limited to, the Prior Agreement.
2. At-will
Employment . This Agreement does not create a contract of
employment. Your employment with the Company is and remains at all
times an at-will relationship. This means that at either Your
option or the Company’s option, Your employment may be
terminated at any time, with or without Cause or with or without
notice. This Agreement does not alter the at-will employment
relationship.
3.
Post-Termination Payment Obligations.
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(a)
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If
Your employment terminates for any of the reasons set forth in
sub-section 6(c) below, then the Company shall pay You all accrued
but unpaid wages, based on Your then current Base Salary, through
the termination date. The Company shall have no other obligations
to You, including under any provision of this Agreement, Company
policy, or otherwise; provided, however, You shall continue to be
bound by (a) the restrictive covenants set forth in
Section 7 below, and (b) all other post-termination
obligations to which You are subject.
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(b)
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If
Your employment terminates for any of the reasons set forth in
sub-sections 6(a), 6(b), 6(d) or 6(e) below, and Section 4
below does not apply, then the Company will pay You all accrued but
unpaid Base Salary through the termination date. In addition, upon
Your “separation from service” (within the meaning of
Internal Revenue Code (“Code”) §
409A(a)(2)(A)(i)), the
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1
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Unless
otherwise indicated, all capitalized terms used in this Agreement
are defined in the “Definitions” section of
Exhibit A. Exhibit A is incorporated by reference and is
included in the definition of “Agreement.”
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Company shall: (i) pay You (or
Your estate if applicable), within thirty (30) days of Your
termination date, a lump sum payment equal to fifty percent (50%)
of Your then current annual Base Salary; (ii) reimburse Your
and Your eligible dependents’ COBRA premiums under the
Company’s major medical group health plan on a monthly basis
for a period of six (6) months; (iii) pay You (or Your estate
if applicable), within thirty (30) days of Your termination
date, a lump sum payment of Thirty Seven Thousand Five Hundred One
Dollars and Fifty Cents ($37,501.50); and (iv) notwithstanding
anything to the contrary in any applicable documents evidencing a
grant of an award under the Lodgian, Inc. 2002 Stock Incentive Plan
or any similar plan, accelerate the vesting of any such awards
granted to You by the Company (the “Award(s)”) so that
any such Award(s) comprised of options to purchase Company stock
shall be immediately exercisable in full, or so that all vesting
restrictions upon any such Award(s) comprised of restricted stock
shall lapse (collectively, the payments and benefits set forth in
the preceding sub-clauses (i) – (iv) to be referred to
as the “Separation Benefits”). The Company shall have
no other obligations to You, including under this Agreement, any
Company policy, or otherwise. The Separation Benefits shall
constitute full satisfaction of the Company’s obligations
under this Agreement, the Lodgian, Inc. Executive Incentive Plan
(the “Incentive Plan”), any Company policy, or
otherwise. The Company’s obligation to provide the Separation
Benefits shall be subject to Section 5 below and conditioned
upon Your satisfaction of the following conditions (the
“Separation Benefits Conditions”):
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(i)
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Execution and non-revocation of a
Separation & Release Agreement in a form prepared by the
Company, which includes, but is not limited to, Your releasing the
Company from any and all liability and claims of any kind;
and
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(ii)
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Your compliance with (a) the
restrictive covenants set forth in Section 7 below, and
(b) all other post-termination obligations to which You are
subject.
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If
You do not execute an effective Separation & Release Agreement
as set forth above, the Company shall have no obligation to provide
the Separation Benefits to You under this sub-section. The
Company’s obligation to provide the Separation Benefits set
forth above shall terminate immediately upon any breach by You of
any post-termination obligations to which You are
subject.
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4. Post
Change In Control Payment Obligations .
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(a)
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Change In Control Separation
Benefits .
If, within sixty (60) days before or three hundred sixty five
(365) days after a Change in Control, this Agreement
terminates for the reasons set forth in Sections 6(d) or 6(e)
below, then the Company will pay You all accrued but unpaid Base
Salary through the termination date. In addition, upon Your
“separation from service” (within the meaning of Code
§ 409A(a)(2)(A)(i)), the Company shall: (i) pay You a
lump sum payment equal to Your then current annual Base Salary, to
be paid within thirty (30) days after the date of termination;
(ii) pay You a lump sum payment of Seventy Five Thousand Three
Dollars ($75,003.00) to be paid within thirty (30) days after
the date of termination; (iii) reimburse Your and Your eligible
dependents’ COBRA premiums under the Company’s major
medical group health plan on a monthly basis for a period of twelve
(12) months; and (iv) notwithstanding anything to the contrary
in any applicable documents evidencing a grant of an award under
the Lodgian, Inc. 2002 Stock Incentive Plan or any similar plan,
accelerate the vesting of any such awards granted to You by the
Company (the “Award(s)”) so that any such Award(s)
comprised of options to purchase Company stock shall be immediately
exercisable in full, or so that all vesting
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restrictions upon any such Award(s)
comprised of restricted stock shall lapse (collectively, the
payments and benefits set forth in the preceding sub-clauses (i)
— (iv) to be referred to as the “Change In Control
Separation Benefits”). Your right to receive the Change In
Control Separation Benefits shall be subject to Section 5
below and the Separation Benefits Conditions set forth in Section
3(b) above. The Change In Control Separation Benefits to be
provided under this Section 4 shall constitute full
satisfaction of the Company’s obligations under this
Agreement, the Incentive Plan, any Company policy, or
otherwise.
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(b)
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Change In Control Completion
Bonus . In
the event of the closing of any transaction constituting a Change
In Control, provided (1) such closing occurs on or before
December 31, 2008, and (2) You are employed within sixty
(60) days before or on the date of such closing, then the
Company shall (i) pay You a lump sum payment equal to
twenty-five percent (25%) of Your then current annual Base Salary;
(ii) pay You a lump sum payment Eighteen Thousand Seven
Hundred Fifty Dollars and Seventy Five Cents ($18,750.75), and (ii)
grant You Twenty Seven Thousand Two Hundred (27,200) restricted
shares of Common Stock subject to the terms and conditions of the
Employee Restricted Stock Agreement attached as Exhibit B
(sub-sections (i) through (iii) collectively, the
“Completion Bonus”). Notwithstanding anything to the
contrary set forth in the Incentive Plan or this Agreement, the
Completion Bonus, if any, shall fully satisfy the Company’s
payment obligations under the Incentive Plan for the calendar year
in which the closing occurs. The Company shall pay You the
Completion Bonus within thirty (30) days following the closing
of the Change In Control; provided, however, the Company’s
obligation to provide the Completion Bonus shall be subject to
Section 5 below and conditioned upon Your execution and
non-revocation of a Release Agreement in a form prepared by the
Company, which includes, but is not limited to, Your releasing the
Company from any and all liability and claims of any
kind.
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5. Delay In
Payments To Comply With Code § 409A . Notwithstanding any
provision of this Agreement to the contrary, if You are a
“specified employee” within the meaning of Code
§409A(a)(2)(B)(i), then any payment that is required to be
made under Section 3 or Section 4 above within the first
six (6) months following Your “separation from
service” (within the meaning of Code § 409A(a)(2)(A)(i))
shall be paid on the date that is the first business day of the
seventh (7th) month after the date of Your “separation from
service” and shall be paid in a single lump sum payment,
provided that You satisfy the Separation Benefits Conditions. The
provisions of this Section are intended to require a delay in a
payment under Section 3 or Section 4 above only to the
extent that such a delay is required in order for such payment to
comply with Code § 409A(a)(2)(B)(i), and shall not otherwise
apply. In addition, immediately prior to Your “separation
from service” (within the meaning of Code
§409A(a)(2)(A)(i), the Company shall (i) establish an
irrevocable grantor trust (the “Trust”) that shall have
terms designed to be consistent with those allowed under the model
trust set forth in IRS Revenue Procedure 92-64 and that shall have
an independent financial institution as trustee, (ii) contribute to
the Trust the amount of each payment delayed for six
(6) months under this Section as of the date such payment
would otherwise be required to be paid absent the provisions of
this Section applying to delay such payment, and (iii) provide
the trustee of the Trust with a written direction to (A) hold
said amount in a segregated account for Your benefit and
(B) pay from such segregated account all payments delayed
under this Section (with earnings thereon) to You on the first
business day of the seventh (7th) month after the date of Your
“separation from service.” Trust assets shall be
invested in the highest-yielding available money market account of
the trustee (or, if the trustee does not have such an account, then
the highest-yielding available money market account of Bank of
America), and earnings on amounts contributed to the Trust for
purposes of the preceding sentence shall be determined based on
such chosen investment. All expenses of the trustee shall be paid
by the Company and not from the Trust’s assets. The
provisions of this Section shall not be required if You so agree in
writing. Upon the trustee’s final payment of the entire
corpus of the Trust in a single lump sum, the Trust shall
terminate.
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6.
Termination of Employment . As an at-will employee, Your
employment may be terminated at any time for any or no reason,
including, but not limited to:
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(a)
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Your death;
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(b)
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Your disability which renders You
unable to perform the essential functions of Your job with or
without reasonable accommodation;
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(c)
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For Cause . For Cause shall mean a termination
by the Company because of any one of the following
events:
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(i)
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Your willful refusal to follow the
lawful direction of the CEO and/or the person to whom You report or
Your material failure to perform Your duties (other than by reason
of Disability, as defined in sub-paragraph 6(b) above), in either
case, only after You have been given written notice by the CEO
and/or the person to whom You report detailing the directives You
have refused to follow or the duties You have failed to perform and
at least 30 days to cure;
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(ii)
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Your material and willful failure to
comply with Company policies, only after You have been given
written notice by the CEO and/or the person to whom You report
detailing the policies with which You have failed to comply and at
least 30 days to cure;
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(iii)
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Your actively seeking a position
with another business, applying for such position, and being likely
to accept such a position without the Company’s written
consent;
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(iv)
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Your engaging in any of the
following conduct:
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(1)
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an
act of fraud or dishonesty that materially harms the Company or its
affiliates,
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(2)
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a
felony or any violation of any federal or state securities law or
Your being enjoined from violating any federal or state securities
law or being determined to have violated any such law;
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(3)
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gross negligence in connection with
any property or activity of the Company and/or its subsidiaries,
affiliates or successors;
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(4)
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repeated and intemperate use of
alcohol or illegal drugs after written notice from the CEO and/or
the person to whom You report;
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