Document:

ex10-3.htm

Exhibit 10.3

 

May 20th, 2014

 

Legend Oil and Gas, Ltd.

1218 Third Avenue

Suite 505

Seattle, WA 98101

Attn: Marshal Diamond-Goldberg, CEO

Gentlemen:

This letter agreement (the “Agreement”) sets forth the understanding between Northpoint Energy Partners, LLC (‘Northpoint”) and Legend Oil & Gas, Ltd. and its affiliated entities (collectively, the “Company”) for the engagement of Andrew Reckles, Managing Partner of Northpoint, to serve as chief restructuring officer of the Company (the “CRO”) during the term hereof.  This Agreement shall be effective on the date that it is executed by you in the space provided for your signature below.

I. APPOINTMENT OF CHIEF RESTRUCTURING OFFICER

Northpoint will provide Mr. Reckles to serve as the CRO and the Company appoints Mr. Reckles to serve as CRO, subject to the terms and conditions of this Agreement, with the title, compensation and other descriptions set forth herein.

II. SCOPE OF SERVICES

Mr. Reckles’ ordinary course duties as CRO will involve managing the Company’s remaining assets, restructuring the indebtedness of the Company including, without, limitation, the compromise and settlement  of indebtedness owed by  the Company to its creditors and, if necessary, the sale and disposition of some or all of  the Company’s assets.  Mr. Reckles  will work with the Company’s senior management team and its representatives and other professionals to effectuate the preceding and, in addition to such duties  will provide the following services during the course of his engagement (collectively, the “Services”):

	
(a)  

	
Oversea the claims resolution process and effectuate compromises and settlements with the Company’s creditors;

	
(b)  

	
To the extent possible, obtain financing and investment capital for the Company;

	
(c)  

	
If it is necessary for the Company to file a petition under chapter 11 of the Bankruptcy Code to oversee the prefiling preparation and subsequent to the filing of the chapter 11 proceedings to oversee such proceedings subject to being retained as CRO pursuant to order of the Bankruptcy Court and a mutually acceptable agreement with  the Company with respect thereto;

	
(d)  

	
Prosecute, at the Company’s cost and expense, all causes of actions and claims held by the Company; and

	
(e)  

	
Take such other actions as may in his sole judgment and discretion be necessary and proper to perform the above services including, without limitation, executing agreements and other legal documents and retaining professionals at the Company’s cost and expense to enable him to provide the Services.

 

  

  

  

 

The Company acknowledges that it is retaining Mr. Reckles to provide the Services.  The Services to be provided by Mr. Reckles as CRO do not include accounting, auditing, any type of financial statement reporting or consulting engagement that subject to the rules of the AICPA, the SSCS or other state and national professional bodies, tax related assistance or other advisory services, except as specifically described in this Agreement.

III. RELATIONSHIP OF THE PARTIES

The parties intend that an independent contractor relationship will be created by this Agreement.  As an independent contractor, the CRO will have complete and exclusive charge of the management and operation of the business, including paying all bills, expenses and other charges incurred or payable with respect to the operation of the business.  As an independent contractor, except with respect to the compensation and reimbursement provisions set forth in this Agreement, the CRO will not be entitled to receive from the Company any vacation pay, sick leave, retirement, and pension or social security benefits, workers ’ compensation, disability, unemployment benefits, or any other employee benefits, except with reposted to officer insurance coverage detailed below.

IV. COMPANY’S RESPONSIBILITY

In connection with the CRO’s provision of the Services, the Company shall perform those tasks and assume those responsibilities specified herein and as stated elsewhere in this Agreement (the “Company Responsibilities”).  The Company Responsibilities include, without limitation, to: (a) provide reliable and accurate detailed information, materials and documentation and (b) make decisions and take future actions, as the Company determines in its sole discretion, on any recommendations and by the CRO in connection with the tasks of work provided under this Agreement.  The Company understands that the performance of the CRO under this Agreement depends on the Company’s timely and effective satisfaction of the Company Responsibilities. Further, the Company understands that the CRO is relying upon the information that the Company provides to the CRO under this Agreement in order to provide the Services and that the CRO shall have no responsibility for the accuracy or completeness of such information.  The ability of the CRO to perform under this Agreement is expressly conditioned and contingent upon the foregoing understandings.

The CRO’s delivery of the Services and the fees charged depend on (i) the Company’s timely and effective completion of the Company Responsibilities, and (ii) timely decisions and approvals by the Company’s management.  The Company shall be responsible for any delays, additional fees or costs or other deficiencies caused by the Company’s failure to complete the Company Responsibilities.

V. FEES AND EXPENSES

	
A.  

	
Compensation

 

As compensation for the CRO’s Services, the Company shall pay Northpoint a non-refundable fee of $15,000 per month payable in advance on the date hereof and each successive monthly anniversary date of this Agreement.  In addition, Northpoint will receive: (a) an additional $10,000 for every incremental increase of 10 barrels of oil produced per day after the date hereof and in connection therewith the Company represents and warrants to the CRO that it is currently producing 11.7 barrels of oil per day. and (b) 10,000,000 shares of the common stock of the Company, $.01 par value per share, which shares the Company shall register, at its expense, with (x)  the Securities and Exchange Commission under Form S8, free of legend, and (y) with any other required governmental authority and (c) $200,000 on the sale of assets realizing a net purchase price that would allow the Company to fully pay its senior indebtedness; (c)  $200,000 on a refinancing of the senior indebtedness of the Company (the “ Senior Debt”)that results in the  Senior Debt being fully paid; and (d) $300,000 on any merger or combination of the Company with another firm or entity resulting in the Company not being the surviving company and the holders of the Senior Debt either being either fully paid,  obtaining equity in the surviving firm or entity in exchange for the Senior Debt, or  the assumption by the surviving firm or entity of all or part of the Senior Debt and cash and/or equity in exchange for the remainder of the Senior Debt and (e) $25,000 bonus paid December 15th, 2014 predicated on the sale of a number of BoE’s in the month of November 2014 to be equal to or greater than 1949 BoE, and the company having at least $50,000 of cash on hand in the bank on Decebmer 1st, 2014,  and a $25,000 bonus paid on the June 15th, 2015, predicated on the sale of a number of BoE’s in the month of May 2015 to be equal to or greater than 2152 BoE, and the company having at least $80,000 of cash on hand in the bank on June 1, 2015.

 

  

  

  

	
B.  

	
Out-Of-Pocket Expenses

The Company shall pay directly or reimburse Northpoint, upon receipt of periodic billings, for all reasonable out-of-pocket expenses incurred in connection with this Agreement and the engagement hereunder, including, but not limited to, travel, lodging, postage, computer and research charges, attorneys’ fees, messenger services, telephone and facsimile services and other charges customarily recoverable as out-of-pocket expenses.

VI. CONFIDENTIALITY

Northpoint and the CRO agree to keep confidential all information obtained from the Company, and Northpoint will not disclose to any other person or entity, or use for any purpose other than specified herein, any information pertaining to the Company or any affiliate thereof, which is either non-public, confidential or proprietary in nature (“Information”) that he obtains or is given access to during the performance of the Services provided hereunder.  The foregoing is not intended to nor shall it be construed as prohibiting the CRO from disclosure pursuant to valid subpoena, order or other legal compulsion, but the CRO shall not encourage, suggest, invite or request, or assist in securing, any such subpoena, court order, or other legal compulsion, and the CRO shall immediately give notice of any such subpoena, court order, or legal compulsion to the Company.  Furthermore, the CRO may make reasonable disclosure of Information to third parties to the extent necessary in connection with his performance of the Services hereunder.  In addition, Northpoint shall have the right to disclose to others in the normal course of business his involvement with the Company.

Information includes data, plans, reports, schedules, drawings, accounts, records, calculations, specifications, flow sheets, computer programs, source or object codes, results, models or any work product relating to the business of the Company, its subsidiaries, distributors, affiliates, vendors, customers, employees, contractors and consultants.

The Company acknowledges that all Information (written or oral) generated by the CRO in connection with this engagement is intended solely for the benefit and use of the Company (limited to its Board and other management).  The Company agrees that no such information shall be used for any other purpose or reproduced, disseminated, quoted or referred to with attribution to Northpoint or the CRO at any time in any manner or for any purpose other than accomplishing the Services referred to herein, without Northpoint or the CRO’s prior approval (which shall not be unreasonably withheld), except as required by law.

 

  

  

  

VII. INDEMNIFICATION, ADVANCEMENT AND EXCULPATION

The Company agrees to indemnify, provide advancement to, and hold harmless Northpoint and each of his respective partners, employees and agents (the “Indemnified Persons”), to the fullest extent lawful, from and against any claims, liabilities, losses, damages and expenses (or any action, claim, suit or proceeding (an “Action”) in respect thereof), as incurred, related to or arising out of or in connection with the CRO’s services (whether occurring before, at or after the date hereof) under the Agreement or any Indemnified Person’s role in connection therewith, whether or not resulting from an Indemnified Person’s negligence (“Losses”), provided, however, that the Company shall not be responsible for any Losses that arise out of or are based on any action of or failure to act by the CRO to the extent such Losses are determined, by a final, non-appealable judgment by a court or arbitral tribunal, to have resulted solely from the CRO’s gross negligence or willful misconduct.

 

The Company agrees to reimburse and provide advancement to the Indemnified Persons for all expenses (including, without limitation, fees and expenses of counsel), including all costs and expenses (including expenses of counsel) incurred by an Indemnified Person to enforce the Indemnified Person’s rights hereunder, as they are incurred in connection with investigating, preparing, defending or settling any Action for which indemnification, advancement or contribution has or is reasonably likely to be sought by the Indemnified Person, whether or not in connection with litigation in which any Indemnified Person is a named party; provided that if any such reimbursement is determined by a final, non-appealable judgment by a court or arbitral tribunal, to have resulted solely from the CRO’s gross negligence or willful misconduct, such Indemnified Person shall promptly repay such amount to the Company.  The Company agrees that neither Northpoint nor the CRO shall not have any personal liability to the Company for monetary damages for breach of fiduciary duty, provided that this limitation shall not eliminate or limit the liability of the CRO: (i) for any breach of the CRO’s duty of loyalty to the Company, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, or (iii) for any transaction from which the CRO received an improper personal benefit.  Notwithstanding the provisions hereof, the aggregate contribution of all Indemnified Persons to all Losses shall not exceed the amount of fees actually received by the CRO with respect to the services rendered pursuant to the Agreement.

In addition to the foregoing indemnification, advancement, and contribution rights, the Company agrees that the CRO will be entitled to the benefit of the most favorable indemnities provided by the Company to its officers and directors, whether under the Company’s by-laws, certificates of incorporation, by contract or otherwise.  The Company further agrees that it will include and cover the CRO under the Company’s policy for directors’ and officers’ (“D&O”) insurance.  The Company agrees to maintain D&O insurance coverage for the CRO for a period of not less than two (2) months following the date of termination of the CRO’s service under this Agreement.  In the event that the Company is unable to include the CRO under the Company’s D&O insurance policies or if the Company’s D&O policies do not have first dollar coverage in effect for at least the first $______________, it is agreed that the CRO is permitted to purchase a separate policy for D&O insurance that covers only the CRO and invoice the Company for the costs associated with such policy as an out-of-pocket expense reimbursement under this Agreement.  If the CRO is unable to purchase such coverage, then the CRO shall have the right to terminate this Agreement upon notice to the Company.

 

  

  

  

The Company agrees that it will not settle or compromise or consent to the entry of any judgment in, or otherwise seek to terminate any pending or threatened Action in respect of which indemnification, advancement, or contribution may be sought hereunder (whether or not any Indemnified Person is a party to such Action) unless the CRO has given his prior written consent, or the settlement, compromise, consent or termination (i) includes an express unconditional release of such Indemnified Person from all Losses arising out of such Action and (ii) does not include any admission or assumption of fault on the part of any Indemnified Person.

 

VIII. DISCLOSURES

The CRO is not aware of any business relationship he has that creates a potential or actual conflict of interest with respect to the Company.

Although the CRO is not aware of any relationships that connect him to any party in interest, because Northpoint serves clients on a national basis, it is possible that Northpoint may have or will render services to or have business associates with other entities which had or have relationships with the Company.

 

IX. RELATED MATTERS

The Company represents and warrants to Northpoint that it has taken all necessary corporate and other action necessary for it to enter in to this Agreement and to enable the CRO to perform the Services.  Further, the Company represents and warrants to the CRO that this Agreement, when executed by you and the undersigned is a valid and binding agreement on the part of the Company enforceable in accordance with its terms.

X. TERMINATION OF ENGAGEMENT

This Agreement to provide the Services may be terminated at any time by either party upon the provision of thirty (30) days prior written notice to the other party.  Notwithstanding any such termination, Northpoint will be entitled to any fees and expenses earned or incurred under the Agreement and, for the sake of clarification, any agreement for the sale of assets of the Company or for the refinancing of the Company’s indebtedness completed after such termination shall be considered earned by Northpoint.

Sections V, VI, VII, X and XI of this Agreement shall survive the expiration or termination of this Agreement.

XI. GENERAL

 

	
A.  

	
Complete Agreement

This Agreement constitutes the entire agreement of the parties with respect to the subject matter hereof and supersedes any other prior communications, understandings and agreements (both written and oral) between the parties with respect to the subject matter hereof.

	
B.  

	
Amendments

This Agreement may be modified, amended or supplemented only by a written agreement between the parties hereto.  The CRO will not be responsible for performing any services not specifically described in this Agreement or in a subsequent writing signed by the parties.

 

  

  

  

	
C.  

	
Governing Law

This Agreement and all controversies arising from or related to the performance hereunder shall be governed by, and construed in accordance with, the laws of the State of Georgia, without giving effect to such State’s conflicts of law principles.

	
D.  

	
Severability

If any portion of this Agreement shall be determined to be invalid or unenforceable, the parties agree that the remainder shall be valid and enforceable to the maximum extent possible.

	
E.  

	
Sole Benefit

This Agreement has been and is made solely for the benefit of the Company, Northpoint, and the CRO (solely as to Sections I, II, IV and VII of the Agreement), and their respective successors and assigns, and no other person or entity shall acquire or have any right under or by virtue of this Agreement.

	
F.  

	
Assignment

Neither party may assign or transfer its rights or obligations under this Agreement without the prior written consent of the other party.

 

	
G.  

	
No Waivers

Each party agrees that no failure or delay by the other party in exercising any right, power or privilege hereunder will operate as a waiver thereof, nor will any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any right, power or privilege hereunder.

	
H.  

	
Notices

All notices required or permitted to be delivered under this Agreement shall be sent, if to Northpoint, to the attention of the CRO, and if to the Company, to the attention of the Marshall Diamond-Goldberg, CEO. All notices under this Agreement shall be sufficient if delivered by facsimile, electronic mail, or overnight courier.  Any notice shall be deemed to be given only upon actual receipt.  Mailed notices shall be addressed as set forth below, or to such other name or address as may be given in writing to the other party.

 

	To the CRO:	Northpoint Energy Partners, LLC
	 	555 Northpoint Center East
	 	Alpharetta, GA 30022
	 	Attn: Andrew Reckles
	 	Facsimile:
	 	Email:  andy@northpointep.com
	 	 

 

  

  

  

	To the Company:	Legend Oil and Gas, Ltd.
	 	1218 Third Avenue
	 	Suite 505
	 	Seattle, WA 98101
	 	Attn: Marshall Diamond-Goldberg, CEO
	 	Facsimile:
	 	Email

 

Please confirm the foregoing is in accordance with your understanding by signing and returning a copy of this Agreement.

Sincerely,

Northpoint Energy Partners, LLC

By:___________________________________

Name: Andrew Reckles

Title: Managing Partner

AGREED AND ACKNOWLEDGED:

 Legend Oil and Gas, Ltd.

By:_________________________

Name:

Title:

Dated:ex10-1.htm

Exhibit 10.1

 

APPLE HOSPITALITY REIT, INC.

EXECUTIVE SEVERANCE PAY PLAN

ARTICLE I

PURPOSES

 

The Board of Directors (the “Board”) of Apple Hospitality REIT, Inc. (the “Company”) has determined that it is in the best interests of the Company and its shareholders to assure that the Company will have the continued services of certain executives, in the event of the possibility or occurrence of a Change in Control of the Company. The Board believes that this objective may be achieved by giving key executives assurances of financial security in case of a pending or threatened Change in Control, so that they will not be distracted by personal risks and will continue to devote their full time and best efforts to the performance of their duties. In order to accomplish these objectives, the Board has caused the Company to adopt this Apple Hospitality REIT, Inc. Executive Severance Pay Plan (the “Plan”).  The Plan provides severance or income protection benefits to Executives who have been designated as Participants by the Compensation Committee of the Board (the “Committee”) pursuant to the Plan.

 

ARTICLE II

CERTAIN DEFINITIONS

 

When used in this Plan, the terms specified below shall have the following meanings:

 

2.1 “Annual Base Salary” means an amount equal to twelve times the highest monthly base salary paid or payable, including any base salary which has been earned but deferred, to the Executive by the Company in respect of the 12-month period immediately preceding the month which contains the Effective Date.

 

2.2 “Annual Bonus” means an amount equal to the annual bonus paid to the Executive by the Company during the calendar year immediately preceding the year which contains the Effective Date; provided, that if the Effective Date occurs during calendar year 2014, then “Annual Bonus” shall mean an amount equal to the Executive’s target annual bonus for calendar year 2014.

 

2.3 “Cause” means (a) the Executive’s continued or deliberate neglect of his or her duties, (b) willful misconduct by the Executive injurious to the Company, whether monetary or otherwise, (c) the Executive’s violation of any code or standard of ethics generally applicable to employees of the Company, (d) the Executive’s active disloyalty to the Company, (e) the Executive’s conviction of a felony, (f) the Executive’s habitual drunkenness or drug abuse or (g) the Executive’s excessive absenteeism unrelated to a disability (as defined in the Company’s long-term disability plan).

 

2.4 “Change in Control” means:

 

(a) any person, including a “group” as defined in Section 13(d) (3) of the Securities and Exchange Act of 1934, as amended (the “Act”), becomes the owner or beneficial owner of Company securities having 20% or more of the combined voting power of the then outstanding Company securities that may be cast for the election of the Company’s directors (other than as a result of an issuance of securities initiated by the Company, or open market purchases approved by the Board, as long as the majority of the Board approving the purchases is also the majority at the time the purchases are made); or

 

(b) as the direct or indirect result of, or in connection with, a cash tender or exchange offer, a merger or other business combination, a sale of assets, a contested election, or any combination of these transactions, the persons who were directors of the Company before such transactions cease to constitute a majority of the Board, or any successor’s board, within two years of the last of such transactions.

 

  

1

  

 

2.5 “Code” means the Internal Revenue Code of 1986, as amended.

 

2.6 “Company” means Apple Hospitality REIT, Inc. or any successor thereto.

 

2.7 “Effective Date” means the date while this Plan is in effect on which a Change in Control occurs. Notwithstanding anything in this Plan to the contrary, if a Change in Control occurs and the Executive’s employment with the Company is terminated by the Company without Cause prior to the date on which a Change in Control occurs, and if it is reasonably demonstrated by the Executive that such termination of employment (a) was at the request of a third party who had taken steps reasonably calculated to effect a Change in Control, or (b) otherwise arose in connection with or in anticipation of a Change in Control, then for all purposes of the Plan, “Effective Date” shall be deemed to have occurred on the date immediately prior to the Termination Date.

 

2.8 “Employment Period” means the period commencing on the Effective Date and ending on the first anniversary of such date.

 

2.9 “Executive or Participant” means the persons holding one or more of the officer positions with the Company listed on Appendix A, or any other person or position designated by the Committee to be eligible to participate in this Plan.

 

2.10 “Excise Taxes” means the excise tax imposed by Section 4999 of the Code including any interest or penalties incurred by the Executive with respect to such excise tax.

 

2.11 “Good Reason” means any action by the Company without the Executive’s consent that results in any of the following: (a) a reduction of the Executive’s annual salary to an amount which is materially less than the amount of the Executive’s Annual Base Salary; (b) a material reduction in the Executive’s duties with the Company, provided that a change in title or position shall not be “Good Reason” absent a material reduction in duties; or (c) a relocation of more than 50 miles from the Executive’s workplace of 814 East Main Street, Richmond, Virginia 23219, without the consent of the Executive.

 

An act or omission shall not constitute Good Reason under this Section 2.11 unless (a) within 30 days after the Executive knows or reasonably should know of an event described in this section, or within 30 days after the last in a series of such events, the Executive gives written notice to the Company indicating that the Executive intends to terminate employment under this Section 2.11, (b) the Executive’s termination occurs within 60 days after the Executive knows or reasonably should know of an event described in this section, or within 60 days after the last in a series of such events, and (c) the Company has failed to remedy the event described in this section as the case may be, within 30 days after receiving the Executive’s written notice. If the Company remedies the event described in this section, within 30 days after receiving the Executive’s written notice, the Executive may not terminate employment under this Section 2.11 on account of the event specified in the Executive’s notice.

 

2.12 “Performance Period” means each period of time designated in accordance with any annual bonus which is based upon performance.

 

2.13 “Termination Date” means the date of termination of the Executive’s employment with the Company as a common law employee.

 

  

2

  

 

ARTICLE III

PLAN TERM

 

The term of the Plan shall be indefinite, provided however the Company shall have the right to amend or terminate the Plan at any time for any reason. Notwithstanding the preceding sentence, (i) no amendment or termination may be made to the Plan and the Plan may not be terminated during the period beginning on the date on which the Company enters into any agreement that would, if the transactions contemplated in the agreement were given effect, result in a Change in Control and ending on the earlier of (A) one year after the date on which the Change in Control contemplated by such agreement occurs or (B) if such agreement terminates, is cancelled or otherwise ceases to be in effect without giving rise to a Change in Control, the date on which such agreement terminates, is cancelled or otherwise ceases to be in effect, and (ii) no amendment or termination shall reduce the benefits payable to an Executive who is then currently receiving a benefit under the Plan, in either case without the consent of the affected Participant(s). Unless otherwise specified by the Board, the term of the Plan shall end automatically on the first anniversary of any Change in Control that occurs while this Plan is in effect. Subject to Section 2.7, if an Executive’s Termination Date is prior to a Change in Control, this Plan shall terminate with respect to such Executive without further obligation to the Executive or his legal representatives.

 

ARTICLE IV

OBLIGATIONS OF THE COMPANY UPON TERMINATION

 

4.1 If by the Company other than for Cause or by an Executive for Good Reason. Subject to Section 4.3, if during the Employment Period, the Company shall terminate an Executive’s employment other than for Cause, or if an Executive shall terminate employment for Good Reason, the Company’s obligations to such Executive shall be as follows:

 

(a) The Company shall pay to the Executive a single lump sum cash payment equal to the sum of the following amounts:

 

(i) to the extent not previously paid, the salary and any accrued paid time off through the date of termination;

 

(ii) an amount equal to the product of (i) the Annual Bonus multiplied by (ii) a fraction, the numerator of which is the number of days the Executive was employed by the Company during the calendar year in which the termination occurs, and the denominator of which is 365;

 

(iii) an amount equal to two and one-half (2 1/2 ) times the sum of the Executive’s Annual Base Salary and the Annual Bonus.

 

The single lump sum cash payment shall be made on or as soon as administratively practicable after the later of the Termination Date or the date on which the Executive has signed the release described in Section 9.4 below and any period for revocation of such release has passed, but in any event not later than March 15th of the year immediately following the calendar year in which the Executive’s termination of employment occurs.

 

(b) The Executive shall become fully vested in any and all stock incentive awards granted to the Executive under any plan or otherwise which have not become exercisable as of the date of the Change in Control and all stock options (including options vested as of the Change in Control) shall remain exercisable until the earlier of (i) the original expiration date or (ii) the tenth anniversary of the original grant date. All forfeiture conditions that as of a Change in Control are applicable to any stock option, deferred stock unit, restricted stock or restricted share units awarded to the Executive by the Company shall lapse immediately.

 

  

3

  

 

(c) Except as provided in subsections (d) and (e), for a one year period following the Executive’s termination of employment, the Company shall arrange to provide the Executive and his family welfare benefits (including, without limitation, medical, dental, health, disability, individual life and group life insurance benefits) which are at least as favorable as those provided under the most favorable welfare plans of the Company applicable with respect to the Executive and his family during either the (i) 90-day period immediately preceding the Change in Control, or (ii) the 90-day period immediately preceding the Executive’s Termination Date. Notwithstanding the foregoing, if the Executive obtains comparable coverage under any welfare benefits provided by another employer, then the amount of coverage required to be provided by the Company hereunder shall be reduced by the amount of coverage provided by such other employer’s welfare benefit plans.

 

(d) The Executive’s rights under this Section shall be in addition to and not in lieu of any post-termination continuation coverage or conversion rights the Executive may have pursuant to applicable law, including, without limitation, continuation coverage required by Section 4980B of the Code (“COBRA Continuation Coverage”). If the Executive elects to receive COBRA Continuation Coverage, the Company shall pay all of the required premiums for the Executive and/or the Executive’s family for the 12 months following the Executive’s Termination Date.

 

(e) If the Executive elects to convert any group term life insurance to an individual policy, the Company shall pay all premiums for 12 months and the Executive shall cease to participate in the Company’s group term life insurance.

 

(f) The Company shall, at its sole expense, as incurred, pay on behalf of Executive up to $15,000 in reasonable fees and costs charged by a nationally recognized outplacement firm selected by the Executive to provide outplacement service for one year after the Termination Date.

 

(g) If the Executive’s employment with the Company as a common law employee is terminated by the Company other than for Cause or by the Executive for Good Reason, the Company’s re-engagement of the Executive as a consultant, an advisor or otherwise as an independent contractor to the Company shall not prohibit the Executive from receiving the payments and benefits provided in this Section 4.1.

 

4.2 If by the Company for Cause or by the Executive other than for Good Reason. If, during the Employment Period, the Company terminates the Executive’s employment for Cause or if the Executive terminates employment other than for Good Reason (including death or disability), this Plan shall terminate with respect to such Executive without further obligation by the Company, other than the obligation to pay to the Executive in cash the Executive’s unpaid salary through the Termination Date, plus any accrued paid time off, in each case to the extent not previously paid.

 

4.3 Employment by Successor or other Related Company. Except as provided elsewhere in this Plan, an Executive shall not be entitled to any of the benefits described in Section 4.1 if, upon or immediately after a Change in Control, the Executive is offered a position with a title, responsibilities and compensation reasonably comparable to the title, responsibilities and compensation of the Executive with the Company preceding the Change in Control by the purchaser or other successor-in-interest to the Company or a substantial portion of its assets or business, and the Executive does not accept such position. In the event any Executive is offered and accepts a position of the type described in the preceding sentence with any company described in the preceding sentence, then, for purposes of this Plan, the employment of the Executive by the Company shall conclusively be deemed not to have been terminated, and the company described in the preceding sentence shall thereafter be deemed to constitute the “Company” for purposes of the interpretation and application of Section 4.1 and Section 4.2 of this Plan.

 

  

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ARTICLE V

CERTAIN LIMITATIONS ON PAYMENTS BY THE COMPANY

 

Notwithstanding anything in the Plan to the contrary, if any payment (other than those payments required under Article VI) which an Executive has the right to receive from the Company or any affiliated entity or any payment or benefits under any plan maintained by the Company or any affiliated entity would otherwise constitute an “excess parachute payment” (as defined in Code section 280G), to the extent the Executive would be entitled to a smaller net after Excise Tax benefit hereunder as a result of the payment of such “excess parachute payments,” payments due hereunder must be reduced (but not below zero) to the largest amount that will result in no portion of any such payment being subject to an Excise Tax. The determination of any reduction pursuant to this subsection must be made by the Company in good faith, before any such payments are due and payable to a Participant.

 

ARTICLE VI

EXPENSES AND INTEREST

 

6.1 Legal Fees and Other Expenses. The Company will reimburse all reasonable fees and expenses, if any (including, without limitation, legal fees and expenses), that are incurred by the Executive to enforce this Plan and that result from a breach of this Plan by the Company. To the extent any such reimbursement to which the Executive is or may be entitled under this Section 6.1 constitutes a “deferral of compensation” for purposes of Section 409A of the Code, then, in addition to the foregoing, the following terms and conditions shall apply: (i) any such reimbursement of an eligible expense shall be paid to the Executive as soon as administratively practicable after the Executive submits a valid claim for reimbursement, but in any event no later than the last day of the taxable year following the taxable year in which the expense was incurred; (ii) the amount of expenses eligible for reimbursement in one taxable year shall not affect the expenses eligible for reimbursement in any other taxable year; and (iii) the right to a reimbursement under this Section 6.1 shall not be subject to liquidation or exchange for another benefit.

 

6.2 Interest. If the Company does not pay any amount due to the Executive under this Plan within three days after such amount became due and owing, interest shall accrue on such amount from the date it became due and owing until the date of payment at an annual rate equal to 200 basis points above the base commercial lending rate published in The Wall Street Journal in effect from time to time during the period of such nonpayment.

 

ARTICLE VII

NO SET-OFF OR MITIGATION

 

7.1 No Set-off by Company. The Executive’s right to receive when due the payments and other benefits provided for under this Plan is absolute, unconditional and subject to no set-off, counterclaim or legal or equitable defense. Any claim which the Company may have against the Executive, whether for a breach of this Plan or otherwise, shall be brought in a separate action or proceeding and not as part of any action or proceeding brought by the Executive to enforce any rights against the Company under this Plan.

 

7.2 No Mitigation. The Executive shall not have any duty to mitigate the amounts payable by the Company under this Plan by seeking new employment following termination. Except as specifically otherwise provided in this Plan, all amounts payable pursuant to this Plan shall be paid without reduction regardless of any amounts of salary, compensation or other amounts which may be paid or payable to the Executive as the result of the Executive’s employment by another employer. However, nothing in this Section 7.2 shall affect the provisions of Section 4.3.

 

  

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ARTICLE VIII

NON-EXCLUSIVITY OF RIGHTS

 

8.1 Waiver of Other Severance Rights. To the extent that payments are made to the Executive pursuant to Section 4.1 of this Plan, the Executive hereby waives the right to receive benefits under any plan or agreement of the Company or its subsidiaries which provides for severance benefits, including any severance benefits that may be provided for under any employment agreement or payable due to the termination of any employment agreement.

 

8.2 Other Rights. Except as provided in Section 8.1, this Plan shall not prevent or limit the Executive’s continuing or future participation in any benefit, bonus, incentive or other plans provided by the Company or any of its subsidiaries and for which the Executive may qualify, nor shall this Plan limit or otherwise affect such rights as the Executive may have under any other agreements with the Company or any of its subsidiaries. Amounts which are vested benefits or which the Executive is otherwise entitled to receive under any plan of the Company or any of its subsidiaries and any other payment or benefit required by law shall be payable in accordance with such plan or applicable law except as expressly modified by this Plan.

 

ARTICLE IX

MISCELLANEOUS

 

9.1 No Assignment. The Executive’s rights under this Plan may not be assigned or transferred in whole or in part, except that the personal representative of the Executive’s estate will receive any amounts payable under this Plan after the death of the Executive. This Plan shall inure to the benefit of and be enforceable by the Executive’s legal representatives.

 

9.2 Successors. The rights and obligations of the Company under this Plan will inure to the benefit of and will be binding upon the successors and assigns of the Company. Before or upon a Change in Control, the Company shall obtain the agreement of the surviving or acquiring corporation that it will succeed to the Company’s rights and obligations under this Plan.

 

9.3 Rights Under the Plan. The right to receive benefits under the Plan will not give the Executive any proprietary interest in the Company or any of its assets. Benefits under the Plan will be payable from the general assets of the Company, and there will be no required funding of amounts that may become payable under the Plan. The Executive will for all purposes be a general creditor of the Company. The interest of the Executive under the Plan cannot be assigned, anticipated, sold, encumbered or pledged and will not be subject to the claims of the Executive’s creditors.

 

9.4 Release. Notwithstanding anything in this Plan to the contrary, in consideration for and as a condition to receiving any payments under this Plan, the Executive must execute a written release in a form provided by the Company. In addition to any other provisions determined by the Company, the release may provide that the Executive agrees, for himself or herself and his or her heirs, representatives, successors and assigns, that the Executive has finally and permanently separated from employment with the Company, and that he or she waives, releases and forever discharges the Company from any and all claims, known or unknown, that he or she has or may have, including but not limited to those relating to or arising out of his or her employment with the Company and the termination thereof, including but not limited to any claims of wrongful discharge, breach of express or implied contract, fraud, misrepresentation, defamation, liability in tort, any claims under Title VII of the Civil Rights Act of 1964, as amended, the Age Discrimination in Employment Act, the Employee Retirement Income Security Act, the Fair Labor Standards Act, or any other federal, state or local law relating to employment, employee benefits or the termination of employment, excepting only any claims to vested retirement benefits.

 

  

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9.5 Notice. For purposes of this Plan, notices and all other communications must be in writing and are effective when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, addressed to the Executive or his personal representative at his last known address. All notices to the Company must be directed to the attention of the Corporate Secretary. Such other addresses may be used as either party may have furnished to the other in writing. Notices of change of address are effective only upon receipt.

 

9.6 Miscellaneous. The Executive and the Company agree that, effective as of the execution of this Plan, any prior Change in Control Plan between the Executive and the Company is null and void. This instrument contains the entire agreement of the parties. To the extent not governed by federal law, this Plan will be construed in accordance with the laws of the Commonwealth of Virginia, without reference to its conflict of laws rules. In addition, the Plan is intended to comply with Section 409A of the Code or an exemption thereunder and shall be construed and administered in accordance with Section 409A of the Code. Notwithstanding any other provision of the Plan, payments provided under the Plan may only be made upon an event and in a manner that complies with Section 409A of the Code or an applicable exemption. Any payments to be made under the Plan upon a termination of employment shall only be made upon a "separation from service" under Section 409A of the Code.  Notwithstanding any other provision of the Plan, if any payment or benefit provided to an Executive in connection with his or her termination of employment is determined to constitute "nonqualified deferred compensation" within the meaning of Section 409A of the Code and the Executive is determined to be a "specified employee" as defined in Section 409A(a)(2)(b)(i) of the Code, then such payment or benefit shall not be paid until the first payroll date to occur following the six-month anniversary of such termination of employment or, if earlier, on the Executive's death.  No provisions of this Plan may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing and the writing is signed by the Executive and the Company. A waiver of any breach of or compliance with any provision or condition of this Plan is not a waiver of similar or dissimilar provisions or conditions. The invalidity or unenforceability of any provision of this Plan will not affect the validity or enforceability of any other provision of this Plan, which will remain in full force and effect. This Plan may be executed in one or more counterparts, all of which will be considered one and the same agreement.

 

9.7 Tax Withholding. The Company may withhold from any amounts payable under this Plan any federal, state or local taxes that are required to be withheld pursuant to any applicable law or regulation.

 

*   *   *

This Plan was approved by the Board of Directors on May 29, 2014, effective as of March  1,  2014.

*   *   *

 

 

  

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Appendix A

Executive Chairman of the Board

President and Chief Executive Officer

Senior Advisor1

Executive Vice President, Chief Financial Officer and Treasurer

Executive Vice President, Chief Operating Officer

Executive Vice President, Secretary and Chief Legal Counsel

Executive Vice President, Chief Investment Officer

 

 

 

 

1 Notwithstanding anything to the contrary in the Plan, the amount payable to this Participant pursuant to Section 4.1(a)(iii) shall equal $2.5 million (i.e., in lieu of the amount otherwise payable pursuant to the calculation in Section 4.1(a)(iii)).  All other provisions of the Plan remain unchanged with respect to this Participant.

 

  

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