Document:

Shareholders' Agreement

 EXHIBIT 10.2 
  
 SHAREHOLDERS’ AGREEMENT 
  

THIS SHAREHOLDERS’ AGREEMENT (this “Agreement”), dated as of January 2, 2004, is made by and among Jameson Inns, Inc., a
Georgia corporation (“Jameson”), and each of the persons listed on Exhibit A hereto (each, a “Seller” and collectively, the “Sellers”). 
  
 W I T N E S S E T H: 
  
 WHEREAS, Jameson, Kitchin Hospitality, LLC, a Georgia limited
liability company (the “LLC”), and the Sellers have entered into a Membership Interest Purchase Agreement dated September 10, 2003 (the “Membership Interest Purchase Agreement”), pursuant to which Jameson,
contemporaneously with the execution and delivery of this Agreement, is purchasing from the Sellers all of the outstanding membership interests in the LLC in return for shares of Common Stock (defined below) and cash; 
  
 WHEREAS, the Sellers, by virtue of their existing ownership of shares
of Common Stock of Jameson, and the issuance to the Sellers of shares of Common Stock pursuant to the closing of the transactions provided for in the Membership Interest Purchase Agreement, collectively will own approximately 20% of the outstanding
shares of Common Stock, and the parties desire to establish in this Agreement certain terms and conditions concerning the corporate governance of Jameson from and after the date hereof and certain terms and conditions concerning the acquisition and
disposition of securities of Jameson by the Sellers; and 
  
 WHEREAS, it is a condition precedent to the closing of the transactions contemplated by the Membership Interest Purchase Agreement that the parties hereto execute this Agreement; 
  
 NOW, THEREFORE, in consideration of the foregoing and the mutual
promises and agreements contained herein, the parties hereto hereby agree as follows: 
  
 ARTICLE I 
  
 DEFINITIONS

  
 SECTION 1.1. DEFINITIONS. As used in this Agreement,
the following terms have the following meanings: 
  
 (a) “Affiliate” has the same meaning as in Rule 12b-2 promulgated under the Exchange Act. 
  
 (b) “Associate” has the same meaning as in Rule 12b-2 promulgated under the Exchange Act. 
  
 (c) “Board of Directors” means the Board of
Directors of Jameson. 

 (d) “Business Combination” means any one of the following transactions:

  
 (i) Any merger or consolidation of Jameson or
any Subsidiary of Jameson with any corporation or other entity (other than Jameson) that is, or after such merger or consolidation would be, an Affiliate or Associate of any Seller; 
  
 (ii) Any sale, lease, exchange, mortgage, pledge, transfer or other disposition by Jameson (in one
transaction or a series of transactions) to or with any Seller, or any Affiliate or Associate of any Seller (other than Jameson), of all or a Substantial Part of the assets of Jameson or any Subsidiary of Jameson; or 
  
 (iii) The adoption of any plan or proposal for the
liquidation or dissolution of Jameson proposed by or on behalf of any Seller or any Affiliate or Associate of any Seller (other than Jameson); or 
  
 (iv) Any reclassification of securities (including any reverse stock split), recapitalization of Jameson, or any merger or consolidation
of Jameson with any Subsidiary thereof or any other transaction to which Jameson is a party (whether or not with or into or otherwise involving any Affiliate or Associate of any Seller) which has the effect, directly or indirectly, of increasing the
proportionate share of the outstanding shares of any class of equity or convertible securities of Jameson or any Subsidiary thereof which is directly or indirectly owned by any Seller, or any Affiliate or Associate of any Seller (other than
Jameson). 
  
 (e) “Common Stock”
means the common stock, par value $.10 per share, of Jameson. 
  
 (f) “Director” means a member of the Board of Directors. 
  
 (g) “Equity Security” means any (i) Common Stock, (ii) securities of Jameson convertible into or exchangeable for
Common Stock, and (iii) options, rights, warrants and similar securities to acquire Common Stock. 
  
 (h) “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder, as amended. 
  
 (i)
“Group” shall have the meaning assigned to it in Section 13(d)(3) of the Exchange Act. 
  
 (j) “Independent Director” means a Person who is an independent director within the meaning of Rule 4200 of the National
Association of Securities Dealers, as such rule may be amended from time to time. 
  
 (k) “Initial Percentage” means the percentage of the issued and outstanding Equity Securities owned in the aggregate by
the Sellers on the date hereof giving effect to the closing of the transactions contemplated by the Membership Interest Purchase Agreement. 
  
 (l) “Jameson” has the meaning set forth in the preamble to this Agreement. 
  

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 (m) “LLC” has the meaning set forth in the recitals to this Agreement.

  
 (n) “Membership Interest Purchase
Agreement” has the meaning set forth in the recitals to this Agreement. 
  
 (o) “Other Shares” means shares of Equity Securities that are not owned or controlled, directly or indirectly, by any
Seller or any Affiliate of any Seller. 
  
 (p)
“Permitted Acquisition Transaction” means either (i) a tender or exchange offer for outstanding shares of Common Stock or (ii) a Business Combination, in either case, that is conditioned upon approval by at least a majority of the
Unaffiliated Shareholders, and which transaction, in the case of either clause (i) or (ii) above, satisfies each of the following conditions: 
  
 (A) the Board of Directors receives an opinion from a recognized independent investment banking firm selected by the Board of Directors
other than Sellers’ Director(s) that the price and other financial terms of the transaction are fair from a financial point of view to the Unaffiliated Shareholders; and 
  
 (B) a majority of the Board of Directors (other than the Sellers’ Director(s)) concludes that the price
and other terms of the transaction are fair to and in the best interests of the Unaffiliated Shareholders and recommends that Unaffiliated Shareholders approve the transaction; or 
  
 (iii) a merger following the consummation of a tender or exchange offer described in clause (i) above that offers the same
consideration as such tender or exchange offer, whether or not such merger complies with paragraph (A) or (B) above. 
  
 (q) “Person” means any individual, corporation, limited liability company, limited or general partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, other entity, government or any agency or political subdivision thereof, or any Group comprised of two or more of the foregoing. 
  
 (r) “Registration Rights Agreement” means
that certain Registration Rights Agreement, by and among Jameson and the Sellers, executed contemporaneously herewith. 
  
 (s) “SEC” means the Securities and Exchange Commission. 
  
 (t) “Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder, as amended. 
  
 (u) “Sellers” has the meaning set forth in the preamble to this Agreement. 
  
 (v) “Sellers’ Director(s)” means the Director or Directors who are designated for such position by the Sellers in
accordance with Section 3.1. 
  

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 (w) “Sellers’ Interest” means the aggregate percentage of the
outstanding Equity Securities that is controlled, directly or indirectly, by any of the Sellers or their respective Affiliates. 
  
 (x) “Subsidiary” has the same meaning as in Rule 12b-2 promulgated under the Exchange Act. 
  
 (y) A “Substantial Part” of Jameson means
more than 10% of the fair market value of the total assets of Jameson and its Subsidiaries as of the end of its most recent fiscal quarter ending prior to the time the determination is made. 
  
 (z) “Unaffiliated Shareholders” means
shareholders of Jameson other than any Seller or any Affiliate or Associate of a Seller. 
  
 ARTICLE II 
  
 BUSINESS
COMBINATIONS INVOLVING JAMESON AND THE SELLERS 
  
 SECTION
2.1. PURCHASES OF EQUITY SECURITIES. 
  
 (a) Unless approved by a majority of the Independent Directors of the Board of Directors, from the date of this Agreement until and including December 31, 2008, none of the Sellers nor their respective Affiliates shall, directly or
indirectly, purchase or otherwise acquire, or propose or offer to purchase or otherwise acquire, any Equity Securities, whether by tender offer, market purchase, privately negotiated purchase, Business Combination or otherwise, if, immediately after
such purchase or acquisition, the aggregate Interest held by the Sellers would equal or exceed the Initial Percentage. 
  
 (b) The prohibitions contained in Section 2.1(a) shall not apply to any Permitted Acquisition Transaction following (x) the commencement
by any third party of (1) a bona fide tender or exchange offer to purchase in excess of 20% of the outstanding shares of Common Stock that the Board of Directors either recommends acceptance of, expresses no opinion and remains neutral toward or is
unable to take a position with respect to, (2) a bona fide proposal to acquire all or substantially all of the assets of Jameson that the Board of Directors is actively entertaining and the consummation of which would require approval by the
shareholders of Jameson pursuant to Section 14-2-1202 of the Georgia Business Corporation Code or (3) a bona fide proposal to enter into any acquisition or other business combination transaction with Jameson that the Board of Directors is actively
entertaining, in the case of each of clauses (1)-(3), which shall not have been approved in advance by Jameson or the Board of Directors, or (y) Jameson entering into (or announcing its intention to do so) a definitive agreement, or an agreement
contemplating a definitive agreement, for any of the transactions described in clauses (1) - (3) above. 
  

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 SECTION 2.2. ADDITIONAL LIMITATIONS. During the term of this Agreement, none of the Sellers shall,
nor shall they permit any of their respective Affiliates to: 
  
 (a) other than in connection with an election contest to which Rule 14a-11 under the Exchange Act applies initiated by a third party or as otherwise approved by a majority of the Board of Directors (other than the
Sellers’ Director(s)), make, or in any way participate, directly or indirectly, in any “solicitation” of “proxies” to vote (as such terms are used in the proxy rules of the SEC) or seek to advise, encourage or influence any
person or entity with respect to the voting of any shares of capital stock of Jameson, initiate, propose or otherwise solicit shareholders of Jameson for the approval of one or more shareholder proposals or induce or attempt to induce any other
individual, firm, corporation, partnership or other entity to initiate any shareholder proposal; 
  
 (b) deposit any Equity Securities into a voting trust or subject any Equity Securities to any arrangement or agreement with respect to the
voting of such securities or form, join or in any way participate in a Group with respect to any Equity Securities; 
  
 (c) other than as permitted by this Agreement, propose any Business Combination, or any other merger, tender offer or other business
combination involving Jameson or its Affiliates; or 
  
 (d) except in connection with a transaction permitted by Section 2.1(b) hereof, make any public announcement with respect to the transactions referred to in Section 2.1(a) hereof. 
  
 ARTICLE III 
  
 CORPORATE GOVERNANCE 
  
 SECTION 3.1. COMPOSITION OF THE BOARD OF DIRECTORS; COMMITTEES. 
  
 (a) Except as otherwise provided herein, the Board of Directors shall consist of at least four (4)
Directors, a majority of whom shall be Independent Directors. 
  
 (b) At all times during the term of this Agreement that the Sellers’ Interest is ten percent (10%) or greater, the Sellers shall have the right to designate for nomination one Director (a “Sellers’
Director” ), subject to increase as provided below. The initial Sellers’ Director shall be Thomas W. Kitchin. 
  
 (c) Notwithstanding the foregoing, the Sellers and Jameson hereby agree that the number of Directors on the Board of Directors may be
increased or decreased from time to time as determined by the Board of Directors, provided that the number of Directors shall not be fewer than four nor greater than ten. In the event that the Board of Directors decides to increase or decrease the
number of directorships on the Board of Directors, and provided that the Sellers’ Interest is 10% or greater at such time, the Sellers will have the right to designate for nomination the number of Directors indicated on Exhibit B hereto.

  
 (d) Subject to the other provisions of this
Section 3.1, the Sellers shall have the right to designate for nomination any replacement for a Director designated in accordance with Section 3.1 by the Sellers at the termination of such Director’s term or 
  

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 upon death, resignation, retirement, disqualification, removal from office or other cause. The Board of
Directors shall elect each person so designated upon nomination by the Board of Directors. 
  
 (e) No individual who is an officer, director, partner or principal shareholder of any competitor of Jameson or any of its Subsidiaries
shall serve as a Sellers’ Director. 
  
 (f)
Each person designated as a nominee for a Sellers’ Director pursuant to this Section 3.1 shall be nominated for such position by the Board of Directors, unless the Board of Directors, in the execution of its fiduciary duties, with any
Sellers’ Directors abstaining, shall reasonably determine that such designee is not qualified to serve on the Board of Directors. If the Board of Directors (with any Sellers’ Directors abstaining) shall reasonably determine that such
designee is not so qualified, the Sellers shall have the opportunity to specify one or more additional designees who shall become nominees subject to the qualification set forth in the immediately preceding sentence. 
  
 SECTION 3.2. SOLICITATION AND VOTING OF SHARES. 
  
 (a) Jameson shall use its reasonable best efforts to solicit
from the shareholders of Jameson eligible to vote for the election of Directors proxies in favor of the nominees designated in accordance with Section 3.1. 
  
 (b) In any election of Directors or any meeting of the shareholders of Jameson called expressly for the removal of Directors, the Sellers
shall cause their Equity Securities to be present for purposes of establishing a quorum and shall vote all of their respective Equity Securities entitled to vote in the election of Directors for all nominees in proportion to the votes cast with
respect to the Other Shares, provided that the Sellers may cast any or all of their votes, in their sole discretion, (i) in favor of any nominee designated by Sellers pursuant to Section 3.1 and (ii) in connection with an election contest described
in paragraph 2.2(a) of this Agreement. 
  
 (c) In
any matter originally submitted to the shareholders of Jameson by a shareholder of Jameson (including by any of the Sellers), the Sellers shall cause their Equity Securities to be present for purposes of establishing a quorum and shall vote all of
their respective Equity Securities entitled to vote on such matter as recommended by the Board of Directors, if the Board of Directors has made a recommendation as to such matter, and, otherwise, in proportion to the votes cast with respect to the
Other Shares. This restriction shall not apply to any matter originally submitted to the shareholders of Jameson by the Board of Directors. 
  
 SECTION 3.3. ARTICLES OF INCORPORATION AND BY-LAWS. The parties hereto shall take or cause to be taken all lawful action necessary to ensure at all
times that Jameson’s Articles of Incorporation and By-Laws are not, at any time, inconsistent with the provisions of this Agreement. 
  

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 ARTICLE IV 
  
 TRANSFER OF JAMESON COMMON STOCK 
  
 SECTION 4.1. TRANSFER OF JAMESON COMMON STOCK. 
  
 (a) From the date of this Agreement until and including December 31, 2004, no Seller or Affiliate of a Seller shall, directly or
indirectly, sell, transfer or otherwise dispose of any Equity Securities. Commencing on January 1, 2005 and thereafter during the term of this Agreement, no Seller or Affiliate of a Seller shall, directly or indirectly, sell, transfer or otherwise
dispose of any Equity Securities, except the transfer of Common Stock (i) in an amount which, when aggregated with all other shares of Common Stock transferred by Sellers or their Affiliates within the three-month period immediately preceding the
date of such transfer, would not exceed the volume limitations of Rule 144 under the Securities Act applicable to sales of securities by an Affiliate of an issuer (regardless of whether the transferring Seller or Affiliate of a Seller is deemed at
such time to be an Affiliate of Jameson); (ii) not more than one time in any twelve-month period by the Sellers and their Affiliates as a group, in an amount equal to no more than 4.9% of the then-outstanding Common Stock to any one institutional
investor which (A) purchases such shares in the normal course of its investment business, for investment purposes only, and with no intention of influencing control of Jameson, (B) pursuant to an exemption from the registration requirements of the
Securities Act and (C) provides appropriate certification to Jameson as to the foregoing matters; (iii) pursuant to a tender offer or exchange offer by a third party that is not rejected by the Board of Directors within the time period prescribed by
the Exchange Act and the rules and regulations thereunder; (iv) to another Seller or its Affiliate; (v) pursuant to exercise of the registration rights provided for in the Registration Rights Agreement; or (vi) as a gift. 
  
 (b) The transfer of any interest in, or control of, any
entity that is a Seller or Affiliate of a Seller shall be deemed to be a transfer of Equity Securities owned or controlled by such entity. 
  
 (c) Proposed transfers of shares of Equity Securities that are not in compliance with this Article IV shall be of no force or effect and
Jameson shall not be required to register any such transfer. 
  
 SECTION 4.2. TRANSFER AS A RESULT OF DEMAND NOTE. The first sentence of Section 4.1 notwithstanding, should a Seller receive a Demand Note (as defined in the Membership Interest Purchase Agreement), such Seller may, directly or
indirectly, sell, transfer or otherwise dispose of up to that number of shares of Common Stock whose aggregate value on the day of issuance of the Demand Note equals the principal amount of the Demand Note; provided, however, that the
restrictions of Section 4.1 applicable from January 1, 2005 onward shall apply to any sale, transfer or disposition pursuant to this Section 4.2. 
  
 SECTION 4.3. NOTICE OF PROPOSED TRANSFER. Prior to any proposed transfer of any Equity Securities by a Seller or an Affiliate of a Seller permitted
pursuant to Section 4.1 or 4.2 (other than pursuant to Section 2.1 or 2.2 of the Registration Rights Agreement), such 
  

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 Seller or Affiliate of a Seller shall give written notice to Jameson of its intention to effect such transfer. Each such
notice shall describe the manner of the proposed transfer and, if requested by Jameson, shall be accompanied by an opinion of counsel satisfactory to the Company to the effect that the proposed transfer does not violate the terms of this Agreement
and that the proposed transfer may be effected without registration under the Securities Act, whereupon such Seller or Affiliate of a Seller shall be entitled to transfer such Equity Securities described in, and in accordance with the terms of, such
notice; provided, however, that no such opinion of counsel shall be required for a transfer to another Seller or Affiliate of a Seller. 
  
 ARTICLE V 
  
 MISCELLANEOUS 
  
 SECTION 5.1. SHAREHOLDER’S ACKNOWLEDGEMENT, CONSENT AND POWER OF ATTORNEY. Contemporaneously with the execution of this Agreement, each of the Sellers shall execute a Shareholder’s Acknowledgement,
Consent and Power of Attorney, appointing Thomas W. Kitchin, and, in the event of death or incapacity of Thomas W. Kitchin, then Craig R. Kitchin, as such Seller’s lawful attorney and proxy for the purpose of taking any actions required or
permitted by the Sellers under this Agreement, including without limitation designation of nominees for the Sellers’ Director(s) pursuant to Section 3.1, voting of Equity Securities of the Sellers in the manner provided in Section 3.2.

  
 SECTION 5.2. ENFORCEMENT OF THIS AGREEMENT. The
approval of either a majority of the Board of Directors or a majority of the Independent Directors shall constitute requisite corporate action for Jameson to seek to enforce the terms of this Agreement. 
  
 SECTION 5.3. COMPLIANCE BY AFFILIATES OF THE SELLERS. The Sellers
hereby agree to cause their respective Affiliates to comply in full with those terms of this Agreement applicable to Affiliates of the Sellers. 
  
 SECTION 5.4. LEGENDS. In addition to any legends required by applicable securities laws, all certificates representing any shares of capital stock
of Jameson subject to the provisions of this Agreement shall have endorsed thereon legends substantially as follows during the term of this Agreement, unless the General Counsel of Jameson agrees to remove or alter such legend: 
  

	
	 “The securities represented by this certificate are subject to the terms of a certain Shareholders’ Agreement, dated January 2, 2004, to which the
registered holder, or his or its predecessor in interest, is a party, which agreement provides for certain voting rights and restrictions on transfer. Such agreement is on file at the principal office of this corporation and affects the
transferability of the shares represented by this certificate. This legend may be removed only at the direction of the issuer.”

  
 SECTION 5.5.
NOTICES. All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have 
  

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 been duly received if so given) by hand delivery, by mail (registered or certified mail, postage prepaid, return receipt
requested) or by any courier service, such as Federal Express, providing proof of delivery. All communications hereunder shall be delivered to the respective parties at the following addresses: 
  
 if to any Seller, to: 
  
 Thomas W. Kitchin 
 8 Perimeter Center East 
 Suite 8050 
 Atlanta, Georgia 30346-1604 
  
 if to Jameson, to: 
  
 Jameson Inns, Inc. 
 8 Perimeter Center East 
 Suite 8050 
 Atlanta, Georgia 30346-1604 
 Attention: General Counsel 
  
 SECTION 5.6. AMENDMENTS; NO WAIVERS. 
  
 (a) Any provision of this Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and signed, in the
case of an amendment, by Jameson and each of the Sellers, or in the case of a waiver, by the party against whom the waiver is to be effective; provided that no such amendment or waiver by Jameson shall be effective without the approval of a majority
of the Independent Directors. 
  
 (b) No failure
or delay by any party in exercising any right, power or privilege hereunder shall operate as waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law. 
  
 SECTION 5.7. SEVERABILITY. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to
any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as
closely as possible in a mutually acceptable manner in order that the transactions be consummated as originally contemplated to the fullest extent possible. 
  
 SECTION 5.8. ENTIRE AGREEMENT; ASSIGNMENT. This Agreement, together with the documents contemplated hereby, constitutes the entire agreement among
the parties with respect to the subject matter hereof and thereof and supersede all prior agreements and undertakings, both written and oral, among the parties, or any of them, with respect to the subject matter hereof. This Agreement shall not be
assigned by operation of law or otherwise. 
  

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 SECTION 5.9. PARTIES IN INTEREST. This Agreement shall be binding upon and inure solely to the
benefit of each party hereto, and nothing in this Agreement, express or implied, is intended to or shall confer upon any other person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement. 
  
 SECTION 5.10. SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was not performed in accordance with the terms hereof and that the parties shall be entitled to specific performance of the terms hereof, in addition to any other remedy at
law or equity. 
  
 SECTION 5.11. GOVERNING LAW. This
Agreement shall be governed by, and construed in accordance with, the laws of the State of Georgia applicable to contracts executed in and to be performed in the State of Georgia. All actions and proceedings arising out of or relating to this
Agreement shall be heard and determined in any Georgia state or federal court thereof. 
  
 SECTION 5.12. HEADINGS. The descriptive headings contained in this Agreement are included for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement.

  
 SECTION 5.13. COUNTERPARTS. This Agreement may be
executed and delivered (including by facsimile transmission) in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed and delivered shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement. 
  
 SECTION 5.14. TERMINATION. This Agreement shall terminate upon the earlier of (i) the date on which the Sellers’ Interest falls below 5%; and (ii) the 20th anniversary of the date hereof. 
  
 [SIGNATURE PAGE TO FOLLOW] 
  

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 IN WITNESS WHEREOF, each of the Sellers has executed this Agreement, and Jameson Inns, Inc. has caused
its duly authorized representative or agent to execute this Agreement, as of the day and year first above written. 
  
  

			
	 JAMESON INNS, INC

		
	 By:
	 	 /s/  Steven A. Curlee

	 	 	 Name:  Steven A. Curlee

	 	 	 Title:  Vice President-Legal

	
	 SELLERS:

	  
 /s/  Thomas W. Kitchin

	 Thomas W. Kitchin, in his individual capacity

	
	  
 /s/  Thomas W. Kitchin

	Thomas W. Kitchin, as attorney-in-fact to each of the Sellers (other than himself), pursuant to the Shareholder’s Acknowledgement, Consent and Power of Attorney executed by
each of the Sellers

 EXHIBIT A 
  

SELLERS 
  
 Thomas W. Kitchin 
  
 Judith K. Kitchin 
  
 Thomas W. Kitchin and Judith
K. Kitchin, Trustees of the Thomas J. Kitchin Family Trust 
  
 Thomas W. Kitchin
and Judith K. Kitchin, Trustees of the Craig R. Kitchin Family Trust 
  
 Thomas W.
Kitchin and Judith K. Kitchin, Trustees of the Matthew T. Kitchin Family Trust 
  
 Thomas W. Kitchin and Judith K. Kitchin, Trustees of the Alexander G. Kitchin Family Trust 
  
 Thomas W. Kitchin and Judith K. Kitchin, Trustees of the John P. Kitchin Family Trust 
  
 Thomas W. Kitchin and Judith K. Kitchin, Trustees of the Karen E. Kitchin Family Trust 

 EXHIBIT B 
  

JAMESON BOARD OF DIRECTORS 
  
 Number of Sellers’ Directors upon Increase in Number of Directors 
  

			
	 Total Number of Directors

	  	 Number of Sellers’ Directors

	 4 – 6
	  	1
	 7 – 10
	  	2Employment contract with Thomas W. Kitchin

 EXHIBIT 10.3 
  
 EMPLOYMENT AGREEMENT 
  
 THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into as of this 19th day of February, 2004, by and between Jameson Inns, Inc., a corporation incorporated under the laws of the State of Georgia (the
“Company”), and Thomas W. Kitchin, an individual resident of the State of Georgia (the “Executive”). 
  
 BACKGROUND 
  
 Executive and Company are parties to that certain Employment Agreement, dated November 29, 2001 (the “Prior Agreement”), pursuant to
which Executive agreed to serve as Chairman of the Board of Directors (the “Board”) and Chief Executive 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 Date”) shall be February 19,
2004. 
  
 2. Employment. Company shall continue to employ
Executive and Executive hereby accepts such continued employment subject to the terms and conditions set forth herein for the Employment Period (as defined below), 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 and, unless earlier terminated in accordance with Section 6 hereof, will continue in effect so long as Executive is employed by the Company or until the Company notifies Executive in writing of its intent to terminate or
change the Agreement (referred to herein as the “Employment Period”). 
  
 4. Duties and Responsibilities; Authority; Devotion of Time to Company. 
  
 (a) Executive will continue to serve in his capacity as Chairman of the Board and Chief Executive Officer of Company. Subject to clause
(c) below, Executive shall faithfully and diligently perform the services and functions relating to such positions or otherwise incident thereto, as may be reasonably designated by the Board from time to time; provided, however, that all such
services shall be within Executive’s area of competence and expertise. 
  

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 (b) Executive shall enjoy the authority consistent with the positions described above and
shall report directly and solely to the Board. 
  
 (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. 
  
 (a) Base Salary. During
the Employment Period, Company will pay to Executive a base salary as determined by the Compensation Committee of the Company from time to time (“Base Salary”), less normal withholdings, payable in equal monthly or more frequent
installments as are customary under Company’s payroll practices from time to time. 
  
 (b) Incentive, Profit Sharing, Savings and Retirement Plans. During the Employment Period, Executive will be entitled to
participate in all executive incentive compensation and bonus programs (including, without limitation, stock option, performance share and restricted stock grants as may from time to time be authorized by the Board), profit sharing, savings and
retirement plans, practices, policies and programs applicable generally to actively employed senior executive officers of Company (“Peer Executives”), on terms and conditions no less favorable than those 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 Company
(including, without limitation, medical, prescription, dental, disability, employee life, group life, accidental death and travel accident insurance plans and programs) (collectively, the “Company Welfare Plans”) to the extent
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 five 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)); 
  

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 (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 $800.00 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 the Ravinia Club, Dunwoody Country Club, Sea Island 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. 
  
 (f) Paid Time Off. During the Employment Period, Executive will be entitled paid time off in
accordance with the plans, policies, programs and practices of Company as in effect generally with respect to Peer Executives, but not less than six weeks of paid time off annually. 
  
 (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. 
  

 -3- 

 6. Termination of Employment. 
  
 (a) Death. Executive’s employment will terminate automatically upon Executive’s death
during the Employment Period. 
  
 (b)
Disability. If the Disability of Executive has occurred during the Employment Period, Company may give to Executive written notice in accordance with Section 16(d) of this Agreement of its intention to terminate Executive’s employment.
In such event, Executive’s employment will terminate effective on the 30th day after receipt by Executive of such written notice (the “Disability Effective Date”), provided that, within the 30 days after such receipt, Executive
shall not have returned to full-time performance of Executive’s duties. For purposes of this Agreement, “Disability” means a physical or mental infirmity that impairs Executive’s ability to substantially perform his duties
with Company for a period of 180 consecutive days, as determined by Company in good faith subject to review by a three-physician panel. 
  
 (c) Termination for Cause. Company may terminate Executive’s employment during the Employment Period for Cause. For purposes
of this Agreement, “Cause” means: 
  
 (i) the failure of Executive to substantially perform Executive’s duties with Company (other than any such failure resulting from incapacity due to physical or mental infirmity), which failure continues for a period of 30 days after a
written demand for substantial performance is delivered to Executive by the Board that specifically identifies the manner in which the Board believes that Executive has not substantially performed Executive’s duties; 
  
 (ii) the engaging by Executive in illegal conduct that is
materially and demonstrably injurious to Company; 
  
 (iii) breach of fiduciary duty to Company that results in material personal profit to Executive at the expense of Company; or 
  
 (iv) the failure by Executive to honor all the terms and provisions of this Agreement, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and which is remedied by Executive promptly after receipt of notice given by Company. 
  
 The cessation of employment of Executive shall not be deemed to be for Cause unless and until there shall have been delivered to
Executive, as part of the Notice of Termination, a 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 
  

 -4- 

 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 the following events: 
  
 (i) the assignment to Executive, without his written consent, of any duties inconsistent in any material respect with Executive’s
position, authority, duties or responsibilities on the Effective Date or any other action by Company that results in a diminution in any material respect in such position, authority, duties or responsibilities, excluding for this purpose an isolated
and inadvertent action not taken in bad faith that is remedied by Company promptly after receipt of notice thereof given by Executive; 
  
 (ii) a reduction by Company in Executive’s annual Base Salary at the rate in effect on the Effective Date or as the same may be
increased from time to time; 
  
 (iii) the
failure by Company (A) to continue in effect any compensation plan in which Executive participates during the Employment Period that is material to Executive’s total compensation, unless an equitable arrangement (embodied in an ongoing
substitute or alternative plan) has been made with respect to such plan or (B) to continue Executive’s participation therein (or in such substitute or alternative plan) on a basis not materially less favorable, both in terms of the amount of
benefits provided and the level of Executive’s participation relative to Peer Executives; 
  
 (iv) the failure by Company to continue to provide Executive with benefits substantially similar to those enjoyed by Executive under any
of Company’s pension, life insurance, medical, health and accident, disability or other welfare plans in which Executive was participating during the Employment Period; 
  
 (v) the failure by Company to pay to Executive any deferred compensation when due under any deferred
compensation plan or agreement applicable to Executive; 
  
 (vi) a permanent transfer or relocation of Executive which results from a required move of the location of the office of the Company to which Executive is to report on a permanent basis to a location outside the
greater Atlanta, Georgia metropolitan area; 
  

 -5- 

 (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 in Section 14(d) of the Securities Exchange Act of 1934 (the “Exchange Act”), other than Thomas W.
Kitchin or any person or persons related to or associated with him, is or becomes the “beneficial owner” (as defined in Rule 13d-3 of the General Rules and Regulations under the Exchange Act), directly or indirectly, of 50% or more
of the outstanding securities of the Company having the right to vote at elections of directors; 
  
 B. the Board of Directors of the Company is changed as a result of a contested election so that the nominees for Directors in such
election designated by the current management group of the Company fail to be elected or constitute a majority of persons constituting the Board of Directors of the Company immediately following such election; 
  
 C. a merger, liquidation, dissolution, consolidation or
reorganization of the Company as a result of which less than 50% of the total voting power of the outstanding securities of the surviving or resulting entity entitled to vote for members of the Board of Directors is represented by the securities
held by the persons who held all of such outstanding voting securities of the Company immediately prior to the consummation of such transaction or development; or 
  
 D. the lease, sale, exchange, transfer or other disposition of all or substantially all of the assets of
the Company or the successor thereof; 
  
 (viii)
the Company notifies Executive in writing of its intent to terminate or change the Agreement in any material respect; or 
  
 (ix) the failure by Company to honor all the terms and provisions of this Agreement, excluding for this purpose an isolated, insubstantial
and inadvertent action not taken in bad faith and which is remedied by Company promptly after receipt of notice thereof given by Executive. 
  
 (e) Notice of Termination. Any termination of Executive’s employment by Company other than by reason of death or Disability,
or by Executive for Good Reason, shall be communicated by Notice of Termination to the other party hereto given in accordance with Section 16(d) of this Agreement. For purposes of this Agreement, a “Notice of Termination” means a
written notice that (i) indicates 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 
  

 -6- 

 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 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 Termination” means (i) if Executive’s employment is terminated by Company other than by reason of death or Disability, or by Executive for Good Reason, the date specified in the Notice
of Termination, (ii) if Executive’s employment is terminated by reason of death or Disability, the Date of Termination will be the date of death or the Disability Effective Date, as the case may be or (iii) if Executive’s employment is
terminated by Executive other than for Good Reason (i.e., if Executive voluntarily resigns from his employment with Company), the date Executive announces his voluntary resignation. 
  
 7. Obligations of Company upon Termination. 
  
 (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 as a result of such termination: 
  
 (i) Severance Payment. The Company shall continue to pay to Executive on a monthly basis for the
twenty-four month period commencing on the Date of Termination an amount equal to one-twelfth of Executive’s Base Salary at the rate in effect immediately prior to the Date of Termination (not taking into account any reduction in Base Salary
that would constitute Good Reason), plus an amount equal to one-twelfth of the Executive’s Average Bonus (the “Continuation Payment”), such amount to be paid on the first day of each month following the Date of Termination. If
the Date of Termination is not the last day of the month, the Company shall pay to 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 two 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 
  

 -7- 

 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 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 two years from the Date of Termination (the “Benefits Period”), Company shall provide Executive with group term life insurance, health insurance, accident and long-term
disability insurance benefits (collectively, “Welfare Benefits”) 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 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 
  

 -8- 

 limitation, payment or provision of amounts and benefits pursuant to the terms of the Incentive Plan
and/or Retirement Plan) (such other amounts and benefits, collectively, the “Other Benefits”). 
  
 (b) Voluntary Resignation other than for Good Reason. If Executive’s employment is terminated by Executive other than for Good
Reason, then in consideration of Executive’s services rendered prior to such termination, Company shall pay to Executive in cash, without discount, an amount equal to Executive’s Base Salary to the Date of Termination; 
  
 (c) Death. If Executive’s employment is
terminated by reason of Executive’s death during the Employment Period, this Agreement will terminate without further obligations to Executive’s legal representatives under this Agreement, other than for payment of Accrued Compensation,
the vesting of stock options and restricted stock and the timely payment or provision of Other Benefits, including without limitation any death benefits to which Executive is then entitled. For purposes of this Agreement, “Accrued
Compensation” means all amounts of 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. 
  
 (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. 
  

 -9- 

 8. Certain Additional Payments by Company. The parties intend that the 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 pursuant to Section 4999 of
the Code (“Excise Tax”), Company shall pay to Executive an additional amount (the “Gross-Up Payment”) such that the net amount 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 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 prevent or limit Executive’s continuing or future participation in any plan, program, policy or practice provided by Company and for which Executive may qualify, nor, subject to Section 16(j), shall anything herein limit
or otherwise affect such rights as Executive may have under any contract or agreement with Company. Amounts that are vested benefits or that Executive is otherwise entitled to receive under 
  

 -10- 

 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. 
  
 (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. 
  
 (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. 
  
 (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. 
  

 -11- 

 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. 
  

(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. 
  

 -12- 

 For purposes of this Agreement, “Proceeding” means any judicial or administrative trial,
hearing, or other activity, civil, criminal or investigative, the result of which may be that a court, arbitrator, or governmental agency may enter a judgment, order, decree, or other determination which, if not appealed and reversed, would be
binding upon Company, its officers or directors or other person subject to the jurisdiction of such court, arbitrator, or governmental agency. 
  
 13. Confidentiality. During the Employment Period and for a period of one year after the Termination Date, Executive will not divulge or
appropriate for his own use or the use of others any Confidential Information. Executive acknowledges that the provisions of the prior sentence are expressly for the benefit of Company, that Company would be irrevocably injured by a violation
thereof and that Company would have no adequate remedy at law in the event of such violation. Therefore, Executive acknowledges and agrees that injunctive relief, specific performance or any other appropriate equitable remedy are appropriate
remedies to enforce compliance with such provisions. Executive’s obligations under this Section shall survive the termination of this Agreement for a period of one year after the Termination Date. 
  
 For purposes of this Agreement, “Confidential Information”
means any valuable, non-public, competitively sensitive information concerning Company’s financial position and results of operations, annual and long-range business plans, product or service plans, marketing plans and methods, training,
educational and administrative manuals, supplier information and purchase histories and employee lists obtained by Executive during his employment with Company; provided, however, that Confidential Information shall not include information to the
extent that it (i) is or becomes publicly known or generally utilized by others engaged in the same business or activities in which Company utilized, developed, or otherwise acquired such information; (ii) is known to Executive prior to employment,
having been lawfully received from parties other than Company; or (iii) is furnished to others by Company with no restriction on disclosure. 
  
 14. Non-Solicitation Agreement. Executive covenants and agrees that for a period of one year after the Termination Date, neither Executive nor any
corporation, firm, partnership, joint venture or other entity of which he is an officer, employee, consultant or holder of ten percent or more of the issued and outstanding Voting Securities or equity interests (any such entity, an “Affiliated
Entity”) will not solicit, directly or indirectly, or cause any other person, firm or business to solicit, any employee of the Company to leave the employment of the Company for any reason, or solicit any customer, guest, direct bill account,
vendor or supplier to cease doing business with the Company. Executive’s obligations under this Section shall survive the termination of this Agreement for a period of one year after the Termination Date. 
  
 15. Arbitration. Any controversy or claim arising from, out of or
relating to this Agreement (other than controversies or claims arising from, out of or relating to the provisions in Sections 13 and 14, with respect to which either party may upon 24 hours notice to the other seek 
  

 -13- 

 injunctive and/or other equitable relief in a court of competent jurisdiction) which would give rise to a claim under
federal, state or local law (including but not limited to claims based in tort or contract, claims for discrimination under state or federal law, and/or claims for violation of any federal, state or local law, statute or regulation) (each a
“Claim”, which shall also include any dispute as to whether a matter constitutes a Claim), which cannot be resolved within 30 days by amicable negotiation between the parties, shall be resolved by final and binding arbitration in
Atlanta, Georgia in accordance with the Model Employment Dispute Resolution Rules ((“Rules”) of the American Arbitration Association (the “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: 
  

			
	  
 /s/  SAC

	 	 /s/  TWK

	 For the Company
	 	 Executive

  

 -14- 

 16. Miscellaneous. 
  
 (a) Governing Law. Except to the extent preempted by federal law and without reference to principles
of conflict of laws, the laws of the State of Georgia will govern this Agreement in all respects, whether as to its validity, construction, capacity, performance or otherwise. 
  
 (b) Captions. The captions in this Agreement are not part of the provisions hereof and shall have no
force or effect. 
  
 (c) Amendments and
Modifications. This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives, which writing makes specific reference to this Agreement.

  
 (d) Notices. All notices and other
communications hereunder shall be in writing and shall be given by hand delivery to the other party or by registered or certified mail, return receipt requested, postage prepaid, addressed as follows: 
  

			
	 If to Company:
	  	 Jameson Inns, Inc.

	 	  	 8 Perimeter Center East, Suite 8050

	 	  	 Atlanta, Georgia 30346

	 	  	 Attention: General Counsel

		
	 If to Executive:
	  	 Thomas W. Kitchin

	 	  	 1754 Brandon Hall Drive

	 	  	 Atlanta, GA 30350

  
 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. 
  

 -15- 

 (g) Withholding. Company may withhold from any amounts payable under this
Agreement such Federal, state, local or foreign taxes as shall be required to be withheld pursuant to any applicable law or regulation. 
  
 (h) Waiver. Failure of either party to insist, in one or more instances, on performance by the other in strict accordance with the
terms and conditions of this Agreement shall not be deemed a waiver or relinquishment of any right granted in this Agreement or of the future performance of any such term or condition or of any other term or condition of this Agreement, unless such
waiver is contained in a writing signed by the party making the waiver. 
  
 (i) Reduction of Benefits By Legally Required Benefits. Notwithstanding any other provision of this Agreement to the contrary, if Company is obligated by law to pay severance pay, a termination indemnity,
notice pay, or the like, or if Company is obligated by law to provide advance notice of separation (“Notice Period”), then any severance benefits hereunder shall be reduced by the amount of any such severance pay, termination
indemnity, notice pay or the like, as applicable, and by the amount of any pay received with respect to any Notice Period. 
  
 (j) Timing of Payments. 
  
 (i) Except as otherwise provided for Continuation Payments, the payments provided for in Sections 7 and 8 shall be made within 30 days
after the Date of Termination, provided, however, that if the amounts of such payments cannot be finally determined on or before such date, Company shall pay to Executive on such day an estimate, as determined in good faith by Company, of the
minimum amount of such payments and shall pay the remainder of such payments (together with interest at the rate provided in Section 1274(b)(2)(B) of the Code from the Date of Termination to the payment of such remainder) as soon as the amount
thereof can be determined but in no event later than the 45th day after the Date of Termination. In the event that the amount of the estimated payments exceeds the amount subsequently determined to have been due, such excess shall constitute a loan
by Company to Executive, payable on the tenth business day after demand by Company (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. 
  

			
	JAMESON INNS, INC.
		
	 By:
	 	 /s/    Steven A. Curlee

	 	 	 Steven A. Curlee, Vice President-Legal

	
	EXECUTIVE:
		
	 	 	 /s/    Thomas W. Kitchin

 Thomas W. Kitchin

  

 -17-

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