Exhibit 10.12
EMPLOYMENT AGREEMENT
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This Agreement ("Agreement") dated this 18th day of December, 1997 between
Choice Hotels International, Inc. ("Employer"), a Delaware corporation with
principal offices at 00000 Xxxxxxxx Xxxx, Xxxxxx Xxxxxx, Xxxxxxxx 00000, and
Xxxxxx Xxxxxxx ("Employee"), sets forth the terms and conditions governing the
employment relationship between Employee and Employer.
1. Employment. During the term of this Agreement, as hereinafter
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defined, Employer hereby employs Employee as Executive Vice President and Chief
Financial Officer. Employee hereby accepts such employment upon the terms and
conditions hereinafter set forth and agrees to faithfully and to the best of his
ability perform such duties as may be from time to time assigned by Employer's
Board of Directors and Chief Executive Officer, such duties to be rendered at
the principal office of Employer, subject to reasonable travel. Employee also
agrees to perform his duties in accordance with policies established by
Employer's Board of Directors, which may be changed from time to time.
2. Term. Subject to the provisions for termination hereinafter provided,
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the term of this Agreement shall begin on January 12, 1998 ("Effective Date")
and shall terminate five (5) years thereafter (the "Termination Date"). The
Termination Date shall automatically be extended for successive one-year terms
unless either party gives written notice no less than nine months prior to the
Termination Date that it elects not to extend the Termination Date.
3. Compensation. For all services rendered by Employee under this
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Agreement during the term thereof, Employer shall pay Employee the following
compensation:
(a) Salary. A base salary of Three Hundred Twenty Five Thousand
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Dollars ($325,000) per annum payable in equal bi-weekly installments.
Such salary shall be reviewed by the Compensation Committee of the
Board of Directors of Employer at the next annual review of officers
following the Effective Date and may be increased at the discretion of
Employer.
(b) Incentive Bonus. Employee shall have the opportunity to earn up
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to a maximum of Fifty-five Percent (55%) per annum of the base salary
set forth in subparagraph 3(a) above in Employer's bonus plans as
adopted from time to time by Employer's Board of Directors.
(c) Restricted Stock. On the Effective Date, Employer shall issue to
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Employee 17,000 shares of restricted Choice Hotels common stock
("Common Stock"). The restrictions on such shares shall lapse upon
vesting, which shall occur in five equal annual installments beginning
on the first anniversary of the Effective Date.
(d) Automobile. Employer shall provide Employee with an allowance for
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automobile expenses of $850 per month subject to withholding of usual
taxes.
(e) Stock Options. Employee shall be eligible to receive options
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under the Choice Hotels International, Inc. Long Term Incentive Plan
("LTIP"), or similar plan, to purchase Common Stock in accordance with
the policy of the Employer's Board as in effect from time to time.
Additionally, the Employee shall be granted, on the Effective Date,
100,000 options to purchase such number of shares of Common Stock. A
number of the options shall be incentive stock options granted under
the LTIP, which number shall be the maximum number permitted under the
LTIP and Section 422(d) of the Internal Revenue Code of 1986, as
amended, but in no event more than 25% of the total number of options
granted pursuant to this Section 3(e). The remainder of the options
shall be nonqualified stock options. The options shall be exercisable
at an amount per share equal to the average of the high and low
trading price of the Common Stock on the Effective Date and shall vest
in five equal annual installments following the first anniversary of
the Effective Date.
(f) SERP. At the Effective Date, Employee shall participate in the
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Choice Hotels International, Inc. Supplemental Executive Retirement
Plan ("SERP"), with the amendments identified on Exhibit A.
(g) Other Benefits. Employee shall, when eligible, be entitled to
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participate in all other fringe benefits, including vacation policy,
generally accorded the most senior executive officers of Employer as
are in effect from time to time on the same basis as such other senior
executive officers.
(h) Relocation Expenses. Employee shall be entitled to all benefits
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under the Relocation Policy of Employer, as adopted in November 1996,
with the following additions:
(1) Notwithstanding Section II(C) of the Relocation Policy, the
Employer will pay up to a maximum of $5,000 for the relocation of
Employee's boat to Annapolis, Maryland;
(2) Notwithstanding Section 2(VII) of the Relocation Policy,
Employer will reimburse Employee for a period of up to twelve
months from the Effective Date for return trips for Employee and
Employee's spouse, children and mother-in-law to and from
Employee's Tennessee home during such period as are reasonably
needed.
(3) Notwithstanding Section 2(VIII) of the Relocation Policy,
Employer shall reimburse Employee for real estate commissions not
to exceed 7% of the sales price.
4. Extent of Services. Employee shall devote his full professional
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time, attention, and energies to the business of Employer, and shall not during
the term of this Agreement be engaged in any other business activity whether or
not such business activity is pursued for gain,
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profit, or other pecuniary advantage; but the foregoing shall not be construed
as preventing Employee from investing his assets in (i) the securities of public
companies, or (ii) the securities of private companies or limited partnerships
outside the lodging industry if such holdings are passive investments of one
percent or less of outstanding securities and Employee does not hold positions
of officer, employee or general partner. Employee shall be permitted to serve as
a director of companies outside of the lodging industry so long as such service
does not inhibit his performance of services to the Employer. Employee shall not
be permitted to serve as a director of any company within the lodging industry
unless (i) the Corporate Compliance officer of the Employer has determined that
there is no conflict of interest and (ii) such service does not inhibit his
performance of services to the Employer. Employee warrants and represents that
he has no contracts or obligations to others which would materially inhibit the
performance of his services under this Agreement.
5. Disclosure and Use of Information. Employee recognizes and
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acknowledges that Employer's and affiliates' present and prospective clients,
franchises, management contracts, acquisitions and personnel, as they may exist
from time to time, are valuable, special and unique assets of Employer's
business. Throughout the term of this Agreement and for a period of two (2)
years after its termination or expiration for whatever cause or reason except as
required by applicable law, Employee shall not directly or indirectly, or cause
others to, make use of or disclose to others any information relating to the
business of Employer that has not otherwise been made public, including but not
limited to Employer's present or prospective clients, franchises, management
contracts or acquisitions. During the term of this Agreement and for a period
of two years thereafter, Employee agrees not to solicit for employment or
contract for services with, directly or indirectly, on his behalf or on behalf
of any other person or entity, any person employed by Employer, or its
subsidiaries or affiliates during such period, unless Employer consents in
writing. In the event of an actual or threatened breach by Employee of the
provisions of this paragraph, Employer shall be entitled to injunctive relief
restraining Employee from committing such breach or threatened breach. Nothing
herein stated shall be construed as preventing Employer from pursuing any other
remedies available to Employer for such breach or threatened breach, including
the recovery of damages from Employee.
6. Notices. Any notice, request or demand required or permitted to be
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given under this Agreement shall be in writing, and shall be delivered
personally to the recipient or, if sent by certified or registered mail to his
residence in the case of Employee, or to its principal office in the case of the
Employer. Such notice shall be deemed given when delivered if personally
delivered or within three days of mailing if sent certified or registered mail.
7. Elective Positions; Constructive Termination
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(a) Nothing contained in this Agreement is intended to nor shall be
construed to abrogate, limit or affect the powers, rights and
privileges of the Board of Directors or stockholders to remove
Employee from the positions set forth in Section 1, with or without
Cause (as defined in Section 10 below), during the term of this
Agreement or to elect someone other than Employee to those positions,
as
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provided by law and the By-Laws of Employer. Nothing in this Agreement
is intended to nor shall be construed to abrogate, limit or affect the
Employee's rights and privileges to terminate this Agreement.
(b) If Employee is Constructively Terminated (as defined in Section
7(c) below) it is expressly understood and agreed that Employee's
rights under this Agreement shall in no way be prejudiced, Employee
shall not, thereafter, be required to perform any services under this
Agreement and Employee shall be entitled to receive compensation
referred to in Section 3 above, including, without limitation, the
continued vesting through the term of this Agreement of stock options
and restricted stock outstanding at the time of the Constructive
Termination. However, Employee shall not be entitled to receive new
stock option grants or rights to ungranted stock options. Employee
upon removal shall not be required to mitigate damages but
nevertheless shall be entitled to pursue other employment, and
Employer shall be entitled to receive as an offset and thereby reduce
its payment by the base salary and bonus received by Employee from any
other employment. As a condition to Employee receiving his
compensation from Employer, Employee agrees to permit verification of
his employment records and income tax returns by an independent
attorney or accountant, selected by Employer but reasonably acceptable
to Employee, who agrees to preserve the confidentiality of the
information disclosed by Employee except to the extent required to
permit Employer to verify the amount received by Employee from other
active employment. Employer shall receive credit for unemployment
insurance benefits, social security insurance or other like amounts
payable during periods of unemployment actually received by Employee.
(c) For purposes of this Section 7, "Constructively Terminated"
shall mean removal or termination of Employee other than in accordance
with Section 10, assignment of duties by the Employer inconsistent
with Section 1, a change in Employee's title or the line of reporting
set forth in Section 1 or any other material breach of this Agreement
by Employer provided Employer shall be given fourteen days advance
written notice of such claim of material breach, which written notice
shall specify in reasonable detail the grounds of such claim of
material breach. Except in the case of bad faith, Employer shall have
an opportunity to cure the basis for Constructive Termination during
the fourteen day period after written notice.
8. Waiver of Breach. The waiver of either party of a breach of any
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provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach.
9. Assignment. The rights and obligations of Employer under this
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Agreement shall inure to the benefit of and shall be binding upon the successors
and assigns of Employer. The obligations of Employee hereunder may not be
assigned or delegated.
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10. Termination of Agreement. This Agreement shall terminate upon the
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following events and conditions:
(a) Upon expiration of its term;
(b) For Cause which means, including but not limited to, deliberate
and continued refusal to carry out duties and instructions of the
Employer's Board of Directors and Chief Executive Officer consistent
with the position, material dishonesty, a violation or a willful
breach of this Agreement, conviction of a felony involving moral
turpitude, fraud or misappropriation of corporate funds or any willful
acts or omissions inimical to or contrary to material policies of
Employer not arbitrarily applied in the case of Employee.
(c) Subject to state and federal laws, if Employee is unable to
perform the essential functions of the services described herein for
more than 180 days (whether or not consecutive) in any period of 365
consecutive days, Employer shall have the right to terminate this
Agreement by written notice to Employee. In the event of such
termination, all non-vested obligations of Employer to Employee
pursuant to this Agreement shall terminate.
(d) In the event of Employee's death during the term of this
Agreement, the Agreement shall terminate as of the date thereof.
11. Legal Fees. Employer shall reimburse the Employee for all reasonable
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attorneys fees incurred in connection with the negotiation and execution of this
Agreement.
12. Entire Agreement. This instrument contains the entire agreement of
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the parties. It may be changed only by an agreement in writing signed by the
party against whom enforcement of any waiver, change, modification, extension,
or discharge is sought. This Agreement shall be governed by the laws of the
State of Maryland, and any disputes arising out of or relating to this Agreement
shall be brought and heard in any court of competent jurisdiction in the State
of Maryland.
13. Compensation Committee Approval. Notwithstanding any other provision
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to the contrary, this Agreement is subject to the approval of the Employer's
Compensation Committee at its next meeting, which is expected to occur on or
about December 17, 1997, and shall not be valid, binding and enforceable prior
thereto. Prior to such approval, neither party hereto shall make any public
announcement with respect to this Agreement or the employment of Employee by
Employer.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first set forth above.
Employer:
CHOICE HOTELS INTERNATIONAL, INC.
By: ______________________________
Xxxxxxx X. XxXxxxxx
Senior Vice President
Employee:
__________________________________
Xxxxxx Xxxxxxx
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