Exhibit 10.2
CONSULTING AGREEMENT AND RELEASE
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This CONSULTING AGREEMENT AND RELEASE (the "Agreement and Release") is made
and entered into as of December 18, 1997, by and between Choice Hotels
International, Inc., a Delaware corporation ("Choice") and Xxxxx X. Xxxxx
("Xxxxx").
RECITALS
X. Xxxxx has informed Choice that he intends to retire from Choice upon
the appointment of a successor to his position.
B. Choice desires to retain Xxxxx as a consultant.
NOW, THEREFORE, in consideration of the mutual promises contained herein
and for other good and valuable consideration, the receipt and sufficiency of
are hereby acknowledged, the parties agree as follows:
1. Resignation. Xxxxx shall resign as Senior Vice President, Marketing,
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upon 45 days after a successor has been appointed by the Board of Directors to
the position (or similar position with similar responsibilities), but in no
event later than December 15, 1998 (the "Resignation Date").
2. Consulting Period. During the period from the Resignation Date
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through December 15, 1998 (assuming the Resignation Date is a date prior to
December 15, 1998), Xxxxx will remain on Choice's payroll and such period will
be referred to as the "Initial Consulting Period". At the mutual election of
Choice and Xxxxx and upon 30 days prior written notice by one party, to be
accepted or rejected by the other in ten (10) days after receipt of notice, the
Initial Consulting Period shall be extended, upon acceptance, for successive one
year periods (the "Additional Consulting Period"); provided, however, that to so
extend, the Additional Consulting Period must still be in effect on the one year
anniversary of the commencement of such term.
3. Consulting Services.
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3.1 Services to be Rendered. During the Initial Consulting
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Period and any Additional Consulting Period, Xxxxx shall provide such consulting
and advisory services to Choice related to marketing issues affecting Choice, as
may be requested by Choice from time to time.
3.2 Report to CEO. During the Initial Consulting Period, Xxxxx
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shall report to the Chief Executive Officer of Choice or to such other officer
as Choice may designate.
4. Compensation.
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4.1 Fees. For and in consideration of the continued agreement of
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Xxxxx to render to Choice the services listed in Section 3, Xxxxx will be
entitled to an Initial Consulting
Period fee for the period ended December 15, 1998 in an amount equal to
$265,000, or the pro rata portion thereof if the Initial Consulting Period
commences after January 1, 1998. These fees shall be payable in equal bi-weekly
installments with usual deductions taken. During any Additional Consulting
Period, Xxxxx shall be paid for services rendered to Choice at a rate of $200
per hour. Xxxxx shall submit monthly bills to Choice with payment due within 30
days thereof.
4.2 Benefits. Choice and Xxxxx have negotiated the following
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undertakings with respect to the amount and payment schedule of certain benefits
to be paid to Xxxxx.
A. During the Initial Consulting Period, Xxxxx shall be
eligible for a bonus under the same bonus plan as in effect as of the date
hereof. The criteria for such bonus shall be agreed to between the parties.
Xxxxx shall remain eligible for a bonus for the fiscal year ended December 31,
1997.
B. No additional vacation or sick leave shall accrue during the
Initial Consulting Period or any Additional Consulting Period.
C. The lump sum relocation expense reimbursement of $2,300 per
month shall cease on the Resignation Date.
D. Reimbursement of reasonable business and travel expenses in
accordance with Choice's policies. No car allowance will be paid after the
Resignation Date.
E. During the Initial Consulting Period and any Additional
Consulting Period, Xxxxx shall have the right to exercise Manor Care, Inc.,
Sunburst Hospitality Corporation and Choice stock options that vest through
December 15, 1998 or the end of any Additional Consulting Period in accordance
with the number of shares shown to vest in the Xxxxx Xxxxx Choice Stock Report
and the Xxxxx Xxxxx Sunburst Stock Report, collectively attached hereto as
Exhibit A. Choice agrees that Xxxxx shall be deemed continuously eligible by
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Choice throughout the Initial Consulting Period and any Additional Consulting
Period for purposes of participation in such stock option plans; however, Xxxxx
shall not be entitled to receive any future grants under the stock option plans
but he shall be entitled to exercise those previously granted.
F. During the Initial Consulting Period, Xxxxx may continue to
make standard employee payments for medical and life insurance plans (not
including AD&D), if and as maintained by Choice during the Initial Consulting
Period. In connection therewith, Xxxxx shall elect and pay for COBRA coverage
with Choice and shall be reimbursed by Choice for the difference between the
COBRA coverage premium and the standard Choice employee premium.
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5. Xxxxx Not to Compete.
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5.1 Non-Compete. During the Initial Consulting Period, Xxxxx
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shall not be employed by or provide consulting services to any other individual,
company, firm or other entity. Xxxxx also agrees that during the Initial
Consulting Period and any Additional Consulting Periods, Xxxxx will not engage,
without first obtaining Choice's prior written consent, directly or indirectly,
in any activities within the Territory (as defined below) whether as employee,
officer, director, partner, joint venturer, stockholder (other than the holder
of less than 5% of the stock of a corporation the securities of which are traded
on a national securities exchange or in the over-the-counter market), consultant
or agent, which involves a business which is in direct competition to the
business in which Choice is engaged at the time of termination of the Initial
Consulting Period.
5.2 Territory. For the purposes of this Section 5, the
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"Territory" shall mean any place within the continental United States in which
Choice is, at the time of the termination of the Additional Consulting Period,
engaged in business.
5.3 Enforceability. It is the intent and understanding of each
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party hereto that if, in any action before any court or agency legally empowered
to enforce the covenants contained in this Section 5 any term, restriction,
covenant or promise contained therein is found to be unreasonable and for that
reason unenforceable, then such term, restriction, covenant or promise shall be
deemed modified to the extent necessary to make it enforceable by such court or
agency.
6. Complete Release.
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6.1 Xxxxx. Xxxxx agrees to release Choice, its former parents,
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Sunburst Hospitality Corporation (formerly Choice Hotels International, Inc.)
and Manor Care, Inc ., and any related companies, subsidiaries and affiliates,
and the officers, directors, employees and agents of all of them, from all
claims or demands Xxxxx may have based on Xxxxx'x employment with Choice or the
termination of that employment except for claims for benefits under this
Agreement. This includes a release of any rights or claims Xxxxx may have under
the Age Discrimination in Employment Act, which prohibits age discrimination in
employment; Title VII of the Civil Rights Act of 1964, which prohibits
discrimination in employment based on race, color, national origin, religion or
sex; the Equal Pay Act, which prohibits paying men and women unequal pay for
equal work; and any other federal, state or local laws or regulations
prohibiting employment discrimination. This also includes a release by Xxxxx of
any claims for personal injuries, wrongful discharge, compensation and benefits,
expenses, bonuses, or any other employee rights or benefits not otherwise being
paid for pursuant to this Agreement. This release does not include a release
of Xxxxx'x right, if any, to retirement or profit-sharing benefits or deferred
compensation arrangements under the standard programs of Choice nor release of
his rights under this Agreement.
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This Agreement and Release covers both claims Xxxxx knows about and those
he may not know about. Xxxxx assumes the risk of such unknown claims which may
exist at the time he signs this Agreement and agrees that this Agreement shall
apply to any and all known and unknown claims, except the parties agree that
this release does not apply to those claims involving fraud or dishonesty on the
part of Choice..
Xxxxx hereby acknowledges that he has been treated fairly by Choice in the
course of his employment, and in the separation of his employment, and further
acknowledges that he has not suffered any age discrimination or wrongful
termination and has no claims of any kind against Choice or any related
companies, subsidiaries, affiliates, or the officers, directors, employees or
agents of any of them.
6.2 Choice. Choice and any subsidiaries, and the officers,
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directors, employees and agents of all of them, agree to release Xxxxx from all
claims or demands Choice may have based on Xxxxx'x employment with Choice or the
termination of that employment except for any claims involving fraud or
dishonesty on the part of Xxxxx.
This Agreement and Release covers both claims Choice knows about and
those it may not know about. Choice assumes the risk of such unknown claims
which may exist at the time it signs this Agreement and agrees that this
Agreement shall apply to any and all known and unknown claims except as provided
in the previous paragraph.
7. Future Lawsuits or Claims . Each party promises never to file a
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lawsuit, administrative proceeding or agency action asserting any claims which
are released in Paragraph 6 of this Agreement except for claims that may arise
out of this Agreement or any stock option plans. Except to the extent otherwise
required by law, each party further agrees not to assist any other person in
bringing any action, claim or demand against the other party with respect to
claims that are released in Paragraph 6. Xxxxx and Choice further agree to keep
confidential all of the events leading up to Xxxxx'x separation from Choice.
8. Non-Disparagement. Choice and Xxxxx agree that they respectively
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shall not disparage the business reputation of the other party hereto and each
shall not communicate to any person any information which would cause injury to
or tend to cause injury to the business reputation of the other.
9. Certificate. Xxxxx acknowledges and agrees that as an additional
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precondition to receiving the benefits described herein, Xxxxx must execute the
Certificate (that is attached as Appendix "A" to this Agreement and Release)
after the Resignation Date and return the Certificate to Choice Hotels
International, Inc., 00000 Xxxxxxxx Xxxx, Xxxxxx Xxxxxx, Xxxxxxxx 00000,
Attention: Senior Vice President, Human Resources. This Certificate must be
received by Choice no later than five business days after the Resignation Date.
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10. Business Information of Choice/Non-Solicitation of Choice's Employees.
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Xxxxx agrees not to directly or indirectly, or cause others to make use of or
disclose to others any non-public information relating to the business of Choice
and its affiliates, which information would be considered Trade Secrets under
the Maryland Uniform Trade Secrets Act. For a period of two (2) years from
December 15, 1998, Xxxxx 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 Choice, or its subsidiaries or
affiliates during the twenty-four (24) month period prior to December 15, 1998,
unless Choice consents in writing.
11. Non-Release of Future Claims. This Agreement does not waive or
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release any rights or claims that Xxxxx may have under the Age Discrimination in
Employment Act which arise after the date Xxxxx signs this Agreement.
12. Consequences of Violation of Promises. If either party breaks the
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promises contained in Paragraph 7 of this Agreement and files a lawsuit,
administrative proceeding or agency action based on claims that such party has
released, the breaching party will pay for all costs incurred by the non-
breaching party, including reasonable attorneys' fees, in defending against such
claim. A breaching party shall also pay for all damages and costs incurred by
the non-breaching party in connection with a breach of the provisions of Section
18.
13. Consultation; Revocation. Xxxxx is advised to consult with an
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attorney prior to executing this Agreement. He may have a period of up to 21
days to consider this Agreement. Xxxxx acknowledges that no deadlines of less
than 21 days have been imposed on him to review or execute this Agreement. In
addition, should he choose to sign the Agreement, he shall have a period of
seven days to revoke such signature. Revocation can be made by delivering a
written notice of revocation to the Senior Vice President, Human Resources,
Choice Hotels International, Inc., 00000 Xxxxxxxx Xxxx, Xxxxxx Xxxxxx, Xxxxxxxx
00000. For this revocation to be effective, written notice must be received by
the Senior Vice President, Human Resources no later than the close of business
on the seventh (7th) day after Xxxxx signs this Agreement. If Xxxxx revokes
this Agreement it shall not be effective or enforceable and Xxxxx will not
receive the benefits described in Section 4.
14. Encouragement to Consult with Attorney. Xxxxx is strongly encouraged
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to consult with an attorney before signing this Agreement. Xxxxx understands
that whether or not to do so is Xxxxx'x decision.
15. Signing is Voluntary. Xxxxx acknowledges that he has had adequate
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opportunity to review this Agreement with an attorney, that Xxxxx understands
its terms, that Xxxxx was not coerced into signing, and that Xxxxx signed this
Agreement knowingly and voluntarily.
16. Complete Defense. Each party fully understands and agrees that
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this Agreement may be pleaded by the other as a complete defense to any claim or
entitlement which may be asserted by a party against the other, for or on
account of any matters waived or released in this Agreement.
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17. Non-Admission of Liability. The parties each make this Agreement to
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avoid the cost of defending against any possible lawsuit. By making this
Agreement, neither party admits that it has done anything wrong.
18. Confidentiality. Xxxxx and Choice agree to preserve the
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confidentiality of this Agreement, except to the extent that disclosure is
required by law, rule or regulation; and except that it is permissible for
either party to disclose the terms of this Agreement to such party's
accountants, attorneys and advisors, financial institution with whom he/it has a
customer relationship and to any third party not otherwise employed by and/or
affiliated with Choice with whom Xxxxx contemplates a business relationship that
is not prohibited by the terms of this Agreement.
19. Entire Agreement. This is the entire Agreement between Xxxxx and
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Choice. Choice has made no promises to Xxxxx other than those in this Agreement.
20. Choice of Law; Jurisdiction. This Agreement shall be construed
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exclusively in accordance with the laws of the State of Maryland, without regard
to the principles of conflicts of laws therein. In the event that a dispute
arises under this Agreement and legal action is instituted, the parties agree
that such action shall be maintained exclusively in the Circuit Court for
Xxxxxxxxxx County, Maryland. The parties hereby voluntarily submit to the
jurisdiction of said court.
XXXXX HAS HAD AN OPPORTUNITY TO CAREFULLY REVIEW AND CONSIDER THIS
AGREEMENT WITH AN ATTORNEY, AND HE HAS HAD SUFFICIENT TIME TO CONSIDER IT.
AFTER SUCH CAREFUL CONSIDERATION, HE KNOWINGLY AND VOLUNTARILY ENTERS INTO THIS
AGREEMENT WITH FULL UNDERSTANDING OF ITS MEANING.
PLEASE READ THIS AGREEMENT CAREFULLY. IT CONTAINS A RELEASE OF ALL KNOWN
AND UNKNOWN CLAIMS.
CHOICE HOTELS INTERNATIONAL, INC.
ATTEST:
By:
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Xxxxxx Xxxxxx, Senior Vice President
WITNESS: -------------------------------------
Xxxxx X. Xxxxx
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APPENDIX A
Certificate
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THIS CERTIFICATE MUST BE SIGNED AFTER THE RESIGNATION DATE AND MUST BE FILED
WITH THE SENIOR VICE PRESIDENT, HUMAN RESOURCES, 00000 XXXXXXXX XXXX, XXXXXX
XXXXXX, XXXXXXXX 00000, NO LATER THAN FIVE BUSINESS DAYS AFTER THE RESIGNATION
DATE.
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I entered into an Agreement and Release with Choice Hotels International,
Inc., formerly named Choice Hotels Franchising, Inc. ("Choice") under which my
last day worked with Choice was ___________________________________, 199___ .
I hereby acknowledge that:
(1) A blank copy of this Certificate was attached as an Appendix to the
Agreement and Release when it was given to me for review. I have had more time
to consider signing this Certificate than the ample time I was given to consider
signing the Agreement and Release. I was advised to discuss the Agreement and
Release, including this Certificate, with an attorney before executing either
document.
(2) The discretionary benefits payable under the Agreement and Release
become payable only if I sign this Certificate.
(3) My employment actually terminated before I signed this Certificate and,
in exchange for the discretionary benefits, I hereby agree that this Certificate
will be a part of my Agreement and Release and that my Agreement and Release is
to be construed and applied as if I signed it on the day I signed this
Certificate. This extends my release of claims under the Agreement and Release
to any claims that arose during the remainder of my employment through the last
day of my employment with Choice.
Date
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Signature
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Print Name
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Social Security Number
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