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EXHIBIT 10.19
EMPLOYMENT AGREEMENT
This Agreement ("Agreement") dated this __ day of October, 1996 among
Choice Hotels International, Inc. (to be renamed Choice Hotels Franchising,
Inc.) ("Choice Franchising") and Choice Hotels Holdings, Inc. (to be renamed
Choice Hotels International, Inc.) ("Choice Hotels" and, collectively with
Choice Franchising, the "Employer"), both Delaware corporations with principal
offices at 00000 Xxxxxxxx Xxxx, Xxxxxx Xxxxxx, Xxxxxxxx 00000, and Xxxxx X.
XxxXxxxxxxx ("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
defined, Employer hereby employs Employee as Chief Financial Officer ("CFO") and
Executive Vice President. 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 or Chief Executive Officer (CEO), such duties to
be rendered at the principal office of Employer, subject to reasonable travel.
The Employer shall assign to Employee only those duties consistent with his
position as CFO and Executive Vice President. The Employee, in his position as
CFO, shall report directly to the CEO. The 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. After the distribution of Choice Hotels
common stock to the stockholders of Manor Care, Inc. (the "Distribution Date"),
the term "Employer" under this Agreement shall refer solely to Choice Hotels.
2. Term. Subject to the provisions for termination hereinafter
provided, the term of this Agreement shall begin on October __, 1996 ("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
Agreement during the term thereof, Employer shall pay Employee the following
compensation:
(a) Salary. A base salary of Three Hundred Thirteen Thousand
Five Hundred Seventy-eight Dollars ($313,578) per annum
payable in equal bi-weekly installments. Such salary shall be
reviewed by the Compensation Committee of the Board of
Directors of Employer on the first anniversary of the
Effective Date and thereafter at the end of each fiscal year
and may be increased at the discretion of Employer.
(b) Incentive Bonus. Employee shall have the opportunity to
earn up 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. For the Employer's 1997 fiscal
year, the Employee's bonus shall be calculated on a pro rata
basis from the Effective Date.
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(c) Automobile. Employer shall provide Employee with an
allowance for automobile expenses of $975 per month.
(d) Club Membership. Employer shall pay Employee's corporate
membership fees at an appropriate country and/or recreational
club at the choice of Employee for the purpose of business
entertainment.
(e) Stock Options. Employee shall be eligible to receive
options 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 Choice Hotels Board
as in effect from time to time.
(f) Other Benefits. Employee shall, when eligible, be entitled
to 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.
4. Extent of Services. Employee shall devote his full professional
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, profit, or other pecuniary
advantage; but the foregoing shall not be construed as preventing Employee from
investing his assets in the securities of public companies, or the securities of
private companies or limited partnerships outside the lodging industries if such
holdings are passive investments of one percent or less of outstanding
securities and Employee does not hold positions of director, officer, employee
or general partner. 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
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, personnel or acquisitions. 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
given under this Agreement shall be in writing, and shall be delivered
personally to the recipient or, if sent by
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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.
(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 provided by law and the By-Laws of Employer; provided,
however, that if Employee is Constructively Terminated (as defined in Section
7(b) below), it is expressly understood and agreed that Employee's rights under
this Agreement shall in no way be prejudiced, and Employee shall be entitled to
receive compensation referred to in Section 3 above, except ungranted stock
options (but including the continued vesting of previously granted restricted
stock and 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 offset and thereby reduce its
payment, the amount received by Employee from any other active employment. As a
condition to Employee receiving his compensation from Employer, Employee agrees
to permit verification of his employment records and Federal 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 like amounts actually received by Employee.
(b) 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 line of reporting as 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 for 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
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
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.
10. Termination of Agreement. This Agreement shall terminate upon the
following
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events and conditions:
(a) Upon expiration of its term;
(b) For Cause which means, including but not limited to, refusal to
carry out duties and instructions of the Employer's Board of Directors
and/or CEO 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.
In the event of termination by Employer for Cause, vested but
unexercised options granted during the term of this Agreement shall be
forfeited as a result thereof, as of the date of notice and Employer
shall have the right to purchase from Employee, at the price paid by
Employee, such of its Common Stock as has been acquired by Employee by
exercise of a stock option granted during the term of this Agreement if
such exercise is within six (6) months prior to termination of this
Agreement as a result of such breach. Employee shall be entitled to
fourteen (14) days advance written notice of termination, except where
the basis for termination constitutes conduct on the part of Employee
involving dishonesty or bad faith, in which case the termination shall
be effective upon the sending of notice. Such written notice shall
specify in reasonable detail the grounds for Cause. Except in the case
of material dishonesty, bad faith, conviction of a felony or fraud,
Employee shall have an opportunity to cure the basis for termination
during the fourteen day period after written notice.
(c) 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 attorneys fees incurred in connection with the negotiation and
execution of this Agreement.
12. Entire Agreement. This instrument contains the entire agreement of
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.
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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: ______________________________
Xxxxx X. Xxxxx
Senior Vice President
CHOICE HOTELS HOLDINGS, INC.
(to be renamed Choice Hotels International, Inc.)
By:_______________________________
Xxxxx X. Xxxxx
Senior Vice President
Employee:
__________________________________
Xxxxx X. XxxXxxxxxxx
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