AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
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This Amended and Restated Employment Agreement ("Agreement") dated this
12th day of November, 2001, amends and restates that Employment Agreement dated
May 13, 1999 between Choice Hotels International, Inc. ("Employer"), a Delaware
corporation with principal offices at 00000 Xxxxxxxx Xxxx, Xxxxxx Xxxxxx,
Xxxxxxxx 00000, and Xxxxxx X. Xxxxxxx ("Employee").
1. Employment. During the term of this Agreement, as hereinafter
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defined, Employer hereby employs Employee as Executive Vice President, Domestic
Hotels. 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
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provided, the term of this Agreement shall begin on November 19, 2001
("Effective Date") and shall terminate on May 31, 2002 (the "Resignation Date").
At the Resignation Date, Employee shall resign as an officer of Employer (and
its respective subsidiaries) and his employment shall cease.
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. From the Effective Date through the Resignation
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Date, a base salary of Three Hundred Forty-Five Thousand
Dollars ($345,000) per annum payable in equal bi-weekly
installments.
(b) Incentive Bonus. For Fiscal Year 2001, Employee shall have
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the opportunity to earn a bonus with a target 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) Automobile. Employer shall provide Employee with an
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allowance for automobile expenses of $1,000 per month, subject
to withholding tax, beginning on the Effective Date.
(d) Other Benefits. Employee shall continue to be entitled to
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participate in all other fringe benefits in which he was a
participant immediately prior to the Effective Date.
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4. Extent of Services. Employee shall devote his full professional
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time, attention, and energies to the business of Employer, and during the term
shall execute against the services outlined in Exhibit A.
5. Disclosure and Use of Confidential Information. Employee
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recognizes and acknowledges that information about Employer's and affiliates'
present and prospective clients, franchises, management contracts, acquisitions
and personnel, as they may exist from time to time, and to the extent it has not
been otherwise disclosed, is a valuable, special and unique asset of Employer's
business ("Confidential Information"). 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 Confidential Information. 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 person or entity, other than on behalf of Employer, 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. "Affiliate" as used in
this Agreement means a person or entity that is directly or through one or more
intermediates controlling, controlled by or under common control with another
person or entity.
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 or
overnight courier service to his residence in the case of Employee, or to its
principal office in the case of the Employer, return receipt requested. Such
notice shall be deemed given when delivered if personally delivered or when
actually received if sent certified or registered mail or overnight courier.
7. Severance.
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(a) Subject to the other provisions of this Section 7, if Employee's
employment terminates on the Resignation Date or if earlier terminated
due to Constructive Termination (the earliest date being the
"Termination Date"), Employee shall be entitled to the following
severance benefits:
1. Discretionary Pay from the Termination Date through May 31,
2003 equal to Employee's base salary and automobile allowance on the
Termination Date, less standard deductions, payable in installments in
accordance with Employer's normal payroll practices. Employee may
continue deductions for medical, dental, life insurance, and pre-tax
spending accounts while receiving Discretionary Pay, and Employee
consents to the
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customary deductions for such benefits from Discretionary Pay.
Employer will continue to pay employer contributions to Employee's
medical, dental, life insurance, and pre-tax spending accounts while
Employee is receiving Discretionary Pay. Employer will stop optional
deductions for items such as retirement plans and deferred
compensation with Employee's last paycheck for regular hours worked
through the Termination Date. Employee will be eligible for COBRA
benefits after the Discretionary Pay ends.
2. Employee will receive a fiscal year 2002 bonus in
accordance with the terms of the bonus plan that Employee was under.
Such bonus shall be payable, if at all, at such time as the employees
of Choice receive their bonus pay out. The EPS portion of the bonus
criteria shall be based on the actual payout used for other Choice
executive officers. The bonus performance target for the management
bonus objective portion shall be deemed to have been met.
3. From the Termination Date through May 31, 2003 (the "Stock
Option Period") previously granted options to acquire Choice Hotels
common stock shall continue to vest on the vesting schedule provided
for under the terms of those options, notwithstanding the termination
of Employee's employment and, for thirty days following the Stock
Option Period, Employee shall have the right to exercise such stock
options, together with all options held by him which have already
vested as of the date of this Agreement. Additionally, all restricted
stock previously granted to Employee shall continue to vest during the
Stock Option Period. Employer agrees that Employee shall be deemed
continuously eligible during the Stock Option Period for purposes of
participation in the Long-Term Incentive Plan; however, Employee shall
not be entitled to any future grants under the Plan. All previously
granted options to acquire Choice Hotels common stock and all
restricted stock grants which vest after the Stock Option Period shall
be deemed forfeited and terminated as of the Termination Date.
(b) "Constructive Termination" shall mean (i) removal or termination of
Employee other than in accordance with Section 10, (ii) a decrease in
Employee's compensation or benefits (unless a similar decrease is
imposed on all senior executive oficers), (iii) a significant reduction
in the scope of Employee's authority, position, duties or
responsibilities, (iv) a significant change in Choice's annual bonus
program which adversely affects Employee, or (v) 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.
(c) Employee upon termination 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 under Section 7(a)(1) and (2), the amount received by Employee
from any other active employment. As a condition to
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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.
(d) As a condition precedent to Employee receiving the benefits under
Section 7(a), Employee, on or after the Termination Date, shall execute
and deliver to Employer a release in the form attached hereto as
Exhibit B.
(e) During the period that Employee is receiving Discretionary Pay,
Employee shall be reasonably available to provide consulting services
to Employer at no additional compensation, so long as such consulting
services do not interfere with any other active employment of Employee
or Employee's search efforts in pursuit of active employment.
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.
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 gross negligence, willful misconduct,
willful nonfeasance, 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 or conviction of a
felony involving moral turpitude, fraud or misappropriation of
corporate funds. Employee shall be entitled to fourteen (14) days
advance written notice of termination, except where the basis for
termination constitutes wilful 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 and Employee shall
have an opportunity to contest to the Board of Directors or cure the
basis for termination during the fourteen day period after written
notice.
(c) Subject to state and federal laws, if Employee is unable to
perform the essential functions of the services described herein,
after reasonable accommodation, for more than
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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 stock option and other 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.
(e) Upon voluntary resignation of Employee not due to Constructive
Termination, so long as Employee has given Employer thirty days prior
written notice of such resignation.
11. Entire Agreement. This instrument contains the entire agreement of
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the parties and superceded all previous agreements. 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.
IN WITNESS WHEREOF, the parties have executed this Agreement on
the date first set forth above.
Employer:
CHOICE HOTELS INTERNATIONAL, INC.
By:
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Xxxxxxx X. XxXxxxxx
Senior Vice President
Employee:
Xxxxxx X. Xxxxxxx
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