Exhibit 10.01
EMPLOYMENT AGREEMENT
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This Agreement ("Agreement") dated this 10th day of February, 1997 among
Choice Hotels International, Inc. the "Employer"), a Delaware corporation with
principal offices at 00000 Xxxxxxxx Xxxx, Xxxxxx Xxxxxx, Xxxxxxxx 00000, and
Xxxxxx Xxxxxx ("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,
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Employer hereby employs Employee as Senior Vice President -- Human Resources.
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 are consistent with his position, and which may be from
time to time assigned by Employer, its Board of Directors or its designees, such
duties to be rendered at the principal office of Employer or at such other place
or places as Employer shall require. 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 March 3, 1997 ("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 (9) 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 Two Hundred Thirty Thousand Dollars
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($230,000) per annum payable in accordance with Employee's standard payroll
practices from time to time in effect. Such salary shall be reviewed on
the first anniversary of the Effective Date and thereafter after 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
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maximum of Fifty Percent (50%) 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. Additionally, the Employer shall pay the Employee a one-
time cash payment of $50,000, payable in two installments, $25,000 payable
within thirty days of the Effective Date and $25,000 payable within thirty
days of the first anniversary of the Effective Date.
(c) 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.
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(d) Stock Options. Employee shall be eligible to receive options under the
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Choice Hotels International, Inc. 1996 Long Term Incentive Plan ("LTIP"),
or similar plan, to purchase Common Stock in accordance with the policy of
the Choice Hotels Board of Directors as in effect from time to time.
Additionally, Employer shall recommend to the Compensation Committee and to
the Board of Directors at its next regularly scheduled meeting that the
Employee be granted, as of the date of such Board approval, or as of his
first day of employment with Employer, whichever is later, in accordance
with the LTIP, 30,000 non-qualified stock options and 10,000 incentive
stock options. Any such award shall be subject to (i) the approval of the
Board of Directors and (ii) Employee executing Employer's standard stock
option agreement in effect from time to time. Employee shall be eligible
for additional grants in accordance with the policies specified in the
LTIP.
(e) Other Benefits. Employee shall, when eligible, be entitled to
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participate in all other fringe benefits accorded headquarters employees of
similar status by Employer as are in effect from time to time excluding
incentive compensation or other programs not designed for a senior
executive.
(f) Relocation Expenses. Employee shall be entitled to all benefits under
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the Relocation Policy of Employer, as adopted in November 1996.
Notwithstanding Section VII of the Relocation Policy, Employer will
reimburse Employee for the reasonable costs of temporary lodging for a
period of 90 days from the Effective Date and two return trips (economy
class) per month until the earlier to occur of (i) the expiration of one
(1) year from the Effective Date or (ii) the sale of Employee's home in
Florida. Notwithstanding the foregoing, if, despite Employee's reasonable
efforts, he is unable to sell his primary residence in Florida within 90
days from the Effective Date, Employer will reimburse Employee the
reasonable costs of temporary lodging for up to an additional 90 days.
4. Extent of Services. Employee shall devote his full professional time,
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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 in the securities of a company that is listed on a national securities
exchange or is regularly traded by national securities dealers, if such holdings
are passive investments of one percent (1%) or less of the market value of the
outstanding securities of such company 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
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acknowledges that Employer's and affiliates' present and prospective clients,
franchises, contracts, development and marketing plans, acquisitions, operating
data, policies 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
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cause or reason, Employee shall not directly or indirectly, or cause others to,
(i) 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, contracts, development
and marketing plans, acquisitions, operating data and policies, or (ii) without
Employer's prior written consent, offer employment to or employ on behalf of
Employee or any other person, any person who at any time is or has been within
the preceding one (1) year an employee of Employer or any parent, subsidiary or
affiliate of Employer or induce such person, directly or indirectly, to leave
his or her employment. 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 provided by law and the By-Laws
of Employer.
(b) 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, 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, except any rights to receive new stock option grants or rights to
ungranted and unvested 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 amount 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
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credit for unemployment insurance benefits, social security insurance or
like amounts 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.
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, refusal to carry out material duties and
instructions of the Employer's Board of Directors consistent with the
position, material dishonesty, a material 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. Employee shall be entitled to fourteen
(14) days of advance written notice of any such termination, except where
the basis for the termination constitutes conduct on the part of Employee
involving dishonesty or bad faith, and in such latter cases, 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 (14) 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 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.
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(d) In the event of Employee's death during the term of this Agreement, the
Agreement shall terminate as of the date thereof.
11. 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.
12. Board Approval. Notwithstanding any other provision to the
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contrary, this Agreement and all of its term are subject to the approval of the
Employer's Board of Directors and shall not be valid, binding or enforceable
prior to such approval being given.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first set forth above.
Employer:
ATTEST: CHOICE HOTELS INTERNATIONAL, INC.
__________________________ By: ______________________________
Xxxxxxx X. Xxxxx
Vice Chairman and Chief Executive Officer
WITNESS: Employee:
__________________________ __________________________________
Xxxxxx Xxxxxx
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