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Exhibit
10.07A
AGREEMENT AND
RELEASE
This Agreement and Release
(“Agreement”) dated as of February 9, 2007
(“Agreement Date”), is made by and between Joseph
Squeri (“Employee“) and Choice Hotels International,
Inc. (“Choice“).
RECITALS
A. Choice and Employee are
parties to an Employment Agreement dated June 3, 1999
(“Employment Agreement”), the term of which expires
June 3, 2008; and
B. Choice and Employee have
determined to terminate Employee‘s status as an employee of
Choice; and
C. In order to avoid
uncertainty or dispute as to the rights and responsibilities of
Choice and Employee in connection with Employee‘s termination
of employment the parties desire to terminate the Employment
Agreement, except as specifically provided herein, and enter into
this Agreement.
NOW, THEREFORE, in
consideration of the promises contained in this Agreement, and
other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties agree:
1. Termination of
Employment Agreement . Except as otherwise specifically
provided herein, the Employment Agreement is hereby
terminated.
2. Employee‘s
Employment . Employee will cease to serve as an executive
officer of Choice as of the Agreement Date. Employee’s
employment will terminate on March 31, 2007 (“Severance
Date“).
(a) From the Agreement Date
through the Severance Date, Employee will be available as needed by
Choice and report to Choice’s Chief Executive Officer. During
this period, Employee will remain a full-time employee and will
maintain a direct dial telephone number, e-mail access and
secretarial support, but will not be required to maintain regular
office hours. In performing any duties for Choice during this
period, Employee will perform them in a professional and timely
manner. Furthermore, during this period, Employee will refrain from
any conduct that is disruptive of or damaging to its operations,
finances or reputation. Finally, during this period and through the
Termination Date (as defined below), Employee will provide
reasonable cooperation to Choice on transitional matters with
respect to information about which he has knowledge. On or before
the Severance Date, Employee will return all Choice property and
all copies, excerpts or summaries of such property, in his
possession, custody or control. Employee shall not serve as an
employee of any other person or entity prior to the Severance
Date.
(b) From the Agreement Date
through the Severance Date, Employee will be entitled to receive
salary and benefits at the levels provided him immediately prior to
the Agreement Date, less standard deductions, payable in
installments and otherwise in accordance with Choice’s normal
payroll practices, except that Employee will not be entitled to any
new grant of equity-based compensation. Employee will continue to
participate and vest in the Choice employee benefit plans and
programs in which he participated immediately prior to the
Agreement Date, including the Choice Hotels International, Inc.
Amended and Restated Supplemental Executive Retirement Plan, and
will continue to vest in previously granted stock options and
restricted stock. Employee will be paid his full fiscal year 2006
bonus, paid out in accordance with the terms of his 2006 Officer
Management Incentive Plan and at the time that bonuses are paid to
Choice executives generally. For the avoidance of doubt,
Employee’s annual salary rate, currently estimated 2006 bonus
amount, monthly automobile allowance and flexible perquisite
supplemental payment amount and Employee’s outstanding
options and restricted stock are set forth on Exhibit A to this
Agreement.
3. Final Paycheck and
Benefits . On the next regular payday following the Severance
Date, Choice will pay Employee for all earned but unpaid salary and
vacation pay as of the Severance Date, less customary withholding
for federal, state, and local taxes.
4. Payments and Benefits
Through the Termination Date. Choice hereby agrees to provide
Employee the payments and benefits provided for in and subject to
the terms and conditions of Section 7(b) of the Employment
Agreement, as follows:
(a) From the Severance Date
through June 3, 2008 (“Termination Date”),
Employee will be entitled to receive salary, monthly automobile
allowance and flexible perquisite supplemental payments at the
levels set forth on Exhibit A, less standard deductions, payable in
installments and otherwise in accordance with Choice’s normal
payroll practices; provided, however, that the payments due for the
period from April 1, 2007 through September 30, 2007
shall be paid in a lump sum on October 1, 2007 to the extent
necessary to avoid a violation of Section 409A of the Internal
Revenue Code of 1986, as amended (the
“Code“).
(b) Employee shall be
entitled to receive a bonus for fiscal year 2007 calculated based
on actual payout on the EPS portion of the bonus as determined for
all Company officers for 2007, with a target of 65% of the annual
base salary amount set forth on Exhibit A (no individual
performance adjustment), and payable at such time as Choice’s
other officers are paid their fiscal year 2007 bonus (but in no
event earlier than January 1, 2008 or later than
March 15, 2008).
(c) From the Severance Date
through the Termination Date, all stock options and restricted
stock awards outstanding on the Severance Date shall continue to
vest and be exercisable. Such outstanding awards are set forth on
Exhibit A. Employee acknowledges that he shall not be entitled to
new stock option, restricted stock unit or restricted stock grants
after the Agreement Date. All stock options (whether vested or
unvested) that are unexercised as of June 3, 2008 shall
terminate on that date and shall no longer be exercisable.
Restricted stock units subject to performance-based vesting
conditions shall be forfeited in accordance with their terms as of
April 1, 2007 because all performance periods end after
June 3, 2008.
(d) Except as otherwise
specifically stated in this Agreement, the Severance Date shall be
the date of Employee’s termination of employment with Choice
without cause for purposes of determining Employee’s rights
under the terms of any qualified or non-qualified savings, pension,
deferred compensation, insurance and health or welfare benefit
plan; provided, however, that in all events benefits under such
plans shall be adjusted to the extent necessary to comply with
Section 409A of the Code. From the Severance Date through the
Termination Date, Employee shall be entitled to receive medical and
dental benefits to the same extent and at the same cost (if any) to
Employee as applicable from time-to-time to senior executives of
the Company and Employee shall be entitled to convert long-term
disability and life insurance benefits to individual coverage at
his own cost pursuant to the terms of such benefits. Employee shall
be eligible to elect COBRA health continuation benefits effective
as of the Termination Date pursuant to Choice‘s health
benefit plans then in effect. Employee's nonqualified deferred
compensation balances (his balance under the Executive Deferred
Compensation Plan is set forth on Exhibit A) shall be paid to
Employee pursuant to the terms of the applicable nonqualified
deferred compensation plans.
(e) From the Severance Date
through the Termination Date, Choice will pay all premiums for the
supplemental executive life insurance that is owned by Employee and
is in force as of the Agreement Date.
(f) Employee may retain his
home computer provided by Choice, provided that Employee shall
bring such computer to Choice‘s premises as soon as
reasonably possible following the Agreement Date so that Choice may
remove all licensed software from such computer.
5. Deductions . Choice
may deduct from the payments otherwise provided for in
Section 4(a) any deductions for medical, dental and insurance
benefits to the same extent and at the same cost to Employee (if
any) as
2
applicable from time-to-time to senior
executives of the Company, and Employee consents to the customary
deductions for such benefits from the payments under
Section 4(a). Choice will stop optional deductions for items
such as retirement plans with Employee’s last paycheck for
regular hours worked through the Severance Date.
6. Unemployment
Benefits . Employee agrees that Employee is not entitled to any
unemployment benefits, and that Employee does not intend to seek
any unemployment benefits, through the Termination Date. Choice
will not contest Employee’s claim for unemployment benefits
after the Termination Date ends.
7. Offset . Employee
shall not be required to mitigate damages but nevertheless shall be
entitled to pursue other employment, and Choice shall be entitled
to receive as an offset and thereby reduce the salary and bonus
payments provided for in Section 4(a) and (b) of this
Agreement by the amount received by Employee from any other active
employment between the Severance Date and the Termination Date. As
a condition to Employee receiving the salary and bonus payments
provided for in Section 4(a) and (b) of this Agreement
from Choice, Employee agrees to permit verification of his
employment records and income tax returns by an independent
attorney or accountant, selected by Choice but reasonably
acceptable to Employee, who agrees to preserve the confidentiality
of the information disclosed by Employee except to the extent
required to permit Choice to verify the amount received by Employee
from other active employment. For purposes of this Section 7,
the amount received by Employee shall mean any amount of salary or
bonus (but not including any equity-based compensation) paid,
earned or accrued for service during the period between the
Severance Date and the Termination Date and shall include
unemployment insurance benefits, social security insurance or other
like amounts payable during periods of unemployment regardless of
when actually received by Employee.
8. Mutual Release
.
(a) Employee agrees, in
consideration for the benefits and agreements provided under this
Agreement, to irrevocably and unconditionally release Choice,
Choice Hotels International Services Corp., and each of their
respective officers, directors, shareholders, employees, agents,
insurers, lawyers, representatives, employee welfare benefit plans
and pension or deferred compensation plans under Section 401
of the Code, and their trustees, administrators and other
fiduciaries; and all persons acting by, through, under or in
concert with them, or any of them (collectively “Choice
Releasees”), of and from any and all manner of action or
actions, cause or causes of action, in law or equity, suits, debts,
liens, contracts, agreements, promises, liability, claims, demands,
grievances, damages, loss, cost or expense, of any nature
whatsoever, known or unknown, fixed or contingent, which Employee
now has or may later have against the Choice Releasees, or any one
of them, by reason of any matter, cause, or thing from the
beginning of time to the Effective Date of this Agreement arising
out of, based on, or relating to the hire, employment, termination,
or remuneration of Employee or any other matter (“Choice
Claims“). The Choice Claims that Employee is releasing
include, but are not limited to, a release of any rights or claims
Employee 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 Civil Rights Act of 1991; the Equal Pay Act, which prohibits
paying men and women unequal pay for equal work; the Americans with
Disabilities Act; the Family and Medical Leave Act; and any other
federal, state or local laws or regulations prohibiting employment
discrimination, harassment or retaliation. Employee also releases
Choice Claims for breach of contract, wrongful discharge,
compensation and benefits, expenses, bonuses, or any other employee
rights or benefits, or any other actions sounding in tort or
contract relating to Employee’s employment and termination
from Choice. This Agreement covers both Choice Claims Employee
knows about and those Employee may not know about except for any
Choice Claim of which Employee is unaware as of the date hereof due
to Choice‘s fraud or active concealment. Employee assumes the
risk of any and all unknown Choice Claims that may exist at the
time Employee signs this Agreement, and Employee agrees that this
Agreement shall apply to
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