UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 3, 2016
CHOICE HOTELS INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Delaware | 001-13393 | 52-1209792 | ||
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
1 Choice Hotel Circle, Suite 400, Rockville, Maryland 20850
(Address of Principal Executive Offices) (Zip Code)
(301) 592-5000
(Registrants telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On June 3, 2016, the Company entered into a Transition Services Agreement with David L. White, the Companys former Chief Financial Officer. This Agreement was entered into in connection with Mr. Whites planned departure from the Company previously disclosed by the Company on Form 8-K filed May 24, 2016.
Pursuant to the terms of the Transition Services Agreement, beginning on June 3, 2016 Mr. White will continue to serve as an employee of the Company until September 21, 2016, performing such duties assigned to him by the Companys Chief Executive Officer. During this period, Mr. White will continue to receive compensation and benefits at the same levels provided to him prior to June 3, 2016 other than eligibility to receive grants of equity.
Pursuant to the terms of the Transition Services Agreement, Mr. Whites employment with the Company will terminate on September 21, 2016, and this termination will be deemed a termination without cause under Mr. Whites Non-Competition, Non-Solicitation and Severance Benefit Agreement with the Company (as amended in the manner described below).
Also on June 3, 2016, the Company and Mr. White further amended Mr. Whites Non-Competition, Non-Solicitation and Severance Benefit Agreement with the Company. The amendment: (i) extends the severance benefit period from 70 weeks to 80 weeks; (ii) modifies the definition of competing business for purposes of the non-competition provisions, (iii) extends Mr. Whites participation in the Companys flexible perquisite program for seven months following the termination date, (iv) requires the Company to provide certain additional insurance coverages and make certain expense reimbursements during the severance benefit period; and (v) provides an exception to the severance payment offset requirement to permit non-competitive consulting services of up to $5,000 per month.
This description of the Transition Services Agreement and the Second Amendment to Non-Competition, Non-Solicitation and Severance Benefit Agreement is qualified in its entirety by reference to the copies of these agreements, which are attached to this report as Exhibits 10.1 and 10.2, respectively, and which are incorporated by reference herein.
Item 9.01. Financial Statements and Exhibits.
The following exhibits are filed herewith:
Exhibit 10.1 | Transition Services Agreement between Choice Hotels International, Inc. and David L. White, dated June 3, 2016. |
Exhibit 10.2 | Second Amendment to Non-Competition, Non-Solicitation and Severance Benefit Agreement between Choice Hotels International, Inc. and David L. White, dated June 3, 2016. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: June 7, 2016 | Choice Hotels International, Inc. | |||||
By: | /s/ Simone Wu | |||||
Name: | Simone Wu | |||||
Title: | Senior Vice President, General Counsel, Corporate Secretary & External Affairs |
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EXHIBIT INDEX
10.1 | Transition Services Agreement between Choice Hotels International, Inc. and David L. White, dated June 3, 2016. | |
10.2 | Second Amendment to Non-Competition, Non-Solicitation and Severance Benefit Agreement between Choice Hotels International, Inc. and David L. White, dated June 3, 2016. |
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Exhibit 10.1
TRANSITION SERVICES AGREEMENT
This Transition Services Agreement (Agreement) dated this 3rd day of June, 2016 between Choice Hotels International, Inc. (Employer), a Delaware corporation with principal offices at 1 Choice Hotels Circle, Rockville, Maryland 20850, and David White (Employee), sets forth the terms and conditions governing the employment relationship between Employee and Employer.
1. Employment. Employer will continue to employ Employee as its Senior Vice President, Chief Financial Officer & Treasurer through June 3, 2016 (the Transition Date). Thereafter through the Termination Date (as hereinafter defined), Employee shall remain an employee of Employer and certain subsidiaries in order to provide Employer transition assistance (the Transition), but not serve as Senior Vice President, Chief Financial Officer & Treasurer or otherwise as an officer of Employer or make any policy making decisions on behalf of Employer. During the Transition, Employee shall serve on a reduced work schedule; however, the parties anticipate that the level of services performed by Employee during the Transition will not permit such reduced work schedule to constitute a constructive separation from service as defined under Section 409A of the Internal Revenue Code of 1986, as amended, and the regulations and guidance promulgated thereunder, in particular Treas. Reg. Section 1.409A-1(h)(1)(ii) (collectively, Section 409A). As such, no benefits otherwise payable under any program maintained by the Employer which are subject to Section 409A and which are triggered by a separation from service will commence prior to the expiration of the Transition.
2. Duties. During the Transition, Employee agrees to perform such duties as may be assigned from time to time by Employers Chief Executive Officer and Employee shall be provided office space at Employers Rockville headquarters or such other location as Employer and Employee shall mutually agree upon.
3. Term; Termination of Employment.
(a) The term of this Agreement (the Term) shall begin on June 3, 2016 (the Effective Date) and shall terminate on September 21, 2016 (the Termination Date).
(b) Employees employment will terminate on the Termination Date and Employee will be deemed to have incurred a Separation from Service for purposes of Section 409A as of the Termination Date. Employee will return to Employer, no later than the close of business on the Termination Date, any Choice property, including original and copied computer hardware or software, credit cards, long distance telephone cards, and keys or passcards to Choice buildings. On the next regular payday following the Termination Date, Employer will pay Employee for earned but unpaid salary and all hours earned and unused vacation as of the Termination Date, less customary withholding for federal, state, and local taxes.
(c) The parties acknowledge that Employers termination of Employees employment will constitute a without cause involuntary separation from service, as described in Treas. Reg. Section 1.409A-1(n), and as such will trigger certain benefits to Employee under the Non-Competition, Non-Solicitation and Severance Benefit Agreement dated August 1, 2011 between Employer and Employee (as amended on March 25, 2013 and June 3, 2016).
4. Compensation. Through the Termination Date, Employee shall continue to receive the equivalent compensation that he was receiving on the Effective Date and shall continue to participate in all Employer employee benefit plans, employee welfare plans (including, but not limited to, medical, dental vision), life insurance, disability and all fringe benefits, including vacation, to the extent provided to other senior executive officers of the Employer; except that Employee shall not be entitled to any future equity grants.
5. 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.
6. Termination. This Agreement and Employees employment may be terminated prior to the Termination Date:
(a) By Employer, after written notice to Employee, for Cause, which means a reasonable determination by the Board of Directors (i) of Employees gross negligence, willful misconduct or willful nonfeasance in the performance of duties to Employer, (ii) of Employees material breach of this Agreement, (iii) of Employees conviction following final disposition of any available appeal of a felony, or pleading guilty or no contest to a felony, or (iv) after an investigation in which Employee is accorded his right of due process that Employee has committed a material violation of Employers anti-harassment, anti-corruption, ethics or discrimination policies. Employee shall be entitled to fourteen (14) days advance written notice of termination, except in the case of clause (iii) or if the basis for termination constitutes willful misconduct on the part of Employee involving dishonesty or bad faith, in which case the termination shall be effective upon receipt of notice. Such written notice shall specify in reasonable detail the grounds for Cause and Employee shall have an opportunity to contest or cure such basis for termination during the fourteen (14) day period after receipt of written notice.
(b) By Employee upon written notice to Employer of his resignation.
7. 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 supersedes all previous agreements between the parties with respect to the matters contained herein. 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. Each party agrees to enter into an amendment to this Agreement to the extent such amendment is reasonably required under Section 409 with the understanding that any such amendment shall not, to the extent possible, reduce or change in any way the economic terms set forth herein.
8. Severability. Any invalidity, in whole or in part, of any provision of this Agreement shall not affect the validity of any other of its provisions.
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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: | /s/ Simone Wu | |
Simone Wu | ||
Senior Vice President | ||
Employee: | ||
/s/ David White | ||
David White |
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Exhibit 10.2
SECOND AMENDMENT TO
NON-COMPETITION, NON-SOLICITATION AND SEVERANCE BENEFIT
AGREEMENT
This Second Amendment (Amendment) is made as of June 3, 2016 by and between David White (Employee) and Choice Hotels International, Inc. (Choice), and amends that certain Non-Competition, Non-Solicitation and Severance Benefit Agreement dated August 1, 2011 between the parties, as amended on March 25, 2013 (Agreement).
NOW, THEREFORE, in consideration of the promises contained in this Amendment, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties agree to the following terms:
1. Definition of Severance Benefit Period. The definition of Severance Benefit Period in Section 1(l) is amended by replacing seventy (70) with eighty (80).
2. Definition of Competing Business. The following is added to the end of the definition of Competing Business in Section 1(e):
For purposes of Section 5, Competing Business shall not include Wyndham Hotel Group, LLC, InterContinental Hotels Group, and Hilton Worldwide, Inc.
3. Additional Severance Benefits. The following provisions are added to the end of Section 6 of the Agreement:
(f) for a period of seven months from the Termination Date, Employee shall continue to participate in Choices Flexible Perquisite program at the same level that Employee was participating at the Termination Date. For 2017, the annual maximum amount shall be pro-rated (4/12).
(g) Choice will provide Employee long-term disability coverage during the Severance Benefit Period substantially equivalent to Employees coverage during employment.
(h) With respect to converted basic and option life insurance in place as of the Termination Date, Choice will pay Employees premiums during the Severance Benefit Period.
(i) Choice will continue to provide Employee with Supplemental Executive Life Insurance in place as of the Termination Date through the Severance Benefit Period.
(j) During the Severance Benefit Period, Choice shall reimburse Employee for monthly cell phone charges, up to $250 per month.
(k) During the Severance Benefit Period, Employee shall continue to participate in the Executive Stay At Choice program up to a total reimbursement of $5,000.
(l) During the Severance Benefit Period, Choice shall reimburse Employee for Long-Term Care Insurance premiums for the coverage in place as of the Termination Date.
4. Outplacement Services. Section 6(d) of the Agreement is amended by adding the following to the end thereof:
The outplacement services will be at the level Choice provides for its other NEOs and will be with the firm of Challenger Gray & Christmas.
5. Offset. Section 7 of the Agreement is amended by adding the following to the end thereof:
Notwithstanding the foregoing, Employee shall be permitted to provide independent consulting services to third parties during the Severance Benefit Period without offset to the payments under Sections 6(a) and (b) so long as: (i) such services do not exceed $5,000 per month, and (ii) such services are not provided to a Competing Business.
6. Miscellaneous.
(a) All other provisions of the Agreement not modified by this Amendment remain in full force and effect.
(b) The Agreement and this Amendment contain the entire agreement of the parties, and supersedes all other agreements, discussions or understandings concerning the subject matter. The Agreement may be changed only by an agreement in writing signed by both parties.
Choice Hotels International, Inc. | Employee: | |||||||
By: | /s/ Simone Wu |
/s/ David White |
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Simone Wu | David White | |||||||
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