Document:

SECOND AMENDED AND RESTATED

Non-Competition, Non-Solicitation & Severance Benefit Agreement

This Non-Competition, Non-Solicitation & Severance Benefit Agreement ("Agreement") is entered into this 25th day of January 2008 between Choice Hotels International, Inc. ("Choice"), a Delaware corporation with principal offices at 10750 Columbia Pike, Silver Spring, Maryland 20901, and Bruce N. Haase ("Employee").

Recitals

A.  Employee is a management-level employee of Choice or a subsidiary of Choice (collectively, "Choice");

B.  Choice devotes significant time, resources and effort to the training and advancement of its management employees, and its management team constitutes a significant asset and important competitive edge;  

C.  Choice has determined that it is in the best interest of the company and its shareholders to enter into an agreement with Employee whereby Employee agrees to certain non-competition, non-solicitation and confidentiality restrictions in consideration of, among other things, certain severance benefits.

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 to the following terms:

 

1.  Definitions.  As used in this Agreement, the following terms shall have the ascribed meaning:

(a) "Board" means the Board of Directors of Choice.

(b)  "Cause" means any one or more of the following: (i) Employee's deliberate and continued refusal to carry out duties and instructions of the Board and CEO consistent with the position; (ii)  Employee's commission of an act materially detrimental to the financial condition, operations and/or goodwill of Choice; (iii) Employee's gross negligence or willful misconduct in the performance of duties to Choice; (iv) Employee's commission of any act of theft, fraud, dishonesty, breach of trust or breach of fiduciary duty involving Choice; (v) Employee's conviction of, or plea of guilty or nolo contendere to, a felony or any crime involving moral turpitude, fraud or embezzlement; (vi) any breach by Employee of the covenants contained in this Agreement, or (vii) the material violation by Employee of any Choice policy or any statutory or common law duty to Choice.

(c)  "Change in Control" means the happening of the earliest of the following to occur:
(i)Any "person" as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (other than (i) Choice, (ii) any trustee or other fiduciary holding securities under an employee benefit plan of Choice, (iii) any corporations owned, directly or indirectly, by the stockholders of Choice in substantially the same proportions as their ownership of stock, or (iv) Stewart Bainum, his wife, their lineal descendants and their spouses (so long as they remain spouses) and the estate of any of the foregoing persons, and any partnership, trust, corporation or other entity to the extent shares of common stock (or their equivalent) are considered to be beneficially owned by any of the persons or estates referred to in the foregoing provisions of this subsection 1(c) or any transferee thereof) becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of Choice representing 33% or more of the combined voting power of Choice's then outstanding voting securities.

(ii)Individuals constituting the Board on the date of this Agreement and the successors of such individuals ("Continuing Directors") cease to constitute a majority of the Board.  For this purpose, a director shall be a successor if and only if he or she was nominated by a Board (or a Nominating Committee thereof) on which individuals constituting the Board on the date of this Agreement and their successors (determined by prior application of this sentence) constituted a majority.

(iii)The stockholders of Choice approve a plan of merger or consolidation ("Combination") with any other corporation or legal person, other than a Combination which would result in stockholders of Choice immediately prior to the Combination owning, immediately thereafter, more than sixty-five percent (65%) of the combined voting power of either the surviving entity or the entity owning directly or indirectly all of the common stock, or its equivalent, of the surviving entity; provided, however, that if stockholder approval is not required for such Combination, the Change in Control shall occur upon the consummation of such Combination.

(iv)The stockholders of Choice approve a plan of complete liquidation of Choice or an agreement for the sale or disposition by Choice of all or substantially all of Choice's stock and/or assets, or accept a tender offer for substantially all of Choice's stock (or any transaction having a similar effect); provided, however, that if stockholder approval is not required for such transaction, the Change in Control shall occur upon consummation of such transaction.

(d)  "Change in Control Termination" means and includes the termination of Employee's employment with Choice at any time during the twelve (12) month period after a Change in Control if such termination is (i) by Choice for any reason other than Cause, (ii) by Employee for Good Reason.

(e)  "Competing Business" means any business or enterprise that: (i) is engaged in the mid-market or economy hotel franchising business, (ii) competes in the same upscale, select service segment as Cambria Suites or any successor or substantially similar Choice brand, or (iii) competes in any other line of business in which Choice is materially engaged at the time of the Termination Date.

(f)  "Confidential Information" means any non-public information, in any format, relating to the business of Choice, including, but not limited to, present or prospective operating, marketing and development plans, training manuals, training policies and procedures, financial and technical information, passwords, source codes, personnel information, franchisee information, business systems, trade secrets, pricing and cost information, contact lists, strategic plans or strategies, operating data or Choice policies.

(g)  "Disability" means if Employee is unable to perform the essential functions of Employee's position, after any legally required reasonable accommodation, for more than 180 days (whether or not consecutive) in any period of 365 consecutive days.

(h)  "Good Reason" means a voluntary termination by Employee following a change in Choice's CEO and a material, substantial change in either Employee's compensation or position and responsibilities, provided such termination occurs within forty-five days of the change in compensation or position.  Employee must provide Choice with at least thirty (30) days' prior written notice of electing a Good Reason termination.  

(i)  "Release Agreement" means the release of claims attached as Exhibit A.

(j)  "Severance Benefits" means the benefits specified in Section 5.

(k)  "Severance Benefit Period" means the eighteen (18) month period following the Termination Date.

(l)  "Termination Date" means the date the Employee's employment with Choice ends.

(m)  "Works" means any ideas, concepts, methods of operation, processes, programs or other materials (including training manuals, policies and procedures) that Employee conceived, created, developed or wrote while employed by Choice that relate in any manner to the business of Choice. 

2.  Confidentiality.  Employee acknowledges that Confidential Information and Works are valuable and unique assets belonging to Choice.  During employment and after the Termination Date, Employee shall not , except as required by law or by Employee's duties for Choice and for the benefit of Choice, directly or indirectly, or cause others to, make use of or disclose to others any Confidential Information or Works.  Notwithstanding the foregoing, Confidential Information does not include information which was or becomes generally available to the public other than as a result of a disclosure by Employee.  Works constitute works made for hire and in all circumstances shall be and remain the sole and exclusive property of Choice, whether or not protectable under any laws, including patent, trademark, copyright or trade secret laws.  

3.  Non-Solicitation.  During employment and for a period of eighteen (18) months after the Termination Date, Employee agrees, except as required by Employee's duties for Choice and for the benefit of Choice or with the prior written consent of Choice,  not to solicit or attempt to solicit, directly or indirectly, on Employee's behalf or on behalf of any other person or entity, any person or entity who then is or who was as of the Termination Date, an employee, business partner or franchisee of Choice, or was actively solicited to have such a relationship with Choice within six (6) months prior to the Termination Date, to cease, curtail or refrain from entering into such a relationship with Choice.  Nothing in the foregoing shall be construed as preventing Employee from otherwise lawfully soliciting business from any then current or prospective business partner or franchisee that is for a line of business other than any Competing Business.

4.  Non-Competition.  During employment and for a period of eighteen (18) months after the Termination Date, Employee will not, except as required by Employee's duties for Choice and for the benefit of Choice, or with the prior written consent of the Board, directly or indirectly, own, manage, operate, join, control, finance or participate in the ownership, management, operation, control or financing of, or be connected as an officer, director, employee, partner, principal, agent, representative, consultant or in any other capacity, or use or permit Employee's name to be used in connection with, any business or enterprise that is engaged in a Competing Business in the U.S. or Canada; provided, however, that the foregoing shall not be construed as preventing Employee from otherwise lawfully (i) investing Employee's assets in (A) the securities of any Competing Business that is a public company, or (B) the securities of any Competing Business that is a privately-held corporation, limited partnership, limited liability company or other business entity, if such holdings are passive investments of one percent (1%) or less of such entity's outstanding securities or (ii) becoming an employee, agent or representative of, consultant to, or otherwise connected with, any business entity that has multiple lines of business, some of which are not a Competing Business, if Employee's services for such entity are restricted so that Employee will provide no services or other assistance in support of, and will not otherwise be involved with, any such Competing Business conducted by such entity.

5.  Severance Benefits.  If Employee terminates for Good Reason or is terminated by Choice for any reason other than Cause, Change in Control Termination, Disability or death and Employee executes the Release Agreement within twenty-one (21) days of the Termination Date (or forty-five (45) days if such longer review period is required by the ADEA) and has not revoked the Release Agreement as permitted therein, Choice shall provide to Employee, in consideration of Employee's promises and covenants contained in this Agreement and the Release Agreement, a Severance Benefit equal to:
(a)  During the Severance Benefit Period, a bi-weekly payment equal to Employee's bi-weekly base salary rate on the Termination Date, less standard deductions, payable in installments in accordance with Choice's normal payroll practices ("Discretionary Pay") ;

(b)  Any bonus(es) that would have otherwise been paid during the Severance Benefit Period.  Such bonuses shall be paid at 100% of Employee's target under the applicable bonus plan.

(c)  Stock option and stock awards granted under Choice's Long-Term Incentive Plan after the date of this Agreement shall continue to vest and be exercisable during the Severance Benefit Period. At the end of the Severance Benefit Period, vesting shall cease and Employee shall have 90 days thereafter to exercise all stock options that are vested at the end of the Severance Benefit Period.

(d)  During the Severance Benefit Period, Choice will provide Employee at its expense with its standard outplacement services for executive level employees. Upon obtaining other employment, Employee will be ineligible to continue receiving these outplacement services at Choice's expense.

(e)  During the Severance Benefit Period, (i) Employee may continue deductions for medical, dental, and pre-tax spending accounts while receiving Discretionary Pay, and Employee consents to the customary deductions for such benefits from Discretionary Pay, and (ii) Choice will continue to pay employer contributions to Employee's medical and dental insurance, and pre-tax spending accounts while Employee is receiving Discretionary Pay.  Choice will stop optional deductions for items such as retirement plans and life insurance with Employee's last paycheck for regular hours worked through the Termination Date. Employee will be eligible to continue group health and dental  benefits at Employee's own expense in accordance with and to the extent required by the federal COBRA law. 

6.  Re-employment.  After the Termination Date, Employee shall not be required to mitigate damages as a condition to receiving Severance Benefits, but nevertheless shall be entitled to pursue other employment as permitted by this Agreement.  If Employee chooses to pursue and accept other employment or consulting during the Severance Benefit Period, Choice shall be entitled to receive as an offset, and thereby reduce its payment under Sections 5(a) and (b), the amounts received by Employee from any other active employment.  Employee agrees to notify Choice within seven (7) days of accepting such employment by sending such notice to Choice Hotels International, 10750 Columbia Pike, Silver Spring, Maryland 20901, Attention: Vice President -- Human Resources.  As a condition to Employee receiving the Severance Benefits from Choice, Employee agrees to permit verification of Employee's employment records and Federal 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 amounts received by Employee from other active employment.  Choice shall receive credit for unemployment insurance benefits, social security insurance or like amounts actually received by Employee.   

7.  Change in Control.  

(a)  If, within twelve (12) months after a Change in Control, there occurs a Change in Control Termination, Employee shall receive as severance compensation a lump sum payment in an amount equal to 200% of Employee's base salary at the rate in effect as of the Termination Date, plus 200% of the amount of any full year bonus awarded to Employee for the year immediately preceding the Change in Control (or the target bonus if no such bonus was awarded in the prior year). Additionally, all unvested restricted stock and stock option awards granted after the date of this Agreement and then held by Employee shall automatically become fully vested as of the date of the Change of Control Termination.

(b)  Employee's right to receive the benefits described in Section 7(a) shall be conditioned upon Employee executing the Release Agreement. 

8.  Excise Tax.

(a)  Anything in this Agreement to the contrary notwithstanding, if it shall be determined that any payment or distribution to the Employee or for the Employee's benefit (whether paid or payable or distributed or distributable) pursuant to the terms of this Agreement or otherwise (the "Payment") would be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code (the "Excise Tax"), then the Employee shall be entitled to receive from Choice an additional payment (the "Gross-Up Payment") in an amount such that the net amount of the Payment and the Gross-Up Payment retained by the Employee after the calculation and deduction of all Excise Taxes (including any interest or penalties imposed with respect to such taxes) on the Payment and all federal, state and local income tax, employment tax and Excise Tax (including any interest or penalties imposed with respect to such taxes) on the Gross-Up Payment provided for in this Section, and taking into account any lost or reduced tax deductions on account of the Gross-Up Payment, shall be equal to the Payment;

(b)  All determinations required to be made under this Section, including whether and when the Gross-Up Payment is required and the amount of such Gross-Up Payment, and the assumptions to be utilized in arriving at such determinations shall be made by Accountants which Choice shall request provide the Employee and Choice with detailed supporting calculations with respect to such Gross-Up Payment at the time the Employee is entitled to receive the Payment.  For the purposes of this Section, the "Accountants" shall mean Choice's independent certified public accountants.  All fees and expenses of the Accountants shall be borne solely by Choice.  For the purposes of determining whether any of the Payments will be subject to the Excise Tax and the amount of such Excise Tax, such Payments will be treated as "parachute payments" within the meaning of Section 280G of the Code, and all "parachute payments" in excess of the "base amount" (as defined under Section 280G(b)(3) of the Code) shall be treated as subject to the Excise Tax, unless and except to the extent that in the opinion of the Accountants such Payments (in whole or in part) either do not constitute "parachute payments" or represent reasonable compensation for services actually rendered (within the meaning of Section 280G(b)(4) of the Code) in excess of the "base amount," or such "parachute payments" are otherwise not subject to such Excise Tax; for purposes of determining the amount of the Gross-Up Payment the Employee shall be deemed to pay Federal income taxes at the highest applicable marginal rate of Federal income taxation for the calendar year in which the Gross-Up Payment is to be made and to pay any applicable state and local income taxes at the highest applicable marginal rate of taxation for the calendar year in which the Gross-Up Payment is to be made, net of the maximum reduction in Federal income taxes which could be obtained from the deduction of such state or local taxes if paid in such year (determined without regard to limitations on deductions based upon the amount of the Employee's adjusted gross income); and to have otherwise allowable deductions for Federal, state and local income tax purposes at least equal to those disallowed because of the inclusion of the Gross-Up Payment in the Employee's adjusted gross income.  Any Gross-Up Payment with respect to any Payment shall be paid by Choice at the time the Employee is entitled to receive the Payment.  Any determination by the Accountants shall be binding upon Choice and the Employee.  As a result of uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accountants hereunder, it is possible that the Gross-Up Payment made will have been an amount less than Choice should have paid pursuant to this Section (the "Underpayment').  In the event that Choice exhausts its remedies and the Employee is required to make a payment of any Excise Tax, the Underpayment shall be promptly paid by Choice to or for the Employee's benefit.

9.  Acknowledgments.  Employee and Choice acknowledge and agree as follows:

(a)  The restrictions contained in Sections 2, 3 and 4 are reasonable and necessary to protect and preserve the legitimate interests, properties, goodwill and business of Choice, that Choice would not have entered into this Agreement in the absence of such restrictions and that irreparable injury will be suffered by Choice should the Employee breach any of those provisions.  Employee represents and acknowledges that (i) the Employee has been advised by Choice to consult Employee's own legal counsel at Employee's expense prior to executing  this Agreement, and (ii) that the Employee has had full opportunity, prior to execution of this Agreement, to review thoroughly this Agreement with the Employee's counsel.  

(b)  A breach of any of the restrictions in this Agreement cannot be adequately compensated by monetary damages and Choice shall be entitled to seek preliminary and permanent injunctive relief, without the necessity of proving actual damages, as well as any other appropriate equitable relief, which rights shall be cumulative and in addition to any other rights or remedies to which Choice may be entitled.  

(c)  In the event that any of the provisions of this Agreement should ever be adjudicated to exceed the time, geographic, service, or other limitations permitted by applicable law in any jurisdiction, it is the intention of the parties that the provision shall be amended to the extent of the maximum time, geographic, service, or other limitations permitted by applicable law, that such amendment shall apply only within the jurisdiction of the court that made such adjudication and that the provision otherwise be enforced to the maximum extent permitted by law.  The invalidity of any provision of this Agreement shall not effect the validity of the remaining provisions of this Agreement.

(d)  This Agreement supersedes and extinguishes any rights Employee may have under Choice's standard Severance Benefit Plan.  

(e)  This Agreement shall not be construed as giving the Employee the right to be retained in the service of Choice for any definite period or otherwise to change Employee's status as an at-will employee.

(f)  If required under Section 409A of the Internal Revenue Code, any Severance Benefit or Change of Control payment will made six (6) months following the Termination Date.

(g)  Employee agrees that Employee is not entitled to any unemployment benefits, and, to the extent permitted by law, that Employee does not intend to seek any unemployment benefits, during the Severance Benefit Period.   Choice will not contest Employee's claim for unemployment benefits after the Severance Benefit Period.  

9.  Miscellaneous. 

(a)  This Agreement contains the entire agreement of the parties, and supersedes all other agreements, discussions or understandings concerning the subject matter.  It may be changed only by an agreement in writing signed by both parties.

  

(b)  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 submits to the venue and jurisdiction of said courts.

(c)  No failure by either party hereto at any time to give notice of any breach by the other party of, or to require compliance with, any condition or provision of this Agreement shall be deemed a waiver.

 

 

IN WITNESS WHEREOF, the parties have executed this Agreement on the date first set forth above.

CHOICE HOTELS INTERNATIONAL, INC.

 

By:__________________________________

Tom Mirgon, Senior Vice President

Employee:

_____________________________________

Bruce N. Haase

EXHIBIT A

RELEASE AGREEMENT

 

This Release Agreement ("Release Agreement") is made as of ___________, 20__  by _____________ ("Employee") in favor of Choice Hotels International, Inc. and its subsidiaries  (collectively "Choice").  

WHEREAS, Employee and Choice have previously entered into a Non-Competition, Non-Solicitation and Severance Benefit Agreement dated November __, 2007 ("Agreement"); and

WHEREAS, in consideration for certain covenants and benefits under the Agreement, Employee is obligated to execute this Release Agreement upon termination of employment; 

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 to the following terms:

1.  Last Day Worked.  Employee's employment terminated, or will terminate, on ___________, 20__ ("Termination Date").  Employee will return to Choice, 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, and all other property in Employee's possession, custody or control.

2.   Release.  Employee agrees, in exchange for the benefits set forth in the Agreement, to irrevocably and unconditionally release Choice and its parents, subsidiaries and affiliated entities, and each of their respective officers, directors, shareholders, employees, agents, representatives, insurers, attorneys, employee welfare benefit plans and pension or deferred compensation plans under Section 401 of the Internal Revenue Code of 1954, as amended, and their trustees, administrators and other fiduciaries; and all persons acting by, through, under or in concert with them, and each of their predecessors, successors and assigns 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, 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, including without limitation those arising out of, based on, or relating to the hire, employment, termination, remuneration (including any severance, salary, bonus, incentive or other compensation; vacation sick leave or medical insurance benefits; or any benefits from any employee stock ownership, profit-sharing and/or any deferred compensation plan under Section 401 of the Internal Revenue Code of 1954 ("Claims").  The Claims that Employee is releasing include, but are not limited to, a release of any rights or claims Employee may have under:

	[if applicable: 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 any Claims for wrongful discharge or breach of contract, Claims for fany personal injury or tort, Claims for any compensation, benefits, expenses, bonuses, or any other employee rights or benefits, Claims for employment or reinstatement, Claims for attorneys' fees and costs, and all other Claims under any applicable statute, contract or other cause of action.  This Agreement covers both Claims Employee knows about and those Employee may not know about.  Employee assumes the risk of any and all unknown Claims which may exist at the time Employee signs this Agreement, and Employee agrees that this Agreement shall apply to any and all known and unknown Claims.

3.  No Release of Rights Under Agreement.  By signing this Release Agreement, Employee does not waive or release Employee's right to enforce the Agreement. 

4.  Lawsuits.  To the fullest extent permitted by law, Employee promises never to file a lawsuit, claim, complaint, charge, demand, administrative proceeding, agency action or any other legal proceeding (collectively "Lawsuit") asserting any Claims that are released in this Agreement.  Employee agrees to withdraw with prejudice all Lawsuits, if any, Employee has filed against any Choice Releasee asserting any Claims with any agency or court.  Employee also waives the right to seek or receive any monetary benefits with respect to Lawsuits asserted by administrative agencies or other third parties on Employee's behalf. Employee further agrees not to assist any other person in bringing any Lawsuit against any Choice Releasee, unless compelled to do so pursuant to a valid court order or subpoena. Employee agrees not to make any derogatory remarks or provide and disparaging information about any Choice Releasee.  Employee agrees to reasonably assist Choice in any Lawsuit arising from circumstances that took place during Employee's employment, to the extent reasonably necessary to protect Choice's interests.  Choice will reimburse Employee for all reasonable and necessary expenses Employee incurs in complying with the foregoing sentence, provided they are approved by Choice in writing prior to being incurred.   

5.  No Admission.  Employee agrees that this Release Agreement is not an admission of guilt or wrongdoing by the Choice Releasees, and Employee acknowledges that the Choice Releasees do not believe or admit that they have done anything wrong.  Employee acknowledges that Employee has not suffered any wrongful treatment by any Choice Releasee.

6.  Breach.  If Employee breaches this Release Agreement and files a Lawsuit against any Choice Releasee on Claims that Employee released in this Release Agreement, Employee agrees to pay for all costs incurred by the Choice Releasee, including reasonable attorneys' fees, in defending against Employee's Lawsuit. Employee further agrees not to assist any other person in bringing any Lawsuit against any Choice Releasee, unless compelled to do so pursuant to a valid subpoena or court order.  If Employee breaches the promises in this Release Agreement, Choice may terminate all Severance Benefits under the Agreement that are still owed to Employee.

7.  Governing Law.  This Agreement is governed by Maryland law, without regard to the principles of conflicts of laws.  If a dispute arises under this Agreement, any Lawsuit must be brought exclusively in the courts for Montgomery County, Maryland.  Employee and Choice voluntarily submit to the jurisdiction and venue of said court.

8.  Binding.  Employee agrees and acknowledges this Release Agreement binds Employee's heirs, administrators, representatives, executors, successors, and assigns, and will inure to the benefit of all Choice Releasees and their respective heirs, administrators, representatives, executors, successors, and assigns.

9.  Severability.  Any invalidity, in whole or in part, of any provision of this Release Agreement shall not affect the validity of any other of its provisions.

[If applicable:

10.  Period for Review and Consideration.  Employee has 21 days from the date Employee receives this Release Agreement to review and consider this document before signing it.  Employee may use as much of this 21 day period as Employee wishes before signing this Release Agreement.  Choice advises Employee to consult with an attorney at Employee's own expense before signing this Release Agreement; whether to do so is Employee's decision.  If Employee wishes to sign this Release Agreement and thereafter be eligible to receive the Severance Benefits under the Agreement, Employee must deliver one fully executed original of this Release Agreement, to Choice Hotels International, 10750 Columbia Pike, Silver Spring, Maryland 20901, Vice President-- Human Resources, no later than the close of business on the 21st day after Employee receives this Release Agreement.  Employee's failure to deliver timely the executed Release Agreement will nullify the Agreement, and Employee will not be entitled to receive the Severance Benefits. 

11.  Revocation of Release Agreement. Employee may revoke this Release Agreement within 7 days after signing it (the "Revocation Period").  If Employee wishes to revoke this Release Agreement after signing it, Employee must deliver a written notice of revocation to Choice Hotels International, 10750 Columbia Pike, Silver Spring, Maryland 20901, Attention: Senior Director, Human Resources. Choice must receive this revocation no later than the close of business on the 7th day after Employee signs this Release Agreement.  If Employee revokes this Release Agreement, it shall not be effective or enforceable and Employee will not receive the Severance Benefits under the Agreement.]  This Agreement will not become effective or enforceable until such date that is is signed by both parties and the Revocation Period expires without Employee exercising Employee's right of revocation (the "Effective Date"). 

EMPLOYEE ACKNOWLEDGES THAT EMPLOYEE HAS HAD AN OPPORTUNITY TO REVIEW AND CONSIDER THIS RELEASE AGREEMENT WITH AN ATTORNEY, AND THAT EMPLOYEE HAS HAD SUFFICIENT TIME TO CONSIDER IT.  AFTER SUCH CAREFUL CONSIDERATION, EMPLOYEE KNOWINGLY AND VOLUNTARILY ENTERS INTO THIS RELEASE AGREEMENT WITH FULL UNDERSTANDING OF ITS MEANING AND EFFECT.

Employee:

 

______________________________2006 Long-Term Compensation Program - Form of Performance Grant

 Exhibit 10.1 
 Dominion Resources, Inc. 
 Performance Grant Agreement 
 THIS AGREEMENT, dated              between DOMINION RESOURCES, INC., a Virginia
Company (the “Company”) and              (“Participant”), is made pursuant and subject to the provisions of the Dominion Resources, Inc. 2005 Incentive
Compensation Plan (the “Plan”) to the extent provided below. All terms used herein that are defined in the Plan have the same meaning given them in the Plan. The Performance Grant will be administered by the Organization, Compensation and
Nominating Committee (“OCN Committee”) of the Company’s Board of Directors. 
  

	 	1.	Performance Grant. Pursuant to the Plan, the Participant is granted a Performance Award at a Target Amount of
             on             , subject further to the terms and conditions set forth herein. The actual payout may
be from 0% to 200% of the Target Amount. Payment will be made by March 15, 2008. 

  

	 	2.	TSR Performance Conditions 

 Total Shareholder
Return Performance (“TSR Performance”) shall determine fifty percent (50%) of the Target Amount (“TSR Percentage”). TSR Performance is defined in Exhibit A. The Performance Period for the TSR Performance is the period
beginning April 1, 2006 and ending December 31, 2007. The portion of the 50% of the Target Amount that will be paid out, if any, is based on the following table. 
  

			
	 Relative TSR Performance
	  	Percentage Payout
of TSR Percentage
	 Top Quartile - 75 % to 100%
	  	150% - 200%
	 2nd Quartile - 50% to 74.9%
	  	100% - 149.9%
	 3rd Quartile - 25% to 49.9%
	  	50% - 99.9%
	 4th Quartile - below 25%
	  	0%

 To the extent that the Company’s TSR Performance ranks in a percentile within the 1st, 2nd or
3rd Quartiles of Relative TSR Performance, then the TSR Percentage Payout shall be interpolated between the top and bottom of the Percentage Payout of TSR Percentage range for that Quartile. 
 No payment will be made if the TSR Performance is in the 4th Quartile, except that a payment of 25% of the TSR Percentage shall be made if the
Company’s TSR Performance was at least         % on a compounded annual basis for the Performance Period. 
  

	 	3.	ROIC Performance Conditions 

 Return on Invested
Capital Performance (“ROIC Performance”) shall determine fifty percent (50%) of the Target Amount (“ROIC Percentage”). ROIC Performance is defined in Exhibit A. The Performance Period for the ROIC Performance is the period
beginning January 1, 2006 and ending December 31, 2007. The portion of the 50% of the Target Amount that will be paid out is based on the following table. 
  

			
	 ROIC Performance
	  	Percentage Payout
of ROIC Percentage
	 7.8% or greater
	  	200%
	 7.6% - 7.79%
	  	150% - 199.9%
	 7.4% - 7.59%
	  	100% - 149.9%
	 7.2% - 7.39%
	  	50% - 99.9%
	 Below 7.2%
	  	0%

 To the extent that the Company’s ROIC Performance is between 7.2% and 7.8%, then the ROIC Percentage
payout shall be interpolated between the top and bottom of the applicable Percentage Payout of ROIC Percentage range set forth above. 
 The
ROIC Performance in the table is based on the Company’s actual 2006 budget and the projected 2007 budget at the date of grant. The ROIC Performance may be adjusted by the OCN Committee based on the Company’s actual 2007 budget. Any
adjustments to the ROIC Performance will be communicated to the Participant when made. 
  

	 	4.	Terms and Conditions. 

  

	 	a.	Employment. Except as provided in paragraphs 5 or 6, the Participant’s rights in the Performance Award shall be forfeited if his employment with the Company or a
Dominion Company terminates before December 31, 2007. 

  

	 	b.	Nontransferability. No rights in the Performance Award are transferable. 

  

	 	5.	Retirement, Death, Disability and Termination without Cause. 

  

	 	a.	Retirement. If the Participant Retires and would have been eligible for a payment under paragraphs 2 or 3 if the Participant had remained employed until December 31,
2007, the Participant shall receive the amount determined under paragraphs 2 and/or 3 as if the Participant had remained employed times the fraction of (A) the number of completed months from April 1, 2006 to the Participant’s
Retirement divided by (B) 21 months. Payment shall be made at the time provided in paragraph 1. 

  

	 	b.	Death, Disability or Termination Without Cause. If the Participant dies, becomes Disabled or is terminated without Cause as defined in the Participant’s Employment
Continuity Agreement, the Participant shall receive a lump sum cash payment equal to the total compensation cost recognized by the Company for this Performance Award from the Date of Grant through the latest financial statement filed with the
Company’s Annual Report on Form 10-K or Quarterly Report on Form 10-Q immediately prior to the event. Payment shall be made within 30 days of the termination, provided that payment shall be made six months after the termination if the payment
is subject to Section 409A of the Code and the Executive is a Specified Employee (within the meaning of Section 409A(a)(2)(B)(i) of the Code). 

  

	 	6.	Change of Control. Upon a Change of Control, the Participant shall receive a lump sum cash payment, within 15 days of the Change of Control, equal to the greater of
(A) the Target Amount or (B) the total payout that would be made at the end of the Performance Period if the predicted performance used for determining the compensation cost recognized by the Company for this Performance Award for the
latest financial statement filed with the Company’s Annual Report on Form 10-K or Quarterly Report on Form 10-Q immediately prior to the Change of Control was the actual performance for the Performance Period. 

  

	 	7.	Retirement. For purposes of this Agreement, the term Retire or Retirement means termination when the Participant is eligible for early, normal or delayed retirement as
defined in the Dominion Pension Plan, or would be eligible if any crediting of deemed additional years of age or service applicable to the Participant under the Company’s Benefit Restoration Plan or New Benefit Restoration Plan were applied
under the Pension Plan, as in effect at the time of the determination. 

  

	 	8.	No Right to Continued Employment. This Performance Award does not confer upon the Participant any right with respect to continuance of employment by the Company or a Dominion
Company, nor shall it interfere in any way with the right of the Company or a Dominion Company to terminate the Participant’s employment at any time. The Committee reserves the right to reduce the amount paid to a Participant below the
calculated amount earned under this Performance Award or pay no amount at all to the Participant. 

  

 2 

	 	9.	Tax Withholding. The Company will withhold from any payment the aggregate amount of federal, state and local income and payroll taxes that the Company is required to withhold
on the payment. 

  

	 	10.	Application of the Plan. The portions of the Performance Award relating to TSR Performance are subject to the terms and conditions of the Plan. It is intended that payments
for TSR Performance under this Performance Award to a Participant who is a “covered employee” constitute “qualified performance-based compensation” within the meaning of section 1.162-27(e) of the Income Tax Regulations. The
Committee will certify the TSR Performance. To the maximum extent possible, this Performance Award and the Plan shall be interpreted and construed consistent with this paragraph 10. 

  

	 	11.	Governing Law. This Agreement shall be governed by the laws of the Commonwealth of Virginia. 

  

	 	12.	Conflicts. In the event of any conflict between the provisions of the Plan as in effect on the date of the award and the provisions of this Agreement, the provisions of the
Plan shall govern. All references herein to the Plan shall mean the Plan as in effect on the date of the Performance Grant, as it may be amended from time to time. 

  

	 	13.	Participant Bound by Plan. The Participant hereby acknowledges receipt of a copy of the Plan and agrees to be bound by all the terms and provisions thereof.

  

	 	14.	Binding Effect. Subject to the limitations stated above and in the Plan, this Agreement shall be binding upon and inure to the benefit of the legatees, distributees, and
personal representatives of the Participant and the successors of the Company. 

 IN WITNESS WHEREOF the Company has caused
this Agreement to be signed by a duly authorized officer. 
  

			
	Dominion Resources, Inc.
		
	By:	 	  

		 	Thomas F. Farrell, II
		 	President and Chief Executive Officer

  

 3 

 EXHIBIT A 
 Total Shareholder Return 
 The TSR Performance will be measured based on where the Company’s
total shareholder return during the Performance Period ranks in relation to the total shareholder returns of the Comparison Companies during such period. In general, Total Shareholder Return consists of the difference between the value of a share of
common stock at the beginning and end of the Performance Period, plus the value of dividends paid as if reinvested in stock and other appropriate adjustments for such events as stock splits. For purposes of TSR Performance, the total shareholder
return of the Company and the Comparison Companies will be the total shareholder return as calculated by Bloomberg L.P. As soon as practicable after the completion of the Performance Period, the total shareholder returns of the Comparison Companies
will be obtained from Bloomberg L.P. and ranked from highest to lowest. The Company’s total shareholder return will then be ranked in terms of which percentile it would have placed in among the Comparison Companies. 
  

			
	The Comparison Companies are:	  	
		
	American Electric Power Company	  	Duke Energy Corp.
	Entergy Corp.	  	Exelon Corp.
	FirstEnergy Corp.	  	FPL Group, Inc.
	NiSource Inc.	  	PPL Corporation
	Progress Energy, Inc.	  	Southern Co.

 Return on Invested Capital 
 ROIC shall mean Total Return divided by Average Invested Capital for the two-year Performance Period. 
 Total Return is Operating Earnings (as disclosed on the Company’s earnings report filed on Form 8-K) + After-tax Interest & PSST Expenses +
Preferred Dividends, all determined for the two-year Performance Period. 
 Average Invested Capital is the Average Balances for
Long & Short-term Debt + PSST + MC + Preferred Equity + (Common Equity excluding AOCI). The Average Balances for a year are calculated by performing the calculation at the end of each month during the fiscal year plus the last month of the
prior fiscal year and then averaging those amounts over 13 months. For the final calculation, the Average Invested Capital for 2006 and 2007 are combined. 
 PSST is the preferred securities of subsidiary trusts shown as junior subordinated notes payable to affiliated trusts (five subsidiary capital trusts) on the Company’s financial statements. 
 MC is mandatory convertible debt. 
 AOCI is
accumulated other comprehensive income as shown on the Company’s financial statements.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00135-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00135-of-00352.parquet"}]]