EXHIBIT 10.3
AGREEMENT FOR PRESIDENT'S COUNCIL
---------------------------------
ARAMARK CORPORATION
AGREEMENT RELATING TO EMPLOYMENT AND
POST-EMPLOYMENT COMPETITION
This Agreement is between the undersigned individual ("Employee") and ARAMARK
CORPORATION ("ARAMARK").
RECITALS
--------
WHEREAS, ARAMARK is a leading provider of managed services to business
and industry, private and public institutions, and the general public, in the
following business groups: food and support services; uniform and career
apparel; and educational resources;
WHEREAS, ARAMARK has a proprietary interest in its business and
financial plans and systems, methods of operation and other secret and
confidential information, knowledge and data ("Proprietary Information") which
includes, but is not limited to, all confidential, proprietary or non-public
information, ideas and concepts; annual and strategic business plans; financial
plans, reports and systems including, profit and loss statements, sales,
accounting forms and procedures and other information regarding costs, pricing
and the financial condition of ARAMARK and its business segments and groups;
management development reviews, including information regarding the capabilities
and experience of ARAMARK employees; intellectual property, including patents,
inventions, discoveries, research and development, compounds, recipes, formulae,
reports, protocols, computer software and databases; information regarding
ARAMARK's relationships with its clients, customers, and suppliers and
prospective clients, partners, investors, vendors, customers and suppliers;
policy and procedure manuals, information regarding materials and documents in
any form or medium
1
(including oral, written, tangible, intangible, or electronic) concerning any of
the above, or any past, current or future business activities of ARAMARK that is
not publicly available; compensation, recruiting and training, and human
resource policies and procedures; and data compilations, research, reports,
structures, compounds, techniques, methods, processes, know-how, and whereas all
such Proprietary Information is developed at great expense to ARAMARK and is
considered by ARAMARK to be confidential trade secrets;
WHEREAS, Employee will, as a senior manager, have access to ARAMARK's
Proprietary Information, directly in the course of Employee's employment, and
indirectly through interaction with and presentations by other senior managers
at the Executive Leadership Institute, Executive Leadership Council meetings,
President's Council meetings and the like;
WHEREAS, ARAMARK will introduce Employee to ARAMARK clients,
customers, suppliers and others, and will encourage, and provide resources for,
Employee to develop personal relationships with ARAMARK's clients, customers,
suppliers and others;
WHEREAS, ARAMARK has provided and will continue to provide specialized
training and skills to Employee in connection with the performance of Employee's
duties at ARAMARK which training involves the disclosure by ARAMARK to Employee
of Proprietary Information;
WHEREAS, pursuant to the merger of ARAMARK with and into its wholly-
owned subsidiary, ARAMARK Worldwide Corporation, each share of Class B common
stock of ARAMARK held by Employee will be converted into two shares of Class A
common stock of the surviving corporation, which following the initial public
offering of the Class B common stock of the surviving corporation (collectively,
the "Transaction") and the expiration of the applicable transfer restrictions
set forth in the Certificate of Incorporation of the surviving
2
corporation will be freely tradeable (subject to restrictions imposed by
applicable securities laws) and no longer subject to the restrictions of the
Stockholders Agreement;
WHEREAS, ARAMARK will be vulnerable to unfair post-employment
competition by Employee because Employee will have access to and knowledge of
ARAMARK's Proprietary Information, will have a personal relationship with
ARAMARK's clients, customers, suppliers and others, and will generate good will
which Employee acknowledges belongs to ARAMARK;
NOW, THEREFORE, in consideration of the benefits received by Employee
in connection with the Transaction, the award of non-qualified stock options
under the ARAMARK 2001 Equity Incentive Plan, the severance and other post-
employment benefits provided for herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Employee agrees to enter into this Agreement with ARAMARK as a condition of
employment pursuant to which ARAMARK will limit Employee's right to compete
against ARAMARK during and following termination of employment on the terms set
forth in this Agreement. Intending to be legally bound, the parties agree as
follows:
ARTICLE 1. NON-DISCLOSURE AND NON-DISPARAGEMENT AGREEMENT: Employee shall not,
----------------------------------------------------------
during or after termination of employment, directly or indirectly, in any manner
utilize or disclose to any person, firm, corporation, association or other
entity, except where required by law, any Proprietary Information which is not
generally known to the public, or has not otherwise been disclosed or recognized
as standard practice in the industries in which ARAMARK is engaged. Employee
shall, during and after termination of employment, refrain from making any
statements or comments of a defamatory or disparaging nature to any third
3
party regarding ARAMARK, or any of ARAMARK's officers, directors, personnel,
policies or products, other than to comply with law.
ARTICLE 2. NON-COMPETITION AGREEMENT:
-------------------------------------
A. Subject to Article 2. B. below, Employee, during Employee's period of
employment with ARAMARK, and for a period of two years following the
voluntary or involuntary termination of employment, shall not, without
ARAMARK's written permission, which shall be granted or denied in ARAMARK's
sole discretion, directly or indirectly, associate with (including, but not
limited to, association as a sole proprietor, owner, employer, partner,
principal, investor, joint venturer, shareholder, associate, employee,
member, consultant, contractor or otherwise), or acquire or maintain
ownership interest in, any Business which is competitive with that
conducted by or developed for later implementation by ARAMARK at any time
during the term of Employee's employment, provided, however, if Employee's
employment is (i) involuntarily terminated by ARAMARK for any reason other
than Cause (as defined herein), or (ii) terminated by Employee for Good
Reason (as defined in Exhibit A) at any time following a Change of Control
(as defined in Exhibit A), then the term of the non-competition provision
set forth herein will be modified to be one year following such termination
of employment. For purposes of this Agreement, "Business" shall be defined
as a person, corporation, firm, LLC, partnership, joint venture or other
entity. Nothing in the foregoing shall prevent Employee from investing in a
Business that is or becomes publicly traded, if Employee's ownership is as
a passive investor of less than 1% of the outstanding publicly traded stock
of the Business.
B. The provision set forth in Article 2.A above, shall apply to (i) all fifty
states, and (ii) each foreign country, possession or territory in which
ARAMARK may be engaged in, or have
4
plans to engage in, business (x) during Employee's period of employment, or
(y) in the case of a termination of employment, as of the effective date of
such termination or at any time during the twenty-four month period prior
thereto.
C. Employee acknowledges that these restrictions are reasonable and necessary
to protect the business interests of ARAMARK, and that enforcement of the
provisions set forth in this Article 2 will not unnecessarily or
unreasonably impair Employee's ability to obtain other employment following
the termination (voluntary or involuntary) of Employee's employment with
ARAMARK. Further, Employee acknowledges that the provisions set forth in
this Article 2 shall apply if Employee's employment is involuntarily
terminated by ARAMARK for Cause; as a result of the elimination of
employee's position; for performance-related issues; or for any other
reason or no reason at all.
ARTICLE 3. NON-SOLICITATION: During the period of Employee's employment with
----------------------------
ARAMARK and for a period of two years following the termination of Employee's
employment, regardless of the reason for termination, Employee shall not
directly or indirectly through another entity: (i) induce or encourage any
employee of ARAMARK to leave the employ of ARAMARK, (ii) hire any individual who
was an employee of ARAMARK as of the date of Employee's termination of
employment or within a six month period prior to such date, or (iii) induce or
encourage any customer, licensee or other business relation of ARAMARK to cease
or reduce doing business with ARAMARK or in any way interfere with the
relationship between any such customer, licensee or business relation and
ARAMARK.
ARTICLE 4. DISCOVERIES AND WORKS: Employee hereby irrevocably assigns,
----------------------------------
transfers, and conveys to ARAMARK to the maximum extent permitted by applicable
law Employee's right, title and interest now or hereinafter acquired, in and to
all Discoveries and Works (as defined below) created, invented, designed,
developed, improved or contributed to by
5
Employee, either alone or jointly with others, while employed by ARAMARK and
within the scope of Employee's employment and/or with the use of ARAMARK's
resources. The terms "Discoveries and Works" include all works of authorship,
inventions, intellectual property, materials, documents, or other work product
(including, without limitation, Proprietary Information, patents and patent
applications, patentable inventions, research, reports, software, code,
databases, systems, applications, presentations, textual works, graphics and
audiovisual materials). Employee shall have the burden of proving that any
materials or works created, invented, designed, developed, contributed to or
improved by Employee that are implicated by or relevant to employment by ARAMARK
are not implicated by this provision. Employee agrees to (i) keep accurate
records and promptly notify, make full disclosure to, and execute and deliver
any documents and to take any further actions requested by ARAMARK to assist it
in validating, effectuating, maintaining, protecting, enforcing, perfecting,
recording, patenting or registering any of its rights hereunder, and (ii)
renounce any and all claims, including, without limitation, claims of ownership
and royalty, with respect to all Discoveries and Works and all other property
owned or licensed by ARAMARK. Any Discoveries and Works that, within six months
after the termination of Employee's employment with ARAMARK, are made,
disclosed, reduced to a tangible or written form or description, or are reduced
to practice by Employee and which pertain to the business carried on or products
or services being sold or developed by ARAMARK at the time of such termination
shall, as between Employee and ARAMARK, be presumed to have been made during
such employment with ARAMARK. Employee acknowledges that, to the fullest extent
permitted by law, all Discoveries and Works shall be deemed "works made for
hire" under the Copyright Act of 1976, as amended, 17 U.S.C. Section 101.
Employee hereby grants ARAMARK a perpetual, nonexclusive, royalty-free,
worldwide, assignable, sublicensable license under all rights and intellectual
property rights (including patent, industrial property,
6
copyright, trademark, trade secret, unfair competition and related laws) in any
Works and Discoveries, for all purposes in connection with ARAMARK's current and
future business, that Employee has created, invented, designed, developed,
improved or contributed to prior to Employee's employment with ARAMARK that are
relevant to or implicated by such employment ("Prior Works"). Any Prior Works
are disclosed by Employee in Schedule A.
ARTICLE 5. REMEDIES: Employee acknowledges that in the event of any violation
--------------------
by Employee of the provisions set forth in Articles 1, 2, 3 or 4 above, ARAMARK
will sustain serious, irreparable and substantial harm to its business, the
extent of which will be difficult to determine and impossible to fully remedy by
an action at law for money damages. Accordingly, Employee agrees that, in the
event of such violation or threatened violation by Employee, ARAMARK shall be
entitled to an injunction before trial before any court of competent
jurisdiction as a matter of course upon the posting of not more than a nominal
bond, in addition to all such other legal and equitable remedies as may be
available to ARAMARK. If ARAMARK is required to enforce the provisions set
forth in Articles 2 and 3 above by seeking an injunction, Employee agrees that
the relevant time periods set forth in Articles 2 and 3 shall commence with the
entry of the injunction. Employee further agrees that, in the event any of the
provisions of this Agreement are determined by a court of competent jurisdiction
to be invalid, illegal, or for any reason unenforceable as written, such court
shall substitute a valid provision which most closely approximates the intent of
the invalid provision and which would be enforceable to the maximum extent
permitted by law.
ARTICLE 6. POST-EMPLOYMENT BENEFITS:
--------------------------------------------------------------------------------
A. If Employee's employment is terminated by ARAMARK for any reason other than
Cause, Employee shall be entitled to the following post-employment
benefits:
7
1. Severance Pay: Employee shall receive severance payments equivalent to
Employee's weekly base salary as of the effective date of termination
for the number of weeks set forth on the following schedule:
----------------------------------------------------------
Years of ARAMARK Weeks of Severance Pay
---------------- ----------------------
Continuous Service
------------------
Completed from Last Hire
------------------------
Date
----
----------------------------------------------------------
Less than 2 26
----------------------------------------------------------
2 32
----------------------------------------------------------
3 39
----------------------------------------------------------
4 45
----------------------------------------------------------
5 or More 52
----------------------------------------------------------
Severance payments shall commence with the Employee's effective date of
termination and shall be made in accordance with ARAMARK's normal payroll
cycle. The period during which employee receives severance payments shall be
referred to as the "Severance Pay Period."
2. Other Post-Employment Benefits
(a) Basic Group medical and life insurance coverages shall continue under
then prevailing terms during the Severance Pay Period; provided,
however, that if Employee becomes employed by a new employer during
that period, continuing coverage from ARAMARK will become secondary to
any coverage afforded by the new employer. Employee's share of the
premiums will be deducted from Employee's severance payments. Basic
Group medical coverage provided during such period shall be applied
8
against ARAMARK's obligation to continue group medical coverage under
the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA").
Upon termination of basic group medical and life coverages, Employee
may convert such coverages to individual policies to the extent
allowable under plan provisions.
(b) Employee's leased vehicle shall be made available to Employee through
the Severance Pay Period at which time Employee has the option to
either purchase the vehicle in accordance with the Executive
Leadership Council plan then in effect or return it to ARAMARK.
(c) Employee's eligibility to participate in all other benefit and
compensation plans, including, but not limited to the Management
Incentive Bonus, Long Term Disability, Stock Unit Retirement, Deferred
Compensation and any stock option or ownership plans, shall terminate
as of the effective date of Employee's termination unless provided
otherwise under the terms of a particular plan, provided, however,
that participation in plans and programs made available solely to
Executive Leadership Council members, including, but not limited to
the Executive Leadership Council Medical Plan, shall cease as of the
effective date of termination or the date Employee's Executive
Leadership Council membership ceases, whichever occurs first.
Employee, however, shall have certain rights to continue the Executive
Leadership Council Medical Plan under COBRA.
B. Termination for "Cause" shall be defined as termination of employment due to:
(i) conviction of or entry of a plea of guilty or nolo contendere to a felony
(or any similar crime for purposes of laws outside the United States), (ii)
fraud or dishonesty, (iii) willful
9
failure to perform assigned duties, (iv) willful violation of ARAMARK's
Business Conduct Policy, or (v) intentionally working against the best
interest of ARAMARK.
C. If Employee is terminated by ARAMARK for reasons other than Cause, Employee
will receive the severance payments and other post-employment benefits
during the Severance Pay Period even if Employee commences other employment
during such period provided such employment does not violate the terms of
Article 2.
D. In addition to the remedies set forth in Article 5, ARAMARK reserves the
right to terminate all severance payments and other post-employment benefits
if Employee violates the covenants set forth in Articles 1, 2, 3 or 4 above.
E. Employee's receipt of severance and other post-employment benefits under
this Agreement is contingent on (i) Employee's execution of a release in a
form reasonably acceptable to ARAMARK, except that such release shall not
include any claims by Employee to enforce Employee's rights under, or with
respect to, this Agreement (including the attached Exhibit A) or any ARAMARK
benefit plan pursuant to its terms, and (ii) the expiration of the
applicable Age Discrimination in Employment Act revocation period without
such release being revoked by Employee; provided, however, that this Article
6.E no longer shall apply following a Change of Control (as defined in the
attached Exhibit A).
F. ARTICLE 7. TERM OF EMPLOYMENT: Employee acknowledges that ARAMARK has the
------------------------------
right to terminate Employee's employment at any time for any reason
whatsoever, provided, however, that any termination by ARAMARK for reasons
other than Cause shall result in the severance and the post-employment
benefits described in Article 6 above, to become due in accordance with the
terms of this Agreement subject to the conditions set forth in this
Agreement. Employee further acknowledges that the
10
severance payments made and other benefits provided by ARAMARK are in full
satisfaction of any obligations ARAMARK may have resulting from ARAMARK's
exercise of its right to terminate Employee's employment, except for those
obligations which are intended to survive termination such as the payments
to be made pursuant to retirement plans, deferred compensation plans and
conversion of insurance.
ARTICLE 8. MISCELLANEOUS:
-------------------------
A. As used throughout this Agreement, ARAMARK includes ARAMARK CORPORATION
(which shall include ARAMARK Worldwide Corporation, as its successor in the
merger described above) and its subsidiaries and affiliates or any
corporation, joint venture, or other entity in which ARAMARK CORPORATION or
its subsidiaries or affiliates has an equity interest in excess of ten
percent (10%).
B. This Agreement shall supersede and substitute for any previous post-
employment or severance agreement between Employee and ARAMARK.
C. In the event of a Change of Control as defined in the attached Exhibit A,
the provisions of Exhibit A shall apply to Employee.
D. If Employee's employment with ARAMARK terminates solely by reason of a
transfer of stock or assets of, or a merger or other disposition of, a
subsidiary of ARAMARK (whether direct or indirect), such termination shall
not be deemed a termination of employment by ARAMARK for purposes of this
Agreement, provided that ARAMARK requires the subsequent employer, by
agreement, to expressly assume and agree to perform this Agreement in the
same manner and to the same extent that ARAMARK would be required to perform
it if no such transaction had taken place.
E. Employee shall not be required to mitigate damages or the amount of any
payment provided for under this Agreement by seeking other employment or
otherwise.
11
F. In the event any one or more of the provisions of this Agreement shall be or
become invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions of this Agreement
shall not be affected thereby.
G. The terms of this Agreement shall be governed by the laws of the
Commonwealth of Pennsylvania, without regard to conflicts of laws principles
thereof. For purposes of any action or proceeding, Employee irrevocably
submits to the non-exclusive jurisdiction of the courts of Pennsylvania and
the courts of the United States of America located in Pennsylvania for the
purpose of any judicial proceeding arising out of or relating to this
Agreement, and acknowledges that the designated fora have a reasonable
relation to the Agreement and to the parties' relationship with one another.
Notwithstanding the provisions of this Article 8.G, ARAMARK may, in its
discretion, bring an action or special proceeding in any court of competent
jurisdiction for the purpose of seeking temporary or preliminary relief
pending resolution of a dispute.
H. Employee expressly consents to the application of Article 8.G to any
judicial proceeding arising out of or relating to this Agreement, and
irrevocably appoints the General Counsel of ARAMARK Corporation (or any
successor) as Employee's agent for service of legal process in connection
with any such action or proceeding and agrees that service of process upon
such agent, who shall promptly advise Employee of any such service of
process at the address of Employee then in the records of ARAMARK, shall be
deemed in every respect effective service of process upon Employee in any
such action or proceeding. Nothing contained herein shall affect the right
of ARAMARK to serve legal process in any other manner permitted by law.
I. Employee hereby waives, to the fullest extent permitted by applicable law,
any objection that Employee now or hereafter may have to personal
jurisdiction or to the laying of
12
venue of any action or proceeding brought in any court referenced in Article
8.G and hereby agrees not to plead or claim the same.
J. Employee and ARAMARK acknowledge that for purposes of Article 6, Employee's
last hire date with ARAMARK is [_______________].
IN WITNESS WHEREOF, and intending to be legally bound, the parties hereto have
caused this Agreement to be signed.
Date:__________________________ ARAMARK CORPORATION
By:____________________________
Xxxxx X. Xxxxxxxx
By:____________________________
13
Schedule A
----------
Prior Works
14
[Direct Reports]
EXHIBIT A
TERMINATION PROTECTION PROVISIONS
THIS is an Exhibit A to, and forms a part of, the ARAMARK Corporation
Agreement Relating to Employment and Post-Employment Competition between
_________________ (the "Executive") and ARAMARK Corporation.
DEFINED TERMS.
Unless otherwise indicated, capitalized terms used in this Exhibit
which are defined in Schedule A shall have the meanings set forth in Schedule A.
EFFECTIVE DATE; TERM.
This Exhibit shall be effective as of ___________, 2001 (the
"Effective Date") and shall remain in effect until _______________, 2004 (the
"Term"); provided, however, that commencing with _________________, 2002 and on
each anniversary thereof (each an "Extension Date"), the Term shall be
automatically extended for an additional one-year period, unless the Company or
Executive provides the other party hereto written notice before the applicable
Extension Date that the Term shall not be so extended. Notwithstanding the
foregoing, this Exhibit shall, if in effect on the date of a Change of Control,
remain in effect for three years following the Change of Control.
CHANGE OF CONTROL BENEFITS.
If Executive's employment with the Company is terminated at any time
within the three years following a Change of Control by the Company without
Cause, or by Executive for Good Reason (the effective date of either such
termination hereafter referred to as the "Termination Date"), Executive shall be
entitled to the payments and benefits provided hereafter in this Section 3 and
as set forth in this Exhibit. If Executive's employment by the Company is
terminated prior to a Change of Control by the Company (i) at the request of a
party (other than the Company) involved in the Change of Control or (ii)
otherwise in connection with or in anticipation of a Change of Control that
subsequently occurs, Executive shall be entitled to the benefits provided
hereafter in this Section 3 and as set forth in this Exhibit, and Executive's
Termination Date shall be deemed to have occurred immediately following the
Change of Control. Payment of benefits under this Exhibit shall be in addition
to, and not in lieu of, any benefits payable under the ARAMARK Corporation
Agreement Relating to Employment and Post-Employment Competition of which this
Exhibit is a part, except as provided in Section 3(b) hereof. Notice of
termination without Cause or for Good Reason shall be given in accordance with
Section 13, and shall indicate the specific termination provision hereunder
relied upon, the relevant facts and circumstances and the Termination Date.
X. Xxxxxxxxx Payments. The Company shall pay Executive cash benefits equal to:
15
(i) (1) two times Executive's Base Salary in effect on the date of
the Change of Control or the Termination Date, whichever is
higher; provided that if any reduction of the Base Salary has
occurred, then the Base Salary on either date shall be as in
effect immediately prior to such reduction, payable in regular
installments at such times as would otherwise be the Company's
usual payroll practice over a period of two years; and
(ii) (2) the higher of: (A) two times Executive's Target Bonus in
effect on the date of the Change of Control or the Termination
Date, whichever is greater; or (B) two times Executive's most
recent actual annual bonus, payable in either case ratably in
regular installments at the same time as payments are made to
Executive under Section 3(a)(1) above; provided that if any
reduction of the Target Bonus has occurred, then the Target
Bonus on either date shall be as in effect immediately prior to
such reduction; and
(iii) (3) Executive's Target Bonus (as determined in (2), above)
multiplied by a fraction, the numerator of which shall equal the
number of days Executive was employed by the Company in the
Company fiscal year in which the Termination Date occurs and the
denominator of which shall equal 365, payable as a cash lump sum
within forty days after the Termination Date; and
(iv) (4) in the case of a termination of employment by Executive for
Good Reason, an amount equal to the severance pay specified in
Article 5.A.1. of the attached ELC Agreement (as defined in
Section 8 hereof), payable according to the schedule set forth
therein, determined as if Executive's employment had been
terminated by ARAMARK without Cause on the Termination Date.
B. Continuation of Benefits. Until the second anniversary of the Termination
Date, the Company shall, at its expense, provide Executive and Executive's
spouse and dependents with medical, life insurance and disability coverages
at the level provided to Executive immediately prior to the Change of
Control; provided, however, that if Executive becomes employed by a new
employer, continuing coverage from the Company will become secondary to any
coverage afforded by the new employer. In the event benefits are continued
under this Section 3(b), such continued benefits shall be in lieu of those
specified in Article 5.A.2.a of the attached ELC Agreement (as defined in
Section 8 hereof).
16
C. Payment of Earned But Unpaid Amounts. Within forty days after the
Termination Date, the Company shall pay Executive the Base Salary through
the Termination Date, any Bonus earned but unpaid as of the Termination
Date for any previously completed fiscal year of the Company, all
compensation previously deferred by Executive but not yet paid and
reimbursement for any unreimbursed expenses properly incurred by Executive
in accordance with Company policies prior to the Termination Date.
Executive shall also receive such employee benefits, if any, to which
Executive may be entitled from time to time under the employee benefit or
fringe benefit plans, policies or programs of the Company, other than any
Company severance policy (payments and benefits in this subsection (c), the
"Accrued Benefits").
D. Outplacement Counseling. For the two-year period following the Termination
Date (or, if earlier, the date Executive first obtains full-time employment
after the Termination Date), the Company shall reimburse all reasonable
expenses incurred by Executive for professional outplacement services by
qualified consultants selected by Executive, in an amount not to exceed 20%
of the Executive's Base Salary in effect on the date of the Change of
Control or the Termination Date, whichever is higher.
E. Vesting of Other Benefits. Executive shall be entitled to such accelerated
vesting of outstanding equity-based awards or retirement plan benefits as
is specified under the terms of the applicable plans, agreements and
arrangements.
MITIGATION.
Executive shall not be required to mitigate damages or the amount of
any payment provided for under this Exhibit by seeking other employment or
otherwise, and, subject to Section 3(b), compensation earned from such
employment or otherwise shall not reduce the amounts otherwise payable under
this Exhibit. No amounts payable under this Exhibit shall be
17
subject to reduction or offset in respect of any claims which the Company (or
any other person or entity) may have against Executive.
GROSS-UP.
A. In the event it shall be determined that any payment, benefit or
distribution (or combination thereof) by the Company, any of its
affiliates, or one or more trusts established by the Company for the
benefit of its employees, to or for the benefit of Executive (whether paid
or payable or distributed or distributable pursuant to the terms of this
Exhibit, or otherwise) (a "Payment") is subject to the excise tax imposed
by Section 4999 of the Code or any interest or penalties are incurred by
Executive with respect to such excise tax (such excise tax, together with
any such interest and penalties, hereinafter collectively referred to as
the "Excise Tax"), Executive shall be entitled to receive an additional
payment (a "Gross-Up Payment") in an amount such that after payment by
Executive of all taxes (including any interest or penalties imposed with
respect to such taxes), including, without limitation, any income taxes
(and any interest and penalties imposed with respect thereto) and the
Excise Tax imposed upon the Gross-Up Payment, Executive retains an amount
of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
B. All determinations required to be made under this Section 5, including
whether and when a Gross-Up Payment is required and the amount of such
Gross-Up Payment and the assumptions to be utilized in arriving at such
determination, shall be made by such nationally recognized certified public
accounting firm as may be designated by the Company (the "Accounting Firm")
which shall provide detailed supporting calculations both to the Company
and Executive within ten business days of the receipt of notice from
Executive that there has been a Payment, or such earlier time as is
requested by the
18
Company; provided that for purposes of determining the amount of any Gross-
Up Payment, Executive shall be deemed to pay federal income tax at the
highest marginal rates applicable to individuals in the calendar year in
which any such Gross-Up Payment is to be made and deemed to pay state and
local income taxes at the highest effective rates applicable to individuals
in the state or locality of Executive's residence or place of employment in
the calendar year in which any such Gross-Up Payment is to be made, net of
the maximum reduction in federal income taxes that can be obtained from
deduction of such state and local taxes, taking into account limitations
applicable to individuals subject to federal income tax at the highest
marginal rates. All fees and expenses of the Accounting Firm shall be borne
solely by the Company. Any Gross-Up Payment, as determined pursuant to this
Section 5, shall be paid by the Company to Executive (or to the appropriate
taxing authority on Executive's behalf) when due. If the Accounting Firm
determines that no Excise Tax is payable by Executive, it shall so indicate
to Executive in writing. Any determination by the Accounting Firm shall be
binding upon the Company and Executive. As a result of the uncertainty in
the application of Section 4999 of the Code, it is possible that the amount
of the Gross-Up Payment determined by the Accounting Firm to be due to (or
on behalf of) Executive was lower than the amount actually due
("Underpayment"). In the event that the Company exhausts its remedies
pursuant to Section 5(c) and Executive thereafter is required to make a
payment of any Excise Tax, the Accounting Firm shall determine the amount
of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to or for the benefit of Executive.
19
C. Executive shall notify the Company in writing of any claim by the Internal
Revenue Service that, if successful, would require the payment by the
Company of any Gross-Up Payment. Such notification shall be given as soon
as practicable but no later than ten business days after Executive is
informed in writing of such claim and shall apprise the Company of the
nature of such claim and the date on which such claim is requested to be
paid. Executive shall not pay such claim prior to the expiration of the
thirty day period following the date on which it gives such notice to the
Company (or such shorter period ending on the date that any payment of
taxes with respect to such claim is due). If the Company notifies Executive
in writing prior to the expiration of such period that it desires to
contest such claim, Executive shall (i) give the Company any information
reasonably requested by the Company relating to such claim, (ii) take such
action in connection with contesting such claim as the Company shall
reasonably request in writing from time to time, including, without
limitation, accepting legal representation with respect to such claim by an
attorney reasonably selected by the Company, (iii) cooperate with the
Company in good faith in order to effectively contest such claim and (iv)
permit the Company to participate in any proceedings relating to such
claim; provided, however, that the Company shall bear and pay directly all
costs and expenses (including additional interest and penalties) incurred
in connection with such contest and shall indemnify and hold Executive
harmless, on an after-tax basis, for any Excise Tax or income tax
(including interest and penalties with respect thereto) imposed as a result
of such representation and payment of costs and expenses. Without
limitation on the foregoing provisions of this Section 5(c), the Company
shall control all proceedings taken in connection with such contest and, at
its sole option, may pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in
20
respect of such claim and may, at its sole option, either direct Executive
to pay the tax claimed and xxx for a refund or contest the claim in any
permissible manner, and Executive agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, further, that if the Company directs Executive to pay
such claim and xxx for a refund, the Company shall advance the amount of
such payment to Executive, on an interest-free basis, and shall indemnify
and hold Executive harmless, on an after-tax basis, from any Excise Tax or
income tax (including interest or penalties with respect thereto) imposed
with respect to such advance or with respect to any imputed income with
respect to such advance; provided, further, that if Executive is required
to extend the statute of limitations to enable the Company to contest such
claim, Executive may limit this extension solely to such contested amount.
The Company's control of the contest shall be limited to issues with
respect to which a Gross-Up Payment would be payable hereunder and
Executive shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other taxing
authority.
D. If, after the receipt by Executive of an amount paid or advanced by the
Company pursuant to this Section 5, Executive becomes entitled to receive
any refund with respect to a Gross-Up Payment, Executive shall (subject to
the Company's complying with the requirements of Section 5(c)) promptly pay
to the Company the amount of such refund received (together with any
interest paid or credited thereon after taxes applicable thereto). If,
after the receipt by Executive of an amount advanced by the Company
pursuant to Section 5(c), a determination is made that Executive shall not
be entitled to any refund with respect to such claim and the Company does
not notify Executive in
21
writing of its intent to contest such denial of refund prior to the
expiration of thirty days after such determination, then such advance shall
be forgiven and shall not be required to be repaid and the amount of such
advance shall offset, to the extent thereof, the amount of the Gross-Up
Payment required to be paid.
TERMINATION FOR CAUSE.
Nothing in this Exhibit shall be construed to prevent the Company from
terminating Executive's employment for Cause. If Executive is terminated for
Cause, the Company shall have no obligation to make any payments under this
Exhibit, except for the Accrued Benefits.
INDEMNIFICATION; DIRECTOR'S AND OFFICER'S LIABILITY INSURANCE.
Executive shall, after the Termination Date, retain all rights to
indemnification under applicable law or under the Company's Certificate of
Incorporation or By-Laws, as they may be amended or restated from time to time.
In addition, the Company shall maintain Director's and Officer's liability
insurance on behalf of Executive, at the level in effect immediately prior to
the Termination Date, for the three year period following the Termination Date,
and throughout the period of any applicable statute of limitations.
EXECUTIVE COVENANTS.
This is an Exhibit A to, and forms a part of, an agreement with the
Company relating to employment and post-employment competition (the "ELC
Agreement"). This Exhibit shall not diminish in any way Executive's rights
under the terms of such ELC Agreement, except that Executive's receipt of
benefits under this Exhibit is contingent upon Executive's compliance in all
material respects with all of the terms and conditions of the ELC Agreement.
COSTS OF PROCEEDINGS.
Each party shall pay its own costs and expenses in connection with any
legal proceeding (including arbitration), relating to the interpretation or
enforcement of any provision of this Exhibit, except that the Company shall pay
such costs and expenses, including attorneys' fees and disbursements, of
Executive if Executive prevails in such proceeding.
ASSIGNMENT.
Except as otherwise provided herein, this Exhibit shall be binding
upon, inure to the benefit of and be enforceable by the Company and Executive
and their respective heirs, legal representatives, successors and assigns. If
the Company shall be merged into or consolidated with another entity, the
provisions of this Exhibit shall be binding upon and inure to the benefit of the
entity surviving such merger or resulting from such consolidation. The Company
shall require any successor (whether direct or indirect, by purchase, merger,
consolidation or
22
otherwise) to all or substantially all of the business or assets of the Company,
by agreement, expressly to assume and agree to perform this Exhibit in the same
manner and to the same extent that the Company would be required to perform it
if no such succession had taken place. The provisions of this Section 10 shall
continue to apply to each subsequent employer of Executive hereunder in the
event of any subsequent merger, consolidation or transfer of assets of such
subsequent employer.
WITHHOLDING.
Notwithstanding any other provision of this Exhibit, the Company may,
to the extent required by law, withhold applicable federal, state and local
income and other taxes from any payments due to Executive hereunder.
APPLICABLE LAW.
This Exhibit shall be governed by and construed in accordance with the
laws of the State of Pennsylvania, without regard to conflicts of laws
principles thereof.
NOTICE.
For the purpose of this Exhibit, any notice and all other
communication provided for in this Exhibit shall be in writing and shall be
deemed to have been duly given when delivered by hand or overnight courier or
three days after it has been mailed by United States registered mail, return
receipt requested, postage prepaid, addressed to the respective addresses set
forth below, or to such other address as either party may have furnished to the
other in writing in accordance herewith, except that notice of change of address
shall be effective only upon receipt.
If to the Company:
ARAMARK Corporation
ARAMARK Tower
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: General Counsel
If to Executive:
To the most recent address of Executive set forth in the personnel records
of the Company.
ENTIRE AGREEMENT; MODIFICATION.
This Exhibit constitutes the entire agreement between the parties and,
except as expressly provided herein, supersedes all other prior agreements
expressly concerning the effect of a Change of Control on the relationship
between the Company and Executive. This Exhibit is not, and nothing herein shall
be deemed to create, a contract of employment between the
23
Company and Executive. This Exhibit may be changed only by a written agreement
executed by the Company and Executive.
SEVERABILITY.
In the event any one or more of the provisions of this Exhibit shall
be or become invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions shall not be affected
thereby.
24
Schedule A
CERTAIN DEFINITIONS
As used in this Exhibit, and unless the context requires a different
meaning, the following terms, when capitalized, have the meaning indicated:
1. "ACT" MEANS THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
"BASE SALARY" MEANS EXECUTIVE'S ANNUAL RATE OF BASE SALARY IN
EFFECT ON THE DATE IN QUESTION.
"BONUS" MEANS THE AMOUNT PAYABLE TO EXECUTIVE UNDER THE
COMPANY'S APPLICABLE ANNUAL BONUS PLAN WITH RESPECT TO A FISCAL
YEAR OF THE COMPANY.
"CAUSE" MEANS EITHER OF THE FOLLOWING:
(a) If Executive has an employment or severance agreement, the
definition contained therein; otherwise
(b) (i) Executive's conviction of or entry of a plea of guilty or
nolo contendere to a felony (or any similar crime for purposes of
laws outside the United States), (ii) Executive's fraud or
dishonesty, (iii) Executive's willful failure to perform assigned
duties to the Company or an affiliate (not including any duties
in excess of Executive's duties immediately prior to a Change in
Control), (iv) Executive's willful violation of the ARAMARK
Business Conduct Policy, or (v) Executive's intentionally working
against the best interest of the Company or an affiliate.
CHANGE OF CONTROL" MEANS THE FIRST TO OCCUR OF ANY OF THE FOLLOWING:
(a) any "person" or "group" (as described in the Act) (other than (i)
a person holding securities representing 10% or more of the combined
voting power of the Company's outstanding securities as of the date
that the Company completes an initial public offering of its class B
common stock (a "Pre-Existing Shareholder"), (ii) the Company, any
trustee or other fiduciary holding securities under an employee
benefit plan of the Company, or (iii) any company owned, directly or
indirectly, by the shareholders of the Company in substantially the
same proportions as their ownership of shares of the Company), becomes
the beneficial owner (as defined in Rule 13d-3 of the Act), directly
or indirectly, of securities of the Company, representing (I) 20% or
more of the combined voting power of the Company's then-outstanding
securities and (II) more of the combined voting
25
power of the Company's then-outstanding securities than the Pre-
Existing Shareholders in the aggregate;
(b) during any period of twenty-four consecutive months (not including
any period prior to the date that the Company completes an initial
public offering of its class B common stock), individuals who at the
beginning of such period constitute the Company's Board of Directors,
and any new director (other than a director nominated by any person
(other than the Company) who publicly announces an intention to take
or to consider taking actions (including, but not limited to, an
actual or threatened proxy contest) which if consummated would
constitute a Change in Control under (a), (c) or (d) of this Section
5) whose election by the Company's Board of Directors or nomination
for election by the Company's shareholders was approved by a vote of
at least two-thirds of the directors then still in office who either
were directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any
reason to constitute at least a majority thereof;
(c) the consummation of any transaction or series of transactions
resulting in a merger or consolidation in which the Company is
involved, other than a merger or consolidation which would result in
the shareholders of the Company immediately prior thereto continuing
to own (either by remaining outstanding or by being converted into
voting securities of the surviving entity), in the same proportion as
immediately prior to the transaction(s), more than 50% of the combined
voting power of the voting securities of the Company or such surviving
entity outstanding immediately after such merger or consolidation;
(d) the complete liquidation of the Company or the sale or disposition
by the Company of all or substantially all of the Company's assets; or
(e) any other transaction so denominated by the Company's Board of
Directors.
"CODE" MEANS THE INTERNAL REVENUE CODE OF 1986, AS AMENDED.
"COMPANY" MEANS ARAMARK CORPORATION AND, AFTER A CHANGE OF
CONTROL, ANY SUCCESSOR OR SUCCESSORS THERETO.
"GOOD REASON" MEANS ANY OF THE FOLLOWING ACTIONS ON OR AFTER
A CHANGE OF CONTROL, WITHOUT EXECUTIVE'S EXPRESS PRIOR WRITTEN
APPROVAL, OTHER THAN DUE TO EXECUTIVE'S PERMANENT DISABILITY OR
DEATH:
(a) any decrease in Base Salary or Target Bonus;
(b) any decrease in Executive's pension benefit opportunities or any
material diminution in the aggregate employee benefits, in each
case, afforded to
26
the Executive immediately prior to the Change of Control, but not
including any such decrease or diminution that is inadvertent and
that is cured within 30 days following written notice of such
decrease or diminution by Executive to the Company;
(c) any diminution in Executive's title or reporting relationship, or
substantial diminution in duties or responsibilities (other than
solely as a result of a Change of Control in which the Company
immediately thereafter is no longer publicly held);
(d) any relocation of Executive's principal place of business of 35
miles or more, other than normal travel consistent with past
practice; or
(e) Executive's notice of termination of employment within the thirty-
day period following the first day of the 13th month following the
Change of Control.
Except with respect to Section 8(e) above, Executive shall have
twelve months from the time Executive first becomes aware of the
existence of Good Reason to resign for Good Reason.
"PERMANENT DISABILITY" MEANS "PERMANENT DISABILITY" AS DEFINED IN
THE COMPANY'S LONG-TERM DISABILITY PLAN AS IN EFFECT FROM TIME TO
TIME, OR IF THERE SHALL BE NO PLAN, THE INABILITY OF EXECUTIVE TO
PERFORM IN ALL MATERIAL RESPECTS EXECUTIVE'S DUTIES AND
RESPONSIBILITIES TO THE COMPANY OR ANY AFFILIATE FOR A PERIOD OF SIX (6)
CONSECUTIVE MONTHS OR FOR AN AGGREGATE OF NINE (9) MONTHS IN ANY
TWENTY-FOUR (24) CONSECUTIVE MONTH PERIOD BY REASON OF A PHYSICAL
OR MENTAL INCAPACITY.
"TARGET BONUS" MEANS THE TARGET BONUS ESTABLISHED FOR EXECUTIVE,
WHETHER EXPRESSED AS A PERCENTAGE OF BASE SALARY OR A DOLLAR
AMOUNT.
27
