Exhibit 10.12
SEVERANCE AGREEMENT
AGREEMENT dated as of August 4, 1998 between Domino's Pizza, Inc., a
Michigan corporation ("DPI") and Xxxx XxXxxxxxxx ("EXECUTIVE").
WHEREAS, Executive is currently a valued employee of DPI; and
WHEREAS, DPI desires to retain the services of Executive in anticipation of
a possible transaction which may result in a Change of Control (as defined
below) and to obtain the covenants set forth herein; and
WHEREAS, the parties desire to enter into this Agreement;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein and for other good and valuable consideration, the parties agree as
follows:
1. Definitions. For purposes of this Agreement, the following terms shall have
the meanings indicated.
"ABANDONMENT OF SALE" means a termination by the Chief Executive Officer of
DPI of the sale process initiated pursuant to the letter dated May 1, 1998
addressed to TISM from X.X. Xxxxxx Securities Inc., as evidenced by an
affirmative action by said Chief Executive Officer such as written notice of
termination of the process to X.X. Xxxxxx Securities Inc.
"BASE SEVERANCE AMOUNT" means $465,366.
"CAUSE" means (i) Executive's continued failure to devote substantially all
of his business time and energies to the performance of his duties to the
Company (other than as a result of total or partial incapacity due to physical
or mental illness or as a result of termination by Executive for Good Reason)
after a written demand for substantial performance is delivered to Executive and
Executive shall have failed during the 30 day period following such written
demand to have corrected such failure, (ii) any willful act or omission by
Executive constituting dishonesty, fraud or other malfeasance against the
Company, (iii) Executive's conviction of a felony under the laws of the United
States or any state thereof or any other jurisdiction in which the Company
conducts business or (iv) breach by Executive of any of the restrictive
covenants contained in Section 4 of this Agreement. No act or failure to act on
Executive's part shall be deemed willful unless done or omitted to be done by
Executive not in good faith and without reasonable belief that Executive's
action or omission was in the best interest of the Company.
"CHANGE OF CONTROL" means the first of the following events to occur
following the date hereof:
(i) Any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Exchange Act) (a "PERSON"), other than any entity or
group in which Executive has not less than a 5% beneficial interest (an
"EXECUTIVE ENTITY"), shall become the beneficial owner (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of more than 51% of the then
outstanding shares of common stock of the Company or TISM; or
(ii) Consummation of any reorganization, merger or consolidation with
respect to the Company or TISM (each a "REORGANIZATION"), other than with an
Executive Entity, unless following such Reorganization more than 51% of the
outstanding equity of the entity resulting from such Reorganization continues to
be beneficially owned, directly or indirectly, by the Majority Owner; or
(iii) The sale or other disposition (or the last in a series of such
transactions) of all or substantially all of the assets of the Company or TISM,
other than to an Executive Entity or to an entity with respect to which
following such sale or other disposition more than 51% of the outstanding equity
is beneficially owned, directly or indirectly, by the Majority Owner.
"COMPANY" means DPI and any successor (whether direct or indirect) to all
or substantially all of the stock, assets or business of DPI.
"DOMINO GROUP" means TISM, the Company and its subsidiaries and Domino's
Farms Office Park Limited Partnership, collectively.
"EXCHANGE ACT" means the Securities and Exchange Act of 1934, as amended.
"GOOD REASON" means:
(i) Removal from, or failure to be reappointed or reelected to, the
position Executive holds with the Company immediately prior to a Change of
Control (other than as a result of a promotion);
(ii) Material diminution in Executive's title, position, duties or
responsibilities, the assignment to Executive of duties that are
inconsistent, in a material respect, with the scope of duties and
responsibilities associated with the position of Executive immediately
prior to the Change of Control;
(iii) Failure by the Company to pay Executive any compensation
otherwise vested and due if such failure continues for ten business days
following notice to the Company thereof;
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(iv) Reduction in base salary, bonus opportunity or benefits;
(v) Relocation of Executive to an office of the Company more than
50 miles from his current office;
(vi) Any reason during the 30 day period following the first
anniversary of a Change of Control; or
(vii) Failure of the Company to obtain the assumption of this
Agreement pursuant to Section 6(g) hereof;
provided that any such event occurring prior to the first anniversary of a
Change of Control shall not be deemed to constitute Good Reason following such
anniversary.
"MAJORITY OWNER" means Xxxxxx X. Xxxxxxxx.
"MULTIPLE" means three in the case of a termination of Executive's
employment prior to or upon the first anniversary of a Change of Control and two
in the case of such termination on or after the first anniversary of a Change of
Control but prior to or upon the second anniversary of such a Change of Control.
"NON-COMPETE TERM" means the period from the date of this Agreement until
the earliest of (i) the date of Executive's termination of employment by the
Company without Cause prior to a Change of Control, (ii) the date eighteen
months following any other termination of Executive's employment prior to a
Change of Control or any termination of Executive's employment upon or following
a Change of Control and prior to or upon the first anniversary of such Change of
Control, (iii) the date twelve months following any termination of Executive's
employment after the first anniversary of a Change of Control but prior to or
upon the second anniversary of such Change of Control, and (iv) the date of any
termination of Executive's employment following or upon the expiration of this
Agreement.
"TARGET BONUS" means, with respect to any fiscal year of the Company, the
higher of (i) the target annual bonus for Executive for such year, if any, and
(ii) the average of the annual bonuses paid to Executive for each of the years
following the year ended December 31, 1995 and prior to the year in which the
Change of Control occurs.
"TISM" means TISM, Inc., a Michigan corporation.
2. Term of Agreement. This Agreement shall be in effect from the date
hereof until the earliest of (i) the second anniversary of a Change of Control,
(ii) January 31, 2000 if no Change of Control shall occur prior to such date,
and (iii) the date of an Abandonment of Sale, except to the extent necessary to
give effect to the provisions hereof. Notwithstanding the foregoing, prior to a
Change of Control and following the expiration of this Agreement,
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Executive's employment shall be deemed an employment at will and Executive's
employment may be terminated at will by Executive or the Company.
3. Severance.
(a) Without Cause by the Company; by Executive for Good Reason. If
Executive's employment with the Company is terminated upon a Change of Control
or prior to or upon the second anniversary of a Change of Control (x) by the
Company without Cause (other than by reason of disability (within the meaning of
the Company's disability program, "DISABILITY") or death) or (y) by Executive
for Good Reason, in lieu of any other severance benefits to which Executive
would be entitled under any other plans or programs of the Company, Executive
shall be entitled to the following benefits.
(i) The Company shall pay Executive, within ten days of the date of such
termination of employment (the "DATE OF TERMINATION") in a lump sum payment
(A) accrued unpaid base salary through the Date of Termination, (B) any
prior year bonus earned but not paid, (C) any bonus earned by Executive
solely by reason of Executive's being employed by any member of the Domino
Group upon a Change of Control ("CHANGE OF CONTROL BONUS") if and to the
extent such bonus has not been paid, (D) the Target Bonus for the year of
termination, pro-rated through the Date of Termination and (E) severance
equal to the Multiple times the Base Severance Amount.
(ii) The Company shall make monthly payments to Executive such that, after
payment by Executive of all applicable taxes thereon, Executive retains an
amount which, when added to the amount of Executive's contribution if any
to his current health insurance arrangement, will enable Executive to
purchase health insurance benefits at the same level enjoyed by Executive
as of the Date of Termination, or at the date of Change of Control, if
greater, for the lesser of a period of the Multiple number of years
following the Date of Termination or until Executive is eligible for
comparable health insurance from a successor employer.
(iii) Executive shall receive any other benefits under other plans or
programs of the Company in accordance with their terms.
(iv) Other than the benefits set forth in this Section 4(a), the Company
and its affiliates will have no further obligations hereunder with respect
to Executive following such Date of Termination.
(v) Executive shall not be required to mitigate damages or the amount of
any payment provided for under this Agreement by seeking other employment
or otherwise, nor will any payments hereunder be subject to offset in
respect of any claims which the Company may have against Executive, nor,
except as provided in subparagraph (ii),
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shall the amount of any payment or benefit provided for in this Section 4
be reduced by any compensation earned as a result of Executive's employment
with another employer.
(b) Upon Death or Disability. If Executive's employment with the Company
is terminated upon a Change of Control or prior to or upon the second
anniversary of a Change of Control by the Company by reason of Disability or
death, in lieu of any other severance benefits to which Executive would be
entitled under any other plans or programs of the Company, Executive shall be
entitled to the following benefits.
(i) The Company shall pay Executive or his estate, as applicable, within
ten days of the Date of Termination in a lump sum payment (A) accrued
unpaid base salary through the Date of Termination, (B) any prior year
bonus earned but not paid, (C) any Change of Control Bonus if and to the
extent it has not been paid, (D) the Target Bonus for the year of
termination, pro-rated through the Date of Termination and (E) severance
equal to the Base Severance Amount.
(ii) Executive shall receive any other benefits, including without
limitation disability and/or death benefits, under other plans or programs
of the Company in accordance with their terms.
(iii) Other than the benefits set forth in this Section 4(b), the Company
and its affiliates will have no further obligations hereunder with respect
to Executive following such Date of Termination.
(c) Any Other Termination. If Executive is terminated during the term of
this Agreement following a Change in Control for any reason other than set forth
in Section 4(a) or 4(b), Executive shall be entitled to receive his accrued
unpaid base salary through the Date of Termination, any prior year bonus earned
but not paid and the any Change of Control Bonus if and to the extent it has not
been paid, all of the foregoing payable in a lump sum within ten days of the
Date of Termination, and any other benefits under other plans and programs of
the Company in accordance with their terms, and the Company and its affiliates
will have no further obligations under this Agreement with respect to Executive
following the Date of Termination.
(d) Notice of Termination. Any purported termination of employment by the
Company or by Executive following a Change of Control shall be communicated by
written notice of termination to the other party hereto in accordance with
Section 6(i) hereof which shall indicate the specific termination provision in
this Agreement relied upon and shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of employment under
the provision so indicated.
4. Non-Competition; Non-solicitation; Confidentiality. (a) Executive
acknowledges and recognizes the highly competitive nature of the business of the
Company and its affiliates
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and accordingly agrees that, in consideration of this Agreement, the rights
conferred hereunder, any Change of Control Bonus and any payments hereunder,
during the Non-Compete Term, Executive will not engage, either directly or
indirectly, as a principal for his own account or jointly with others, or as a
stockholder in any corporation or joint stock association, in any business other
than the Company that is principally engaged in the sale of fast food pizza
(whether as home delivery, eat-in or carry-out) (the "BUSINESS") within the
United States; provided, that nothing herein shall prevent Executive from (i)
owning, directly or indirectly, not more than five percent of the outstanding
shares of, or any other equity interest in, any entity engaged in the Business
and listed or traded on a national securities exchanges or in an over-the-
counter securities market or (ii) being a franchisee of the Company.
(b) During the Non-Compete Term, Executive will not (i) employ or solicit,
or receive or accept the performance of services by any current employee with
managerial responsibility or other current key employee of the Company or any
subsidiary of the Company, except in connection with general, non-targeted
recruitment efforts such as advertisements and job listings or (ii) solicit for
business any person who is a customer or former customer of the Company or any
of its affiliates unless such person should have ceased to have been a customer
of the Company or any of its affiliates for a period of at least six (6) months.
(c) Executive will not at any time (whether during or after his employment
with the Company) disclose or use for his own benefit or purposes or the benefit
or purposes of any other person, firm, partnership, joint venture, association,
corporation or other business organization, entity or enterprise other than the
Company and any of its subsidiaries or affiliates, any trade secrets,
information, data, or other confidential information relating to customers,
development programs, costs, marketing, trading, investment, sales activities,
promotion, credit and financial data, financing methods, plans, or the business
and affairs of the Company generally, or of any subsidiary or affiliate of the
Company, unless required to do so by applicable law or court order, subpoena or
decree or otherwise required by law, with reasonable evidence of such
determination promptly provided to the Company. The preceding sentence of this
paragraph (c) shall not apply to information which is not unique to the Company
or which is generally known to the industry or the public other than as a result
of Executive's breach of this covenant. Executive agrees that upon termination
of his employment with the Company for any reason, he will return to the Company
immediately all memoranda, books, papers, plans, information, letters and other
data, and all copies thereof or therefrom, in any way relating to the business
of the Company and its affiliates, except that he may retain personal notes,
notebooks and diaries. Executive further agrees that he will not retain or use
for his account at any time any trade names, trademark or other proprietary
business designation used or owned in connection with the business of the
Company or its affiliates.
(d) It is expressly understood and agreed that although Executive and the
Company consider the restrictions contained in this Section 4 to be reasonable,
if a final judicial
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determination is made by a court of competent jurisdiction that the time or
territory or any other restriction contained in this Agreement is an
unenforceable restriction against Executive, the provisions of this Agreement
shall not be rendered void but shall be deemed amended to apply as to such
maximum time and territory and to such maximum extent as such court may
judiciary determine or indicate to be enforceable. Alternatively, if any
tribunal of competent jurisdiction finds that any restriction contained in this
Agreement is unenforceable, and such restriction cannot be amended so as to make
it enforceable, such finding shall not affect the enforceability of any of the
other restrictions contained herein.
5. Remedies. (a) Executive acknowledges and agrees that the Company's
remedies at law for a breach or threatened breach of any of the provisions of
Section 4 hereof would be inadequate and, in recognition of this fact, Executive
agrees that, in the event of such a breach or threatened breach, in addition to
any remedies at law, the Company, without posting any bond, shall be entitled to
seek equitable relief in the form of specific performance, temporary restraining
order, temporary or permanent injunction or any other equitable remedy which may
then be available.
(b) Notwithstanding any provision of this Agreement to the contrary, from
and after any breach by Executive of the provisions of Section 4 of this
Agreement, the Company shall cease to have any obligations to make payments or
provide benefits to Executive under this Agreement.
6. Miscellaneous.
(a) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of Michigan.
(b) Entire Agreement/Amendments. This Agreement contains the entire
understanding of the parties with respect to the severance payable to Executive
in the event of a termination of employment following a Change of Control during
the term of this Agreement. There are no restrictions, agreements, promises,
warranties, covenants or undertakings between the parties with respect to the
subject matter herein other than those expressly set forth herein or therein.
This Agreement may not be altered, modified, or amended except by written
instrument signed by the parties hereto.
(c) No Waiver. The failure of a party to insist upon strict adherence to
any term of this Agreement on any occasion shall not be considered a waiver of
such party's rights or deprive such party of the right thereafter to insist upon
strict adherence to that term or any other term of this Agreement.
(4) Severability. In the event that any one or more of the provisions of this
Agreement shall be or become invalid, illegal or unenforceable in any respect,
the validity,
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legality and enforceability of the remaining provisions of this Agreement shall
not be affected thereby.
(e) Arbitration. With respect to any dispute between the parties hereto
arising from or relating to the terms of this Agreement, except as provided in
Section 6(a), the parties agree to submit such dispute to arbitration in Ann
Arbor, Michigan under the auspices of and the employment rules of the American
Arbitration Association. The determination of the arbitrator(s) shall be
conclusive and binding on the Company and Executive and judgment upon the award
rendered by the arbitrator(s) may be entered in any court having jurisdiction
thereof.
(f) Attorneys Fees. In the event of a dispute by the Company, Executive or
others as to the validity or enforceability of, or liability under, any
provision of this Agreement, the Company shall reimburse Executive for all legal
fees and expenses incurred by him in connection with such dispute except to the
extent (i) in the case of a dispute prior to a Change of Control, Executive
shall not prevail to any material extent or (ii) in the case of severance under
Section 3 hereof or any other dispute following a Change of Control, Executive's
position is found by a tribunal of competent jurisdiction to have been
frivolous.
(g) Assignment. This Agreement shall not be assignable by Executive and
shall be assignable by the Company only with the consent of Executive; provided,
however, that the Company shall require any successor to substantially all of
the stock, assets or business of the Company to assume this Agreement.
(h) Successors; Binding Agreement. This Agreement shall inure to the
benefit of and be binding upon the personal or legal representatives, executors,
administrators, successors, including successors to all or substantially all of
the stock, business and/or assets of the Company, heirs, distributees, devisees
and legatees of the parties.
(i) Notice. For the purpose of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth on the execution page of this Agreement, provided
that all notices to the Company shall be directed to the attention of the Board
of Directors of the Company with a copy to the Secretary of the Company, 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.
(j) Withholding Taxes. The Company may withhold from any amounts payable
under this Agreement such U.S. federal, state and local taxes as may be required
to be withheld pursuant to any applicable law or regulation.
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(k) Counterparts. This Agreement may be signed in counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties hereto have duty executed this Agreement as
of the day and year first above written.
DOMINO'S PIZZA, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
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Title: Chief Executive Officer
Address: 30 Xxxxx Xxxxx Xxxxxx Xxxxx
X.X. Xxx 000
Xxx Xxxxx, Xxxxxxxx 00000-0000
XXXX XXXXXXXXXX
/s/ Xxxx XxXxxxxxxx
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Address: 0000 Xxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
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