CKE RESTAURANTS, INC. AMENDMENT NO. 3 TO EMPLOYMENT AGREEMENT
Exhibit
10.22
CKE
RESTAURANTS, INC.
This
Amendment No. 3 (the “Amendment”) to Employment Agreement is made effective as
of December 16, 2008, by and between CKE Restaurants, Inc. (the “Company”) and
E. Xxxxxxx Xxxxxx (the “Employee”).
RECITALS:
A. The
Company and the Employee entered into an Employment Agreement, dated as of
January 12, 2004, and amended on December 6, 2005 and October 12, 2006
(collectively, the “Agreement”).
B. The
Company and the Employee now desire to further amend the Agreement as set forth
below.
AGREEMENT
1. Employment and
Duties. Section 1 is hereby amended to change and replace the
Employee’s stated position from “Executive Vice President, General Counsel and
Secretary” to “President, Chief Legal Officer and Secretary”, which amendment
shall be effective on January 27, 2009.
2. Term. Section
2 is hereby amended to read in its entirety as follows:
“2. Term. The
term of this Agreement shall commence on the Effective Date and, prior to July
11, 2012, shall terminate three (3) years following the date on which notice of
non-renewal or termination of this Agreement is given by either party to the
other and, on and subsequent to July 11, 2012, shall terminate on July 11, 2015,
subject in all cases to prior termination as set forth in Section 7 below (the
“Term”). Thus,
prior to July 11, 2012, the Term shall be renewed automatically on a daily basis
so that the outstanding Term is always three (3) years following the date on
which notice of non-renewal or termination is given by either party to the other
and, on July 11, 2012, the Term shall convert into a remaining three (3) year
term ending on July 11, 2015. The Term may be extended at any time
upon mutual written agreement of the parties.”
3. Salary. Section
3 is hereby amended to provide that the minimum base annual salary shall be
$636,750, effective as of January 27, 2009.
4. Other Compensation and
Fringe Benefits. Section 4(e)(vi) is hereby amended to read in
its entirety as follows, which amendment shall be effective as of January 27,
2009 for determining annual bonuses for the fiscal year ending in January 2010
and subsequent fiscal years, as applicable:
“(vi) If
Actual Income is 120% or greater of Target Income, Employee shall receive a
bonus equal to 220% of Current Base.”
5. Other Compensation and
Fringe Benefits. The definition of “Actual Income” as set
forth in Section 4(e) is hereby amended to add the following phrase at the end
thereof:
“provided,
further, that any accounting credits or charges associated with any interest
rate swap derivatives shall be excluded from Actual Income;”
6. Other Compensation and
Fringe Benefits. Clause (g) is hereby added to Section 4,
which clause reads in its entirety as follows:
“(g) Section 409A
Limitation. Any amounts payable under Sections 4(b), 4(c) or 6
shall be paid no later than December 31 of the year following the
year in which the expenses are incurred.”
7. Termination. Section
7(b)(ii) is hereby amended to add the following text immediately following the
phrase which reads “...subject to the Employee executing and delivering to the
Company a release of the Company and its affiliates from all known and unknown
claims at the date of such termination based upon or arising out of this
Agreement or the termination, in form reasonably acceptable to the
Employee”:
“(provided
that such release shall be executed and delivered on or prior to the fifty-fifth
(55th) day
following the date of the Employee’s termination and shall be in the form of an
effective release agreement for which any applicable revocation period has
expired)”
8. Termination. Section
7(b)(ii)(B) is hereby amended to add the following phrase at the end
thereof:
“if, at
the time the Company terminates Employee’s employment under this Section 7(b),
the Company is not a reporting company under the Exchange Act (as defined
below), or the Employee is not a “specified employee” for purposes of Section
409A(a)(2)(B)(i) of the Internal Revenue Code of 1986, as amended (the “Code”);
however, if at the time the Company terminates Employee’s employment under this
Section 7(b), the Company is a reporting company under the Exchange Act and the
Employee is a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of
the Code, then Employee shall be entitled to such sum in a single lump sum on
the first business day that occurs at the end of the period commencing on the
date of termination and ending six months after the last day of the calendar
month in which the date of termination occurs (e.g., if the Company terminates
Employee’s employment on March 15, 2009, the Company will pay the amount
specified herein on the first business day immediately following September 30,
2009).”
9. Termination. Section
7(b)(v) is hereby amended as follows:
(1) To add
the following text immediately following the phrase which reads “...if the
Company is a reporting company under the Securities Exchange Act of 1934, as
amended (the “Exchange Act”)”:
“and the
Employee is a “specified employee” for purposes of Section 409A(2)(B)(i) of the
Code”;
(2) To change
and replace the timing for the grant of Restricted Shares as provided therein
from “the date of such termination” to:
“the
first business day that occurs at the end of the period commencing on the date
of termination and ending six months after the last day of the calendar month in
which the date of termination occurs”; and
(3) To change
and replace the provision regarding vesting in the final phrase therein from
“concurrently with such termination” to “on such date of grant.”
10. Termination. Section
7(b)(vi) is hereby amended to add the following text immediately following the
phrase which reads “...if the Company is not a reporting company under the
Exchange Act”:
“or the
Employee is not a “specified employee” for purposes of Section 409A(a)(2)(B)(i)
of the Code”
11. Termination. There
is hereby added as a new final paragraph to Section 7(b), the
following:
“Notwithstanding
anything in Section 7(b) to the contrary, no amount shall be payable pursuant to
this Section 7(b) unless Employee has incurred a Separation from Service (within
the meaning of Section 409A(a)(2)(A)(i) of the Code, and Treasury Regulation
Section 1.409A-1(h) (“Separation from Service”) by reason of a termination of
the Employee’s employment by the Company under this Section 7(b).”
12. Termination for Good
Reason. There is hereby added as new Section 7A to the
Agreement, the following:
“7A. Termination for Good
Reason.
(a) The
Employee may terminate his employment hereunder for “Good Reason,” which for
purposes of this Agreement, means a Change In Control (as defined in Section 6
on Exhibit B). The Employee may only terminate this Agreement for
Good Reason within 90 days after the Change In Control.
(b) If
the Employee terminates his employment for Good Reason:
(i) The
Company shall pay the Employee all amounts owed through the date of termination;
and
(ii) In
lieu of any further salary and bonus payments or other payments due to the
Employee for periods subsequent to the date of termination, under this Agreement
or otherwise, the Company shall pay, as severance to the Employee, the sum
of:
(A) An
amount equal to the product of the Employee’s minimum base annual salary in
effect as of the date of termination multiplied by the number three,
plus
(B) An
amount equal to a pro rata portion of the bonus for the year in which the
termination occurs, as provided in Section 4(e) (based on an annualized
calculation as of the date of termination), which sum shall be made in a single
lump sum in accordance with its normal payroll procedures within five days
following the date of termination if, at the time the Company terminates
Employee’s employment under this Section 7A(b), the Company is not a reporting
company under the Exchange Act (as defined below), or the Employee is not a
“specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Internal
Revenue Code of 1986, as amended (the “Code”); however, if at the time the
Company terminates Employee’s employment under this Section 7A(b), the Company
is a reporting company under the Exchange Act and the Employee is a “specified
employee” for purposes of Section 409A(a)(2)(B)(i) of the Code, then Employee
shall be entitled to such sum in a single lump sum on the first business day
that occurs at the end of the period commencing on the date of termination and
ending six months after the last day of the calendar month in which the date of
termination occurs (e.g., if the Company terminates Employee’s employment on
March 15, 2009, the Company will pay the amount specified herein on the first
business day immediately following September 30, 2009).
(iii) All
options granted to the Employee that had not vested as of the date of such
termination shall vest concurrently with such termination;
(iv) All
restricted stock awards, restricted stock unit awards, and other forms of equity
compensation awards granted to the Employee, which had not vested as of the date
of such termination, shall vest concurrently with such termination;
(v) All
Restricted Shares provided for in Amendment No. 3 to this Agreement to be
granted after the date of such termination shall, if on the date of Employee’s
termination the Company is a reporting company under the Exchange Act, and the
Employee is a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of
the Code, be granted on the first business day that occurs at the end of the
period commencing on the date of termination and ending six months after the
last day of the calendar month in which the date of termination occurs;
provided, however, if, in doing so, such grant shall exceed the limitations
imposed under the Company Equity Plans, such excess shall be spread back to
Dates of Grant within the period from the date of such Amendment No. 3 through
the date of such termination in a manner that would result in the maximum number
of Restricted Shares permitted to be granted to Employee under the Company
Equity Plans during such period, and shall vest concurrently on such date of
grant;
(vi) All
Restricted Shares provided for in Amendment No. 3 to this Agreement to be
granted after the date of such termination shall, if the Company is not a
reporting company under the Exchange Act, or the Employee is not a “specified
employee” for purposes of Section 409A(a)(2)(B)(i) of the Code, at the time of
termination, be granted on the date of such termination either under a Company
Equity Plan, or, if for some reason such Restricted Shares cannot be so granted,
otherwise outside a Company Equity Plan as necessary to effect the grant, by the
Company, and shall vest concurrently with such termination; and
(vii) The
Company shall maintain in full force and effect for the continued benefit of the
Employee during the period commencing on the date of termination and ending on
the December 31 of the second calendar year following the calendar year in which
the termination occurred, all employee benefit plans (except for the company’s
stock incentive plans) and programs in which the Employee was entitled to
participate immediately prior to the date of termination, provided that the
Employee’s continued participation is not prohibited under the general terms and
provisions of such plans and programs, but, if prohibited, the Company shall, at
the Company’s expense, arrange for substantially equivalent benefits; provided,
however, that notwithstanding the foregoing, there shall only be included, and
Employee shall only be entitled to, those benefit plans or programs that are
exempt from the term “nonqualified deferred compensation plan” under
Section 409A of the Code.
Notwithstanding
any other provision in this Agreement, under no circumstances, will the Employee
be permitted to exercise any discretion to modify the vesting of an award or the
amount, timing or form of payment described in this Section 7A.
Notwithstanding
anything in Section 7A(b) to the contrary, no amount shall be payable pursuant
to this Section 7A(b) unless Employee has incurred a Separation from Service by
reason of a termination of the Employee’s employment by the Employee for Good
Reason.
(c) The
Employee shall not be required to mitigate the amount of any payment provided
for in this Section 7A by seeking other employment or otherwise, nor shall any
compensation or other payments received by the Employee after the date of
termination reduce any payments due under this Section 7A.”
13. Definitions. Terms
used but not defined in this Amendment shall have the respective meanings
assigned to them in the Agreement.
14. Counterparts. This
Amendment may be executed in multiple counterparts, each of which shall be
deemed an original, and all of which shall constitute one
Amendment.
15. Terms and Conditions of
Agreement. Except as specifically amended by this Amendment,
all terms and conditions of the Agreement shall remain in full force and
effect.
IN
WITNESS WHEREOF, this Amendment is executed by the undersigned as of the date
first above written.
/s/
E. Xxxxxxx
Xxxxxx
E.
Xxxxxxx Xxxxxx
CKE
Restaurants, Inc.
By: /s/ Xxxxx
Xxxxx
Xxxxx Xxxxx,
Director and Chairman of the
Compensation
Committee of the Board of
Directors
