EXHIBIT 10.5
AGREEMENT FOR PRESIDENTS' 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, customers and suppliers; policy and procedure
manuals, information regarding materials and documents in any form or medium
(including oral,
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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;
WHEREAS, all such Proprietary Information is developed at great
expense to ARAMARK and is considered by ARAMARK to be confidential trade
secrets;
WHEREAS, Employee, as a senior manager, will have access to ARAMARK's
Proprietary Information, directly in the course of Employee's employment, and
indirectly through interaction with and presentations by other ARAMARK senior
managers at the Executive Leadership Institute, Executive Leadership Council
meetings, Presidents' 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
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applicable transfer restrictions set forth in the Certificate of Incorporation
of the surviving corporation will be freely tradeable (subject to restrictions
imposed by applicable securities laws) and no longer subject to the restrictions
of the Stockholders Agreement to which Employee currently is a party;
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 (including pursuant to Exhibit A
hereto), 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: 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
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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 party regarding ARAMARK, or any of ARAMARK's officers,
directors, personnel, policies or products, other than to comply with law.
ARTICLE 2. NON-COMPETITION:
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
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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 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: (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, client,
supplier or other business relation of ARAMARK to cease or reduce doing
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business with ARAMARK or in any way interfere with the relationship between any
such customer, client, supplier or other 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 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
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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, 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 1.
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
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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
and purpose 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:
1. SEVERANCE PAY: (a) Employee shall receive severance payments equivalent
to Employee's monthly base salary as of the effective date of termination
for the number of months set forth on the following schedule:
YEARS OF ARAMARK MONTHS OF SEVERANCE PAY
CONTINUOUS SERVICE
COMPLETED FROM LAST HIRE
DATE
---------------------------------------------------------------
Less than 2 6
---------------------------------------------------------------
2 9
---------------------------------------------------------------
3 9
---------------------------------------------------------------
4 10
---------------------------------------------------------------
5 11
---------------------------------------------------------------
6 12
---------------------------------------------------------------
7 13
---------------------------------------------------------------
8 14
---------------------------------------------------------------
9 16
---------------------------------------------------------------
10 or more 18
---------------------------------------------------------------
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."
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(b) In addition to the severance payments provided in Article 6.A.1(a)
above, if Employee's employment is terminated involuntarily by ARAMARK
for any reason other than Cause and before Employee is vested in any
portion of the award of non-qualified stock options under the ARAMARK
2001 Equity Incentive Plan referenced in the Preamble to this Agreement,
Employee shall receive a lump sum cash severance payment equal to
$10,000, payable as soon as practicable following termination of
employment.
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 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 the
terms of the plans providing such coverages.
(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
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purchase the vehicle in accordance with the Executive Leadership
Council policy 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 failure to perform assigned
duties, (iv) willful violation of ARAMARK's Business Conduct Policy, or (v)
intentionally working against the best interests 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.
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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); and provided further that this Article 6.E shall not
apply with respect to the severance payments specified in Article 6.A.1(b).
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 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.
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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.
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.
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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 action or proceeding arising out of or relating to this Agreement.
ARAMARK shall have the right to serve legal process upon Employee in any
manner permitted by law. In addition, Employee 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 Employee agrees that service of legal process upon such
agent, who shall promptly advise Employee of any such service of legal
process at the address of Employee then in the records of ARAMARK, shall be
deemed in every respect effective service of legal process upon Employee in
any such action or proceeding.
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 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.
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J. Notwithstanding any other provision of this Agreement, ARAMARK may, to the
extent required by law, withhold applicable federal, state and local income
and other taxes from any payments due to Employee hereunder.
K. 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:____________________________
By:____________________________
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Schedule 1
Prior Works*
------------
* If no Prior Works are listed, Employee certifies that there are none.
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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.
1. 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.
2. 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
until the later of three years following the Change of Control and the date that
all of the Company's obligations under this Exhibit have been satisfied in full.
3. 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.
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x. Xxxxxxxxx Payments. The Company shall pay Executive cash benefits equal to:
(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
(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
(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
(4) in the case of a termination of employment by Executive for Good
Reason, an amount equal to the severance pay specified in Article
6.A.1. of the attached Presidents' Council 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 6.A.2.a of the attached Presidents' Council Agreement
(as defined in Section 8 hereof).
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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.
4. 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 subject to
reduction or offset in respect of any claims which the Company (or any other
person or entity) may have against Executive.
5. 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
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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 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.
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
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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 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
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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 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.
6. 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.
7. 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.
8. 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 "Presidents'
Council Agreement"). This Exhibit shall not diminish in any way Executive's
rights under the terms of such Presidents' Council 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 Presidents' Council Agreement.
9. 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.
10. Assignment.
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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 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.
11. 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.
12. 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.
13. 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.
14. Entire Agreement; Modification.
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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 Company and
Executive. This Exhibit may be changed only by a written agreement executed by
the Company and Executive.
15. 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.
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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.
2. "Base Salary" means Executive's annual rate of base salary in effect on
the date in question.
3. "Bonus" means the amount payable to Executive under the Company's
applicable annual bonus plan with respect to a fiscal year of the Company.
4. "Cause" means "cause" as defined in the Presidents' Council Agreement of
which this Schedule A forms a part.
5. 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 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
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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.
6. "Code" means the Internal Revenue Code of 1986, as amended.
7. "Company" means ARAMARK Corporation and any successor or successors
thereto.
8. "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 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.
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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.
9. "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.
10. "Target Bonus" means the target Bonus established for Executive,
whether expressed as a percentage of Base Salary or a dollar amount.
