Exhibit 10.10
Form of
Compensation and Benefits
Assurance Agreement for
Executives
Foodmaker, Inc.
September 30, 1996
Contents
Page
Section 1. Term of Agreement 1
Section 2. Severance Benefits 2
Section 3. Excise Tax Avoidance 7
Section 4. Successors and Assignments 8
Section 5. Miscellaneous 8
Section 6. Contractual Rights and Legal Remedies 9
Compensation and Benefits Assurance Agreement
This COMPENSATION AND BENEFITS ASSURANCE AGREEMENT (this "Agreement") is
made, entered into, and is effective as of this _____ day of ________________
(the "Effective Date") by and between Foodmaker, Inc. (hereinafter referred
to as the "Company") and ______________________ (hereinafter referred to
as the "Executive").
WHEREAS, the Executive is presently employed by the Company in a key
management capacity; and
WHEREAS, the Executive possesses considerable experience and knowledge
of the business and affairs of the Company concerning its policies, methods,
personnel, and operations; and
WHEREAS, the Company desires assuring the continued employment of the
Executive in a key management capacity, and the Executive is desirous of
having such assurances.
NOW THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements of the parties set forth in this Agreement, and of
other good and valuable consideration the receipt and sufficiency of which
are hereby acknowledged, the parties hereto, intending to be legally bound,
agree as follows:
Section 1. Term of Agreement
This Agreement will commence on the Effective Date and shall continue
in effect for two full calendar years (through ______________________) (the
"Initial Term").
The Initial Term of this Agreement automatically shall be extended
for two additional years at the end of the Initial Term, and then again after
each successive two-year period thereafter (each such two-year period
following the Initial Term a "Successive Period"). However, either party may
terminate this Agreement at the end of the Initial Term, or at the end of any
Successive Period thereafter, by giving the other party written notice of
intent not to renew, delivered at least six (6) months prior to the end of
such Initial Term or Successive Period. If such notice is properly delivered
by either party, this Agreement, along with all corresponding rights, duties,
and covenants shall automatically expire at the end of the Initial Term or
Successive Period then in progress.
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In the event that a "Change in Control" of the Company occurs (as
such term is hereinafter defined) during the Initial Term or any Successive
Period, upon the effective date of such Change in Control, the term of this
Agreement shall automatically and irrevocably be renewed for a period of
twenty-four (24) full calendar months from the effective date of such Change
in Control. This Agreement shall thereafter automatically terminate following
the twenty-four (24) month Change in Control renewal period. Further, this
Agreement shall be assigned to, and shall be assumed by the purchaser in such
Change in Control, as further provided in Section 4 herein.
Section 2. Severance Benefits
2.1. Right to Severance Benefits. The Executive shall be entitled to
receive from the Company Severance Benefits as described in Paragraph 2.3
herein, if during the term of this Agreement there has been a Change in
Control of the Company (as defined in Paragraph 2.4 herein) and if, within
twenty-four (24) calendar months immediately thereafter, the Executive's
employment with the Company shall end for any reason specified in Paragraph
2.2 herein as being a Qualifying Termination. The Severance Benefits
described in Paragraphs 2.3(a), 2.3(b), 2.3(c), and 2.3(d) herein shall be
paid in cash to the Executive in a single lump sum as soon as practicable
following the Qualifying Termination, but in no event later than thirty (30)
calendar days from such date. Notwithstanding the foregoing, Severance
Benefits which become due pursuant to Paragraphs 2.2(c) and 4.1 shall be paid
immediately.
The Severance Benefits described in Paragraphs 2.3(a), 2.3(b),
2.3(c), and 2.3(d) herein shall be paid out of the general assets of the
Company.
2.2. Qualifying Termination. The occurrence of any one or more of the
following events (i.e., a "Qualifying Termination") within twenty-four (24)
calendar months immediately following a Change in Control of the Company
shall trigger the payment of Severance Benefits to the Executive, as such
benefits are described under Paragraph 2.3 herein:
(a) The Company's involuntary termination of the Executive's employment
without Cause (as such term is defined in Paragraph 2.6 herein);
(b) The Executive's voluntary termination of employment for Good Reason
(as such term is defined in Paragraph 2.5 herein); and
(c) The Company, or any successor company, commits a material breach of
any of the provisions of this Agreement.
A Qualifying Termination shall not include a termination of the
Executive's employment within twenty-four (24) calendar months after a Change
in Control by reason of death, disability (as such term is defined under the
Company's governing disability plan, or any successor plan thereto), the
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Executive's voluntary termination without Good Reason, or the Company's
involuntary termination of the Executive's employment for Cause.
2.3. Description of Severance Benefits. In the event that the Executive
becomes entitled to receive Severance Benefits, as provided in Paragraphs 2.1
and 2.2 herein, the Company shall pay to the Executive and provide the
Executive with the following:
(a) A lump-sum cash amount equal to the Executive's unpaid Base Salary
(as such term is defined in Paragraph 2.7 herein), accrued vacation
pay, unreimbursed business expenses, and all other items earned by
and owed to the Executive through and including the date of the
Qualifying Termination. Such payment shall constitute full
satisfaction for these amounts owed to the Executive.
(b) A lump-sum cash amount equal to ___ multiplied by the Executive's
annual rate of Base Salary in effect upon the date of the Qualifying
Termination or, if greater, by the Executive's annual rate of Base
Salary in effect immediately prior to the occurrence of the Change in
Control.
(c) A lump-sum cash amount equal to ___ multiplied by the greater of: (i)
the bonus percentage used to determine the executive's bonus in the
prior fiscal year, times the executive's annualized Base Salary
determined in (b) above or (ii) the bonus amount paid for the fiscal
year immediately prior to the fiscal year of the occurrence of the
Change in Control. Such payment shall constitute full satisfaction
for these amounts owed to the Executive.
(d) A lump-sum cash amount equal to ___ multiplied by the maximum
possible estimated annual Company match of the Executive's
contributions to the Company's Capital Accumulation Plan for
Executives for the year in which the Executive's Qualifying
Termination occurs (this amount shall not be less than the Company
match of the Executive's contribution to the Company's Capital
Accumulation Plan for the calendar year prior to the date of the
qualifying termination). Provided, however, that the source of
payment of this sum shall be the general assets of the Company unless
the payment of such amounts is otherwise permissible from the
corresponding qualified plan trust without violating any governmental
regulations or statutes. Such payment shall constitute full
satisfaction for these amounts owed to the Executive.
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(e) At the exact same cost to the Executive, and at the same coverage
level as in effect as of the Executive's date of the Qualifying
Termination (subject to changes in coverage levels applicable to all
employees generally), a continuation of the Executive's (and the
Executive's eligible dependents') health insurance coverage for
eighteen (18) months from the date of the Qualifying Termination.
This will run concurrently with any coverage provided as required by
the Consolidated Budget Reconciliation Act (COBRA). If this requires
a monthly payment to the Plan, the Company will pay the required
amount, adjusted to a pre-tax basis. For this purpose, the executive
shall be deemed to be at the highest marginal rate of federal and
state taxes.
The providing of these health insurance benefits by the Company
shall be discontinued prior to the end of the eighteen (18) month
continuation period to the extent that the Executive becomes
covered under the health insurance coverage of a subsequent
employer which does not contain any exclusion or limitation with
respect to any preexisting condition of the Executive or the
Executive's eligible dependents. For purposes of enforcing this
offset provision, the Executive shall have a duty to inform the
Company as to the terms and conditions of any subsequent
employment and the corresponding benefits earned from such
employment. The Executive shall provide, or cause to provide, to
the Company in writing correct, complete, and timely information
concerning the same.
(f) The Executive shall be entitled, at the expense of the Company, to
receive standard outplacement services from a nationally recognized
outplacement firm of the Executive's selection, for a period of up to
two (2) years from the Executive's date of Qualifying Termination.
However, such services shall be at the Company's expense to a maximum
amount not to exceed thirty-five percent (35%) of the Executive's
annual rate of Base Salary as of the date of the Qualifying
Termination.
2.4. Definition of "Change in Control." "Change in Control" of the
Company means, and shall be deemed to have occurred upon, the first to occur
of any of the following events:
(a) Any Person (other than those Persons in control of the Company as of
the Effective Date, or other than a trustee or other fiduciary
holding securities under an employee benefit plan of the Company, or
a corporation owned directly or indirectly by the stockholders of the
Company in substantially the same proportions as their ownership of
stock of the Company) becomes the Beneficial Owner, directly or
indirectly, of securities of the Company representing twenty-five
percent (25%) or more of the combined voting power of the Company's
then outstanding securities; or
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(b) During any period of two (2) consecutive years (not including any
period prior to the Effective Date), individuals who at the beginning
of such period constitute the Board (and any new Director, whose
election by the Company's stockholders was approved by a vote of a
least two-thirds (2/3) 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 so approved), cease for any
reason to constitute a majority thereof; or
(c) The stockholders of the Company approve: (i) a plan of complete
liquidation of the Company; or (ii) an agreement for the sale or
disposition of all or substantially all of the Company's assets; or
(iii) a merger, consolidation, or reorganization of the Company with
or involving any other corporation, other than a merger,
consolidation, or reorganization that would result in the voting
securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) at least
fifty percent (50%) of the combined voting power of the voting
securities of the Company (or such surviving entity) outstanding
immediately after such merger, consolidation, or reorganization.
However, in no event shall a "Change in Control" be deemed to have
occurred, with respect to the Executive, if the Executive is part
of a purchasing group which consummates the Change in Control
transaction. The Executive shall be deemed "part of a purchasing
group" for purposes of the preceding sentence if the Executive is
an equity participant in the purchasing company or group (except
for: (i) passive ownership of less than two percent (2%) of the
stock of the purchasing company; or (ii) ownership of equity
participation in the purchasing company or group which is
otherwise not significant, as determined prior to the Change in
Control by a majority of the nonemployee continuing Directors).
2.5. Definition of "Good Reason." "Good Reason" shall be determined
by the Executive, in the exercise of good faith and reasonable judgment, and
shall mean, without the Executive's express written consent, the occurrence
of any one or more of the following within two (2) years immediately
following a Change in Control:
(i) The assignment of the Executive to duties inconsistent with the
Executive's authorities, duties, responsibilities, and status as an
executive of the Company, or a reduction or alteration in the nature
or status of the Executive's authorities, duties, or
responsibilities, from those in effect as of ninety (90) calendar
days prior to the Change in Control, other than an insubstantial and
inadvertent act that is remedied by the Company promptly after
receipt of notice thereof given by the Executive;
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(ii) The Company's requiring the Executive to be based at a location in
excess of fifty (50) miles from the location of the Executive's
principal job location or office immediately prior to the Change in
Control; except for required travel on the Company's business to an
extent consistent with the Executive's then present business travel
obligations;
(iii) A reduction by the Company of the Executive's Base Salary in effect
on the Effective Date, or as the same shall be increased from time to
time;
(iv) The failure of the Company to keep in effect any of the Company's
compensation, health and welfare benefits, retirement benefits, or
perquisite programs under which the Executive receives value, as such
program exists immediately prior to the Change in Control. However,
the replacement of an existing program with a new program will be
permissible (and not grounds for a Good Reason termination) if the
value to be delivered to the Executive under the new program is at
least as great as the value delivered to the Executive under the
existing programs; or
Any breach by the Company of its obligations under Section 4 of this
Agreement or any failure of a successor company to assume and agree
to perform the Company's entire obligations under this Agreement, as
required by Section 4 herein.
The Executive's right to terminate employment for Good Reason
shall not be affected by the Executive's incapacity due to
physical or mental illness. The Executive's continued employment
shall not constitute consent to, or a waiver of rights with
respect to, any circumstance constituting Good Reason herein.
2.6. Definition of "Cause." "Cause" shall be determined by the
Administrative Committee, in the exercise of good faith and reasonable
judgment, and shall mean the occurrence of any one or more of the following:
(a) A demonstrably willful and deliberate act or failure to act by the
Executive (other than as a result of incapacity due to physical or
mental illness) which is committed in bad faith, without reasonable
belief that such action or inaction is in the best interests of the
Company, which causes actual material financial injury to the Company
and which act or inaction is not remedied within fifteen (15)
business days of written notice from the Company; or
(b) The Executive's conviction for committing an act of fraud,
embezzlement, theft, or any other act constituting a felony involving
moral turpitude or causing material harm, financial or otherwise, to
the Company.
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2.7. Other Defined Terms. The following terms shall have the meanings
set forth below:
(a) "Base Salary" means, at any time, the then-regular annualized rate of
pay which the Executive is receiving as a salary, excluding amounts
(i) designated by the Company as payment toward reimbursement of
expenses; or (ii) received under incentive or other bonus plans,
regardless of whether or not the amounts are deferred.
(b) "Beneficial Owner" shall have the meaning ascribed to such term in
Rule 13d-3 of the General Rules and Regulations under the Exchange
Act (as such term is defined below).
(c) "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, or any successor act thereto.
(d) "Person" shall have the meaning ascribed to such term in Section
3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d)
thereof, including a "group" as defined in Section 13(d) thereof.
Section 3. Excise Tax Avoidance
3.1. Reduction in Award to Avoid Excise Tax Liability. If any portion
of the Severance Benefits or any other payment under this Agreement, or under
any other agreement with, or plan of the Company, including but not limited
to stock options and other long-term incentives (in the aggregate "Total
Payments") would constitute an "excess parachute payment," such that an
excise tax is due as a result of Section 280G of the Internal Revenue Code,
then the payments to be made to the Executive under this Agreement shall be
reduced such that the value of the aggregate Total Payments that the
Executive is entitled to receive shall be One Dollar ($1) less than the
maximum amount which the Executive may receive without becoming subject to
the tax imposed by Section 4999 of the Code or which the Company may pay
without loss of deduction under Section 280G(a) of the Code.
However, the payments to be made to the Executive under this Agreement shall
be reduced if and only if so reducing the payments results in the Executive
receiving a greater net benefit than he would have received had a reduction
not occurred and an excise tax been paid.
For purposes of this Agreement, the term "excess parachute payment" shall
have the meaning assigned to such term in Section 280G of the Internal
Revenue Code, as amended (the "Code"), and the term "excise tax" shall mean
the tax imposed on such excess parachute payment pursuant to Sections 280G
and 4999 of the Code.
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Section 4. Successors and Assignments
4.1. Successors. The Company will require any successor (whether via a
Change in Control, direct or indirect, by purchase, merger, consolidation, or
otherwise) of the Company to expressly assume and agree to perform the
obligations under this Agreement 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.
Failure of the Company to obtain such assumption and agreement prior
to the effectiveness of any such succession shall, as of the date immediately
preceding the date of a Change in Control, automatically give the Executive
Good Reason to collect, immediately, full benefits hereunder as a Qualifying
Termination.
4.2. Assignment by Executive. This Agreement shall inure to the
benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees, and legatees. If an Executive should die while any amount is still
payable to the Executive hereunder had the Executive continued to live, all
such amounts, unless otherwise provided herein, shall be paid in accordance
with the terms of this Agreement, to the Executive's devisee, legatee, or
other designee, or if there is no such designee, to the Executive's estate.
An Executive's rights hereunder shall not otherwise be assignable.
Section 5. Miscellaneous
5.1. Administration. This Agreement shall be administered by the
Board of Directors of the Company, or by a Committee of the Board designated
by the Board (the "Administrative Committee"). The Administrative Committee
(with the approval of the Board, if the Board is not the Administrative
Committee) is authorized to interpret this Agreement, to prescribe and rescind
rules and regulations, and to make all other determinations necessary or
advisable for the administration of this Agreement.
In fulfilling its administrative duties hereunder, the
Administrative Committee may rely on outside counsel, independent
accountants, or other consultants to render advice or assistance.
5.2. Notices. Any notice required to be delivered to the Company or
the Administrative Committee by the Executive hereunder shall be properly
delivered to the Company when personally delivered to (including by a
reputable overnight courier), or actually received through the U.S. mail,
postage prepaid, by:
Foodmaker, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: General Counsel
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Any notice required to be delivered to the Executive by the Company
or the Administrative Committee hereunder shall be properly delivered to the
Executive when personally delivered to (including by a reputable overnight
courier), or actually received through the U.S. mail, postage prepaid, by,
the Executive at his last known address as reflected on the books and records
of the Company.
Section 6. Contractual Rights and Legal Remedies
6.1. Contractual Rights to Benefits. This Agreement establishes in
the Executive a right to the benefits to which the Executive is entitled
hereunder. However, except as expressly stated herein, nothing herein
contained shall require or be deemed to require, or prohibit or be deemed to
prohibit, the Company to segregate, earmark, or otherwise set aside any funds
or other assets, in trust or otherwise, to provide for any payments to be
made or required hereunder.
6.2. Legal Fees and Expenses. The Company shall pay all legal fees,
costs of litigation, prejudgment interest, and other expenses which are
incurred in good faith by the Executive as a result of the Company's refusal
to provide the Severance Benefits to which the Executive becomes entitled
under this Agreement, or as a result of the Company's (or any third party's)
contesting the validity, enforceability, or interpretation of the Agreement,
or as a result of any conflict between the parties pertaining to this
Agreement.
6.3. Arbitration. The Executive shall have the right and option to
elect (in lieu of litigation) to have any dispute or controversy arising
under or in connection with this Agreement settled by arbitration, conducted
before a panel of three (3) arbitrators sitting in a location selected by the
Executive within fifty (50) miles from the location of his or her job with
the Company, in accordance with the rules of the American Arbitration
Association then in effect. The Executive's election to arbitrate, as herein
provided, and the decision of the arbitrators in that proceeding, shall be
binding on the Company and the Executive.
Judgment may be entered on the award of the arbitrator in any court
having jurisdiction. All expenses of such arbitration, including the fees and
expenses of the counsel for the Executive, shall be borne by the Company.
6.4. Unfunded Agreement. This Agreement is intended to be an
unfunded general asset promise for a select, highly compensated member of the
Company's management and, therefore, is intended to be exempt from the
substantive provisions of the Employee Retirement Income Security Act of 1974
as amended.
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6.5. Exclusivity of Benefits. Unless specifically provided herein,
neither the provisions of this Agreement nor the benefits provided hereunder
shall reduce any amounts otherwise payable, or in any way diminish the
Executive's rights as an employee of the Company, whether existing now or
hereafter, under any compensation and/or benefit plans, programs, policies,
or practices provided by the Company, for which the Executive may qualify.
Vested benefits or other amounts which the Executive is otherwise
entitled to receive under any plan, policy, practice, or program of the
Company (i.e., including, but not limited to, vested benefits under the
Company's 401(k) plan), at or subsequent to the Executive's date of
Qualifying Termination shall be payable in accordance with such plan, policy,
practice, or program except as expressly modified by this Agreement.
6.6. Includable Compensation. Severance Benefits provided hereunder
shall not be considered "includable compensation" for purposes of determining
the Executive's benefits under any other plan or program of the Company.
6.7. Employment Status. Nothing herein contained shall be deemed to
create an employment agreement between the Company and the Executive,
providing for the employment of the Executive by the Company for any fixed
period of time. The Executive's employment with the Company is terminable at
will by the Company or the Executive and each shall have the right to
terminate the Executive's employment with the Company at any time, with or
without Cause, subject to the Company's obligation to provide Severance
Benefits as required hereunder.
In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts
payable to the Executive under any of the provisions of this Agreement, nor
shall the amount of any payment hereunder be reduced by any compensation
earned by the Executive as a result of employment by another employer, other
than as provided in Paragraph 2.3(e) herein.
6.8. Entire Agreement. This Agreement represents the entire
agreement between the parties with respect to the subject matter hereof, and
supersedes all prior discussions, negotiations, and agreements concerning the
subject matter hereof, including, but not limited to, any prior severance
agreement made between the Executive and the Company.
6.9. Tax Withholding. The Company shall withhold from any amounts
payable under this Agreement all federal, state, city, or other taxes as
legally required to be withheld.
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6.10. Waiver of Rights. Except as otherwise provided herein, the
Executive's acceptance of Severance Benefits, the Gross-Up Payment (if
applicable), and any other payments required hereunder shall be deemed to be
a waiver of all rights and claims of the Executive against the Company
pertaining to any matters arising under this Agreement.
6.11. Severability. In the event any provision of the Agreement
shall be held illegal or invalid for any reason, the illegality or invalidity
shall not affect the remaining parts of the Agreement, and the Agreement
shall be construed and enforced as if the illegal or invalid provision had
not been included.
6.12. Applicable Law. To the extent not preempted by the laws of the
United States, the laws of the State of Delaware shall be the controlling law
in all matters relating to this Agreement.
IN WITNESS WHEREOF, the Company has executed this Agreement, to be
effective as of the day and year first written above.
ATTEST: Foodmaker, Inc.
By:___________________________ By:___________________________
Secretary Title: _______________________
______________________________
name
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Attachment A
The multiple of salary would vary by role. 2.5 is used for the following
roles:
- Chief Executive Officer
- Chief Financial Officer
- Chief Legal Officer
- Executive Vice President
1.5 is used for the following roles:
- Vice President, Human Resources
- Vice President, Quality Assurance
- Vice President, Controller
- Vice President, Operations