UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): June 21, 2011
ARAMARK CORPORATION
(Exact name of registrant as specified in charter)
Delaware | 001-04762 | 95-2051630 | ||
(State or Other Jurisdiction of Incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) | ||
1101 Market Street Philadelphia, Pennsylvania |
19107 | |||
(Address of Principal Executive Offices) | Zip Code |
Registrants telephone, including area code: 215-238-3000
N/A
(Former name and former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 5.02. Departure of Directors or Certain Officers, Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
Management Stock Incentive Plan
ARAMARK Holdings Corporation (Holdings), ARAMARK Corporations (the Company) ultimate parent, adopted an amended and restated ARAMARK Holdings Corporation 2007 Management Stock Incentive Plan (the Amended Stock Incentive Plan) on June 21, 2011. The Amended Stock Incentive Plan incorporates certain changes from prior amendments to the Stock Incentive Plan and provides for the grant of Installment Stock Purchase Opportunities, which is a new type of stock option, the terms of which are further described below. The Stock Incentive Plan also provides that shares purchased by Holdings from former employees will become eligible for issuances as stock options or purchased stock. A copy of the Amended Stock Incentive Plan is attached as Exhibit 10.1 to this Current Report on Form 8-K and incorporated herein by reference.
Form of Non Qualified Installment Stock Purchase Opportunity Agreement
Installment stock purchase opportunities granted under the Amended Stock Incentive Plan will be awarded pursuant to a Non-Qualified Installment Stock Purchase Opportunity Agreement with Holdings (the ISPO Agreement). On June 21, 2011, the Board of Directors of Holdings approved a form of ISPO Agreement that sets forth the terms of installment stock purchase opportunities (ISPO). ISPO awards are divided into five equal installments. The first installment, which represents 20% of the total award, vests immediately upon grant and will be exercisable until the first anniversary of the grant date. At least 25% of this installment must be exercised or the entire grant (including the remaining four installments) will expire and any part of the first installment that is not exercised during the exercise period will also expire, in each case on the first anniversary of the grant date. The remaining four installments will vest on December 15th of the first calendar year following the year in which the ISPO is granted, and on each of the three anniversaries of such date, respectively, and will be exercisable for 30 days thereafter. Any of these remaining four installments that becomes vested but is not exercised during its respective exercise period will expire at the end of its exercise period, but the holder may still exercise any subsequent installments when they vest in future years. A copy of the ISPO Agreement is attached as Exhibit 10.2 to this Current Report on Form 8-K and incorporated herein by reference.
Form of Non Qualified Stock Option Agreement
Stock options granted under the Stock Incentive Plan have been, and will in the future be, awarded pursuant to a Non-Qualified Stock Option Agreement with Holdings (the Option Agreement). On June 21, 2011, the Board of Directors of Holdings approved a new form of Option Agreement that is similar to the forms that have been filed previously. The new form of Option Agreement includes a revised EBIT target for fiscal year 2011 and provides that the Compensation and Human Resources Committee will, on an annual basis, set both annual and cumulative EBIT targets for future fiscal years within 90 days of the beginning of each fiscal year. The annual EBIT target for fiscal year 2011 is $748.5 million. The foregoing performance target is not a prediction of how the Company will perform during the fiscal year 2011. The Company is not providing any guidance, nor updating any prior guidance, of its future performance with the disclosure of these performance targets, and you are cautioned not to rely on these performance targets as a prediction of the Companys future performance. A copy of the Option Agreement is attached as Exhibit 10.3 to this Current Report on Form 8-K and incorporated herein by reference.
Amendment to Outstanding Non Qualified Stock Option Agreements
On June 21, 2011, the Board of Directors of Holdings approved an amendment to outstanding Stock Option Agreements that includes revised Schedule 1s to reflect a new annual EBIT performance target for fiscal 2011 of $748.5 million. The amendment also provides that if an annual EBIT target is established for fiscal 2012 or later years for options granted after June 21, 2011 that is less than the annual EBIT target for such fiscal year for the outstanding stock options, the EBIT target for such outstanding options will be reduced to such lower EBIT target. In addition, if a cumulative EBIT target as established for options granted after June 21, 2011 is achieved in a fiscal year ending after fiscal 2011, then for any years (beginning with fiscal 2011) that an annual EBIT target as established under the outstanding Stock Option Agreement was not achieved and which was not the final performance year of such option (a Missed Year), then the portion of the performance option under the
outstanding Stock Option Agreement that did not vest in respect of such Missed Year will nevertheless become vested. The 2011 performance target is not a prediction of how the Company will perform during the fiscal year 2011. The Registrant is not providing any guidance, nor updating any prior guidance, of its future performance with the disclosure of these performance targets, and you are cautioned not to rely on these performance targets as a prediction of the Registrants future performance. The form of Amendment to outstanding Non Qualified Stock Option Agreements and the revised Schedule 1s to the outstanding Non Qualified Stock Option Agreements are attached as Exhibits 10.4 and 10.5, respectively, to this Current Report on Form 8-K and incorporated herein by reference.
ITEM 9.01. Financial Statements and Exhibits
(d) Exhibits.
Number |
Description | |
10.1 | Amended and Restated ARAMARK Holdings Corporation 2007 Management Stock Incentive Plan. | |
10.2 | Form of Non Qualified Installment Stock Purchase Opportunity Agreement. | |
10.3 | Form of Non Qualified Stock Option Agreement. | |
10.4 | Form of Amendment to outstanding Non Qualified Stock Option Agreements. | |
10.5 | Revised Schedule 1s to outstanding Non-Qualified Stock Option Agreements. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
ARAMARK CORPORATION | ||||||
Date: June 21, 2011 | By: | /s/ L. FREDERICK SUTHERLAND | ||||
Name: | L. Frederick Sutherland | |||||
Title: | Executive Vice President and Chief Financial Officer |
EXHIBIT INDEX
Number |
Description | |
10.1 | Amended and Restated ARAMARK Holdings Corporation 2007 Management Stock Incentive Plan. | |
10.2 | Form of Non Qualified Installment Stock Purchase Opportunity Agreement. | |
10.3 | Form of Non Qualified Stock Option Agreement. | |
10.4 | Form of Amendment to outstanding Non Qualified Stock Option Agreements. | |
10.5 | Revised Schedule 1s to outstanding Non-Qualified Stock Option Agreements. |
Exhibit 10.1
ARAMARK HOLDINGS CORPORATION
AMENDED AND RESTATED 2007 MANAGEMENT STOCK INCENTIVE PLAN
ARTICLE I
PURPOSE OF THE PLAN
The purpose of the AMENDED AND RESTATED ARAMARK CORPORATION 2007 MANAGEMENT STOCK INCENTIVE PLAN (the Plan) is to further the growth and success of Aramark Holdings Corporation, a Delaware corporation (the Company), and its Affiliates (as hereinafter defined) by enabling directors and employees of, or consultants to, the Company or any of its Affiliates to acquire Shares (as hereinafter defined), thereby increasing their personal interest in such growth and success and to provide a means of rewarding outstanding performance by such persons to the Company and/or its Affiliates. Awards granted under the Plan shall include nonqualified stock options (referred to herein as Options), restricted shares of Common Stock (Restricted Stock), the opportunity to purchase shares of Common Stock (Purchased Stock) and such Other Stock-Based Awards as the Board may determine (collectively, the Awards).
ARTICLE II
DEFINITIONS
As used in the Plan, the following terms shall have the meanings set forth below:
Adoption Agreement means an agreement between the Company and an individual eligible to become a Participant or a holder of Shares, pursuant to which such individual agrees to become a party to the Stockholders Agreement.
Affiliate means with respect to any Person, any other Person that, directly or indirectly through one or more intermediaries controls, is controlled by, or is under common control with, such Person or any other entity designated by the Board in which the Company or an Affiliate has an interest. As used in this definition, the term control, including the correlative terms controlling, controlled by and under common control with, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies (whether through the ownership of securities or any partnership or other ownership interests, by contract or otherwise) of a Person. The term Affiliate shall not include at any time any portfolio companies of any of the Sponsor Stockholders or any of their Affiliates, other than the Company and its Subsidiaries.
Award has the meaning set forth in Article I hereof.
Award Agreement means any writing setting forth the terms of an Award that has been duly authorized and approved by the Board or the Committee.
Award Committee has the meaning set forth in Section 3.3(b) hereof.
Board means the Board of Directors of the Company.
Cause means, with respect to a Participant: (i) if such Participant is at the time of termination a party to any employment, consulting or other similar agreement (any such agreement, an Individual Agreement) that defines such term, the meaning given in such Individual Agreement; (ii) otherwise if such Participant is at the time of termination a party to an Award Agreement which was entered into under this Plan and defines such term, the meaning given in the Award Agreement; and (iii) in all other cases, such Participants (A) commission of a felony or a crime of moral turpitude; (B) commission of a willful and material act of dishonesty involving the Company; (C) material breach of the Companys Business Conduct Policy that causes harm to the Company or its business reputation; or (D) willful misconduct that causes material harm to the Company or its business reputation.
Change of Control has the meaning set forth in the Stockholders Agreement.
Closing Date has the meaning ascribed thereto in the Agreement and Plan of Merger made and entered into as of the 8th day of August, 2006, by and among RMK Acquisition Corporation, a Delaware corporation, RMK Finance LLC, a Delaware limited liability company, and the Company (the Merger Agreement).
Code means the Internal Revenue Code of 1986, as amended.
Committee means the Compensation and Human Resources Committee of the Board or such other committee appointed by the Board to administer the Plan (and, before the time that the Board appoints such committee and such committee first meets to take action, the Board).
Common Stock means the common stock of the Company, par value $.01 per share.
Company has the meaning set forth in Article I hereof.
Corporate Transaction has the meaning set forth in Section 7.1 hereof.
Deferred Stock Unit or DSU means the right to receive one whole Share for each whole Deferred Stock Unit, and cash for fractional Deferred Stock Units, upon the terms and conditions set forth in the respective Award Agreement granting the Award.
Disability means, unless the Award granted to the applicable Participant is subject to Section 409A of the Code, with respect to each Participant, the Participant is (1) unable to perform the material and substantial duties of the Participants Regular Occupation (as defined herein below) due to the Participants sickness or injury; and (2) the Participant is under the regular care of a qualified doctor; and (3) the Participant has incurred a 20% or more loss in the Participants monthly earnings due to that sickness or injury (or such other definition of disability that results in a termination of employment and commencement of receipt of benefits under the Company or its Affiliates long term disability plan, as in effect at the applicable time
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(the LTD Plan)). In the event that the Award granted to the applicable Participant is subject to Section 409A of the Code, the term Disability, shall instead have the meaning of Disability as defined under Section 409A of the Code or any successor provision of the Code at the applicable time. For purposes of this definition, the term Regular Occupation means the occupation the Participant is routinely performing when the Participants Disability begins, which shall be determined by the LTD Plan Claims Administrator as provided in the LTD Plan.
Effective Date means January 25, 2007 (the date the Plan was adopted by the Board and approved by the shareholders of the Company).
Excess has the meaning set forth in Section 7.2 hereof.
Exchange Act means the Securities Exchange Act of 1934, as amended.
Fair Market Value means (1) on the Closing Date, the price the Sponsor Stockholders paid to acquire the Common Stock and (2) as of any subsequent, specified date, if the Common Stock is listed on a national securities exchange, the closing price of the Common Stock on any national securities exchange or any national market system (including, but not limited to, The NASDAQ National Market) on that date, or if no prices are reported on that date, on the last preceding date on which such prices of the Common Stock are so reported. If the Common Stock is not then listed on any national securities exchange but is traded over the counter at the time determination of its Fair Market Value is required to be made, its Fair Market Value shall be deemed to be equal to the average between the reported high and low sales prices of Common Stock on the most recent date on which Common Stock was publicly traded. If the Common Stock is not publicly traded at the time a determination of its Fair Market Value is to be made, then Fair Market Value shall have the meaning set forth in the Stockholders Agreement. In connection with any of the foregoing, solely to the extent necessary to avoid causing an Option or an Other Stock-Based Award (if and where applicable) to be deemed deferred compensation within the meaning of Section 409A of the Code, the Board may deviate from such meaning and determine Fair Market Value in such manner as it deems appropriate, reasonable and in good faith is required to comply with Section 409A of the Code, after consultation with counsel to the Company, but in all cases will make such determination in a manner that is as close as possible to that set forth herein.
IPO has the meaning set forth in the Stockholders Agreement.
Installment Stock Purchase Opportunity Option or ISPO Option means those Options that the Committee (or Award Committee, as applicable) have designated as ISPO Options, which constitute Options that have limited periods of exercisability, as set forth in the relevant Award Agreement.
Net Exercise means a Participants ability to exercise an Option by directing the Company to deduct from the shares of Common Stock issuable upon exercise of his Options a number of Shares having an aggregate Fair Market Value equal to the sum of the aggregate Option Price therefor plus the amount of the Participants Tax Withholding, and the Company shall thereupon issue to the Participant the net remaining number of Shares after such deductions.
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Notice has the meaning set forth in Section 5.6 hereof.
Option has the meaning set forth in Article I hereof.
Option Price has the meaning set forth in Section 5.4 hereof.
Option Shares has the meaning set forth in Section 5.6(b) hereof.
Original Shares has the meaning set forth in the Stockholders Agreement.
Other Stock-Based Awards has the meaning set forth in Section 6.1 hereof.
Participant has the meaning set forth in Section 4.1 hereof.
Performance Based Awards has the meaning set forth in Section 3.5 hereof.
Person shall include an individual, a partnership, a corporation, an association, a joint stock company, a limited liability company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof.
Plan has the meaning set forth in Article I hereof.
Public Offering has the meaning set forth in the Stockholders Agreement.
Reserved Shares means, subject to adjustment in accordance with Section 7.1 below: (1) an aggregate number of Shares equal to 15.5% of the fully-diluted Common Stock of the Company as of immediately after the Closing Date (the Fully Diluted Equity), up to 11% of which will be granted at or within ninety days following the Closing Date (the Initial Grant Pool) and the remainder of which will be granted in future years; provided that any amount of Shares subject to the Initial Grant Pool that are not granted within such ninety-day period, and any related Returned Shares, may be granted under an Award at any time during the term of this Plan; plus (2) the aggregate number of Shares that constitute Original Shares (other than those held by Joseph Neubauer or any of the Sponsor Stockholders) (and any related Returned Shares); plus (3) 200,000 Shares, subject to adjustment in accordance with Section 7.1 below, available exclusively for issuance under the Plan pursuant to Awards of Deferred Stock Units to non-employee directors of the Company.
Retirement means with respect to a Participant the retirement of such Participant upon or after achieving age 60 and five (5) years of employment with the Company, any of its Affiliates, and/or any of their respective predecessors.
Returned Shares has the meaning set forth in Section 3.5(b) hereof.
Securities Act means the Securities Act of 1933, as amended.
Shares means shares of Common Stock.
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Spin-off means any distribution without consideration of shares of a Subsidiary to shareholders of the Company.
Sponsor Stockholders has the meaning set forth in the Stockholders Agreement.
Sponsor Investment means direct or indirect investments in Shares made by the Sponsor Stockholders on or after the Closing Date, but excluding any purchases or repurchases of Shares on any securities exchange or any national market system after an IPO. Any direct or indirect investments in Shares made by the Sponsor Stockholders after the Closing Date shall be included in this definition except in the event and to the extent that the Sponsor Stockholders waive such inclusion herein for any purpose under this Plan.
Stockholders Agreement means the Stockholders Agreement, dated on or about January 26, 2007, among the Company and the holders party thereto, as it is amended, supplemented, restated or otherwise modified from time to time.
Subsidiary means any corporation or other entity of which the Company owns securities or interests having a majority, directly or indirectly, of the ordinary voting power in electing the board of directors, managers, general partners or similar governing Persons thereof.
Tax Withholding means a Participants minimum tax withholding with respect to any Award granted hereunder.
Termination Date means the tenth anniversary of the Effective Date.
Termination of Relationship means (i) if the Participant is an employee of the Company or any Affiliate, the termination of the Participants employment with the Company and its Affiliates for any reason; (ii) if the Participant is a consultant to the Company or any Affiliate, the termination of the Participants consulting relationship with the Company and its Affiliates for any reason; and (iii) if the Participant is a director of the Company or any Affiliate, the termination of the Participants service as a director of the Company or such Affiliate for any reason; including, in the case of clauses (i), (ii) or (iii), as a result of such Affiliate no longer being a Affiliate of the Company because of a sale, divestiture or other disposition of such Affiliate by the Company (whether such disposition is effected by the Company or another Affiliate thereof). Notwithstanding the foregoing, unless otherwise approved by the Chief Executive Officer of the Company (provided that such authority shall be effective only to the extent that neither its existence nor its exercise would result in imposition of taxes under Section 409A of the Code), a Termination of Relationship shall not be deemed to have occurred if a Participant remains an employee or director of the Company or any Affiliate, but a Termination of Relationship shall be deemed to have occurred if a Participant remains a consultant of the Company or any Affiliate.
Vested Options means Options that have vested in accordance with the applicable Award Agreement.
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ARTICLE III
ADMINISTRATION OF THE PLAN; SHARES SUBJECT TO THE PLAN
Section 3.1. Committee.
The Plan shall be administered by the Committee.
Section 3.2. Procedures.
The Committee shall adopt such rules and regulations as it shall deem appropriate concerning the holding of meetings and the administration of the Plan, which shall be consistent with the current practice of the Compensation and Human Resources Committee of ARAMARK CORPORATION as of the Effective Date.
Section 3.3. Interpretation; Powers of Committee.
Except as may otherwise be expressly reserved to the Board as provided herein, and with respect to any Award, except as may otherwise be provided in the Award Agreement evidencing such Award or an Individual Agreement between the Participant and Company, the Committee shall have all powers with respect to the administration of the Plan, including the authority to:
(a) determine eligibility and the particular persons who will receive Awards;
(b) grant Awards to eligible persons, determine the price and number of securities to be offered or awarded to any of such persons, determine the other specific terms and conditions of Awards consistent with the express limits of the Plan, establish the installments (if any) in which such Awards will become exercisable or will vest and the respective consequences thereof (or determine that no delayed exercisability or vesting is required), and establish the events of termination or reversion of such Awards; provided, however, that the Committee may also delegate, at any time and from time to time, to any sub-committee of the Committee and the Board may also delegate, at any time and from time to time, to any other committee of the Board (in either case which shall consist of one or more members of the Committee or Board, respectively, and may consist solely of the Chief Executive Officer of the Corporation so long as he or she is a member of the Committee or Board, respectively) (an Award Committee), subject to such guidelines as the Board, the Committee or the Award Committee may establish from time to time, the authority to grant Awards under the Plan
(c) approve the forms of Award Agreements, which need not be identical either as to type of Award or among Participants;
(d) construe and interpret the provisions of the Plan and any Award Agreement or other agreement defining the rights and obligations of the Company and Participants under the Plan, make factual determinations with respect to the
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administration of the Plan, further define the terms used in the Plan, and prescribe, amend and rescind rules and regulations relating to the administration of the Plan;
(e) cancel, modify, or waive the Companys rights with respect to, or modify, discontinue, suspend, or terminate any or all outstanding Awards held by Participants, subject to any required consent under Article X;
(f) accelerate or extend the exercisability or extend the term of any or all outstanding Awards, subject to any consent required under ARTICLE X; and
(g) make all other determinations and take such other action as contemplated by this Plan or as may be necessary or advisable for the administration of this Plan and the effectuation of its purposes, other than the amendment of any Plan provision, which power and authority shall be held by the Board and subject to the Stockholders Agreement.
All decisions of the Board or the Committee, as the case may be, shall be made in good faith and shall be conclusive and binding on all Participants in the Plan.
Section 3.4. Terms of Certain Award Agreements.
Notwithstanding anything else set forth in this Plan document to the contrary, any grants of Options shall be made using the form attached hereto as Exhibit A with only such changes as may be made by the Board solely with respect to the Option Price (to the extent required to comply with Section 5.4 of this Plan), the EBIT Targets (as such term is defined in Exhibit A) for any applicable Fiscal Years subsequent to those identified in Exhibit A and the Sponsor shareholder return targets, the date on which the vesting of the Options shall commence (namely, to reflect the later grant date of the Options), and any other terms as the Board may determine appropriate; provided that the Committee may make changes to the form to correct any defect or supply any omission or reconcile any inconsistency in the Plan or in any Award or to aid in the administration of the Plan or any Award, in the manner and to the extent the Committee deems necessary or desirable. Fifty percent of Options granted will vest upon the attainment of performance goals, and fifty percent of Options will vest in equal annual installments on each of the first four anniversaries of the applicable date of grant, in each case in a manner substantially similar to the manner set forth in the Award Agreement attached as Exhibit A (subject to the changes noted in the preceding sentence). In connection with all of the foregoing, the Committee shall in good faith consider making additional Award grants following the fourth anniversary of the Closing Date. In addition to the foregoing, Participants who are non-employee directors of the Company may be granted Deferred Stock Units upon the terms and conditions pursuant to an Award Agreement attached hereto as Exhibit C with such changes as may be made by the Board; provided that the Committee may make changes to the form to correct any defect or supply any omission or reconcile any inconsistency in the Plan or in any Award or to aid in the administration of the Plan or any Award in the manner and to the extent the Committee deems necessary or desirable. Notwithstanding the foregoing, with respect to ISPO Options, the Committee may approve the forms of Award Agreements, which need not be identical among Participants.
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Section 3.5. Compliance with Code Section 162(m).
In the event the Company becomes a publicly-held corporation as defined in Code §162(m)(2), the Company may establish a committee of outside directors meeting the requirements of Code §162(m)(2) to (i) approve Awards that might reasonably be anticipated to result in the payment of employee remuneration that would otherwise exceed the limit on employee remuneration deductible for income tax purposes by the Company pursuant to Code §162(m); and (ii) administer the Plan. In such event, the powers reserved to the Committee in the Plan shall be exercised by such compensation committee. In addition, to the extent Code §162(m) is applicable, Awards under the Plan may be granted upon satisfaction of the conditions to such grants provided pursuant to Code §162(m) and any Treasury Regulations promulgated thereunder. In connection with the foregoing, (i) subject to adjustment in accordance with Section 7.1, the maximum number of Shares for which Options, and any Other Stock-Based Awards that are intended to qualify as performance-based compensation under Code §162(m) (Performance Based Awards), may be granted during any calendar year to any Participant shall be 7,500,000, and (ii) the maximum amount of a Performance Based Award that can be paid in cash to any Participant during any calendar year shall be $90,000,000.
Section 3.6. Number of Shares.
(a) Subject to the provisions of Article VII (relating to adjustments upon changes in capital structure and other corporate transactions), the aggregate number of Shares with respect to which Awards may be granted under the Plan shall not exceed the Reserved Shares.
(b) Shares that are subject to or underlie Options granted under the Plan that expire, are redeemed as part of a Net Exercise settlement or as part of the payment of any Option Price, or for any reason are canceled or terminated without having been exercised (or Shares subject to or underlying the unexercised portion of any Options, in the case of Options that were partially exercised at the time of their expiration, cancellation or termination), including in any such instance any Options, or Shares subject to or underlying Options, that are purchased by the Company from the Participants pursuant to the Stockholders Agreement or otherwise, and Shares that were Purchased Stock or other Shares issued in exchange for shares of common stock of the Company in connection with the Merger by a Participant, that are purchased by the Company from the Participants pursuant to the Stockholders Agreement or otherwise, shall again become available for subsequent Awards of Options or of Purchased Stock under the Plan (any Shares so expired, redeemed, cancelled, terminated or purchased, Returned Shares). In addition to the foregoing, Shares that are subject to Awards of Deferred Stock Units that are forfeited without settlement of Shares, and Shares purchased by the Company from any Participants who are non-employee directors of the Company pursuant to the Stockholders Agreement or otherwise, shall again only become available for subsequent Awards of Deferred Stock Units under the Plan, and for all purposes of this Plan shall be included in the term Returned Shares as defined in the immediately preceding sentence.
Section 3.7. Reservation of Shares.
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The number of Shares reserved for issuance with respect to Awards granted under the Plan shall at no time be less than the maximum number of Shares which may be issued or delivered at any time pursuant to outstanding Awards.
ARTICLE IV
ELIGIBILITY
Section 4.1. General.
Awards may be granted under the Plan only to persons who are employees or directors of, or consultants to, the Company or any of its Affiliates on the date of the grant. Each such person to whom an Award is granted under the Plan is referred to herein as a Participant
ARTICLE V
STOCK OPTIONS
Section 5.1. General.
Options may be granted under the Plan at any time and from time to time on or prior to the Termination Date. Each Option granted under the Plan shall be subject to the terms and conditions set forth in the Plan. Each Option shall be evidenced by an Award Agreement incorporating the terms and provisions of the Plan that shall be executed by the Company and the Participant. The Award Agreement shall specify the number of Shares for which such Option shall be exercisable, the Option Price (as defined in Section 5.4 below) for such Shares and the other terms and conditions of the Option.
Section 5.2. Vesting.
The Committee, in its sole discretion, shall determine whether and to what extent any Options are subject to vesting based upon the Participants continued service to, or the Participants performance of duties for, the Company and its Subsidiaries, and/or upon any other basis.
Section 5.3. Date of Grant.
Except as may be otherwise provided in an Award Agreement or as may be required by applicable law, the date of grant of an Option under this Plan shall be the date as of which the Committee approves the grant.
Section 5.4. Option Price.
The Option Price shall be the exercise price per Share of any Option granted under this Plan, to be determined by the Committee and set forth in the Award Agreement. In no event, however, may the Committee determine an Option Price that is less than the Fair Market Value of the Share on the date of grant.
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Section 5.5. Payment of Option Price and Tax Withholding.
The aggregate Option Price (and any Tax Withholding due) shall, to the extent permitted by applicable law, be paid:
(a) in cash (by wire transfer of immediately available funds to a bank account of the Company, by delivery of a certified check payable to the Company);
(b) by surrender of shares of Common Stock (by delivery of such shares or by attestation) with a Fair Market Value equal to the Option Price; provided that such Shares have been held by the Participant for such period, if any, as may be required from time to time by the Committee in order to satisfy applicable generally accepted accounting principles);
(c) pursuant to a Net Exercise arrangement; provided, however, that in such event, the Committee may exercise its discretion to limit or prohibit the use of a Net Exercise solely with respect to Tax Withholding if the Committee determines in good faith that to allow for a Net Exercise with respect to Tax Withholding would result in a material negative impact on the Companys and its Subsidiaries, near-term liquidity needs; provided, further, however, that solely with respect to an ISPO Option, a Net Exercise arrangement may be limited or prohibited as provided in the Award Agreement;
(d) if the Common Stock is a class of securities then listed or admitted to trading on any national securities exchange or traded on any national market system (including, but not limited to, The Nasdaq National Market), in compliance with any cashless exercise program authorized by the Board or the Committee for use in connection with the Plan at the time of such exercise (but, subject in any case, to the applicable limitations of Rule 16b-3 under the Exchange Act); or
(e) a combination of the methods set forth in this Section 5.5.
Section 5.6. Notice of Exercise.
A Participant (or other person, as provided in Section 8.2) may exercise an Option (for the Shares represented thereby) granted under the Plan in whole or in part (but for the purchase of whole Shares only), as provided in the Award Agreement evidencing his Option, by delivering a notice (the Notice) to the Company in accordance with the Option exercise notice practices and procedures in effect at ARAMARK CORPORATION as of the Effective Date. In accordance therewith, the Notice may include the following:
(a) that the Participant elects to exercise the Option;
(b) the number of Shares with respect to which the Option is being exercised (the Option Shares);
(c) the method of payment for the Option Shares (which method must be available to the Participant under the terms of his Award Agreement);
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(d) the date upon which the Participant desires to consummate the purchase of the Option Shares (which date must be prior to the termination of such Option); and
(e) any additional provisions with respect to Notice consistent with the Plan as the Committee may from time to time require.
The exercise date of an Option shall be the date on which the Company receives the Notice and any payment due from the Participant. Such Notice shall also contain, to the extent such Participant is not then a party to the Stockholders Agreement (and the Stockholders Agreement has not been terminated prior to such date), an Adoption Agreement, in form and substance satisfactory to the Board pursuant to which the Participant agrees to become a party to the Stockholders Agreement.
ARTICLE VI
OTHER EQUITY AWARDS
Section 6.1. Other Equity-Based Awards.
Subject to the Stockholders Agreement (including, without limitation, Section 1.09(a)) and subject to the Reserved Shares limit referred to in Section 3.6(a) of this Plan, the Committee may grant or sell awards of Shares, including awards of Restricted Stock, Purchased Stock (including the right to purchase shares on one or more dates that are up to 18 months after the date a Participant becomes employed by the Company or any of its Affiliates or is admitted to the Executive Leadership Council of the Company or any of its Affiliates or is promoted to an eligible employment band, which right the Committee shall provide to such newly hired, admitted or promoted employees as the Chief Executive Officer of the Company may recommend) and awards that are valued in whole or in part by reference to, or are otherwise based on the Fair Market Value of, Shares, including, without limitation, awards of Deferred Stock Units (such other awards, the Other Stock-Based Awards). Such Other Stock-Based Awards shall be in such form, and dependent on such conditions, as the Committee shall determine, including, without limitation, the right to receive, or vest with respect to, one or more Shares (or the equivalent cash value of such Shares) upon the completion of a specified period of service, the occurrence of an event and/or the attainment of performance objectives. Other Stock-Based Awards may be granted alone or in addition to any other Awards under the Plan. Subject to the provisions of the Plan and the Stockholders Agreement, the Committee shall determine to whom and when other equity-based Awards will be made, the number of Shares to be awarded under (or otherwise related to) such Awards; whether such Awards shall be settled in cash, Shares or a combination of cash and Shares; and all other terms and conditions of such awards (including, without limitation, the vesting provisions thereof and provisions ensuring that all Shares so awarded and issued shall be fully paid and non-assessable).
Section 6.2. Issuance of Shares to Participants.
The Company shall issue Shares to a Participant upon the entry by the Company into the stockholder records of the Company in the name of the Participant (or other person exercising the applicable Option in accordance with the provisions of Section 8.2) of the number
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of Shares acquired by the Participant under the Plan, whether upon exercise of an Option (in which case such issuance shall occur as soon as practicable after receipt of the Notice and payment of the aggregate Option Price for such Shares) or otherwise; provided that the Company, in its sole discretion, may elect to not issue any fractional Shares upon the exercise of an Option (determining the fractional Shares after aggregating all Shares issuable to a single holder as a result of an exercise of an Option for more than one Share) and, in lieu of issuing such fractional Shares, shall pay the Participant the Fair Market Value thereof. Neither the Participant nor any person exercising an Option in accordance with the provisions of Section 8.2 shall have any privileges as a stockholder of the Company with respect to any Shares of stock issuable upon exercise of an Option granted under the Plan until the date of entry of the stockholdings of the Participant into the stockholder records of the Company representing such Shares pursuant to this Section 6.2.
ARTICLE VII
ADJUSTMENTS
Section 7.1. Changes in Capital Structure.
(a) Subject to Section 7.2, in the event of a stock dividend, stock split, reverse stock split, share combination, or recapitalization or similar event affecting the capital structure of the Company, an extraordinary cash dividend, separation, Spin-off or a reorganization, the Committee shall act in good faith and make appropriate and equitable substitutions or adjustments, as applicable, to: (A) the aggregate number and kind of Shares or other securities reserved for issuance and delivery under the Plan, (B) the number and kind of Shares or other securities subject to outstanding Awards; (C) performance metrics and targets underlying outstanding Awards; and (D) the Option Price of outstanding Options.
(b) In the event of a merger, consolidation, acquisition of property or shares, stock rights offering, liquidation, disaffiliation, or similar event affecting the Company or any of its Subsidiaries (each, a Corporate Transaction), the Committee shall act in good faith and make appropriate and equitable substitutions or adjustments, as applicable, to (A) the aggregate number and kind of Shares or other securities reserved for issuance and delivery under the Plan, (B) the number and kind of Shares or other securities subject to outstanding Awards; (C) performance metrics and targets underlying outstanding Awards; and (D) the Option Price of outstanding Options. In the case of a Corporate Transaction that does not constitute a Change of Control, the Committee shall act in good faith and make appropriate and equitable substitutions or adjustments, which, in addition to those identified in the immediately preceding sentence, may also include, without limitation, (1) the cancellation of outstanding Awards in exchange for, on a per Share basis, the same amount and kind of consideration, in the same proportion, as that received by each Sponsor Stockholder in respect of each Share held (directly or indirectly) by the Sponsor Stockholder (less, in the event an Award is an Option, the applicable Option Price); and (2) the substitution of other property (including, without limitation, cash or other securities of the Company and securities of entities other than the Company) for the Shares subject to outstanding Awards.
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(c) In the case of a Corporate Transaction that does constitute a Change in Control, unless any given Participant agrees otherwise with respect to his or her own Awards, all then outstanding Awards shall be cancelled in exchange for, on a per Share basis, the same amount and kind of consideration, in the same proportion, as that received by each Sponsor Stockholder in respect of each Share held (directly or indirectly) by the Sponsor Stockholder (less, in the event an Award is an Option, the applicable Option Price).
Section 7.2. Extraordinary Cash Distributions.
In the event of an extraordinary cash distribution on Shares subject to an Option, the Option Price of such Option shall be reduced by the amount of such cash distribution (the Adjustment Amount), but only to the extent permitted without subjecting such Option to Section 409A of the Code. If the Adjustment Amount exceeds the reduction permitted without subjecting such Option to Section 409A of the Code (such excess, the Excess), then, if and when the Option becomes a Vested Option, the holder thereof shall receive, in addition to the Shares subject to such Option, an amount in cash or in the form of additional Shares having a value equal to the Excess.
ARTICLE VIII
RESTRICTIONS ON AWARDS
Section 8.1. Compliance With Securities Laws.
(a) No Awards shall be granted under the Plan, and no Shares shall be issued and delivered pursuant to Awards granted under the Plan, unless and until the Company and/or the Participant shall have complied with all applicable Federal, state or foreign registration, listing and/or qualification requirements and all other requirements of law or of any regulatory agencies having jurisdiction.
(b) The Committee in its discretion may, as a condition to the delivery of any Shares pursuant to any Award granted under the Plan, require under the Award Agreement that the applicable Participant (i) represent in writing that the Shares received pursuant to such Award are being acquired for investment and not with a view to distribution and (ii) make such other representations and warranties as are deemed reasonably appropriate by the Committee. Stock certificates representing Shares acquired under the Plan that have not been registered under the Securities Act shall, if required by the Committee, bear such legends as may be required by the Stockholders Agreement and the applicable Award Agreement.
Section 8.2. Nonassignability of Awards.
(a) No Award granted under this Plan shall be assignable or otherwise transferable by the Participant, except by designation of a beneficiary, by will or by the laws of descent and distribution. An Award may be exercised during the lifetime of the Participant only by the Participant, unless the Participant becomes subject to a Disability. If a Participant dies or becomes subject to a Disability, his Options shall thereafter be exercisable, during the period specified in the applicable Award Agreement (as the case may be), by the Participant subject to a
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Disability by his designated beneficiary or if no beneficiary has been designated in writing, by his executors or administrators to the full extent (but only to such extent) to which such Options were exercisable by the Participant at the time of (and after giving effect to any vesting that may occur in connection with) his death or Disability.
(b) Before granting any Awards or issuing any Shares under the Plan to any person who is not already a party to the Stockholders Agreement, the Company shall obtain an executed Adoption Agreement from such person, unless a Public Offering shall have already occurred prior to such grant or issuance.
Section 8.3. No Right to an Award or Grant.
Neither the adoption of the Plan nor any action of the Board or the Committee shall be deemed to give an employee, director or consultant any right to be granted an Option to purchase Common Stock, receive an Award under the Plan except as may be evidenced by an Award Agreement duly executed on behalf of the Company, and then only to the extent of and on the terms and conditions expressly set forth in the Award Agreement. The Plan will be unfunded. The Company will not be required to establish any special or separate fund or to make any other segregation of funds or assets to assure the payment of any Award.
Section 8.4. No Evidence of Employment or Service.
Nothing contained in the Plan or in any Award Agreement shall confer upon any Participant any right with respect to the continuation of his employment by or service with the Company or any of its Subsidiaries or interfere in any way with the right of the Company or any such Subsidiary, in its sole discretion (subject to the terms of any separate agreement to the contrary), at any time to terminate such employment or service or to increase or decrease the compensation of the Participant from the rate in existence at the time of the grant of an Award.
Section 8.5. No Liability with Respect to Any Corporate Action.
Subject to Section 3.4 and Article XIII, nothing contained in the Plan or in any Award Agreement will be construed to prevent the Company or any Subsidiary or Affiliate of the Company from taking any corporate action which is deemed by the Company or by its Subsidiaries and Affiliates to be appropriate or in its best interest and no Participant or beneficiary of a Participant will have any claim against the Company or any affiliate as a result of any such corporate action.
ARTICLE IX
TERM OF THE PLAN
This Plan shall become effective on the Effective Date and shall terminate on the Termination Date. No Awards may be granted after the Termination Date. Any Award outstanding as of the Termination Date shall remain in effect and the terms of the Plan will apply until such Award terminates as provided in the Plan or the applicable Award Agreement.
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ARTICLE X
AMENDMENT OF PLAN
Subject to any applicable provision of the Stockholders Agreement, the Plan may be modified or amended in any respect, and at any time or from time to time, by the Board or by the Committee with the prior approval of the Board. Notwithstanding the foregoing, the Plan may not be modified or amended as it pertains to any existing Award Agreement without the consent of an applicable Participant where such modification or amendment would materially impair the rights of such Participant. In addition, no such amendment shall be made without the approval of the Companys stockholders to the extent such approval is required by applicable law or regulation or the listing standards of the securities exchange, which is, at the applicable time, the principal market for the Common Stock.
ARTICLE XI
CAPTIONS
The use of captions in the Plan is for convenience. The captions are not intended to provide substantive rights.
ARTICLE XII
WITHHOLDING TAXES
Upon any exercise or payment of any Award, the Participant shall be required to pay or provide for payment of the amount of any Tax Withholding which the Company or any Subsidiary may be required to withhold with respect to any exercise of an Option or other payment of an Award; provided, that to the extent permitted by applicable law or as otherwise provided in the Award Agreement, the Participant may satisfy such payment obligations to the Company through (i) the deduction from any amount payable to the Participant in cash or securities in respect of the Award the amount of any taxes which the Company may be required to withhold with respect to such exercise or payment; or (ii) in accordance with the provisions of Section 5.5(c) hereof, the reduction of the number of Shares to be delivered to the Participant in connection with such exercise or payment by the appropriate number of Shares, valued at their then Fair Market Value, to satisfy the minimum Tax Withholding obligation; provided, however, that in such event, the Committee may exercise its discretion to limit or prohibit the use of Shares for such Tax Withholding if the Committee determines in good faith that to allow for the use of such Shares with respect to Tax Withholding would result in a material negative impact on the Companys and its Subsidiaries, near-term liquidity needs; provided, further, however, that solely with respect to an ISPO Option, a Net Exercise arrangement may be limited or prohibited as provided in the Award Agreement. In no event will the value of Shares withheld under clause (ii) above exceed the minimum amount of required Tax Withholding under applicable law.
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ARTICLE XIII
CODE SECTION 409A COMPLIANCE
If any term, distribution or settlement of an Award, or any other action by the Company (including by the Committee) pursuant to the terms of this Plan or an Award Agreement, subjects a Participant to tax under Section 409A of the Code, the Company shall indemnify and hold harmless the Participant for any taxes, interest and penalties the Participant may incur under Section 409A of the Code as a result thereof, such that on a net-after-tax basis, the Participant shall not be liable for any such taxes, interest or penalties, or for any taxes, interest or penalties imposed upon the Companys provision of such indemnity. The Company and the Participant shall cooperate in good faith, and consult with tax counsel to the Company, to restructure the Award and the Award Agreement (which may require the provision of an alternative payment or benefit, but which shall not convey an economic benefit to the Participant that is diminished in value to the Participant other than in a de minimis manner) in a manner that will cause the Participant to not be subject to such taxes, interest and penalties in respect of the Award and the Award Agreement (or any such restructured arrangement).
ARTICLE XIV
SECTION 16 COMPLIANCE
In the event that the Company becomes subject to Section 16 of the Exchange Act, it is intended that the Plan and any Award made to a Participant subject to Section 16 of the Exchange Act will meet all of the requirements of Rule 16b-3. Accordingly, unless otherwise provided by the Committee, if any provisions of the Plan or any Award would disqualify the Plan or the Award, or would otherwise not comply with Rule 16b-3, such provision or Award will be construed or deemed amended to conform to Rule 16b-3.
ARTICLE XV
OTHER PROVISIONS
Each Award granted under the Plan may contain such other terms and conditions not inconsistent with the Plan as may be determined by the Committee, in its sole discretion.
ARTICLE XVI
NUMBER AND GENDER
With respect to words used in the Plan, the singular form shall include the plural form, the masculine gender shall include the feminine gender, and vice versa, as the context requires.
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ARTICLE XVII
MISCELLANEOUS
Section 17.1. Affiliate Employees.
In the case of a grant of an Award to an employee or consultant of any Affiliate of the Company, the Company may, if the Committee so directs, issue or transfer the shares of Common Stock, if any, covered by the Award to the Affiliate, for such lawful consideration as the Committee may specify, upon the condition or understanding that the Affiliate will transfer the shares of Common Stock to the employee or consultant in accordance with the terms of the Award specified by the Committee pursuant to the provisions of the Plan. All shares of Common Stock underlying Awards that are forfeited or canceled shall revert to the Company.
Section 17.2. Foreign Employees and Foreign Law Considerations.
The Committee may grant Awards to individuals who are eligible to participate in the plan who are foreign nationals, who are located outside the United States or who are not compensated from a payroll maintained in the United States, or who are otherwise subject to (or could cause the Company to be subject to) legal or regulatory provisions of countries or jurisdictions outside the United States, on such terms and conditions different from those specified in the Plan as may, in the judgment of the Committee, be necessary or desirable to foster and promote achievement of the purposes of the Plan, and, in furtherance of such purposes, the Committee may make such modifications, amendments, procedures, or subplans as may be necessary or advisable to comply with such legal or regulatory provisions.
Section 17.3. Information Delivery.
The Company will provide the following information to all Participants who hold Options until such times as the Company becomes subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act or is no longer relying on the exemption from registration of stock options under the Exchange Act as provided in Rule 12h-1(f)(1) of the Exchange Act; provided that the Companys obligation to provide any such information may be subject to any confidentiality requirements imposed by the Company:
The information described in Rules 701(e)(3), (4), and (5) under the Securities Act every six months, with the financial statements being not more than 180 days old and with such information provided either by physical or electronic delivery to the Participants who hold Options or by written notice to the Participants who hold Options of the availability of the information on an Internet site that may be password-protected and of any password needed to access the information.
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ARTICLE XVIII
GOVERNING LAW
All questions concerning the construction, interpretation and validity of the Plan and the instruments evidencing the Awards granted hereunder shall be governed by and construed and enforced in accordance with the domestic laws of the State of Delaware, without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware. In furtherance of the foregoing, the internal law of the State of Delaware will control the interpretation and construction of this Plan, even if under such jurisdictions choice of law or conflict of law analysis, the substantive law of some other jurisdiction would ordinarily apply.
* * * * * *
As adopted by the Board and the shareholders of ARAMARK Holdings Corporation on January 25, 2007; amended and restated and approved by the Board on November 13, 2007 and by the shareholders of ARAMARK Holdings Corporation on November 13, 2007; amended as approved by the Board on January 23, 2008; amended as approved by the Board on December 9, 2009; amended as approved by the Board on March 1, 2010; and as amended and restated and approved by the Board on June 21, 2011 and by the shareholders of ARAMARK Holdings Corporation on June 21, 2011.
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Exhibit 10.2
CERTIFICATE OF GRANT
Installment Stock Purchase Opportunity Award
This certifies that the Participant:
[Name]
has been granted the non-qualified stock options described in this Certificate of Grant to purchase shares of ARAMARK Holdings Corporation Common Stock in accordance with the Vesting Schedule indicated below:
VESTING SCHEDULE
Installment |
Number of Shares Vested |
Vesting Date |
Minimum Exercisable |
Expiration Date1 | ||||
1 |
[20% of Total Shares] | [Grant Date] | 100 up to [25% rounded up] | The first anniversary of the Grant Date. | ||||
2 |
[20% of Total Shares] | December 15, 2 | 100 | [31 Days after Vesting] | ||||
3 |
[20% of Total Shares] | December 15, | 100 | [31 Days after Vesting] | ||||
4 |
[20% of Total Shares] | December 15, | 100 | [31 Days after Vesting] | ||||
5 |
[20% of Total Shares] | December 15, | 100 | [31 Days after Vesting] |
Option Price: [] | Number of Shares: [] | |
Grant Date: [] | Participant Account Number: [] | |
Grant Number: [] | Expiration Date: [] |
This Option Award is subject to the terms and conditions of the attached Non-Qualified Installment Stock Purchase Opportunity Agreement (the Agreement).
1 | If the relevant Expiration Date is not a business day, then the relevant Expiration Date shall not occur until the next business day following the relevant Expiration Date. |
2 | December 15 of calendar year following year of Grant Date, and each of the next 3 anniversaries thereof. |
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FORM OF NON QUALIFIED INSTALLMENT STOCK PURCHASE OPPORTUNITY AGREEMENT (this Agreement) dated as of [ ][ ], 20[11][12] between ARAMARK HOLDINGS CORPORATION, a Delaware corporation (the Company), and the participant set forth on the Certificate of Grant and signature page to this Agreement (the Participant).
WHEREAS, the Company, acting through the Committee (as such term is defined in the Plan) or a subcommittee thereof, has agreed to grant to the Participant, as of the date of grant set forth on the Certificate of Grant to which this Agreement is attached (the Grant Date), an option under the Aramark Holdings Corporation Amended and Restated 2007 Management Stock Incentive Plan (the Plan) to purchase a number of shares of Common Stock on the terms and subject to the conditions set forth in this Agreement and the Plan; and
WHEREAS, the Participant is either already, or in connection with the execution of this Agreement is to become, a party to the Stockholders Agreement (as such term is defined in the Plan).
NOW, THEREFORE, in consideration of the promises and of the mutual agreements contained in this Agreement, the parties hereto hereby agree as follows:
Section 1. The Plan. The terms and provisions of the Plan are hereby incorporated into this Agreement as if set forth herein in their entirety. In the event of a conflict between any provision of this Agreement and the Plan, the provisions of the Agreement shall control. A copy of the Plan has been provided to the Participant. Capitalized terms used herein and not otherwise defined herein shall have the respective meanings ascribed thereto in the Plan or the Stockholders Agreement, as the case may be.
Section 2. Option; Option Price. Effective on the Grant Date, on the terms and subject to the conditions of the Plan and this Agreement, the Company hereby grants to the Participant the option (the Option) to purchase the number of Shares set forth on the Certificate of Grant to which this agreement is attached, at the Option Price equal to $ [the most recent quarterly appraisal price of one share of Common Stock]. The payment of the Option Price may be made, at the election of the Participant and in accordance with Section 9 hereof. The Option is not intended to qualify for federal income tax purposes as an incentive stock option within the meaning of Section 422 of the Code.
Section 3. Term.
(i) The term of the Option (the Option Term) shall commence on the Grant Date and expire in accordance with Section 8 below.
Section 4. Vesting and Exercisability.
(a) Subject to the Participant not having a Termination of Relationship and except as otherwise set forth in Section 8 hereof, the Options shall become vested and exercisable (any Options that shall have become vested and exercisable pursuant to this Section 4,
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the Vested Options, and the date on which the Options have become vested and exercisable, the Vesting Date) according to the following provisions:
(i) Twenty percent (20%) of the Option shall become Vested Options immediately on the Grant Date (the Installment 1 Option).
(ii) Twenty percent (20%) of the Option shall become Vested Options on each December 15th occurring after the first through fourth anniversaries of the Grant Date, subject to the Participants continued employment with the Company through the applicable Vesting Date (the Installment 2 Option, Installment 3 Option, Installment 4 Option, and Installment 5 Option, respectively, and collectively, the Option Installments), as set forth on the Certificate of Grant to which this Agreement is attached.
(b) Notwithstanding Section 4(a)(i) and Section 4(a)(ii), in the event of a Change of Control, each outstanding Option which has not theretofore become a Vested Option pursuant to Section 4(a)(i) or Section 4(a)(ii), or otherwise been terminated pursuant to Section 8 hereof, shall become a Vested Option concurrently with consummation of such event.
Section 5. Minimum Exercise. At the time of exercise, the Participant shall exercise no less than a portion of the Vested Options equal to one-hundred (100) underlying Shares for each of the Installment 1 Option, Installment 2 Option, Installment 3 Option, Installment 4 Option and Installment 5 Option.
Section 6. Restriction on Transfer/Stockholders Agreement.
(a) The Option may not be transferred, pledged, assigned, hypothecated or otherwise disposed of in any way by the Participant, except (i) if permitted by the Board or the Committee or (ii) by will or the laws of descent and distribution. The Option shall not be subject to execution, attachment or similar process. Shares of Common Stock acquired pursuant to the exercise of Options hereunder will be subject to the Stockholders Agreement. Any attempted assignment, transfer, pledge, hypothecation or other disposition of the Option contrary to the provisions of this Agreement or the Stockholders Agreement shall be null and void and without effect.
(b) Notwithstanding Section 6.01 of the Stockholders Agreement, if the Participant exercises the Option pursuant to Section 9(a)(ii) of this Agreement, such Shares may not be subject to a Put Purchase (as defined in the Stockholders Agreement) and may not otherwise be sold, unless such Shares have been held for at least six months (or such other period necessary in order to satisfy applicable generally accepted accounting principles) by the Participant.
Section 7. Participants Employment. Nothing in this Agreement or in the Option shall confer upon the Participant any right to continue in the employ of the Company or any of its Subsidiaries or interfere in any way with the right of the Company and its Subsidiaries, in their sole discretion, to terminate the Participants employment or to increase or decrease the Participants compensation at any time.
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Section 8. Termination of Option.
(a) The Option shall automatically terminate and be of no further force and effect as follows:
(i) With respect to the Installment 1 Option (and all other Option Installments), on the first anniversary of the Vesting Date, unless the Participant exercises at least twenty-five percent (25%) of the Installment 1 Option prior to such first anniversary; provided, further, that if a Termination of Relationship occurs prior to the first anniversary of the Vesting Date, the Installment 1 Option (and all other Option Installments) shall terminate, if not exercised, on the earlier of: (i) the first anniversary of the Vesting Date, (ii) the 31st day following the date of termination or (iii) the date the Termination of Relationship occurs, if such Termination of Relationship is for Cause by the Company and its Subsidiaries; and
(ii) if the Option has not otherwise terminated pursuant to clause (i) hereof, with respect to each of the Installment 2 Option, Installment 3 Option, Installment 4 Option and Installment 5 Option, on the 31st day following the applicable Vesting Date; provided, that that if a Termination of Relationship occurs during any 31-day period following a Vesting Date, the Option Installment that has become vested on such Vesting Date (and any remaining Option Installment) shall terminate, if not exercised, on the earlier of (i) the 31st day following such Vesting Date and (ii) the date the Termination of Relationship occurs, if such Termination of Relationship is for Cause by the Company and its Subsidiaries.
(b) Except as otherwise provided above in Section 8(a)(i) and (ii), the unvested portions of the Option (i.e., those Option Installments that have not yet become Vested Options) shall terminate and cease to be outstanding on the date on which the Termination of Relationship occurs and shall no longer be eligible to be a Vested Option.
Section 9. Payment of Option Price and Tax Withholding
(a) The aggregate Option Price and any Federal, state, local and other applicable taxes (individually or collectively, a Tax) required to be withheld in connection with the exercise of any portion of the Option shall, to the extent permitted by applicable law, be paid:
(i) in cash (by wire transfer of immediately available funds to a bank account of the Company, by delivery of a certified check payable to the Company);
(ii) in the case of the aggregate Option Price only, by surrender of shares of Common Stock (by delivery of such shares or by attestation) previously held by the Participant prior to the exercise of the Option, having a Fair Market Value equal to the Option Price; so long as such Shares have been held by the Participant for such period, if any, as may be required from time to time by the Committee in order to satisfy applicable generally accepted accounting principles; provided, however, that the Participant may not pay by surrender of shares of Common Stock if the Option Price is greater than the Fair
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Market Value per Share on the date of exercise; and provided further, that as a condition to paying by surrender of shares of Common Stock hereunder, the Participant is deemed to have acknowledged and agreed to the provisions of Section 6(b) of this Agreement;
(iii) if the Common Stock is a class of securities then listed or admitted to trading on any national securities exchange or traded on any national market system (including, but not limited to, The Nasdaq National Market), in compliance with any cashless exercise program authorized by the Board or the Committee for use in connection with the Plan at the time of such exercise (but, subject in any case, to the applicable limitations of Rule 16b-3 under the Exchange Act); or
(iv) by any other manner authorized by the Committee (or Award Committee, as applicable); provided, however, that (unless otherwise determined by any such Committee) neither the aggregate Option Price nor any Tax may be paid pursuant to a Net Exercise arrangement.
Section 10. Securities Law Representations. The Participant acknowledges that, unless and until the Option and the Shares are registered under the Securities Act on a Form S-8, the Option and the Shares are not being registered under the Securities Act, based, in part, on either (i) reliance upon an exemption from registration under Securities and Exchange Commission Rule 701 promulgated under the Securities Act or (ii) the fact that the Participant is an accredited investor (as defined under the Securities Act and the rules and regulations promulgated thereunder), and, in each of (i) and (ii) above, a comparable exemption from qualification under applicable state securities laws, as each may be amended from time to time. The Participant, by executing this Agreement, hereby agrees that the Participant shall make such representations as may be required to be made by the Participant upon any acquisition of Shares hereunder as set forth in the Stockholders Agreement, as such representations, if any, shall be required to be made at such time. The Participant further represents the following, as of the date hereof:
The Participant represents and warrants that (i) such party has full legal power, authority and right to execute and deliver, and to perform its obligations under, this Agreement, and (ii) this Agreement has been duly and validly executed and delivered by such party and constitutes a valid and binding agreement of such party enforceable against such party in accordance with its terms.
| The Participant has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the Option and the restrictions imposed on any Shares purchased upon exercise of the Option. |
| The Participant is aware that the Option may be of no practical value, that any value it may have depends on its vesting and exercisability as well as an increase in the Fair Market Value of the underlying Shares to an amount in excess of the Option Price, and that any investment in common shares of a closely held corporation such as the Company is non-marketable, non-transferable and could require capital to be invested for an indefinite period of time, possibly without return, and at substantial risk of loss. |
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| The Participant has read and understands the restrictions and limitations set forth in the Stockholders Agreement, the Plan and this Agreement. |
| The Participant has not relied upon any oral representation made to the Participant relating to the Option or the purchase of the Shares on exercise of the Option or upon information presented in any meeting or material relating to the Option or the Shares. |
| The Participant understands and acknowledges that, if and when the Participant exercises the Option, (a) any certificate evidencing the Shares (or evidencing any other securities issued with respect thereto pursuant to any stock split, stock dividend, merger or other form of reorganization or recapitalization) when issued shall bear any legends which may be required by applicable federal and state securities laws, and (b) except as otherwise provided in this Agreement or under the Stockholders Agreement or the Registration Rights Agreement (as such term is defined in the Stockholders Agreement), the Company has no obligation to register the Shares or file any registration statement under federal or state securities laws. |
Section 11. Notices. All notices, claims, certifications, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given and delivered if personally delivered or if sent by nationally-recognized overnight courier, by telecopy, email or by registered or certified mail, return receipt requested and postage prepaid, addressed as follows:
If to the Company, to it at:
If to the Company, to:
ARAMARK Holdings Corporation
ARAMARK Tower
1101 Market Street
Philadelphia, PA 19107-2988
Attention: Head of Human Resources
With a copy to:
ARAMARK Holdings Corporation
ARAMARK Tower
1101 Market Street
Philadelphia, PA 19107-2988
Attention: General Counsel
If to the Participant, to him at the address set forth on the signature page hereto; or to such other address as the party to whom notice is to be given may have furnished to the other party in writing in accordance herewith. Any such notice or other communication shall be deemed to have been received (a) in the case of personal delivery, on the date of such delivery (or if such
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date is not a business day, on the next business day after the date of delivery), (b) in the case of nationally-recognized overnight courier, on the next business day after the date sent, (c) in the case of telecopy transmission, when received (or if not sent on a business day, on the next business day after the date sent), and (d) in the case of mailing, on the third business day following that on which the piece of mail containing such communication is posted.
Section 12. Waiver of Breach. The waiver by either party of a breach of any provision of this Agreement must be in writing and shall not operate or be construed as a waiver of any other or subsequent breach.
Section 13. Governing Law. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE TO BE APPLIED. IN FURTHERANCE OF THE FOREGOING, THE INTERNAL LAW OF THE STATE OF DELAWARE WILL CONTROL THE INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT, EVEN IF UNDER SUCH JURISDICTIONS CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS, THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION WOULD ORDINARILY APPLY.
Section 14. Adjustment to Option; Registration of Shares. In the event of any event described in Article VII of the Plan occurring after the Grant Date, the adjustment provisions (including cash payments) as provided for under Article VII of the Plan shall apply. The Company shall, concurrently with the closing of a Public Offering, register all Shares subject to an Option by filing a Form S-8 with the U.S. Securities Exchange Commission.
Section 15. Section 409A of the Code. If any term, distribution or settlement of this Agreement, or any other action by the Company (including by the Committee) pursuant to the terms of the Plan or this Agreement, would subject the Participant to tax under Section 409A of the Code, the Company shall indemnify and hold harmless the Participant for any taxes, interest and penalties the Participant may incur under Section 409A of the Code as a result thereof, such that on a net-after-tax basis, the Participant shall not be liable for any such taxes, interest or penalties, or for any taxes, interest or penalties imposed upon the Companys provision of such indemnity. The Company and the Participant shall cooperate in good faith, and consult with tax counsel to the Company, to restructure the Option and this Agreement (which may require the provision of an alternative payment or benefit, but which shall not convey an economic benefit to the Participant that is diminished in value to the Participant other than in a de minimis manner) in a manner that will cause the Participant to not be subject to such taxes, interest and penalties in respect of the Option and this Agreement (or any such restructured arrangement).
Section 16. Modification of Rights; Entire Agreement. The Participants rights under this Agreement and the Plan may be modified only to the extent expressly provided under this Agreement or under Article X or Article XIV of the Plan. This Agreement and the Plan (and the other writings referred to herein, including the Stockholders Agreement or the Registration Rights Agreement) constitute the entire agreement between the parties with respect to the subject
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matter hereof and thereof and supersede all prior written or oral negotiations, commitments, representations and agreements with respect thereto.
Section 17. Severability. It is the desire and intent of the parties hereto that the provisions of this Agreement be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, if any particular provision of this Agreement shall be adjudicated by a court of competent jurisdiction to be invalid, prohibited or unenforceable for any reason, such provision, as to such jurisdiction, shall be ineffective, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction. Notwithstanding the foregoing, if such provision could be more narrowly drawn so as not to be invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.
Section 18. Waiver of Jury Trial; Legal Fees. Each party hereto hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, trial by jury in any suit, action or proceeding arising hereunder or under any other agreement regarding any option to purchase Shares that may be granted to the Participant under the Plan after the date of this Agreement. In the event of any dispute regarding any term of this Option, the Company shall promptly reimburse the Participant for all legal fees and expenses the Participant incurs in connection with such dispute if the Participant prevails in such dispute on a substantial portion of the claims under such dispute.
Section 19. FORFEITURE IF AGREEMENT NOT EXECUTED IN 90 DAYS. THIS AGREEMENT AND THE OPTION SHALL AUTOMATICALLY TERMINATE AND SHALL BECOME NULL AND VOID AND BE OF NO FURTHER FORCE AND EFFECT, AND THE PARTICIPANT SHALL HAVE NO FURTHER RIGHTS UNDER THIS AGREEMENT, IF THE PARTICIPANT DOES NOT RETURN AN EXECUTED COUNTERPART TO THIS AGREEMENT TO THE COMPANY WITHIN 90 DAYS OF THE GRANT DATE.
Section 20. Counterparts. This Agreement may be executed in one or more counterparts, and each such counterpart shall be deemed to be an original, but all such counterparts together shall constitute but one agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Nonqualified Stock Option Agreement as of the date first written above.
ARAMARK HOLDINGS CORPORATION | ||
By: |
| |
Name: | ||
Title: |
PARTICIPANT
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|
(Signature of Participant) |
|
(Print Name of Participant) |
9
Exhibit 10.3
CERTIFICATE OF GRANT
[Investment Match or Discretionary] Stock Option Award
This certifies that the Participant:
[Name]
has been granted the non-qualified stock options described in this Certificate of Grant to purchase shares of ARAMARK Holdings Corporation Common Stock in accordance with the Vesting Schedule indicated below:
VESTING SCHEDULE
Time Based Options |
Performance Based Options* |
Vesting Date | ||
[] |
[] | [] | ||
[] |
[] | [] | ||
[] |
[] | [] | ||
[] |
[] | [] |
Grant Price: [] | Number of Shares: [] | |
Date of Grant: [] | Participant Account Number: [] | |
Grant Number: [] | Expiration Date: [] |
This Option Award is subject to the terms and conditions of the attached Non-Qualified Stock Option Agreement (the Option Agreement).
* | Vesting is subject to the achievement of certain financial targets or the occurrence of certain events as described in the Option Agreement. |
FORM OF NON QUALIFIED STOCK OPTION AGREEMENT (this Agreement) dated as of [ ][ ], 20[11][12] between ARAMARK HOLDINGS CORPORATION, a Delaware corporation (the Company), and the Optionee set forth on the Certificate of Grant and signature page to this Agreement (the Optionee).
WHEREAS, pursuant to the Agreement and Plan of Merger (the Merger Agreement) made and entered into as of the 8th day of August, 2006, by and among RMK Acquisition Corporation, a Delaware corporation (MergerCo), RMK Finance LLC, a Delaware limited liability company, and Aramark Corporation, MergerCo has been merged with and into Aramark Corporation, with Aramark Corporation surviving the merger as a wholly-owned subsidiary of the Company (the Transaction);
WHEREAS, the Company, acting through the Committee (as such term is defined in the Plan) or a subcommittee thereof, has agreed to grant to the Optionee, as of the Date of Grant set forth on the Certificate of Grant to which this Agreement is attached (the Grant Date), an option under the Aramark Holdings Corporation 2007 Management Stock Incentive Plan (as amended, the Plan) to purchase a number of shares of Common Stock on the terms and subject to the conditions set forth in this Agreement and the Plan; and
WHEREAS, the Optionee is, in connection with the execution of this Agreement, to become a party to the Stockholders Agreement (as such term is defined in the Plan).
NOW, THEREFORE, in consideration of the promises and of the mutual agreements contained in this Agreement, the parties hereto hereby agree as follows:
Section 1. The Plan. The terms and provisions of the Plan are hereby incorporated into this Agreement as if set forth herein in their entirety. In the event of a conflict between any provision of this Agreement and the Plan, the provisions of the Agreement shall control. A copy of the Plan has been provided to the Optionee. Capitalized terms used herein and not otherwise defined herein shall have the respective meanings ascribed thereto in the Plan or the Stockholders Agreement, as the case may be.
Section 2. Option; Option Price. Effective on the Grant Date, on the terms and subject to the conditions of the Plan and this Agreement, the Company hereby grants to the Optionee the option (the Option) to purchase the number of Shares set forth on the Certificate of Grant to which this agreement is attached, at the Option Price equal to $ [the most recent quarterly appraisal price of one share of Common Stock]. One-half of the Option consists of options with time-based vesting (Time-Based Options), and one-half of the Option consists of options with performance-based vesting (Performance-Based Options). The payment of the Option Price may be made, at the election of the Optionee, in any manner authorized under Section 5.5 of the Plan as such section is in effect on the date of this Agreement. The Option is not intended to qualify for federal income tax purposes as an incentive stock option within the meaning of Section 422 of the Code.
Section 3. Term. The term of the Option (the Option Term) shall commence on the Grant Date and expire on the tenth anniversary of the Grant Date, unless the Option shall
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have sooner been terminated in accordance with the terms of the Plan (including, without limitation, Article V of the Plan) or this Agreement.
Section 4. Vesting. Subject to the Optionees not having a Termination of Relationship and except as otherwise set forth in Section 7 the Options shall become non-forfeitable and exercisable (any Options that shall have become non-forfeitable and exercisable pursuant to Section 4 the Vested Options) according to the following provisions:
(a) Time-Based Options.
(i) Twenty-five percent (25%) of the Time-Based Options shall become Vested Options on each of the first four anniversaries of the [Grant Date][Other Date Specified by Board or Committee or Sub-Committee] (each, a Vesting Date), subject to the Optionees continued employment with the Company through the applicable Vesting Date.
(ii) Notwithstanding Section 4(a)(i) in the event of (A) a Change of Control, each outstanding Time-Based Option which has not theretofore become a Vested Option pursuant to Section 4(a)(i) shall become a Vested Option concurrently with consummation of such event, and (B) a Termination of Relationship as a result of the Optionees death, Disability, or Retirement (each, a Special Termination), the installment of Time-Based Options scheduled to vest during the 12-month period immediately following such Special Termination shall become Vested Options, and the remaining Time-Based Options which are not then Vested Options shall be forfeited.
(b) Performance-Based Options.
(i) Twenty-five percent (25%) of the Performance-Based Options shall become Vested Options on each Vesting Date, subject to the Optionees continued employment with the Company through the applicable Vesting Date and the achievement of the applicable EBIT performance target for the applicable fiscal year of the Company relating to the applicable Vesting Date (each such fiscal year, a Fiscal Year, and each such EBIT performance target, once so established, an EBIT Target); provided that for each Fiscal Year set forth on Schedule 1 to this Agreement, the Committee shall establish an EBIT Target within the first ninety days of each such Fiscal Year and communicate such EBIT Target to the Optionee promptly following such time through the delivery of an updated Schedule 1 to this Agreement.
(ii) Notwithstanding Section 4(b)(i) but, except as otherwise provided in Section 4(b)(ii)(E) below, subject to the Optionees continued employment with the Company through the applicable vesting event:
(A) in the event that the EBIT Target is not achieved for any particular Fiscal Year set forth on Schedule 1 to this Agreement (other than the Final Fiscal Year as defined on Schedule 1) (any such Fiscal Year, a Missed Year), if the cumulative EBIT
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earned as of the end of any subsequent Fiscal Year equals or exceeds the Cumulative EBIT Target (as determined by the Committee at the same time that each EBIT Target for each such subsequent Fiscal Year is established and as set forth on the relevant updated Schedule 1 to this Agreement) for such subsequent Fiscal Year (any such Fiscal Year, a Catch-up Year), then all installments of Performance-Based Options that did not become vested in respect of any Missed Year will nevertheless become Vested Options on the same date that the installment of Performance-Based Options that otherwise vests in respect of such Catch-up Year pursuant to this Section 4(b) (see the attached Schedule 2 for an example hereof);
(B) upon the consummation of a Return-Based Vesting Event (as defined below), all then-unvested Performance-Based Options shall become Vested Options concurrently with the consummation of such event;
(C) upon the consummation of a Qualified Partial Liquidity Event (as defined below), a portion of the then-unvested Performance-Based Options (in the order set forth below) shall become Vested Options concurrently with the consummation of such event, such that the total percentage of Performance-Based Options that have become Vested Options immediately after the consummation of such Qualified Partial Liquidity Event shall, after taking into account any Performance-Based Options that had become Vested Options pursuant to any other provision of Section 4(b) prior to such Qualified Partial Liquidity Event, be equal to the Partial Liquidity Vesting Percentage (as defined below) (see the attached Schedule 2 for an example hereof);
(D) upon the occurrence, prior to the conclusion of the Final Fiscal Year, of a Change of Control that is not a Return-Based Vesting Event, a percentage of the then-unvested Performance-Based Options which would have been eligible for vesting based on EBIT performance for the Fiscal Year during which the Change in Control occurs and those eligible for any subsequent Fiscal Years, equal to (x) 100% multiplied by (y) a quotient, the numerator of which is the aggregate number of Performance-Based Options that previously became Vested Options prior to the Fiscal Year in which such Change of Control occurs, and the denominator of which is the aggregate number of Performance-Based Options that were eligible to become Vested Options if all EBIT Targets were achieved prior to the Fiscal Year during with the Change in Control occurs, shall become Vested Options concurrently with consummation of such a Change of Control (see the attached Schedule 2 for an example hereof); and
(E) in the event of a Special Termination, all installments of unvested Performance-Based Options that would have vested during the 12-month period immediately following such Special Termination (the Special Termination Vesting Period) in accordance with the other provisions of this Section 4(b) if no such termination had occurred during such period (including in the event that any such installments would have vested based on (x) the achievement of the Cumulative EBIT Target for the Fiscal Year immediately following the Fiscal Year in which the Special Termination occurs in accordance with Section 4(b)(ii)(A) or (y) the occurrence during the Special Termination Vesting Period of a Return-Based Vesting Event, a Qualified Partial Liquidity Event or a Change of Control that is
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not a Return-Based Vesting Event, in accordance with Section 4(b)(ii)(B), Section 4(b)(ii)(C) or Section 4(b)(ii)(D), respectively) shall become Vested Options on the applicable Vesting Date(s) that occur during the Special Termination Vesting Period (see the attached Schedule 2 for an example hereof).
For purposes of Section 4(b)(ii)(C) above, the then-unvested Performance-Based Options shall become Vested Options in the manner set forth therein, in the following order, to the extent applicable: first, any then-unvested Performance-Based Options from any prior Missed Years (beginning with the earliest Missed Year and each subsequent Missed Year); second, the then-unvested Performance-Based Options eligible for vesting based on EBIT performance for the Fiscal Year in which the Qualified Partial Liquidity Event occurs; and third, any then-unvested Performance-Based Options eligible for vesting based on EBIT performance for the Fiscal Year immediately subsequent to the Fiscal Year in which the Qualified Partial Liquidity Event occurs and each subsequent Fiscal Year.
(c) Except as otherwise provided above with respect to a Special Termination, upon a Termination of Relationship for any reason, the unvested portion of the Option (i.e. , that portion which does not constitute Vested Options) shall terminate and cease to be outstanding on the date the Termination of Relationship occurs and shall no longer be eligible to become Vested Options, provided, however, that if upon the date the Termination of Relationship occurs, the Committee is unable to determine if the EBIT Target for the Fiscal Year immediately preceding the year in which the Termination of Relationship occurs has been met, any unvested portion of the Option that could vest based upon such determination shall not terminate until such determination is made (and shall vest if the applicable EBIT Target is achieved in accordance with Section 4(b)(ii) above)).
(d) Certain Definitions.
(i) A Return-Based Vesting Event shall be deemed to occur upon the achievement of either of the following performance goals: (x) on or after the third anniversary of the Grant Date, the Sponsor IRR (or, during the Special Termination Vesting Period, the Special Termination Sponsor IRR) is equal to or exceeds 15% or (y) the Sponsor Stockholders have, prior to the third anniversary of the Grant Date, received a Sponsor Return (or, during the Special Termination Vesting Period, the Special Termination Sponsor Return) that equals or exceeds 200% of the Sponsor Investment.
(ii) A Qualified Partial Liquidity Event shall mean any disposition, whether in an IPO or other public offering, or any sale or other private transaction to any person or entity, of a portion of the Sponsor Investment (including any Change of Control, transfer from one Investor Group to another Investor Group, or LP Transfer (as defined below), but excluding, for the avoidance of doubt, a Spin-off, unless and until such shares are themselves disposed of or realized upon for cash and/or liquid or marketable equity or debt securities), or a recapitalization, resulting in (x) on or after the third anniversary of the Grant Date, the achievement by the Sponsor Stockholders of a Sponsor IRR (or, during the Special Termination Vesting Period, the Special Termination Sponsor IRR) that would equal or exceed 15%, or (y) prior to the third anniversary of the Grant Date,
5
the receipt of a Sponsor Return (or, during the Special Termination Vesting Period, the Special Termination Sponsor Return) that equals or exceeds 200% of the Sponsor Investment, in either case, when measured with respect to such disposed or otherwise realized upon portion (and all previously liquidated, disposed of or otherwise realized (in cash or marketable securities, taking into account Section 4(d)(vi) upon portions) of the Sponsor Investment.
(iii) The Partial Liquidity Vesting Percentage shall equal the percentage of the Sponsor Investment liquidated, disposed of or otherwise realized upon in a Qualified Partial Liquidity Event; provided that, if immediately following such event, the Sponsor Stockholders have liquidated, disposed of or otherwise realized upon 80% or more of the Sponsor Investment, then the Partial Liquidity Vesting Percentage shall equal 100%.
(iv) Sponsor IRR means the pretax compounded annual internal rate of return realized by the Sponsor Stockholders on the Sponsor Investment, based on the aggregate amount invested by the Sponsor Stockholders for all Sponsor Investment and the aggregate value and amount of cash and liquid or marketable debt or equity securities (excluding securities of the Company and, in the event of a Spin-off, securities of a Subsidiary (Subsidiary Stock), unless and until such shares are themselves disposed of or realized upon for cash and/or liquid or marketable equity or debt securities) actually received by the Sponsor Stockholders or in respect of all Sponsor Investment, assuming all Sponsor Investment were purchased by one Person and were held continuously by such Person. The Sponsor IRR shall be determined based on the actual time of each Sponsor Investment and the actual cash and liquid or marketable debt or equity securities received (in each case, measured at the time of receipt) by the Sponsor Stockholders in respect of all Sponsor Investment and including, as a return on each Sponsor Investment, any cash dividends, cash distributions or cash sales by the Company or any Affiliate in respect of such Sponsor Investment during such period, any transaction fees received in connection with the Transaction, and, in the event of any distribution of Shares by a Sponsor Stockholder to its general or limited partners, members, managers or stockholders (in each such case, other than a distribution by a Sponsor Stockholder to another member of such Sponsor Stockholders Investor Group) in accordance with such Sponsor Stockholders governing documents (an LP Transfer), the Fair Market Value of such Shares on such distribution date (the LP Transfer Value), but excluding any amounts payable to the Sponsor Stockholders as expense reimbursements and indemnification payments.
(v) Sponsor Return shall mean, on an aggregate basis, the value and amount of cash and liquid or marketable equity or debt securities (excluding securities of the Company or, in the event of a Spin-off, Subsidiary Stock, unless and until such Subsidiary Stock are themselves disposed of or realized upon for cash and/or liquid or marketable equity or debt securities) actually received by the Sponsor Stockholders in respect of all Sponsor Investment, assuming all Sponsor Investment were purchased by one Person and were held continuously by such Person. The Sponsor Return shall be determined based on the actual time of each Sponsor Investment and actual cash and/or liquid or marketable equity or debt securities received (in each case, measured at the time of receipt) by the Sponsor Stockholders in respect of all Sponsor Investment and
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including, as a return on each Sponsor Investment, any cash dividends, cash distributions, cash sales made by the Company or any Affiliate in respect of such Sponsor Investment during such period, any transaction fees received in connection with the Transaction, and, in the event of an LP Transfer, the LP Transfer Value, but excluding any amounts payable to the Sponsor Stockholders as expense reimbursements and indemnification payments.
(vi) In the event of a Special Termination, the term Special Termination Sponsor IRR shall have the same meaning as Sponsor IRR, except that the Sponsor IRR shall also be determined by including in such calculation the following, as of the date of such termination: (x) if no IPO has occurred at such time, the Fair Market Value of the Common Stock and the fair market value (determined in a manner consistent with the manner in which the Fair Market Value is determined under the Plan) of any Subsidiary Stock then held by the Sponsor Stockholders; or (y) following an IPO, the fair market value of each of the Common Stock and any Subsidiary Stock then held by the Sponsor Stockholders, calculated based on the average trading price of the applicable stock over the 30 trading-day period prior to the applicable potential Vesting Date (the amounts in clauses (x) and (y), collectively, the Special Termination Valuations); and the term Special Termination Sponsor Return shall have the same meaning as Sponsor Return, except that the Sponsor Return shall also be determined by including in such calculation the Special Termination Valuations.
All decisions by the Committee with respect to any calculations pursuant to this Section 4 shall be made in good faith after consultation with senior management and shall be final and binding on the Optionee absent manifest error by the Committee.
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Section 5. Restriction on Transfer/Stockholders Agreement. The Option may not be transferred, pledged, assigned, hypothecated or otherwise disposed of in any way by the Optionee, except (i) if permitted by the Board or the Committee, (ii) by will or the laws of descent and distribution or (iii) pursuant to beneficiary designation procedures approved by the Company. The Option shall not be subject to execution, attachment or similar process. Shares of Common Stock acquired pursuant to the exercise of Options hereunder will be subject to the Stockholders Agreement. Any attempted assignment, transfer, pledge, hypothecation or other disposition of the Option contrary to the provisions of this Agreement or the Stockholders Agreement shall be null and void and without effect.
Section 6. Optionees Employment. Nothing in this Agreement or in the Option shall confer upon the Optionee any right to continue in the employ of the Company or any of its Subsidiaries or interfere in any way with the right of the Company and its Subsidiaries, in their sole discretion, to terminate the Optionees employment or to increase or decrease the Optionees compensation at any time.
Section 7. Termination. The Option shall automatically terminate and shall become null and void, be unexercisable and be of no further force and effect upon the earliest of:
(a) so long as the Optionee remains employed by the Company or one of its Affiliates, the tenth anniversary of the Grant Date;
(b) in the case of a Termination of Relationship due to a Special Termination, (i) with respect to any Time-Based Options and Performance-Based Options that are vested as of the Termination of Relationship, the first anniversary of the Termination of Relationship, and (ii) with respect to any Performance-Based Option that becomes a Vested Option pursuant to Section 4(b)(ii)(E), the later of the first anniversary of the Termination of Relationship and the 90th day following the last Vesting Date (if any) that occurs during the Special Termination Vesting Period;
(c) in the case of a Termination of Relationship other than (x) for Cause or (y) due to a Special Termination, the 90th day following the Termination of Relationship; and
(d) the day of the Termination of Relationship in the case of a Termination of Relationship for Cause.
Section 8. Securities Law Representations. The Optionee acknowledges that, unless and until the Option and the Shares are registered under the Securities Act on a Form S-8, the Option and the Shares are not being registered under the Securities Act, based, in part, on either (i) reliance upon an exemption from registration under Securities and Exchange Commission Rule 701 promulgated under the Securities Act or (ii) the fact that the Optionee is an accredited investor(as defined under the Securities Act and the rules and regulations promulgated there under), and, in each of (i) and (ii) above, a comparable exemption from qualification under applicable state securities laws, as each may be amended from time to time. The Optionee, by executing this Agreement, hereby agrees that the Optionee shall make such representations as may be required to be made by the Optionee upon any acquisition of Shares hereunder as set
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forth in the Stockholders Agreement, as such representations, if any, shall be required to be made at such time. The Optionee further represents the following, as of the date hereof:
The Optionee represents and warrants that (i) such party has full legal power, authority and right to execute and deliver, and to perform its obligations under, this Agreement, and (ii) this Agreement has been duly and validly executed and delivered by such party and constitutes a valid and binding agreement of such party enforceable against such party in accordance with its terms.
| The Optionee has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the Option and the restrictions imposed on any Shares purchased upon exercise of the Option. |
| The Optionee is aware that the Option may be of no practical value, that any value it may have depends on its vesting and exercisability as well as an increase in the Fair Market Value of the underlying Shares to an amount in excess of the Option Price, and that any investment in common shares of a closely held corporation such as the Company is non-marketable, non-transferable and could require capital to be invested for an indefinite period of time, possibly without return, and at substantial risk of loss. |
| The Optionee has read and understands the restrictions and limitations set forth in the Stockholders Agreement, the Plan and this Agreement. |
| The Optionee has not relied upon any oral representation made to the Optionee relating to the Option or the purchase of the Shares on exercise of the Option or upon information presented in any meeting or material relating to the Option or the Shares. |
| The Optionee understands and acknowledges that, if and when the Optionee exercises the Option, (a) any certificate evidencing the Shares (or evidencing any other securities issued with respect thereto pursuant to any stock split, stock dividend, merger or other form of reorganization or recapitalization) when issued shall bear any legends which may be required by applicable federal and state securities laws, and (b) except as otherwise provided in this Agreement or under the Stockholders Agreement or the Registration Rights Agreement (as such term is defined in the Stockholders Agreement), the Company has no obligation to register the Shares or file any registration statement under federal or state securities laws. |
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Section 9. [Intentionally Omitted.]
Section 10. [Intentionally Omitted.]
Section 11. Notices. All notices, claims, certifications, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given and delivered if personally delivered or if sent by nationally-recognized overnight courier, by telecopy, email or by registered or certified mail, return receipt requested and postage prepaid, addressed as follows:
If to the Company, to it at:
If to the Company, to:
ARAMARK Holdings Corporation
ARAMARK Tower
1101 Market Street
Philadelphia, PA 19107-2988
Attention: Head of Human Resources
With a copy to:
ARAMARK Holdings Corporation
ARAMARK Tower
1101 Market Street
Philadelphia, PA 19107-2988
Attention: General Counsel
If to the Optionee, to him at the address set forth on the signature page hereto; or to such other address as the party to whom notice is to be given may have furnished to the other party in writing in accordance herewith. Any such notice or other communication shall be deemed to have been received (a) in the case of personal delivery, on the date of such delivery (or if such date is not a business day, on the next business day after the date of delivery), (b) in the case of nationally-recognized overnight courier, on the next business day after the date sent, (c) in the case of telecopy transmission, when received (or if not sent on a business day, on the next business day after the date sent), and (d) in the case of mailing, on the third business day following that on which the piece of mail containing such communication is posted.
The Company shall, reasonably promptly upon the occurrence of any vesting pursuant to Section 4(b)(ii)(E) above, provide notice to the Optionee of such vesting (it being understood that a failure to so provide such notice shall not result in an extension of the applicable Option exercise period, but shall constitute a breach of this Agreement).
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Section 12. Waiver of Breach. The waiver by either party of a breach of any provision of this Agreement must be in writing and shall not operate or be construed as a waiver of any other or subsequent breach.
Section 13. Governing Law. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE TO BE APPLIED. IN FURTHERANCE OF THE FOREGOING, THE INTERNAL LAW OF THE STATE OF DELAWARE WILL CONTROL THE INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT, EVEN IF UNDER SUCH JURISDICTIONS CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS, THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION WOULD ORDINARILY APPLY.
Section 14. Withholding. As a condition to exercising this Option in whole or in part, the Optionee will pay, or make provisions satisfactory to the Company for payment of, any Federal, state, local and other applicable taxes required to be withheld in connection with such exercise in a manner that is set forth in Section 5.6 of the Plan.
Section 15. Adjustment to Option; Registration of Shares. In the event of any event described in Article VII of the Plan occurring after the Grant Date, the adjustment provisions (including cash payments) as provided for under Article VII of the Plan shall apply. The Company shall, concurrently with the closing of a Public Offering, register all Shares subject to an Option by filing a Form S-8 with the U.S. Securities Exchange Commission.
Section 16. Section 409A of the Code. If any term, distribution or settlement of this Agreement, or any other action by the Company (including by the Committee) pursuant to the terms of the Plan or this Agreement, would subject the Optionee to tax under Section 409A of the Code, the Company shall indemnify and hold harmless the Optionee for any taxes, interest and penalties the Optionee may incur under Section 409A of the Code as a result thereof, such that on a net-after-tax basis, the Optionee shall not be liable for any such taxes, interest or penalties, or for any taxes, interest or penalties imposed upon the Companys provision of such indemnity. The Company and the Optionee shall cooperate in good faith, and consult with tax counsel to the Company, to restructure the Option and this Agreement (which may require the provision of an alternative payment or benefit, but which shall not convey an economic benefit to the Optionee that is diminished in value to the Optionee other than in a de minims manner) in a manner that will cause the Optionee to not be subject to such taxes, interest and penalties in respect of the Option and this Agreement (or any such restructured arrangement).
Section 17. Modification of Rights; Entire Agreement. The Optionees rights under this Agreement and the Plan may be modified only to the extent expressly provided under this Agreement or under Article X or Article XIV of the Plan. This Agreement and the Plan (and the other writings referred to herein, including the Stockholders Agreement or the Registration Rights Agreement) constitute the entire agreement between the parties with respect to the subject matter hereof and thereof and supersede all prior written or oral negotiations, commitments, representations and agreements with respect thereto.
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Section 18. Severability. It is the desire and intent of the parties hereto that the provisions of this Agreement be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, if any particular provision of this Agreement shall be adjudicated by a court of competent jurisdiction to be invalid, prohibited or unenforceable for any reason, such provision, as to such jurisdiction, shall be ineffective, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction. Notwithstanding the foregoing, if such provision could be more narrowly drawn so as not to be invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.
Section 19. Waiver of Jury Trial; Legal Fees. Each party hereto hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, trial by jury in any suit, action or proceeding arising hereunder or under any other agreement regarding any option to purchase Shares that may be granted to the Optionee under the Plan after the date of this Agreement. In the event of any dispute regarding any term of this Option, the Company shall promptly reimburse the Optionee for all legal fees and expenses the Optionee incurs in connection with such dispute if the Optionee prevails in such dispute on a substantial portion of the claims under such dispute.
Section 20. FORFEITURE IF AGREEMENT NOT EXECUTED IN 90 DAYS. THIS AGREEMENT AND THE OPTION SHALL AUTOMATICALLY TERMINATE AND SHALL BECOME NULL AND VOID AND BE OF NO FURTHER FORCE AND EFFECT, AND THE OPTIONEE SHALL HAVE NO FURTHER RIGHTS UNDER THIS AGREEMENT, IF THE OPTIONEE DOES NOT RETURN AN EXECUTED COUNTERPART TO THIS AGREEMENT TO THE COMPANY WITHIN 90 DAYS OF THE GRANT DATE.
Section 21. Counterparts. This Agreement may be executed in one or more counterparts, and each such counterpart shall be deemed to be an original, but all such counterparts together shall constitute but one agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Nonqualified Stock Option Agreement as of the date first written above.
ARAMARK HOLDINGS CORPORATION | ||
By: |
| |
Name: | ||
Title: | ||
OPTIONEE |
12
|
(Signature of Optionee) |
|
(Print Name of Optionee) |
13
Schedule 1
EBIT Targets
(in millions)
Year |
Annual EBIT Target |
Cumulative EBIT Target |
||||||
2011 |
$ | 748.5 | $ | N/A | ||||
2012 |
$ | [ | ]* | $ | [ | ]* | ||
2013 |
$ | [ | ]* | $ | [ | ]* | ||
2014 (the Final Fiscal Year) |
$ | [ | ]* | $ | [ | ]* |
EBIT shall mean for any Fiscal Year, net income increased by (i) net interest expense and (ii) the provision for income taxes; all determined in accordance with U.S. generally accepted accounting principles (GAAP) consistently applied on a consolidated basis. For this purpose EBIT shall:
1. | Exclude any extraordinary gains or losses, cumulative effect of a change in accounting principle, income or loss from disposed or discontinued operations and any gains or losses on disposed or discontinued operations, all as determined in accordance with GAAP. |
2. | Exclude any gain or loss greater than $2 million attributable to asset dispositions, contract terminations and similar items, provided that losses on contract terminations and asset dispositions in connection with client contract terminations shall be limited in any given Fiscal Year to $5 million. |
3. | Exclude any increase in amortization or depreciation resulting from the application of purchase accounting to the Transaction, including the current amortization of existing acquired intangibles. |
4. | Exclude any gain or loss from the early extinguishment of indebtedness including any hedging obligations or other derivative instrument. |
5. | Exclude any impairment charge or similar asset write off required by GAAP. |
6. | Exclude any non cash compensation expense resulting from the application of SFAS No. 123R or similar accounting requirements. |
7. | Exclude any expenses or charges related to any equity offering, acquisition, disposition, recapitalization, refinancing or similar transaction, including the Transaction. |
8. | Exclude any transaction, management, monitoring, consulting, advisory and related fees and expenses paid or payable to the Sponsor Stockholders. |
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9. | Exclude the effects of changes in foreign currency translation rates from such rates used in the calculation of the EBIT Targets based on the 2011 Business Plan approved by the Board. |
10. | Exclude the impact that the 53rd week of operations will have on the Companys financial results during any 53 week fiscal year referenced in this Schedule. |
The final EBIT calculation for any Fiscal Year will be subject to review and approval by the Committee.
The EBIT Targets shall be adjusted for acquisitions as follows:
1. | For acquisitions having purchase consideration of less than $20 million each, there shall be no adjustment until the aggregate consideration for all such acquisitions exceeds $20 million in any Fiscal Year and then the EBIT Targets shall be adjusted to the extent the consideration for all such acquisitions exceeds $20 million. The amount of the adjustment shall be based on the last twelve months earnings of the acquired business, provided however, that the last twelve months earnings shall be adjusted, if necessary, to reflect the sustainable underlying profitability of the acquired business. If the purchase consideration for all such acquisitions is less than $20 million in any Fiscal Year, the amount by which $20 million exceeds such aggregate consideration shall be carried forward to future Fiscal Years for purposes of making this determination under this sub paragraph a). |
2. | For acquisitions having purchase consideration of more than $20 million each, the EBIT Targets shall be adjusted based on the pro forma used to approve the acquisition. |
The EBIT Targets will be adjusted for divestitures of a business by the amount of the last twelve months earnings of the divested business.
* | The Committee shall establish these targets in accordance with Section 4(b) of the Agreement to which this Schedule 1 is attached. |
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Schedule 2
Examples of Application of Certain Provisions of Section 4(b)(ii)
For ease of reference, the following is based on the following hypothetical EBIT targets
(assuming for these purposes that all EBIT targets have been set):
EBIT Targets
Year |
Annual EBIT Target |
Cumulative EBIT Target |
||||||
First Fiscal Year |
$ | 10.00 | N/A | |||||
Second Fiscal Year |
$ | 15.00 | $ | 25.00 | ||||
Third Fiscal Year |
$ | 20.00 | $ | 45.00 | ||||
Fourth Fiscal Year |
$ | 25.00 | $ | 60.00 |
Section 4(b)(ii)(A)
First Fiscal Year: EBIT is $8.00. No Performance-Based Options for First Fiscal Year vest.
Second Fiscal Year: Annual EBIT is $16.00, Cumulative EBIT is $24.00. Performance-Based Options for Second Fiscal Year vest because annual EBIT Target is achieved, Performance-Based Options for First Fiscal Year do not vest because Cumulative EBIT Target is not achieved.
Third Fiscal Year: Annual EBIT is $25.00, Cumulative EBIT is $49.00. Performance-Based Options for Third Fiscal Year vest because annual EBIT is achieved; Performance-Based Options for First Fiscal Year also vest because Cumulative EBIT Target is achieved.
Section 4(b)(ii)(C)
First Fiscal Year: EBIT is $12.00. Performance-Based Options for First Fiscal Year vest (i.e., 25% of all Performance-Based Options are vested).
Second Fiscal Year: EBIT is $14.00. No Performance-Based Options for Second Fiscal Year vest (i.e., Optionee is still only vested in 25% of all Performance-Based Options).
Third Fiscal Year: A Qualified Partial Liquidity Event occurs where the Partial Liquidity Vesting Percentage is 75%. Performance-Based Options for Second Fiscal Year vest and, whether or not either of the EBIT Targets for Third Fiscal Year is achieved, the Performance-Based Options for Third Fiscal Year will also vest, such that the Optionee will be 75% vested in all Performance-Based Options.
Section 4(b)(ii)(D)
First Fiscal Year: EBIT is $16.00. Performance-Based Options for First Fiscal Year vest (i.e., 100% of all Performance-Based Options that were eligible to vest in First Fiscal Year are vested).
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Second Fiscal Year: EBIT is $14.00. No Performance-Based Options for Second Fiscal Year vest (i.e., Optionee is only 50% vested in all Performance-Based Options that were eligible to vest in First Fiscal Year and Second Fiscal Year combined).
Third Fiscal Year: A Change of Control that is not a Return-Based Vesting Event occurs. 50% of the Performance-Based Options for Third Fiscal Year and Fourth Fiscal Year will become vested.
Section 4(b)(ii)(B) and (E)
First Fiscal Year: EBIT is $8.00. No Performance-Based Options for First Fiscal Year vest.
Second Fiscal Year: EBIT is $14.00. No Performance-Based Options for First Fiscal Year or Second Fiscal Year vest.
January of Third Fiscal Year: Optionees employment terminates due to Retirement.
August of Third Fiscal Year: A Return-Based Vesting Event occurs. All Performance-Based Options (for First Fiscal Year through Fourth Fiscal Year) vest, even though the event occurs after the Optionees employment terminates, because the event occurs within 12 months after the termination of employment.
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Exhibit 10.4
[Aramark Letterhead]
June , 2011
[Name]
[Address]
Re: | Amendments to Non Qualified Stock Option Agreement |
Dear :
This letter is regarding your outstanding options to purchase common stock of ARAMARK HOLDINGS CORPORATION (the Company) granted to you pursuant to that certain Non-Qualified Stock Option Agreement (the Option Agreement) pursuant to the ARAMARK Holdings Corporation 2007 Management Stock Incentive Plan, as amended (the Plan). All capitalized terms used but not otherwise defined herein shall have the meaning set forth in the Option Agreement.
In recognition of the changed conditions since the EBIT target for Fiscal Year 2011 was established, the Board has elected to reduce the EBIT Target for Fiscal Year 2011 as set forth on Schedule 1 to your Option Agreement from $789.4 million to $748.5 million.
[Insert for grants made in or after 2009 only:][In addition, if in the future the Board or the Committee establishes an annual EBIT Target for a Fiscal Year set forth on Schedule 1 to your Option Agreement for any other grant of options to purchase common stock of the Company that might be made on or after [June [ ], 2011][Insert date of Board approval of this amendment] and such EBIT Target is less than the EBIT Target for such Fiscal Year set forth on Schedule 1 to your Option Agreement, the EBIT Target for such Fiscal Year shall be such lower EBIT Target and Schedule 1 shall be modified accordingly. The Board of Directors has also elected to amend your Option Agreement to provide that if the Board or the Committee sets a Cumulative EBIT Target for Fiscal Year 2012, or any subsequent Fiscal Year, for any other grant of options to purchase common stock of the Company that might be made on or after [June [ ], 2011][ Insert date of Board approval of this amendment], and that Cumulative EBIT Target is achieved, any portion of any tranche of the Performance Option that had not become vested in respect of Fiscal Year 2011 or later but prior to the Fiscal Year for which the Cumulative EBIT Target was achieved and prior to the Final Fiscal Year of the grant will become vested.]
Enclosed with this letter please find a Revised Schedule 1, which constitutes the amendment to your Option Agreement to reflect the amendments described above. Please replace the current Schedule 1 to your Option Agreement with the attached Revised Schedule 1.
If you have any questions, please contact [NAME] at [NUMBER/EMAIL].
Sincerely, |
Lynn McKee |
Executive Vice President, Human Resources |
ARAMARK Corporation |
Revised Schedule 1
[Insert 1 of 4 Schedule 1s from Board resolutions]
Exhibit 10.5
Schedule 1 (to 2008 Agreements)
EBIT Targets
(in millions)
Year |
Annual EBIT Target |
Cumulative EBIT Target | ||||||
2008 |
$ | 755.1 | N/A | |||||
2009 |
$ | 779.3 | $ | 1,534.3 | ||||
2010 |
$ | 718.1 | $ | 2,252.4 | ||||
2011 (the Final Fiscal Year) |
$ | 748.5 | $ | 3,041.8 |
EBIT shall mean for any Fiscal Year, net income increased by (i) net interest expense and (ii) the provision for income taxes; all determined in accordance with U.S. generally accepted accounting principles (GAAP) consistently applied on a consolidated basis. For this purpose EBIT shall:
a) Exclude any extraordinary gains or losses, cumulative effect of a change in accounting principle, income or loss from disposed or discontinued operations and any gains or losses on disposed or discontinued operations, all as determined in accordance with GAAP.
b) Exclude any gain or loss greater than $2 million attributable to asset dispositions, contract terminations and similar items, provided that losses on contract terminations and asset dispositions in connection with client contract terminations shall be limited in any given Fiscal Year to $5 million.
c) Exclude any increase in amortization or depreciation resulting from the application of purchase accounting to the Transaction, including the current amortization of existing acquired intangibles.
d) Exclude any gain or loss from the early extinguishment of indebtedness including any hedging obligations or other derivative instrument.
e) Exclude any impairment charge or similar asset write off required by GAAP.
f) Exclude any non cash compensation expense resulting from the application of SFAS No. 123R or similar accounting requirements.
g) Exclude any expenses or charges related to any equity offering, acquisition, disposition, recapitalization, refinancing or similar transaction, including the Transaction.
h) Exclude any transaction, management, monitoring, consulting, advisory and related fees and expenses paid or payable to the Sponsor Stockholders.
i) Exclude the effects of changes in foreign currency translation rates from such rates used in the calculation of the EBIT Targets. The 2011 EBIT Target is based on the foreign currency translation rates used in the 2011 Business Plan approved by the Board.
1
j) Exclude the impact that the 53rd week of operations will have on the Companys financial results during any 53 week Fiscal Year referenced in this Schedule.
The final EBIT calculation for any Fiscal Year will be subject to review and approval by the Committee.
The EBIT Targets shall be adjusted for acquisitions as follows:
a) For acquisitions having purchase consideration of less than $20 million each, there shall be no adjustment until the aggregate consideration for all such acquisitions exceeds $20 million in any Fiscal Year and then the EBIT Targets shall be adjusted to the extent the consideration for all such acquisitions exceeds $20 million. The amount of the adjustment shall be based on the last twelve months earnings of the acquired business, provided however, that the last twelve months earnings shall be adjusted, if necessary, to reflect the sustainable underlying profitability of the acquired business. If the purchase consideration for all such acquisitions is less than $20 million in any Fiscal Year, the amount by which $20 million exceeds such aggregate consideration shall be carried forward to future Fiscal Years for purposes of making this determination under this sub paragraph a).
b) For acquisitions having purchase consideration of more than $20 million each, the EBIT Targets shall be adjusted based on the pro forma used to approve the acquisition.
The EBIT Targets will be adjusted for divestitures of a business by the amount of the last twelve months earnings of the divested business.
Schedule 1 (to 2009 Agreements)
EBIT Targets
(in millions)
Year |
Annual EBIT Target |
Cumulative EBIT Target | ||||||
2009 |
$ | 779.3 | N/A | |||||
2010 |
$ | 718.1 | $ | 1,497.3 | ||||
2011 |
$ | 748.5 | * | $ | 2,286.7 | * | ||
2012 (the Final Fiscal Year) |
$ | 858.5 | * | $ | 3,145.2 |
EBIT shall mean for any Fiscal Year, net income increased by (i) net interest expense and (ii) the provision for income taxes; all determined in accordance with U.S. generally accepted accounting principles (GAAP) consistently applied on a consolidated basis. For this purpose EBIT shall:
a) Exclude any extraordinary gains or losses, cumulative effect of a change in accounting principle, income or loss from disposed or discontinued operations and any gains or losses on disposed or discontinued operations, all as determined in accordance with GAAP.
b) Exclude any gain or loss greater than $2 million attributable to asset dispositions, contract terminations and similar items, provided that losses on contract terminations and asset dispositions in connection with client contract terminations shall be limited in any given Fiscal Year to $5 million.
c) Exclude any increase in amortization or depreciation resulting from the application of purchase accounting to the Transaction, including the current amortization of existing acquired intangibles.
d) Exclude any gain or loss from the early extinguishment of indebtedness including any hedging obligations or other derivative instrument.
e) Exclude any impairment charge or similar asset write off required by GAAP.
f) Exclude any non cash compensation expense resulting from the application of SFAS No. 123R or similar accounting requirements.
g) Exclude any expenses or charges related to any equity offering, acquisition, disposition, recapitalization, refinancing or similar transaction, including the Transaction.
h) Exclude any transaction, management, monitoring, consulting, advisory and related fees and expenses paid or payable to the Sponsor Stockholders.
i) Exclude the effects of changes in foreign currency translation rates from such rates used in the calculation of the EBIT Targets. The 2011 EBIT Target is based on the foreign currency translation rates used in the 2011 Business Plan approved by the Board. 2012 and later
3
EBIT Targets are based on the foreign currency translation rates used in the 2010 Business Plan approved by the Board.
j) Exclude the impact that the 53rd week of operations will have on the Companys financial results during any 53 week Fiscal Year referenced in this Schedule.
The final EBIT calculation for any Fiscal Year will be subject to review and approval by the Committee.
The EBIT Targets shall be adjusted for acquisitions as follows:
a) For acquisitions having purchase consideration of less than $20 million each, there shall be no adjustment until the aggregate consideration for all such acquisitions exceeds $20 million in any Fiscal Year and then the EBIT Targets shall be adjusted to the extent the consideration for all such acquisitions exceeds $20 million. The amount of the adjustment shall be based on the last twelve months earnings of the acquired business, provided however, that the last twelve months earnings shall be adjusted, if necessary, to reflect the sustainable underlying profitability of the acquired business. If the purchase consideration for all such acquisitions is less than $20 million in any Fiscal Year, the amount by which $20 million exceeds such aggregate consideration shall be carried forward to future Fiscal Years for purposes of making this determination under this sub paragraph a).
b) For acquisitions having purchase consideration of more than $20 million each, the EBIT Targets shall be adjusted based on the pro forma used to approve the acquisition.
The EBIT Targets will be adjusted for divestitures of a business by the amount of the last twelve months earnings of the divested business.
* | If in the future the Board or the Committee establishes an annual EBIT Target for a Fiscal Year set forth above for any other grant of options to purchase common stock of the Company that might be made on or after June 17, 2011 and such EBIT Target is less than the EBIT Target for such Fiscal Year set forth above, the EBIT Target for such Fiscal Year set forth on this Schedule 1 shall be deemed reduced to such lower EBIT Target. In addition, if the Board of Directors or the Committee establishes any Cumulative EBIT Target(s) for any other Option granted by the Company for any of the Fiscal Years beginning with 2012 or following, and such Cumulative EBIT Target(s) are achieved, any portion of the Performance Option that has not become vested in respect of Fiscal Year 2011 or later but prior to the Fiscal Year in which the Cumulative EBIT Target was achieved and prior to the Final Fiscal Year will become vested. |
Schedule 1 (to 2010 Agreements)
EBIT Targets
(in millions)
Year |
Annual EBIT Target |
Cumulative EBIT Target | ||||||
2010 |
$ | 718.1 | N/A | |||||
2011 |
$ | 748.5 | * | $ | 1,507.5 | * | ||
2012 |
$ | 858.5 | * | $ | 2,366.0 | * | ||
2013 (the Final Fiscal Year) |
$ | 933.3 | * | $ | 3,299.3 |
EBIT shall mean for any Fiscal Year, net income increased by (i) net interest expense and (ii) the provision for income taxes; all determined in accordance with U.S. generally accepted accounting principles (GAAP) consistently applied on a consolidated basis. For this purpose EBIT shall:
a) Exclude any extraordinary gains or losses, cumulative effect of a change in accounting principle, income or loss from disposed or discontinued operations and any gains or losses on disposed or discontinued operations, all as determined in accordance with GAAP.
b) Exclude any gain or loss greater than $2 million attributable to asset dispositions, contract terminations and similar items, provided that losses on contract terminations and asset dispositions in connection with client contract terminations shall be limited in any given Fiscal Year to $5 million.
c) Exclude any increase in amortization or depreciation resulting from the application of purchase accounting to the Transaction, including the current amortization of existing acquired intangibles.
d) Exclude any gain or loss from the early extinguishment of indebtedness including any hedging obligations or other derivative instrument.
e) Exclude any impairment charge or similar asset write off required by GAAP.
f) Exclude any non cash compensation expense resulting from the application of SFAS No. 123R or similar accounting requirements.
g) Exclude any expenses or charges related to any equity offering, acquisition, disposition, recapitalization, refinancing or similar transaction, including the Transaction.
h) Exclude any transaction, management, monitoring, consulting, advisory and related fees and expenses paid or payable to the Sponsor Stockholders.
i) Exclude the effects of changes in foreign currency translation rates from such rates used in the calculation of the EBIT Targets. The 2011 EBIT Target is based on the foreign currency translation rates used in the 2011 Business Plan approved by the Board. 2012 and later
5
EBIT Targets are based on the foreign currency translation rates used in the 2010 Business Plan approved by the Board.
j) Exclude the impact that the 53rd week of operations will have on the Companys financial results during any 53 week Fiscal Year referenced in this Schedule.
The final EBIT calculation for any Fiscal Year will be subject to review and approval by the Committee.
The EBIT Targets shall be adjusted for acquisitions as follows:
a) For acquisitions having purchase consideration of less than $20 million each, there shall be no adjustment until the aggregate consideration for all such acquisitions exceeds $20 million in any Fiscal Year and then the EBIT Targets shall be adjusted to the extent the consideration for all such acquisitions exceeds $20 million. The amount of the adjustment shall be based on the last twelve months earnings of the acquired business, provided however, that the last twelve months earnings shall be adjusted, if necessary, to reflect the sustainable underlying profitability of the acquired business. If the purchase consideration for all such acquisitions is less than $20 million in any Fiscal Year, the amount by which $20 million exceeds such aggregate consideration shall be carried forward to future Fiscal Years for purposes of making this determination under this sub paragraph a).
b) For acquisitions having purchase consideration of more than $20 million each, the EBIT Targets shall be adjusted based on the pro forma used to approve the acquisition.
The EBIT Targets will be adjusted for divestitures of a business by the amount of the last twelve months earnings of the divested business.
* | If in the future the Board or the Committee establishes an annual EBIT Target for a Fiscal Year set forth above for any other grant of options to purchase common stock of the Company that might be made on or after June 17, 2011 and such EBIT Target is less than the EBIT Target for such Fiscal Year set forth above, the EBIT Target for such Fiscal Year set forth on this Schedule 1 shall be deemed reduced to such lower EBIT Target. In addition, if the Board of Directors or the Committee establishes any Cumulative EBIT Target(s) for any other Option granted by the Company for any of the Fiscal Years beginning with 2012 or following, and such Cumulative EBIT Target(s) are achieved, any portion of the Performance Option that has not become vested in respect of Fiscal Year 2011 or later but prior to the Fiscal Year in which the Cumulative EBIT Target was achieved and prior to the Final Fiscal Year will become vested. |
Schedule 1 (to 2011 Agreements)
EBIT Targets
(in millions)
Year |
Annual EBIT Target |
Cumulative EBIT Target | ||||||
2011 |
$ | 748.5 | * | N/A | ||||
2012 |
$ | 858.5 | * | $ | 1,647.9 | * | ||
2013 |
$ | 933.3 | * | $ | 2,581.2 | * | ||
2014 (the Final Fiscal Year) |
$ | 1,013.4 | * | $ | 3,594.6 |
EBIT shall mean for any Fiscal Year, net income increased by (i) net interest expense and (ii) the provision for income taxes; all determined in accordance with U.S. generally accepted accounting principles (GAAP) consistently applied on a consolidated basis. For this purpose EBIT shall:
a) Exclude any extraordinary gains or losses, cumulative effect of a change in accounting principle, income or loss from disposed or discontinued operations and any gains or losses on disposed or discontinued operations, all as determined in accordance with GAAP.
b) Exclude any gain or loss greater than $2 million attributable to asset dispositions, contract terminations and similar items, provided that losses on contract terminations and asset dispositions in connection with client contract terminations shall be limited in any given Fiscal Year to $5 million.
c) Exclude any increase in amortization or depreciation resulting from the application of purchase accounting to the Transaction, including the current amortization of existing acquired intangibles.
d) Exclude any gain or loss from the early extinguishment of indebtedness including any hedging obligations or other derivative instrument.
e) Exclude any impairment charge or similar asset write off required by GAAP.
f) Exclude any non cash compensation expense resulting from the application of SFAS No. 123R or similar accounting requirements.
g) Exclude any expenses or charges related to any equity offering, acquisition, disposition, recapitalization, refinancing or similar transaction, including the Transaction.
h) Exclude any transaction, management, monitoring, consulting, advisory and related fees and expenses paid or payable to the Sponsor Stockholders.
i) Exclude the effects of changes in foreign currency translation rates from such rates used in the calculation of the EBIT Targets. The 2011 EBIT Target is based on the foreign currency translation rates used in the 2011 Business Plan approved by the Board. 2012 and later
7
EBIT Targets are based on the foreign currency translation rates used in the 2010 Business Plan approved by the Board.
j) Exclude the impact that the 53rd week of operations will have on the Companys financial results during any 53 week Fiscal Year referenced in this Schedule.
The final EBIT calculation for any Fiscal Year will be subject to review and approval by the Committee.
The EBIT Targets shall be adjusted for acquisitions as follows:
a) For acquisitions having purchase consideration of less than $20 million each, there shall be no adjustment until the aggregate consideration for all such acquisitions exceeds $20 million in any Fiscal Year and then the EBIT Targets shall be adjusted to the extent the consideration for all such acquisitions exceeds $20 million. The amount of the adjustment shall be based on the last twelve months earnings of the acquired business, provided however, that the last twelve months earnings shall be adjusted, if necessary, to reflect the sustainable underlying profitability of the acquired business. If the purchase consideration for all such acquisitions is less than $20 million in any Fiscal Year, the amount by which $20 million exceeds such aggregate consideration shall be carried forward to future Fiscal Years for purposes of making this determination under this sub paragraph a).
b) For acquisitions having purchase consideration of more than $20 million each, the EBIT Targets shall be adjusted based on the pro forma used to approve the acquisition.
The EBIT Targets will be adjusted for divestitures of a business by the amount of the last twelve months earnings of the divested business.
* | If in the future the Board or the Committee establishes an annual EBIT Target for a Fiscal Year set forth above for any other grant of options to purchase common stock of the Company that might be made on or after June 17, 2011 and such EBIT Target is less than the EBIT Target for such Fiscal Year set forth above, the EBIT Target for such Fiscal Year set forth on this Schedule 1 shall be deemed reduced to such lower EBIT Target. In addition, if the Board of Directors or the Committee establishes any Cumulative EBIT Target(s) for any other Option granted by the Company for any of the Fiscal Years beginning with 2012 or following, and such Cumulative EBIT Target(s) are achieved, any portion of the Performance Option that has not become vested in respect of Fiscal Year 2011 or later but prior to the Fiscal Year in which the Cumulative EBIT Target was achieved and prior to the Final Fiscal Year will become vested. |