ex10_40.htm


    
      Exhibit
10.40

       

    

     

    EMPLOYMENT
AGREEMENT

    


    


    THIS
EMPLOYMENT AGREEMENT (the “Agreement”) is
entered into as of January 27, 2009 by and between HARDEE’S FOOD SYSTEMS, INC.,
a North Carolina corporation (the “Company”), and ROBERT
J. STARKE (the “Employee”).

     

    R E C I T
A L S:

     

    A.           Employee
is a key employee of the Company.

     

    B.           The
Company and Employee desire to enter into this Agreement to set forth the terms
and provisions of Employee’s employment by the Company.

     

    NOW,
THEREFORE, in consideration of the mutual covenants and agreements set forth
herein, the parties agree as follows:

     

    1. Employment and
Duties.  Subject to the terms and conditions of this Agreement,
the Company employs the Employee to serve in an executive and managerial
capacity as President of the Company, and the Employee accepts such employment
and agrees to perform such reasonable responsibilities and duties commensurate
with the aforesaid positions as directed by the Company’s Board of Directors or
as set forth in the Articles of Incorporation and the Bylaws of the
Company.  Any change in such titles or delegation of duties
inconsistent with such titles without the consent of Employee, shall be deemed a
termination without cause under Section 7(b) below.

     

    2. Term.  The
term of this Agreement shall commence on the first day of the Company’s fiscal
year commencing in the year 2009 (the “Effective Date”) and,
prior to July 11, 2012, shall terminate three (3) years following the date on
which notice of non-renewal or termination of this Agreement is given by either
party to the other and, on and subsequent to July 11, 2012, shall terminate on
July 11, 2015, subject in all cases to prior termination as set forth in Section
7 below (the “Term”).  Thus,
prior to July 11, 2012, the Term shall be renewed automatically on a daily basis
so that the outstanding Term is always three (3) years following the date on
which notice of non-renewal or termination is given by either party to the other
and, on July 11, 2012, the Term shall convert into a remaining three (3) year
term ending on July 11, 2015.  The Term may be extended at any time
upon mutual written agreement of the parties.

     

    3. Salary.  Commencing
on the Effective Date, and subject to the other provisions of this Agreement,
the Company shall pay the Employee a minimum base annual salary of
$275,000.  The Chief Executive Officer of the Company may, from time
to time, increase such salary in his sole discretion.

     

    4. Other Compensation and
Fringe Benefits.  In addition to any executive bonus, pension,
deferred compensation and stock option grants which the Company may from time to
time make available to the Employee upon mutual agreement, the Employee shall be
entitled to the following:

     

    (a) The
standard Company benefits enjoyed by the Company’s other top
executives;

     

    (b) Provision
by the Company during the Term and any extensions thereof to the Employee and
his dependents of the medical and other insurance coverage provided by the
Company to its other top executives;

     

    (c) Provision
by the Company of supplemental disability insurance sufficient to provide
two-thirds of the Employee’s pre-disability minimum base annual salary for a
two-year period; and

     

    (d) For the
fiscal year ending in January 2010, Employee shall be entitled to a bonus in the
amount determined by the Company’s Chief Executive Officer, in his sole
discretion.  Such
discretionary bonus shall be evaluated and paid (if applicable) no later than
December 31 of the calendar year following the calendar year to which such bonus
relates.

     

    The
Company shall deduct from all compensation payable under this Agreement to the
Employee any taxes or withholdings the Company is required to deduct pursuant to
state and federal laws or by mutual agreement between the parties.

     

    5. Vacation.  For
and during each year of the Term and any extensions thereof, the Employee shall
be entitled to reasonable paid vacation periods consistent with his positions
with the Company and in accordance with the Company’s standard policies, or as
the Company’s Board of Directors may approve.  In addition, the
Employee shall be entitled to such holidays consistent with the Company’s
standard policies or as the Company’s Board of Directors may
approve.

     

    6. Expense
Reimbursement.  In addition to the compensation and benefits
provided herein, the Company shall, upon receipt of appropriate documentation,
reimburse the Employee each month for his reasonable travel, lodging,
entertainment, promotion and other ordinary and necessary business expenses in
accordance with the Company’s policies then in effect.  Any amounts payable under this Section
6 shall be paid no later than December 31 of the year following the year in
which the expenses are incurred.

     

    7. Termination.

     

    (a) For
Cause.  The Company may terminate this Agreement immediately
for cause upon written notice to the Employee, in which event the Company shall
be obligated only to pay the Employee that portion of the minimum base annual
salary due him through the date of termination.  Cause shall be
limited to (i) the persistent failure to perform duties consistent with a
commercially reasonable standard of care; (ii) the willful neglect of duties;
(iii) criminal or other illegal activities involving dishonesty; or, (iv) a
material breach of this Agreement.

     

    (b) Without
Cause.  Either party may terminate this Agreement immediately
without cause by giving written notice to the other.  If the Company
terminates under this Section 7(b) , then it shall pay to the Employee the
sum of (i) all amounts owed through the date of termination, plus (ii) an amount
equal to the product of the Employee’s minimum base annual salary in effect as
of the date of termination times the number of years (including partial years)
remaining in the Term.  Such payment to be made in a lump sum on or
before the fifth day following the date of termination, and shall be in lieu of
all further salary and bonus obligations under this Agreement.  In
addition, if the Company terminates under this Section 7(b), (i) all
options granted to the Employee which had not vested as of the date of such
termination shall vest concurrently with such termination, and, notwithstanding
the terms of any option agreements, Employee may exercise any vested options,
including by reason of acceleration, for a period after such termination which
is the greater of what is provided in the respective option agreement or 30
days, and (ii) the Company shall maintain in full force and effect for the
continued benefit of the Employee during the period commencing on the date of
termination and ending on the December 31 of the second calendar year following
the calendar year in which the termination occurred, all employee benefit plans
(except for the Company’s stock option plans) and programs in which the Employee
was entitled to participate immediately prior to the date of termination,
provided that the Employee’s continued participation is possible under the
general terms and provisions of such plans and programs.  In the event
that the Employee’s participation in any such plan or program is prohibited, the
Company shall, at its expense, arrange to provide the Employee with benefits
substantially similar to those which the Employee would otherwise have been
entitled to receive under such plans and programs from which his continued
participation is prohibited; provided, however, that notwithstanding the
foregoing, there shall only be included, and Employee shall only be entitled to,
those benefit plans or programs that are exempt from the term “nonqualified
deferred compensation plan” under Section 409A of the Code.  If the
Employee terminates under this Section 7(b), then the Company shall only be
obligated to pay the Employee the minimum annual base salary due him through the
date of termination.  Notwithstanding anything in Section 7(b) to the
contrary, no amount shall be payable pursuant to this Section 7(b) unless
Employee has incurred a Separation from Service (within the meaning of Section
409A(a)(2)(A)(i) of the Code, and Treasury Regulation Section 1.409A-1(h)
(“Separation from
Service”) by reason of a termination of the Employee’s employment by the
Company under this Section 7(b).

     

    (c) Disability.  If
the Employee fails to perform his duties hereunder on account of illness or
other incapacity for a period of six consecutive months, then the Company shall
have the right upon written notice to the Employee to terminate this Agreement
without further obligation by paying the Employee the minimum base annual
salary, without offset, for the remainder of the Term in a lump sum or as
otherwise directed by the Employee.

     

    (d) Death.  If
the Employee dies during the Term, then this Agreement shall terminate
immediately and the Employee’s legal representatives shall be entitled to
receive the minimum annual base salary for the remainder of the Term in a lump
sum or as otherwise directed by the Employee’s legal
representative.  Executive’s outstanding Company options will
immediately vest in full and be exercisable for a period of 90 days from
Employee’s death.

     

    (e) Effect of
Termination.  Termination for any reason or for no reason shall
not constitute a waiver of the Company’s rights under this Agreement nor a
release of the Employee from any obligation hereunder except his obligation to
perform his day-to-day duties as an employee.

     

    (f) Mitigation.  Employee
shall not be required to mitigate the amount of any payment provided for in this
Section 7 by seeking other employment or otherwise, nor shall any compensation
or other payments received by the Employee after the date of termination reduce
any payments due under this Section 7.

     

    8. Non-Delegation of Employee’s
Rights.  The obligations, rights and benefits of the Employee
hereunder are personal and may not be delegated, assigned or transferred in any
manner whatsoever, nor are such obligations, rights or benefits subject to
involuntary alienation, assignment or transfer.

     

    9. Confidential
Information.  The Employee acknowledges that in his capacity as
an employee of the Company he will occupy a position of trust and confidence and
he further acknowledges that he will have access to and learn substantial
information about the Company and its operations that is confidential or not
generally known in the industry, including, without limitation, information that
relates to purchasing, sales, customers, marketing, and the Company’s financial
position and financing arrangements.  The Employee agrees that all
such information is proprietary or confidential, or constitutes trade secrets
and is the sole property of the Company.  The Employee will keep
confidential, and will not reproduce, copy or disclose to any other person or
firm, any such information or any documents or information relating to the
Company’s methods, processes, customers, accounts, analyses, systems, charts,
programs, procedures, correspondence or records, or any other documents used or
owned by the Company, nor will the Employee advise, discuss with or in any way
assist any other person, firm or entity in obtaining or learning about any of
the items described in this Section 9.  Accordingly, the Employee
agrees that during the Term and at all times thereafter he will not disclose, or
permit or encourage anyone else to disclose, any such information, nor will he
utilize any such information, either alone or with others, outside the scope of
his duties and responsibilities with the Company.

     

    10. Non-Competition During
Employment Term.  The Employee agrees that, during the Term and
any extensions thereof, he will devote substantially all his business time and
effort, and give undivided loyalty, to the Company, and that he will not engage
in any way whatsoever, directly or indirectly, in any business that is
competitive with the Company or its affiliates, nor solicit, or in any other
manner work for or assist any business which is competitive with the Company or
its affiliates.  In addition, during the Term and any extensions
thereof, the Employee will undertake no planning for or organization of any
business activity competitive with the work he performs as an employee of the
Company, and the Employee will not combine or conspire with any other employee
of the Company or any other person for the purpose of organizing any such
competitive business activity.

     

    11. Non-Competition After
Employment Term.  The parties acknowledge that the Employee
will acquire substantial knowledge and information concerning the business of
the Company and its affiliates as a result of his employment.  The
parties further acknowledge that the scope of business in which the Company is
engaged as of the Effective Date is national and very competitive and one in
which few companies can successfully compete.  Competition by the
Employee in that business after this Agreement is terminated would severely
injure the Company.  Accordingly, for a period of two years after this
Agreement is terminated or the Employee leaves the employment of the Company for
any reason whatsoever, except as otherwise stated hereinbelow, the Employee
agrees (i) not to become an employee, consultant, advisor, principal, partner or
substantial shareholder of any firm or business that in any way competes with
the Company or its affiliates in any of their presently-existing or
then-existing products and markets; and (ii) not to solicit any person or
business that was at the time of such termination and remains an executive
employee of the Company or any of its affiliates.  Notwithstanding any
of the foregoing provisions to the contrary, the Employee shall not be subject
to the restrictions set forth in this Section 11 under the following
circumstances:

     

    (a) If the
Employee’s employment with the Company is terminated by the Company without
cause; or

     

    (b) If the
Employee’s employment with the Company is terminated as a result of the
Company’s unwillingness to extend the Term of this Agreement.

     

    12. Return of Company
Documents.  Upon termination of this Agreement, Employee shall
return immediately to the Company all records and documents of or pertaining to
the Company and shall not make or retain any copy or extract of any such record
or document.

     

    13. Improvements and
Inventions.  Any and all improvements or inventions which the
Employee may conceive, make or participate in during the period of his
employment shall be the sole and exclusive property of the
Company.  The Employee will, whenever requested by the Company,
execute and deliver any and all documents which the Company shall deem
appropriate in order to apply for and obtain patents for improvements or
inventions or in order to assign and convey to the Company the sole and
exclusive right, title and interest in and to such improvements, inventions,
patents or applications.

     

    14. Actions.  The
parties agree and acknowledge that the rights conveyed by this Agreement are of
a unique and special nature and that the Company will not have an adequate
remedy at law in the event of a failure by the Employee to abide by its terms
and conditions nor will money damages adequately compensate for such injury. It
is therefore agreed between the parties that, in the event of a breach by the
Employee of any of his obligations contained in this Agreement, the Company
shall have the right, among other rights, to damages sustained thereby and to
obtain an injunction or decree of specific performance from any court of
competent jurisdiction to restrain or compel the Employee to perform as agreed
herein.  The Employee agrees that this Section 14 shall survive the
termination of his employment and he shall be bound by its terms at all times
subsequent to the termination of his employment for so long a period as Company
continues to conduct the same business or businesses as conducted during the
Term or any extensions thereof.  Nothing herein contained shall in any
way limit or exclude any other right granted by law or equity to the
Company.

     

    15. Amendment;
Integration.  This Agreement contains, and its terms
constitute, the entire agreement of the parties, and it may be amended only by a
written document signed by both parties to this Agreement.

     

    16. Governing
Law.  California law shall govern the construction and
enforcement of this Agreement and the parties agree that any litigation
pertaining to this Agreement shall be adjudicated in courts located in
California.

     

    17. Attorneys’
Fees.  If any party finds it necessary to employ legal counsel
or to bring an action at law or other proceedings against the other party to
enforce any of the terms hereof, the party prevailing in any such action or
other proceeding shall be paid by the other party its reasonable attorneys’ fees
as well as court costs, all as determined by the court and not a
jury.

     

    18. Severability.  If
any section, subsection or provision hereof is found for any reason whatsoever,
to be invalid or inoperative, that section, subsection or provision shall be
deemed severable and shall not affect the force and validity of any other
provision of this Agreement. If any covenant herein is determined by a court to
be overly broad thereby making the covenant unenforceable, the parties agree and
it is their desire that such court shall substitute a reasonable judicially
enforceable limitation in place of the offensive part of the covenant and that
as so modified the covenant shall be as fully enforceable as if set forth herein
by the parties themselves in the modified form.  The covenants of the
Employee in this Agreement shall each be construed as an agreement independent
of any other provision in this Agreement, and the existence of any claim or
cause of action of the Employee against the Company, whether predicated on this
Agreement or otherwise, shall not constitute a defense to the enforcement by the
Company of the covenants in this Agreement.

     

    19. Notices.  Any
notice, request, or instruction to be given hereunder shall be in writing and
shall be deemed given when personally delivered or three days after being sent
by United States certified mail, postage prepaid, with return receipt requested,
to the parties at their respective addresses set for the below:

     

    To the Company:

     

    Hardee’s
Food Systems, Inc.

    One US
Bank Plaza

    Suite
2000

    St.
Louis, MO 63101

    Attention:
 General Counsel

     

    To the Employee:

     

    Robert J.
Starke

    2097
Farris Road

    Foristell,
MO 63348

     

    20. Waiver of Breach. The
waiver by any party of any provisions of this Agreement shall not operate or be
construed as a waiver of any prior or subsequent breach by the other
party.

     

    IN
WITNESS WHEREOF the parties have executed this Agreement to be effective as of
the date first set forth above.

    


    HARDEE’S
FOOD SYSTEMS, INC.

    


    


    By:    /s/ Andrew F.
Puzder     
                                                                       

    Andrew F. Puzder

    Chief Executive Officer

     

    


    


    EMPLOYEE

     

    
/s/ Robert J.
Starke                 


    Robert J.
Starke